[Senate Report 109-51]
[From the U.S. Government Publishing Office]




109th Congress                                                   Report
                                 SENATE
 1st Session                                                     109-51
_______________________________________________________________________

                                     
                                     
                                     
                                     

                                                        Calendar No. 60


                      PERSONAL RESPONSIBILITY AND
            INDIVIDUAL DEVELOPMENT FOR EVERYONE ACT (PRIDE)

                               ----------                              

                              R E P O R T

                         [To accompany S. 667]




                 March 30, 2005.--Ordered to be printed
                      PERSONAL RESPONSIBILITY AND

            INDIVIDUAL DEVELOPMENT FOR EVERYONE ACT (PRIDE)


109th Congress                                                   Report
                                 SENATE
 1st Session                                                     109-51
_______________________________________________________________________

                                     

                                     

                                     

                                     

                                                        Calendar No. 60


                      PERSONAL RESPONSIBILITY AND

            INDIVIDUAL DEVELOPMENT FOR EVERYONE ACT (PRIDE)

                               __________

                              R E P O R T

                         [To accompany S. 667]




                 March 30, 2005.--Ordered to be printed
                                                        Calendar No. 60
109th Congress                                                   Report
                                 SENATE
 1st Session                                                     109-51

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



 
  PERSONAL RESPONSIBILITY AND INDIVIDUAL DEVELOPMENT FOR EVERYONE ACT 
                                (PRIDE)

                                _______
                                

                 March 30, 2005.--Ordered to be printed

          Filed under authority of the order of March 17, 2005

                                _______
                                

  Mr. Grassley, from the Committee on Finance, submitted the following

                              R E P O R T

                         [To accompany S. 667]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance reported an original bill (S. 667) 
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, having 
considered the same, reports favorably thereon, and recommends 
that the bill do pass.

                             I. BACKGROUND

    The 1996 welfare reform law supplanted the main existing 
welfare program for families, Aid to Families with Dependent 
Children (AFDC) and its work/training component (JOBS), and 
greatly changed most other federally supported aid to the poor. 
It was enacted after debate stretching over 3 years and two 
presidential vetoes.
    The move to reform this system was prompted by soaring AFDC 
rolls and higher costs, extant federal waivers for more than 
half the states to undertake their own welfare reforms, 
frustration with the long AFDC tenure and youth of many 
recipient parents, concerns over the extent of unwed parenthood 
among recipients, reaction to AFDC's unrestricted entitlement 
nature, and disillusion with the most recent attempt at reform 
(the 1988 Family Support Act).
    The welfare portion of the House Republicans' Contract with 
America agenda was introduced as the Personal Responsibility 
Act in January 1995. The House and Senate both passed versions 
of the legislation.
    A preliminary House-Senate agreement on H.R. 4 was added to 
the 1995 Balanced Budget Act (H.R. 2491) in late November 1995. 
Excepting some small but controversial items, it contained the 
gist of the final accord on H.R. 4. President Clinton vetoed it 
on December 6, 1995--objecting to Medicaid provisions in the 
larger measure. Then, on December 21-22, 1995, Congress 
approved the final House-Senate H.R. 4 agreement (the Personal 
Responsibility and Work Opportunity Act). The President vetoed 
this H.R. 4 accord on January 9, 1996, citing insufficient 
child care and work support provisions.
    By the end of June 1996, House and Senate Republicans had 
essentially incorporated the vetoed H.R. 4, with added money 
for child care and contingencies, in H.R. 3734 (the FY1997 
budget reconciliation bill). On August 22, 1996, President 
Clinton signed the welfare reform law.

                             107TH CONGRESS

    Programs authorized under PRWORA were scheduled to expire 
on September 30, 2002. In February, 2002 President Bush 
released his reauthorization proposal. The House of 
Representatives passed a welfare bill very similar to the 
President's proposal.
    In the 107th Congress, the Senate Finance Committee 
reported legislation based on a proposal crafted by a 
bipartisan group of Senators on the Senate Finance Committee 
which included a number of provisions adopted from the 
President's proposal for welfare reform. The full Senate did 
not pass a reauthorization of Temporary Assistance for Needy 
Families (TANF).

                             108TH CONGRESS

    The Finance Committee continued the work done in the 107th 
Congress relative to welfare reform. In the 108th Congress, the 
Finance Committee held a number of bipartisan briefings on: 
fatherhood initiatives, data collection, state plans, workforce 
attachment and advancement, work readiness, and family 
formation policies. The committee made a sustained effort to 
hear from stakeholders on the issue of welfare reform, 
including policy experts, advocates, family groups, 
organizations representing the states, and officials from the 
Department of Health and Human Services.
    The full committee held one field hearing and one committee 
hearing and one subcommittee hearing.
    On September 10, 2003, the Senate Finance Committee 
favorably reported the Personal Responsibility and Individual 
Development for Everyone (PRIDE) Act.
    The legislation was considered by the full Senate during 
the week of March 29, 2004 during which time an amendment 
offered by Senator Olympia Snowe (R-ME) was agreed to which 
would increase mandatory child care spending by $6 billion over 
5 years.
    The full Senate did not pass a reauthorization of Temporary 
Assistance for Needy Families (TANF).
    TANF has operated under a series of short term extensions 
of federal law since September 30, 2002.

                             109TH CONGRESS

    The Committee determined that after nearly four years of 
debate, including three full committee hearings and two 
subcommittee hearings in the 107th Congress and one full 
committee hearing, one field hearing and one subcommittee 
hearing in the 108th Congress, two markups and one week 
consideration on the senate floor, that debate over the 
reauthorization of TANF had been extensive. The Committee 
determined that no more hearings on welfare reform were 
necessary.
    The Finance Committee began deliberations in the 109th 
Congress by agreeing to many of the provisions negotiated in 
the 108th Congress and which were subsequently included in the 
PRIDE bill. The PRIDE bill, as reported out of the Senate 
Finance Committee in the 109th Congress, was included as part 
of the Senate Republican Leadership agenda in S. 6, sponsored 
by Senator Rick Santorum (R-PA).
    The following provisions are retained from the PRIDE bill 
as reported from the Senate Finance Committee in 2003 and are 
included in the PRIDE bill as reported from the Senate Finance 
Committee in 2005. The PRIDE bill:
     Increases the work participation rate for states 5 
percent each year, from 50 percent in 2006 to 70 percent in 
2010.
     Phases out the caseload reduction credit, which 
placed too much emphasis on caseload reduction and dramatically 
diminished most states' work participation rates. The Committee 
replaces the caseload reduction credit with an employment 
credit which emphasizes moving TANF recipients into good jobs.
     Caps the credit. The value of the credit is phased 
down so that in FY 2010, all states must have a real work 
participation rate of 50 percent.
     Increases the minimum threshold for participation 
in core work activities from 20 to 24 hours.
     Increases the ``standard hour'' (when an adult 
counts as ``one family'' for purposes of calculating a state's 
participation rate) from 30 to 34 for a parent with a child six 
and over. Provides states with increased flexibility to capture 
partial and extra credit for adult participation in countable 
activities below and above the standard hour, whereas under 
PRWORA states could only count adults who met the standard hour 
and provided no extra credit for adults who exceeded the 
standard hour.
     Increases the ``standard hour'' (when an adult 
counts as ``one family'' for purposes of calculating a state's 
participation rate) from 20 to 24 for a parent with a child 
under six. Allows states to capture partial and extra credit 
for adult participation in countable activities below and above 
the standard hour.
     Ensures that every family has a plan for achieving 
self-sufficiency. States must prepare a plan for every family 
receiving assistance and in most cases that plan should involve 
some amount of work or work readiness activities.
     Allows states to engage individuals in a broader 
range of activities, including job search, substance abuse 
treatment, post-secondary education and training and other 
barrier removal activities after the 24 hour threshold of core 
work activities is met.
     Allows states to engage adult recipients in a 
broad range of activities, including substance abuse treatment, 
post-secondary education and other barrier removal activities 
for a three-month period in each 24 month period.
     Allows states to engage adult recipients in 
education and rehabilitative activities combined with work or 
work readiness activities for an additional three months out of 
24 months for a total of 6 months.
     Includes a provision allowing adult recipients to 
attend longer duration vocational or post-secondary education.
     The Committee bill also strengthens and improves 
child support collection and gives states additional financing 
options to pass-through more child support funding collected on 
behalf of families receiving assistance and families who 
formerly received assistance.
    In the ongoing effort to achieve a bipartisan consensus on 
the legislation, the PRIDE bill as reported by the Senate 
Finance Committee in 2005 added additional provisions to the 
bill considered in the previous Congress. These include:
    Providing for mandatory spending and appropriating funding 
for additional grants by:
     Increasing mandatory child care spending an 
additional $5 billion over five years, bringing the total 
increase for mandatory child care spending to $6 billion over 
five years;
     Increasing funding for Title XX--the Social 
Services Block Grant by $1 billion over five years;
     Increasing annual mandatory funding by $20 million 
for state demonstration and by $30 million for national 
demonstrations to promote responsible fatherhood;
     Providing $10 million annually for the development 
of comprehensive indicators of child well-being;
     Providing $5 million a year to be spent over 5 
years for a national teen pregnancy prevention resource center 
to provide technical assistance to state, tribal, local, 
community, and faith based organizations seeking to reduce the 
rates of teen pregnancy.
    Providing additional state flexibility by:
     Allowing states the option to receive work 
participation rate credit for an individual whose plan 
specifies that they have a continuing need for rehabilitative 
services in order to engage in direct work activities. The 
addition permits states the option of continuing to provide 
rehabilitative services, if needed, beyond 6 months. To be 
counted as working, recipients must be engaged in additional 
work activities for at least half the time required to count 
recipients without disabilities. Eligible individuals must be 
determined, using a medically acceptable clinical or diagnostic 
technique, as having a disability that impedes the individual's 
ability to function in a work setting. To be eligible for the 
state option state agencies must work collaboratively in 
assisting the person with disabilities.
     By clarifying that parenting skills building shall 
count as a qualified work activity. The mark further clarifies 
substance abuse counseling or treatment in the list of 
qualified activities to mean drug and alcohol abuse counseling 
or treatment.

                        ASSISTING INDIAN TRIBES

    The Committee bill makes a number of improvements to assist 
Indian tribes. The 1996 welfare law permitted Indian tribes to 
operate their own welfare programs for the first time. The 
Committee is informed that there are now currently 45 approved 
Tribal TANF plans (38 tribals, 3 Alaskan native associations) 
serving 230 tribes and Alaskan Native villages. Additionally, 
there are currently 10 new plans in the review and negotiation 
process and 15 additional letters of intent that have been 
submitted.
    These tribes and intertribal consortia have taken advantage 
of the flexibility allowed under TANF to design culturally 
appropriate programs to support low-income American Indians. 
This important policy, allowing for tribal administration of 
programs to tribal citizens, is consistent with the value of 
tribal sovereignty. Although tribes have shown enthusiasm for 
taking on TANF administration, there is more work to be done. 
Less than \1/3\ of tribes are served by tribal TANF programs, 
largely due to prohibitive start-up costs and insufficient 
administrative support. Tribes that are administering TANF have 
had to supplement the funding they receive to implement TANF. 
Moreover, according to the Census Bureau, 25.7 percent of 
American Indians live in poverty, more than twice the national 
poverty rate. The average household income for American Indians 
is only 72.9 percent of that of the rest of Americans.
    The Committee bill contains critical provisions to support 
tribes in setting up and improving tribal TANF programs while 
exercising their sovereignty to adapt their programs to better 
fit the needs of American Indians residing in tribal 
communities. The Committee bill includes provisions to support 
economic development and job creation in Indian Country, better 
facilitating opportunities for tribal citizens to move from 
welfare (whether served by state or tribal programs) to work. 
Provisions supporting tribal capacity building, technical 
assistance, and infrastructure development for tribal human 
service programs bring much-needed resources to tribes 
operating their own welfare programs. Funding to expand job 
training programs and lock in tribal child care funding at the 
current rate is also included. Another provision allows tribes 
with high joblessness rates the continued flexibility to 
determine how best to approach work requirements and terms of 
assistance. The addition of a GAO study to identify barriers 
for urban Indians accessing benefits and the new requirements 
for HHS to collect more comprehensive data on receipt of 
benefits among American Indians will contribute to the data 
needed to address poverty and work supports in Indian Country.

                 ENCOURAGING HEALTHY MARRIAGE PROMOTION

    The Committee intends that healthy marriage promotion 
programs, will, by definition, help couples improve the skills 
they need to form healthy, mutually respectful, non-violent 
relationships that lead to more stable, loving and committed 
marriages.
    The Committee is aware that domestic violence is a problem 
and a barrier to self-sufficiency for many TANF recipients as 
well as those not receiving TANF, regardless of whether or not 
couples are participating in counseling or in marriage 
promotion activities. The Committee wants to ensure that 
marriage promotion programs are supported in their efforts to 
address the safety of domestic violence victims including the 
need to escape violent relationships.
    The Committee finds that social service programs should 
better integrate an awareness of the larger issue of domestic 
violence into their services and the TANF program represents a 
particularly relevant avenue for identifying those who need or 
are at risk of needing domestic violence services.

Provisions that enhance attention to Domestic Violence/Explanation of 
        Provisions

    Given the high incidence of DV in many women's lives, this 
program provides an opportunity to identify and provide 
services that could help those who face multiple barriers to 
self sufficiency including those in unhealthy relationships.
    The Committee bill includes a number of provisions that 
address the need to identify and respond to domestic violence 
for families. The committee finds that these provisions are 
integral features of any state marriage initiative. The 
committee encourages states that have previously established 
marriage promotion activities to incorporate these provisions 
into their current programs as well as any future marriage 
promotion activities states undertake with their TANF block 
grant and MOE.
            1. Voluntary Participation
    The Committee bill requires that participation in all 
marriage promotion programs must be voluntary. Therefore, TANF 
recipients must be informed that participation in marriage 
promotion is voluntary and if they elect to participate in such 
programs and opt to discontinue, no sanction may be imposed 
solely for nonparticipation or disenrollment in these 
activities. However, the state may reassign TANF recipients at 
any time to other activities in accordance with universal 
engagement requirements. In addition, any grantee of funds for 
marriage promotion must detail how they will ensure that 
participation in their programs is voluntary and how they will 
inform participants that their participation is voluntary.
            2. Domestic Violence Consultation
    The Committee bill stipulates that funding will not be 
provided for marriage promotion activities unless the recipient 
of funds consults with domestic violence organizations, which 
the committee understands to be local, State or national 
organizations with recognized expertise in the dynamics of 
domestic violence and a history of working with survivors of 
domestic violence and whose primary purpose is to provide 
services to victims of domestic violence or engage in domestic 
violence intervention or prevention activities. This 
consultation will be for the purpose of developing policies, 
procedures, programs and training necessary to appropriately 
address domestic violence in families served by programs and 
activities which promote marriage. The committee believes that 
applicants should consider the issues and needs related to 
domestic violence awareness in the overall design of their 
services and proposals. An applicant for a grant will outline 
in the application for funds how the funded program will 
address issues of domestic violence. All marriage promotion 
programs must establish protocols for helping identify 
instances or risks of domestic violence and specify procedures 
for making service referrals and providing protections and 
appropriate assistance.
            3. Reports
    A bi-annual report is required from the Secretary of HHS 
providing a detailed description of the programs and activities 
funded by marriage promotion grants and how each program 
addresses domestic violence. Annual reports are required of 
grantees under Section 103 detailing how the program addresses 
domestic violence.
            4. Funding for domestic violence prevention grants
    The Committee recognizes that TANF programs provide a 
unique opportunity to identify and help address issues of 
domestic violence among vulnerable families that these programs 
serve. Accordingly, $10 million is authorized annually to 
develop and implement programs designed to address domestic 
violence as a barrier to healthy relationships, marriage, and 
economic security. Such funding shall be used for grants, 
contracts, and interagency agreements to provide training for 
caseworkers administering TANF as well as technical assistance, 
services for victims of domestic violence and activities 
related to the prevention of domestic violence.
    This funding would complement an authorization of $20 
million for Domestic Violence Prevention Grants (Section 114) 
that can be used for additional activities including developing 
and disseminating best practices for addressing domestic and 
sexual violence and disseminating research on the causes of 
domestic violence and abuse. While discretionary in nature, it 
is the Committee's intent that funding for these programs may 
not be diverted from existing domestic violence prevention or 
services programs.

                               CONCLUSION

    The Committee finds that during the years of debate on the 
issue of welfare reform, a number of different perspectives on 
the best approach to take for the next phase of welfare reform 
have been discussed. The Committee has heard arguments that the 
most effective way to assist families make the transition from 
welfare to work was to increase the time that adults receiving 
assistance spent engaged in meaningful work activities. The 
Committee finds that the correlation between full time work and 
increased earning is compelling.
    The Committee has heard arguments that increasing the 
amount of time allowed for education and training led to 
increased earnings and self-sufficiency. The Committee finds 
that the correlation between increased education and increased 
earnings is compelling as well.
    The Committee has heard that encouraging marriage and 
reducing out-of-wedlock births would net positive outcomes for 
children.
    The Committee has heard that increasing state flexibility 
should be an integral part of any reform effort.
    The Committee finds when working with vulnerable families 
on assistance, or struggling to keep from having to go on 
assistance, there is no such thing as ``one size fits all.'' 
While education may be the best approach for some, it may not 
be for others. Encouraging healthy family formation may be what 
one family needs, but perhaps this approach would not be in the 
best interest of another family in difference circumstances.
    The Committee bill takes a ``blended approach'' to welfare 
reforms and strives to find balance among a number of 
perspectives. PRIDE increases the emphasis on work and work 
readiness activities as well as increases the flexibility for 
states to engage adults in education and training activities. 
PRIDE also provides resources to encourage states to develop 
innovative family formation programs, while making it clear 
that participation in these programs must be voluntary and the 
program must be developed with domestic violence professionals.
    The Committee finds that the PRIDE bill represents a number 
of improvements over current law and that it would contribute 
to moving families out of dependency and into greater self-
sufficiency.

                    II. SECTION-BY-SECTION ANALYSIS


                             TITLE I--TANF


                Section 101--State Plans and Performance


State Plans

                              CURRENT LAW

    To receive block grant funds, a state must have submitted a 
TANF plan within the 27-month period that ends with the close 
of the 1st quarter of the fiscal year. This plan must include 
an outline of the program the state intends to operate to 
provide assistance to needy families; provide job preparation, 
work, and support services to enable them to leave the program; 
and describe how the state will ensure that parents and 
caretakers receiving assistance engage in work activities 
(within 24 months of receiving assistance, or earlier at state 
option). The plan must describe whether the state intends to 
treat families migrating from another state differently from 
others (and, if so, how) and whether it intends to provide 
assistance to non-citizens (and, if so, to provide an overview 
of aid). It also must establish goals to reduce the rate of 
out-of-wedlock pregnancies, with special emphasis on teenage 
pregnancies, and establish numerical goals for reducing the 
illegitimacy ratio of the state. The plan must describe how the 
state will provide education and training on statutory rape to 
the law enforcement and educational systems, and it must 
include a number of certifications (for example, equitable 
access to Indians and establishment and enforcement of 
standards against program fraud and abuse). States have the 
option of including a certification regarding the treatment of 
individuals with a history of domestic violence.

                             COMMITTEE BILL

    The Committee Bill requires states to establish and provide 
in their state plans specific measurable performance objectives 
for pursuing TANF purposes. They are to describe the 
methodology the state will use to measure performance in 
programs funded by TANF and maintenance of effort (MOE) dollars 
in relation to each objective. In developing the performance 
measures, states are to consider the criteria used by the 
Secretary of Health and Human Services (HHS) in establishing 
performance measures for the employment achievement bonus 
(workforce attachment and advancement) and with such other 
criteria related to other (non-work) purposes of the program. 
The Secretary is to develop performance measures related to the 
non-work purposes of TANF in consultation with the National 
Governor's Association, the National Conference of State 
Legislatures, and the American Public Human Services 
Association.
    The Committee Bill specifies that the plan must describe 
any strategies and programs that the state plans to use 
concerning employment retention and advancement; reduction of 
teen pregnancy; services for struggling and noncompliant 
families, and for clients with special problems; program 
integration, including provision of services through the One-
Stop delivery system under WIA; and if the state is undertaking 
any strategies or programs to engage faith based organizations 
in the delivery of services funded under this part or that 
relate to section 104 of the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996, the document should 
describe such strategies and programs. It requires state plans 
to describe how the state intends to encourage equitable 
treatment of healthy, married, two-parent families under TANF.
    The Committee Bill also adds to the state plan additional 
descriptive information about state programs. It requires 
states to describe in their plans financial and nonfinancial 
eligibility rules for assistance (including income eligibility 
thresholds, treatment of earnings, asset eligibility rules, and 
excluded forms of income), the amount of assistance, and 
applicable time limits on providing assistance (including 
exemption and extension policies). It requires state plans to 
set forth the criteria for counting care of a disabled family 
member as a work activity. Section 109 of this Committee Bill 
makes caring for a disabled family member a work activity under 
specified conditions. The Committee Bill requires states to 
describe how they will inform ``child-only'' families (families 
without an adult recipient) receiving assistance of the work 
supports and other assistance for which the family may be 
eligible. It deletes the requirement to indicate whether the 
state intends to treat incoming families differently from 
residents (found unconstitutional) and drops the rule that 
community service be required from adults who fail to work 
after two months of aid, unless the governor opts out.
    The Committee Bill directs the Secretary to develop a 
proposed Standard State Plan Form for use by states nine months 
from enactment and requires states, by October 1, 2006 to 
submit their plans on the standard form. It requires states to 
make available to the public through an appropriate State-
maintained Internet website and through other means that the 
state deems appropriate several documents: the proposed state 
plan (with at least 45 days for comment), comments received 
concerning the plan (or, at the state's discretion, a summary 
of the comments), and proposed amendments to the plan. It also 
requires that state plans in effect for any fiscal year be 
available to the public by the means listed above. States 
required to renew their state plans between the date of 
enactment and October 1, 2006 may wait until October 1, 2006 to 
submit their new plans in the Standard Form.
    The Committee Bill adds a requirement that tribal 
governments be consulted about the TANF plan and its service 
design. It also adds a requirement that states that provide 
transportation aid under TANF certify that state and local 
transportation agencies have been consulted in the development 
of the TANF state plan.
    Sections 107, 109, 110, and 113 of the Committee Bill 
contain other state TANF plan provisions. Section 107 requires 
a state that takes the option to establish an undergraduate 
post-secondary or vocational education program to describe, in 
an addendum to the TANF state plan, eligibility criteria that 
will restrict enrollment in the program to persons whose past 
earnings indicate they cannot qualify for employment that will 
make them self-sufficient and who, by enrolling, will be 
prepared for higher paying occupations in demand in the state. 
Section 109 permits a state, if it includes in its TANF plan a 
description of policies for areas of Indian country with high 
joblessness, to define countable work activities for persons 
complying with individual responsibility plans and living in 
these areas. Section 110 requires state plans to outline how 
the state intends to require parent or caretaker recipients to 
engage in work or alternative self-sufficiency activities, as 
defined by the state, and to require recipient families to 
engage in activities in accordance with family self-sufficiency 
plans. It further requires a stateplan addendum if the state 
opts to receive work participation rate credit for an individual whose 
family self sufficiency plan specifies a need for ongoing, 
rehabilitative activities. Section 113 has provisions to increase the 
coordination and consultation between states and tribes in developing 
TANF plans.

                           REASON FOR CHANGE

    The Committee Bill includes provisions to clarify what 
states are doing to move welfare clients into self sufficiency 
and to make the plans more meaningful. The Committee Bill would 
require states to establish performance objectives and 
encourage an ongoing review of these objectives while 
maintaining state flexibility.

Annual Ranking of States' Performance

                              CURRENT LAW

    The Secretary of HHS is required to annually rank states on 
the success of their welfare to work programs. The ranking 
considers state performance on placing recipients into long-
term private sector jobs; reducing the overall welfare 
caseload; and, when a practical method for calculating 
information becomes available, diverting individuals from 
formally applying for and receiving assistance. In this 
ranking, the Secretary is to take into account the average 
number of poor children in the state.

                             COMMITTEE BILL

    The Committee Bill requires the Secretary, in consultation 
with states, to develop uniform performance measures designed 
to evaluate TANF- and MOE-funded state programs. It modifies 
the criteria for the Secretary's annual ranking of the success 
of states' welfare-to-work programs to include placement of 
assistance recipients in unsubsidized employment, success of 
recipients in retaining employment and increase in wages, and 
the degree to which recipients have workplace attachment and 
advancement. It requires the Secretary's ranking to consider 
the number of poor children and child poverty rate in each 
state.

                           REASON FOR CHANGE

    The Committee Bill updates the factors used in the annual 
ranking of states on the success of their programs.

                 Section 102--Family Assistance Grants


                              CURRENT LAW

    The law appropriated $16.5 billion annually for family 
assistance grants to the states and the District of Columbia 
(D.C.) for FYs 1997-2002. It also appropriated $77.9 million 
annually for family assistance grants to the territories (and, 
within overall ceilings, such sums as needed for matching 
grants to the territories). Family assistance grants have been 
extended at FY2002 funding levels through March 31, 2005 by a 
series of temporary extensions. Basic state grants are based on 
federal expenditures for TANF's predecessor programs during 
FY1992 through FY1995.

                             COMMITTEE BILL

    The Committee Bill appropriates family assistance grants, 
at current levels, for the states, the District of Columbia, 
and the territories for fiscal years 2006 through 2010. The 
Committee Bill also appropriates matching grants for the 
territories for fiscal years 2006 through 2010.

                           REASON FOR CHANGE

    (No change)

    Section 103--Promotion of Family Formation and Healthy Marriage


                              CURRENT LAW

    The purposes of TANF include encouraging the formation and 
maintenance of two-parent families, ending the dependence of 
needy parents on government benefits by promoting . . . 
marriage, and reducing the incidence of out-of-wedlock 
pregnancies. The law established a bonus (up to $100 million 
annually) for 5 jurisdictions with the greatest percentage 
decease in nonmarital birth ratios and a decline from 1995 
levels in abortion rates.

                             COMMITTEE BILL

    The Committee Bill repeals the bonus for reduction of the 
illegitimacy ratio. It appropriates $100 million a year for 
five years (FYs 2006-2010) for competitive grants (50 percent 
matching rate) to states, Indian tribes, and tribal 
organizations to develop and implement innovative programs to 
promote and support healthy, married, two-parent families and 
to encourage responsible fatherhood. Grant and matching funds 
must be used to support any of the following: public 
advertising campaigns on the value of marriage and the skills 
needed to increase marital stability and health; education in 
high schools on the importance of healthy marriages and 
characteristics of other healthy relationships experienced 
throughout life, including the importance of grounding 
relationships in mutual respect; voluntary marriage education, 
marriage skills, and relationship skills programs, which may 
include parenting skills, financial management, conflict 
resolution, and job and career advancement, for non-married 
expectant and recent mothers and fathers; voluntary pre-marital 
education and marriage skills training for engaged couples and 
for couples or persons interested in marriage; voluntary 
marriage enhancement and marriage skills training programs for 
married couples; voluntary divorce reduction programs that 
teach relationship skills; voluntary marriage mentoring 
programs which use married couples as role models and mentors; 
and programs to reduce the marriage disincentive in means-
tested aid programs, if offered in conjunction with any 
activity described above. The Committee Bill exempts marriage 
promotion grants from the general rules governing use of TANF 
funds (Section 404 of the Social Security Act), but not from 
the percentage cap on administrative costs. To be eligible for 
a grant, applicants must consult with domestic violence 
organizations that have demonstrated expertise working with 
survivors of domestic violence in developing policies, 
procedures, programs and training necessary to appropriately 
address domestic violence in families served by programs and 
activities funded through the grant; describe in their 
applications how their proposed programs or activities will 
deal with issues of domestic violence; establish protocols for 
helping identify instances or risks of domestic violence and 
specify procedures for making service referrals and providing 
protections and appropriate assistance; and what they will do, 
to the extent relevant, to ensurethat participation in the 
programs is voluntary and to inform potential participants that 
participation is voluntary.
    The Committee Bill requires the Secretary of HHS to submit 
a biannual report to Congress, providing a detailed description 
of the programs and activities funded by the grants and how 
they address domestic violence.
    The Committee Bill requires each State, tribe, or tribal 
organization that carries out marriage promotion activities to 
provide the Secretary of HHS with an assurance that TANF 
assistance recipients who elect to participate in these 
activities are informed that participation is voluntary; that 
the recipient may disenroll from such programs or activities; 
and that there be a process that provides recipients who 
withdraw from or fail to participate in marriage promotion 
activities to be reassigned to other activities. There is no 
sanction for failure to participate in marriage promotion 
activities. The state may reassign TANF recipients at any time 
to other activities in accordance with universal engagement 
requirements (See Section 110).
    The Committee Bill provides that marriage promotion funds 
appropriated for each of fiscal years 2006 through 2010 shall 
remain available to the Secretary until spent. The Committee 
Bill provides that TANF funds can be used as all or part of the 
required state match for marriage promotion grants, but that 
these federal funds cannot count towards a state's MOE. The 
Committee Bill also includes conforming language relative to 
the fourth purpose of TANF, specifying that it is to encourage 
the formation and maintenance of healthy, two-parent married 
families and to encourage responsible fatherhood.
    The Committee Bill also authorizes $10 million annually for 
FY2006 through FY2010 for the Secretary of HHS to develop and 
implement programs designed to address domestic violence as a 
barrier to healthy relationships, marriage, and economic 
security. Grants, contracts, and interagency agreements shall 
provide training for caseworkers administering TANF, technical 
assistance, the provision of voluntary services for victims of 
domestic violence, and activities related to the prevention of 
domestic violence. Funding for these programs may not be 
diverted from existing domestic violence prevention programs.

                           REASON FOR CHANGE

    Two of the four original purposes of PRWORA are directly 
related to ending out-of-wedlock births and encouraging the 
formation and maintenance of two-parent families. The bonus to 
reduce out of wedlock births was initially developed to enhance 
these purposes. This bonus has not proven to be an effective 
mechanism for motivating state action. A correlation between 
state action and a reduction in out of wedlock births and 
family formation has not been established.
    The Committee Bill would redirect the funding to address 
the underlying purposes of PRWORA. The Committee Bill would 
provide optional grants to states to explore innovative and 
creative approaches to promote healthy family formation 
activities. The Committee Bill stipulates that participation in 
these programs is voluntary and that to be eligible for a grant 
applicants must consult with domestic violence organizations 
that have demonstrated expertise working with survivors of 
domestic violence in developing policies, procedures, programs 
and training necessary to appropriately address domestic 
violence in families served by programs and activities funded 
through the grant; describe in their applications how their 
proposed programs or activities will deal with issues of 
domestic violence; establish protocols for helping identify 
instances or risks of domestic violence and specify procedures 
for making service referrals and providing protections and 
appropriate assistance; and what they will do, to the extent 
relevant, to ensure that participation in the programs is 
voluntary and to inform potential participants that 
participation is voluntary.
    The Committee Bill also includes a provision (in Section 
114) which would redirect a portion of the funds for research 
and demonstration programs and technical assistance related to 
healthy family formation activities. These funds would be in 
addition to grants to states for healthy family formation 
activities. Currently, there is a 25 year body of research 
related to work activities and welfare. The Committee Bill 
would encourage a focus on research centered on marriage and 
family assistance so that states can learn from rigorous 
evaluations of activities to promote marriage and family 
formation.

  Section 104--Supplemental Grant for Population Increases in Certain 
                                 States


                              CURRENT LAW

    The law provides supplemental grants for (17) states with 
exceptionally high population growth during the early 1990s, 
benefits lower than 35 percent of the national average, or a 
combination of above-average growth and below-average AFDC 
benefits. Grants were authorized for a total of $800 million 
over FYs 1998 through 2001, and annual grants grew from $79 
million to $319.5 million over this period. Congress froze 
grants at the fiscal year 2001 level when it extended 
supplemental grants for FYs 2002-2005.

                             COMMITTEE BILL

    The Committee Bill extends supplemental grants for the 17 
states that currently receive them at their FY 2001 level, for 
FYs 2006 through 2009.

                           REASON FOR CHANGE

    The Committee Bill extends the supplemental grant program 
for certain states.

          Section 105--Bonus To Reward Employment Achievement


                              CURRENT LAW

    The Secretary of HHS, in consultation with the National 
Governors Association (NGA) and the American Public Human 
Services Association (APHSA) was required to develop a formula 
for measuring state performance relative to block grant goals. 
Awards for performance years 1998-2000 were based on work-
related measures (and were paid to 38 jurisdictions). For later 
years, non-work measures--including food stamp and Medicaid 
coverage of low-income families--were added. States can receive 
a bonus based on their absolute score in the current 
(performance) year and/or their improvement from the previous 
year, but the bonus cannot exceed 5 percent of the family 
assistance grant. $200 million per year was available for 
performance bonuses, for a total of $1 billion between FYs 1999 
and 2003. Bonuses were awarded in FY2004 under TANF temporary 
extension legislation.

                             COMMITTEE BILL

    The Committee Bill appropriates $450 million for FYs 2006 
through 2011 for bonuses to states that qualify as ``employment 
achievement'' states by meeting standards to be developed by 
the Secretary in consultation with the states. Bonuses for 
FY2006 through FY2008 are to average $50 million per year; 
bonuses for FY2009 through FY2011 are to average $100 million 
per year. The Committee Bill specifies that the employment 
achievement formula is to measure workplace attachment and 
advancement of assistance recipients and, if the Secretary 
determines it is possible, those diverted from assistance. It 
caps a state's bonus at 5 percent of its family assistance 
grant. For FYs 2006 and 2007, the employment achievement bonus 
may be based on three components of the repealed high 
performance bonus--job entry rate, job retention rate, and 
earnings gain rate. The Committee Bill makes Indian tribes 
eligible for the bonus, sets aside 2 percent of bonus funds for 
them, and directs the Secretary to consult with tribes in 
determining criteria for awards to them.
    Section 702 of the Committee Bill eliminates the FY2005 
High Performance Bonus.

                           REASON FOR CHANGE

    The Committee Bill provides for states to continue their 
successful efforts to move welfare recipients into good jobs. 
States have directed considerable resources into moving welfare 
recipients into meaningful employment. The Committee Bill would 
continue to provide incentives for states to focus on 
employment achievement and would continue the policy of 
rewarding states for doing so. The Committee Bill would 
preserve the concept of the High Performance Bonus focused on 
employment achievement.

                     Section 106--Contingency Fund


                              CURRENT LAW

    The TANF law established a $2 billion contingency fund for 
matching grants at the Medicaid matching rate (which ranges 
from 50 percent to 77 percent) to ``needy'' states that expect 
during the fiscal year to spend under the TANF program (not 
counting child care) 100 percent of their FY1994 level of 
spending on TANF-predecessor programs (not counting child 
care). States can access the contingency fund by meeting one of 
two ``needy'' state triggers: (1) an unemployment rate for a 3-
month period that is at least 6.5 percent and at least 10 
percent higher than the rate for the corresponding period in 
either of the two preceding calendar years; or (2) a food stamp 
caseload increase of 10 percent over the FY 1994-1995 level 
(adjusted for the impact of immigrant and food stamp 
constraints in the 1996 welfare law). Contingency payments for 
any fiscal year are limited to 20 percent of the state's base 
grant, and a state can draw down no more than \1/12\ of its 
maximum annual contingency fund amount in a given month. Under 
a final reconciliation process, a state's federal match rate 
(for drawing down contingency funds) is reduced if it received 
funds for fewer than 12 months in any year.

                             COMMITTEE BILL

    The Committee Bill appropriates such sums as are needed for 
contingency fund grants, up to $2 billion over 5 years, FYs 
2006-2010. It eliminates the requirement that states spend 100 
percent of their historic level to qualify for contingency 
funds (instead applying the TANF MOE, 75 percent-80 percent). 
It entitles states to a contingency fund grant reflecting costs 
of TANF caseloads when they are ``needy'' under a revised 
definition. To trigger as needy: (a) a state must have an 
increase of 5 percent in the monthly average unduplicated 
number of families receiving assistance under its TANF program 
in the most recently concluded 3-month period with data, 
compared with the corresponding period in either of the two 
most recent preceding fiscal years; (b) the TANF caseload 
increase must be due, in large measure, to economic conditions 
rather than state policy changes, and (c) for the most recent 
three-month period with data, the average rate of seasonally 
adjusted total unemployment must be at least 1.5 percentage 
points or 50 percent higher than in the corresponding period in 
either of the two most recent preceding fiscal years; or, for 
the most recent 13 weeks with data, the average rate of insured 
unemployment must be at least 1 percentage point higher than in 
the corresponding period in either of the two most recent 
fiscal years; or, for the most recently concluded 3-months with 
national data, the monthly average number of food stamp 
recipient households, as of the last day of each month, exceeds 
by at least 15 percent the corresponding caseload number in the 
comparable period in either of the two most recent preceding 
fiscal years, provided the HHS Secretary and the Secretary of 
Agriculture agree that the increased caseload was due, in large 
measure, to economic conditions rather than to policy change. 
The Committee Bill provides that a state that initially 
qualifies as needy because of its TANF caseload plus its food 
stamp caseload shall continue to be considered needy as long as 
the state meets the original qualifying conditions. A state 
that initially qualifies as needy because of its TANF caseload 
plus its total or insured unemployment rate shall not trigger 
off until its rate falls below the original qualifying level.
    The contingency fund grant is based on the maximum cash 
benefit level for a family of 3 persons (if the state has more 
than one maximum cash benefit level, the grant is based on the 
maximum benefit for the largest number of 3-person families) 
and is payable for TANF caseload increases above 5 percent. The 
grant equals the state's federal Medicaid matching rate times 
the benefit cost of an increase in the TANF family caseload 
above 5 percent in the most recently concluded 3-month period 
with data, compared with the corresponding period in either of 
the two most recent preceding fiscal years. A state's total 
contingency grant cannot exceed 10 percent of its family 
assistance grant. To receive a contingency fund grant, a state 
must have spent 70 percent of its TANF grants (excluding 
welfare-to-work funds from the Department of Labor). Unexpended 
balances are the total amount of TANF grants not yet spent by 
the state as of the end of the preceding fiscal year minus 
current year expenditures through the end of the most recent 
quarter that exceed the pro rata share of the current fiscal 
year TANF grant. The Committee Bill repeals the fiscal penalty 
for failure of a state that receives contingency funds to 
maintain 100 percent of its historic spending level (MOE), but 
provides that a state shall not be eligible for a contingency 
fund grant unless its MOE spending equals 75 percent (80 
percent, if it fails work participation rates).
    The Committee Bill also sets aside $25 million from the 
contingency fund for payment to tribes with approved tribal 
family assistance plans operating during periods of economic 
hardship. The Secretary of HHS, in consultation with the 
tribes, is required to develop the criteria for access by 
tribes to the fund.

                           REASON FOR CHANGE

    Because of a ``super'' MOE provision in PRWORA, states have 
been unable to access contingency funds in the manner in which 
they were intended in times of economic downturn. The Committee 
Bill would liberalize the contingency fund so that states are 
better able to draw down those dollars.

                       Section 107--Use of Funds


                            CARRYOVER FUNDS

                              CURRENT LAW

    The law permits states or tribes to use TANF funds received 
for any fiscal year for ``assistance'' in any later year, 
without fiscal year limitation. Regulations define assistance 
as ongoing aid for basic needs, plus supportive services such 
as child care and transportation for families who are not 
employed.

                             COMMITTEE BILL

    The Committee Bill permits carryover of TANF funds granted 
to the state or tribe for any fiscal year to provide any 
benefit or service under the state or tribal TANF program 
without fiscal year limitation. The Committee Bill also allows 
a state or tribe to designate a portion of the TANF grant as a 
contingency reserve, which may be used without fiscal year 
limitation, to provide any benefit or service. If the state or 
tribe designates reserve funds, it must include the amount in 
its annual report. Additionally, the Committee Bill would 
permit states to designate an amount of unused dollars in a 
contingency reserve fund. Section 117 of the Committee Bill 
revises the definition of assistance.

                           REASON FOR CHANGE

    Currently, carry over funds can be spent only on cash 
assistance. The Committee Bill would allow carry over funds to 
be spent on any activity authorized under PRWORA, including 
child care. This provides additional flexibility for the 
states. Permitting states to designate unused funds as a 
contingency reserve clarifies that, while unspent, these funds 
have been earmarked for purposes associated with the 
legislation.

Social Services Block Grant Transfers

                              CURRENT LAW

    The original 1996 welfare reform law provided that states 
could transfer up to 10 percent of their TANF grants to the 
Social Services Block Grant (Title XX). P.L. 105-178 
(Transportation Equity Act for the 21st Century) reduced 
funding for the Social Services Block Grant and called for the 
transfer authority from TANF to SSBG to be reduced to 4.25 
percent of the block grant, effective FY2001. However, annual 
appropriation bills through FY2005 have superceded, maintaining 
the 10 percent transfer limit for each year.

                             COMMITTEE BILL

    The Committee Bill restores the transferability of TANF 
funds to SSBG to 10 percent.

                           REASON FOR CHANGE

    This increases state flexibility for assisting low-income 
families.

Social Services Block Grant

                              CURRENT LAW

    The current funding level for the Social Services Block 
Grant (Title XX) is $1.7 billion per year.

                             COMMITTEE BILL

    The Committee Bill increases funding for the Social 
Services Block Grant by $1 billion over the 5-year period, to 
$1.9 billion per year for FY2006 through FY2010. Funding will 
revert to $1.7 billion per year in FY2011.

                           REASON FOR CHANGE

    The Committee intends for states to refocus their efforts 
to move adult recipients from welfare to work and intends for 
states to use their TANF block grant for those purposes. The 
Committee finds that Title XX funds support needed services for 
children and families in crisis. SSBG funds are used to support 
a number of child welfare programs including, child protective 
services, children's foster care and prevention and 
intervention services. These are services that a number of 
states are currently funding through their TANF block grants. 
The Committee bill would provide an increase of funding for 
SSBG so that states do not have curtail their efforts to 
improve child welfare, as they redirect their TANF funds to 
provide services to move adults into meaningful employment.

Post-Secondary Education Option (``Parents as Scholars'')

                              CURRENT LAW

    TANF permits states to use TANF funds in ``any manner 
reasonably calculated'' to achieve the goals of TANF, including 
reducing ending the dependence of needy parents through job 
preparation. Post-secondary education is an allowable use of 
TANF funds, though participation in such education is generally 
limited to vocational education countable for only up to 12 
months.

                             COMMITTEE BILL

    The Committee Bill permits states to use TANF and MOE funds 
to establish an undergraduate 2- or 4-year degree postsecondary 
education or vocational educational program for students in 
families receiving TANF assistance, who formerly received 
assistance, or needy parents who are eligible for TANF 
services. The program may provide the following services: child 
care, transportation, payment for books and supplies, and other 
services provided by the state to ensure coordination and lack 
of duplication.
    The Committee Bill requires states that opt to run a 
postsecondary education program to file an addendum with their 
TANF state plan with the applicable eligibility requirements of 
the program. Eligibility requirements must be designed to limit 
the program to individuals whose past earnings indicate that 
they cannot qualify for employment that pays enough to allow 
them to obtain self-sufficiency (as defined by the state) and 
for whom enrollment in the program will prepare individuals for 
higher paying occupations in demand in the state.
    The Committee Bill would permit states to count the 
participation of TANF assistance recipients in the post-
secondary program, with participation capped at 10 percent of a 
state's TANF caseload. There are two options for counting hours 
of participation for students in the post-secondary education 
program. Under the first option, total hours would be the sum 
of those in the priority activities in current law; in work-
study, practicums, internships, clinical placement, laboratory 
or field work, or other activities that would enhance 
employability in the recipient's field of study; and study 
time. These hours would be counted toward the participation 
standards (e.g. the 34-hour requirement), and the state would 
be given either full (maximum counted as 1 family) or partial 
credit for that family's participation. Under the second 
option, a student's family would be counted as a fully 
participating (one family) if, in addition to complying with 
the full-time educational participation requirement of the 
program, the student is participating in TANF priority work 
activities and work study, practicums, etc. for at least the 
following number of hours: 6 hours in the first year, 8 hours 
in the second year, 10 hours in the third year, and 12 hours in 
the fourth and later years.
    The rules for this program apply only for states that opt 
to operate it and only for students participating in the 
program. These rules do not limit the discretion states 
otherwise have under TANF to support postsecondary or 
vocational education for needy parents.

                           REASON FOR CHANGE

    The Committee Bill permits a subset of recipients to 
benefit from a postsecondary education strategy while 
maintaining an overall work orientation. The option is modeled 
on a Maine program known as ``Parents as Scholars.''

     Section 108--Repeal of Federal Loan for State Welfare Programs


                              CURRENT LAW

    The law provides a $1.7 billion revolving and interest-
bearing federal loan fund for state TANF programs.

                             COMMITTEE BILL

    The Committee Bill repeals the loan fund.

                           REASON FOR CHANGE

    The fund did not function effectively.

              Section 109--Work Participation Requirements


Participation standards

                              CURRENT LAW

    States must have a specified percentage of their adult 
recipients engaged in creditable work activities. Since FY 2002 
the participation standard has been 50 percent for all families 
(and since FY 1999 it has been 90 percent for the two-parent 
component of the caseload). Participation standards are reduced 
by a caseload reduction credit (below). In tribal family 
assistance programs, work participation standards are set by 
the HHS Secretary, with the tribe's participation.

                             COMMITTEE BILL

    The Committee Bill increases the all-family standard from 
the current 50 percent level to the following levels: FY 2007, 
55 percent; FY 2008, 60 percent; FY 2009, 65 percent; and FY 
2010 and thereafter, 70 percent. The Committee Bill eliminates 
the separate rate for two parent families. The Committee Bill 
also forgives penalties for states' failure to meet the two-
parent work requirement in FY2002 through FY2004.

                           REASON FOR CHANGE

    PRWORA included a credit states could take for purposes of 
establishing their work participation rate based on a state's 
caseload reduction. Because caseloads have fallen so 
dramatically, the effect of the caseload reduction credit has 
been to diminish states' work participation rates. The 
Committee Bill increases work participation requirements to 
move towards universal engagement policies under which states 
actively engage all welfare recipients in moving towards self 
sufficiency.

Calculation of participation rates

                              CURRENT LAW

    A state's monthly participation rate, expressed as a 
percentage, equals (a) the number of all recipient families in 
which an individual is engaged in work activities for the 
month, divided by (b) the number of recipient families with a 
recipient who is an adult or minor head of household, but 
excluding families subject that month to a penalty for work 
refusal (provided they have not been penalized for more than 3 
months), single-parent families with children under 1 (limited 
to 12 months in a lifetime) and, at state option, families in 
tribal family assistance programs.

                             COMMITTEE BILL

    The Committee Bill permits a state to exclude all families 
from work participation calculations during their first month 
of TANF assistance and to exclude families with a child under 
age 1 (subject to a 12 month in a lifetime limit) from work 
requirements and calculations of work participation rates on a 
case-by-case basis.

                           REASON FOR CHANGE

    The initial assessment and development of a family self 
sufficiency plan may take some time, during which the family 
may not be participating in countable activities. In addition, 
the Committee Bill would ensure that states receive credit for 
families with young children who are engaged in countable 
activities.

Caseload reduction credit

                              CURRENT LAW

    For each percent decline in the caseload from the FY 1995 
level (not attributable to policy changes), the work 
participation standard is lowered by 1 percentage point. (In FY 
2003, caseload reduction credits cut required work rates of 20 
states to zero.)

                             COMMITTEE BILL

    The Committee Bill replaces the current caseload reduction 
credit with an employment credit. In a separate provision, it 
places the same limits on the extent to which any employment, 
caseload reduction, or other credit could reduce a state's 
required participation rate. Under these limitations, credits 
could not exceed 40 percentage points for fiscal year 2006; 35 
percentage points for fiscal year 2007; 30 percentage points 
for fiscal year 2008; 25 percentage points for fiscal year 
2009; and 20 percentage points for fiscal year 2010 or 
thereafter.

                           REASON FOR CHANGE

    PRWORA included a credit states could take for purposes of 
establishing their work participation rate based on a state's 
caseload reduction. Because caseloads have fallen so 
dramatically, the effect of the caseload reduction credit has 
been to diminish states' work participation rates. The cap on 
the employment credit ensures that while policy priorities 
relative to encouraging states to work to move clients into 
good paying jobs are achieved, participation rates are not 
undermined by the credit.

Employment credit

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill establishes a percentage point credit 
against the work participation standard (subject to the limits 
described immediately below). Essentially, the credit equals 
the percentage of TANF families who leave ongoing cash 
assistance with a job. It is calculated by dividing (a) twice 
the quarterly average unduplicated number of families 
(excluding child-only families) that received TANF assistance 
during the preceding fiscal year but who ceased to receive 
TANF--and did not receive cash assistance from a separate 
state-funded program--for at least two consecutive months 
following case closure during the applicable period (most 
recent 4 quarters with data) and were employed during the 
calendar quarter immediately after leaving TANF by (b) the 
average monthly number of families (again excluding child-only 
families) who received cash payments under TANF during the 
preceding fiscal year. At state option, calculations could 
include in the numerator: (1) twice the quarterly average 
number of families that received non-recurring short term 
benefits rather than ongoing cash and who earned at least 
$1,000 in the quarter after receiving the benefit, and (2) 
twice the quarterly average number of working families (earned 
at least $1,000 in the quarter) that included an adult who 
received TANF-funded substantial child care or transportation 
assistance. TANF-funded child care includes child care funded 
through transfers from TANF to the Child Care and Development 
Block Grant (CCDBG). If both these options were taken, the 
denominator would be increased by twice the number of families 
that received non-recurring short-term benefits during the year 
and by twice the quarterly average number of families with an 
adult who received substantial child care or transportation 
assistance. In consultation with directors of state TANF 
programs, the Secretary is to define substantial child care or 
transportation assistance, specifying a threshold for each type 
of aid a dollar value or a time duration. The definition is to 
take account of large one-time transition payments.
    Extra credit--as 1.5 families--would be given to a family 
whose earnings during the preceding fiscal year equaled at 
least 33 percent of the state's average wage.
    Employment credits or caseload reduction credits or a 
combination of the two could not exceed 40 percentage points 
for fiscal year 2006; 35 percentage points for fiscal year 
2007; 30 percentage points for fiscal year 2008; 25 percentage 
points for fiscal year 2009; and 20 percentage points for 
fiscal year 2010 or thereafter. (As a result, credits could not 
cut effective work participation rates below these floors: 10 
percent for fiscal year 2006, 20 percent for fiscal year 2007; 
30 percent for fiscal year 2008; 40 percent for fiscal year 
2009, and 50 percent for fiscal year 2010 and thereafter.)
    The Committee Bill requires the Secretary to issue 
regulations to implement the employment credit. It also 
requires the HHS Secretary to use information in the National 
Directory of New Hires to calculate state employment credits. 
If the TANF leaver's employer is not required to report new 
hires, the Secretary must use quarterly wage information 
submitted by the state. To calculate employment credits for 
families who received non-recurring short term benefits and for 
those who received substantial child care and transportation 
assistance, the Secretary is to use other required data. The 
Committee Bill requires the Secretary by August 31 each year to 
determine--and to notify each state of--the amount of the 
employment credit that will be used in calculating 
participation rates for the immediately succeeding fiscal year.
    States would continue to receive the current law caseload 
reduction credit through FY2007 (subject to the cap, described 
above). In FY2008, states would be given the option to either 
take the employment credit or have their participation standard 
reduced by a credit based \1/2\ on the current law caseload 
reduction credit and \1/2\ based on the employment credit. The 
employment credit would apply to all states beginning in 
FY2009.
    ``The Senator Blanche L. Lincoln Employment Credit Study.'' 
The Committee Bill also provides that the Secretary of HHS will 
report to the Senate Finance and House Ways and Means 
Committees findings from a study, known as ``The Senator 
Blanche L. Lincoln Employment Credit Study'' examining the 
policy implications of modifying the design of the employment 
credit. ``The Senator Blanche L. Lincoln Employment Credit 
Study'' will include a discussion of the implications of 
crediting the states for families receiving TANF-funded work 
supports (child care and transportation aid), crediting 
families diverted from the rolls who become employed, and 
potential different thresholds for the ``good jobs'' bonus. 
``The Senator Blanche L. Lincoln Employment Credit Study'' is 
due July, 2009.

                           REASON FOR CHANGE

    The current caseload reduction credit contains a flawed 
incentive under which a state may receive credit toward the 
work participation requirements for families who leave 
assistance but do not become employed. The Committee Bill 
substitutes an employment credit for families that leave 
assistance for gainful employment.

Work activities

                              CURRENT LAW

    The law lists 12 activities that can be credited toward 
meeting participation standards. Nine activities have priority 
status: unsubsidized jobs, subsidized private jobs, subsidized 
public jobs, work experience, on-the-job training; job search 
(6 weeks usual maximum, with no more than 4 consecutive weeks), 
community service, vocational educational training (12 month 
limit), and providing child care for TANF recipients in 
community service. Three non-priority activities are countable: 
job skills training directly related to employment; and (for 
high-school dropouts only) education directly related to work 
and completion of secondary school. The 6-week time limit on 
countable job search is doubled during high unemployment. No 
more than 30% of persons credited with work may consist of 
persons engaged in vocational educational training and teen 
parents without high school diplomas who are deemed to be 
engaged in work through education. In tribal family assistance 
programs, work activities are set by the HHS Secretary, with 
the tribe's participation.

                             COMMITTEE BILL

    The Committee Bill lists 20 activities that can be credited 
toward meeting participation standards. It retains the 12 work 
activities in current law, with the 9 priority activities 
considered ``direct work'' activities, adds one new nonpriority 
activity, and lists seven additional ``qualified activities'' 
that may be counted under certain conditions (see below). The 
new nonpriority activity (countable after the family meets 
minimum hours requirements in direct work activities, see 
below) is marriage education, training, and conflict 
resolution. The qualified activities are postsecondary 
education; adult literacy programs or activities, including 
participation in a program to increase proficiency in the 
English language; substance abuse counseling or treatment 
(including drug or alcohol abuse counseling or treatment); 
programs or activities designed to remove work barriers, as 
defined by the state; programs or activities authorized under a 
waiver approved for any state after August 22, 1996 (regardless 
of the expiration date of the waiver); financial literacy 
training (limited to 5 hours per week); and programs or 
activities designed to develop parenting skills. The Committee 
Bill deletes the requirement that only four consecutive weeks 
of job search can be counted within the normal 6 week limit. 
The Committee Bill permits a state to define countable work 
activities for persons complying with a family self sufficiency 
plan and living in areas of Indian country or an Alaskan native 
village with high ``joblessness.'' To qualify for this option, 
the state must include in its TANF plan a description of its 
policies for these areas.

                           REASON FOR CHANGE

    The Committee Bill includes activities proposed to maintain 
all the flexibility of current law and adds new flexibility in 
countable activities. Expanding the list of allowable 
activities would permit states to provide up-front job 
preparedness for families who need specialized services. It 
would allow states to engage recipients in short-term ``barrier 
removal'' activities. Many states have such programs and some 
have done these under waivers. Hours in such activities would 
now count toward the federal participation standards.

Required work hours

                              CURRENT LAW

    Generally, to count toward the all-family rate, 
participation of 30 hours (20 hours in priority work 
activities) is required. For two-parent families the standard 
is 35 hours (30 in priority work activities), but increases to 
55 hours (50 in priority activities) if the family receives 
federally subsidized child care. Teen parents are deemed to 
meet the weekly hour participation standard by maintaining 
satisfactory attendance in secondary school (or the equivalent 
in the month) or by participating in education directly related 
to employment for an average of 20 hours weekly. In tribal 
family assistance programs, required work hours are set by the 
HHS Secretary, with the tribe's participation. [Note: except 
for teen parents, single parents with a child under 6, and 
participants in a tribal program with different hour 
requirements, families must work an average of at least 30 
hours weekly to be counted as working.]

                             COMMITTEE BILL

    The Committee Bill adopts a standard work week of 24 hours 
for a single parent with a child under age 6; 34 hours for a 
single parent with a child over 6; 39 hours for a two-parent 
family (but 55 hours for a two-parent family that receives 
child care. The calculation of weekly work hours is made by 
dividing monthly hours of work by 4. Families meeting the 
standard are counted as 1.0 family in calculating the state's 
work participation rate. Extra credit is given for work by a 
single parent family (with or without a pre-schooler) above 34 
hours, and by two-parent families above their 39- and 55-hour 
standards. All schedules provide partial credit--provided 
sufficient hours are spent in direct work activities--for hours 
below the standard, as follows:

----------------------------------------------------------------------------------------------------------------
                                           Single-parent family                      Two-parent family
 Partial/full/extra work credit  -------------------------------------------------------------------------------
                                     Child under 6     No child under 6                         With child care
----------------------------------------------------------------------------------------------------------------
.675 of a family................  20-23 hours.......  20-23 hours.......  26-29 hours.......  40-44 hours.
.75 of a family.................  ..................  24-29 hours.......  30-34 hours.......  45-50 hours.
.875 of a family................  ..................  30-33 hours.......  35-38 hours.......  51-54 hours.
1.0 family......................  24-34 hours.......  34 hours..........  39 hours..........  55+ hours.
1.05 family.....................  35-37 hours.......  35-37 hours.......  40-42 hours.......  56-58 hours.
1.08 family.....................  38 + hours........  38+ hours.........  43 + hours........  59+ hours.
----------------------------------------------------------------------------------------------------------------

    Generally, to receive any credit for hours at or below 24, 
a single-parent family must engage for all of these hours in 
direct work activities--unsubsidized job, subsidized private 
job, subsidized public job, work experience, on-the-job 
training; job search and job readiness assistance, community 
service, vocational educational training, and providing child 
care for TANF recipients in community service. For work credit, 
a two-parent family generally must spend all hours at or below 
34 weekly in direct work activities (50 hours if the family 
receives federally funded child care and has no disabled 
member). Once a family has reached the work hours threshold in 
direct work activities, additional hours in unlimited job 
search or vocational educational training or any of the six 
``qualified activities'' would be counted.
    However, for three months in any 24-month period, a state 
may give work credit for any hours spent in one of the six 
``qualified activities''--(1) postsecondary education; (2) 
adult literacy programs or activities, including those to 
increase proficiency in the English language; (3) substance 
abuse counseling or treatment; (4) programs or activities 
designed to remove work barriers, as defined by the state; (5) 
programs or activities authorized under a waiver approved for 
any state after August 22, 1996; and (6) financial literacy 
training (for up to 5 hours per week). These ``qualified 
activities'' may be combined with direct work activities to 
meet hours requirements. An additional 3 months (within the 24 
month period) would also be counted for recipients 
participating in adult literacy programs (including programs to 
increase proficiency in the English language) or recipients 
participating in a service if the recipient is certified by a 
qualified medical, mental health, or social services 
professional as having a physical or mental disability, 
substance abuse problem, or other problem that requires a 
rehabilitative service.
    A parent who provides continuous care for a child or 
dependent with a physical or mental impairment may receive 
credit as engaged in work under certain conditions. The 
qualifying conditions include: the state must determine that 
the child or dependent has an impairment that requires that he/
she have substantial continuous care, that the parent is the 
only reasonable provider of the care, that the recipient is in 
compliance with her self-sufficiency plan. The state must 
conduct regular periodic evaluations of the recipient's family 
and regularly update her self-sufficiency plan. (Section 101 
requires state TANF plans to set forth criteria for deeming the 
parent providing care for a disabled child or dependent to be 
meeting all or part of that family's work requirements.)
    The Committee Bill retains the (30 percent) limitation on 
persons who may be credited with work by virtue of vocational 
educational training (countable toward the direct work hours 
requirement) or (if teen parents) by high school attendance or 
work directly related to education. As discussed above, 
vocational education done as a supplementary activity for 
families meeting the priority hours threshold is not subject to 
the 30 percent limitation. Teen parents who maintain 
satisfactory secondary school attendance or participate in 
education directly related to work for an average of 20 hours 
weekly are deemed to count as one family.

                           REASON FOR CHANGE

    The Committee Bill recognizes that the success achieved by 
TANF and Work First programs are a result of a sustained 
emphasis on adult attachment to the workforce. The Committee 
Bill attempts to the build on the success of the past by 
increasing work and reducing the welfare rolls. Successes thus 
far come primarily from experiments and initiatives undertaken 
at the state level under waivers or TANF to move recipients 
from welfare-to-work. The Committee Bill establishes clearly 
defined goals and benchmarks for hours of participation.
    Under the Committee Bill, states would have flexibility to 
engage single moms with preschoolers at fewer hours than the 
overall ``standard'' and to offset this by engaging others full 
time.
    The Committee Bill would expand the list of activities that 
count after a recipient has engaged in core work activities for 
24 hours--allowing states to count ``supplemental'' hours spent 
in post-secondary education, vocational education beyond 1 
year; and other education and barrier removal activities.
    It would encourage states to provide post-employment 
activities, particularly education or additional job search, 
for working recipients to help recipients enhance their job 
skills and training to advance and leave welfare.
    The Committee Bill provides a ``Tiered Approach'' to 
calculating hours of work activity counted towards meeting the 
participation rate.
    ``Partial credit'' recognizes that some recipients might 
not meet the full-time standard; for example, persons in 
unsubsidized employment might be employed part-time or part of 
the month.
    The Committee Bill recognizes that parents who must engage 
in substantial, continuous care of a disabled child or family 
member are engaged in meaningful activity. States should work 
with these families to monitor their progress and development.

  Section 110--Universal Engagement and Family Self Sufficiency Plan 
           Requirements; Other Prohibitions and Requirements


Universal Engagement

                              CURRENT LAW

    State plan must require that a parent or caretaker engage 
in work (as defined by the state) after, at most, 24 months of 
assistance. (This requirement is not enforced by a specific 
penalty.)

                             COMMITTEE BILL

    The Committee Bill deletes the 24-month work trigger 
provision. It requires that state plans outline how they intend 
to require adult or minor heads of households to engage in work 
or alternative sufficiency activities, as defined by the 
state--while observing the prohibition against penalizing work 
refusal by a single parent of a preschool child if she has a 
demonstrated inability to obtain needed child care for 
specified reasons. It also requires state plans to outline how 
they intend to require families to engage in activities 
according to their self-sufficiency plans. The Committee Bill 
allows, but does not require, states to develop self-
sufficiency plans for child-only cases.

                           REASON FOR CHANGE

    By requiring states to outline how they intend to engage in 
self-sufficiency efforts all TANF families--not just those 
included in the work participation rate--the Committee Bill 
would promote movement of all families from dependence to self-
sufficiency.

Family Self-Sufficiency Plan Requirements

                              CURRENT LAW

    Within 30 days, states must make an initial assessment of 
the skills, work experience, and employability of each 
recipient 18 or older or those who have not completed high 
school. States may, but need not, establish an individual 
responsibility plan for each family.

                             COMMITTEE BILL

    The Committee Bill requires states to make an initial 
screening and assessment, in a manner they deem appropriate, of 
the skills, work experience, education, work readiness, work 
barriers and employability of each adult or minor head of 
household recipient who has attained age 18 or who has not 
completed high school and to assess, in a manner they deem 
appropriate, the work support and other assistance and family 
support services for which families are eligible and the well-
being of the family's children and, where appropriate, 
activities or resources to improve their well being. The 
Committee Bill requires states, in a manner they deem 
appropriate, to establish a self-sufficiency plan for each 
family with an adult recipient or minor head of household 
recipient. (States may establish self-sufficiency plans 
describing services only for child-only cases.) Required plan 
contents: activities designed to assist the family to achieve 
their maximum degree of self-sufficiency; requirement that the 
recipient participate in activities in accordance with the 
plan; supportive services that the state intends to provide; 
steps to promote child well-being and, when appropriate, 
adolescent well-being; and information about work support 
assistance for which the family may be eligible (such as food 
stamps, Medicaid, SCRIP, federal or state funded child care--
including that provided under the Child Care and Development 
Block Grant and the Social Services Block Grant), EITC, low-
income home energy assistance, WIC, WIA program, and housing 
assistance). The state must monitor the participation of adults 
and minor child household heads in the self-sufficiency plans 
and, using methods it determines appropriate, regularly review 
the family's progress and revise the plan when appropriate. 
Before imposing a sanction against a family for failing to 
comply with a TANF rule or requirement of the self-sufficiency 
plan, the state must, to the extent deemed appropriate by the 
state, review the plan and make a good faith effort (defined by 
the state) to consult with the family.
    States must comply with self-sufficiency plan requirement 
within one year after enactment (for families then receiving 
TANF). For families not enrolled on the date of enactment, the 
deadline for self-sufficiency plans is the later of: 60 days 
after the family first receives assistance on the basis of its 
most recent application, or 1 year after enactment. The 
Committee Bill provides that nothing in the self-sufficiency 
plan subsection or amendments made shall be construed to 
establish a private right or cause of action against a state 
for failure to comply with the provisions or to limit claims 
that might be available under other federal or state laws. The 
Government Accountability Office is required to submit a report 
to the Ways and Means and Finance Committees evaluating the 
implementation of the universal engagement provisions of the 
bill.
    The Committee Bill adds failure to comply with family self-
sufficiency plan requirements to the penalty paragraph 
regarding failure to comply with minimum participation 
standards (see above for penalty schedule). For fiscal year 
2007 and later, it provides that the penalty shall be based on 
the degree of substantial noncompliance. The Secretary must 
take into account factors such as the number or percentage of 
families for whom a plan is not established in a timely 
fashion, the duration of delays, whether the failure is 
isolated and nonrecurring, and the existence of systems to 
ensure establishment and monitoring of plans. The Secretary may 
reduce the penalty if the noncompliance is due to circumstances 
that made the state needy under the contingency fund definition 
or due to extraordinary circumstances such as a natural 
disaster or regional recession.

                           REASON FOR CHANGE

    The Committee Bill would require states to make families on 
assistance aware of additional work supports and assistance for 
which they are eligible. The Committee Bill adds a penalty 
provision to enforce the new requirement that states develop 
family self-sufficiency plans for recipients, while stipulating 
that states will not be subject to penalty unless they are in 
substantial noncompliance with the law.

State Option To Receive Work Credit for Individual With Continuing Need 
        for Rehabilitative Services

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill permits states the option of continuing 
to provide rehabilitative services, if needed, beyond 6 months. 
To be counted as working, recipients must be engaged in 
additional work activities for at least half the time required 
to count recipients without disabilities. Eligible individuals 
must be determined, using a medically acceptable clinical or 
diagnostic technique, as having a disability that impedes the 
individual's ability to function in a work setting. To be 
eligible for the state option state agencies must work 
collaboratively in assisting the person with disabilities.

                           REASON FOR CHANGE

    To provide states with the option to receive work 
participation rate credit for a recipient whose self-
sufficiency plan specifies that they have a continuing need for 
rehabilitative services in order to engage in direct work 
activities.

Transitional Compliance for Teen Parents

                              CURRENT LAW

    The law makes an unmarried teenage parent (under age 18) 
ineligible for federally funded TANF assistance if she has a 
minor child at least 12 weeks old and no high school diploma 
unless she participates in a high school diploma program (or 
equivalent) or in an alternative educational or training 
program approved by the state. To receive TANF, she also must 
live with her child in an adult-supervised setting (a residence 
maintained by her parent, legal guardian, or other adult 
relative). If the teen parent has no available relative or 
guardian with whom to live, or if the state determines that the 
relative's home might be harmful, the state must provide, or 
assist the teen mother in locating, a second chance home, 
maternity home, or other appropriate adult-supervised living 
arrangement. TANF funds may be used to help operate second-
chance homes.

                             COMMITTEE BILL

    The Committee Bill would allow 60 days for a teen parent to 
comply with these requirements--permitting states to give 
federally funded TANF for up to 60 days to a teen parent not 
yet participating in education or training or not yet living in 
an adult-supervised arrangement. It also would add to allowable 
living arrangements transitional living youth projects funded 
under section 321 of the Runaway and Homeless Youth Act.

                           REASON FOR CHANGE

    The Committee Bill includes a ``transitional compliance'' 
period for minor parents, so that income-eligible minor parents 
who at the time of application are having trouble meeting the 
rules and eligibility conditions related to education and 
living arrangements (such as school dropouts and homeless 
youth) are brought into the program where they can get the case 
management they need to meet the requirements.

TANF Time Limit in Areas of Indian Country With High Joblessness

                              CURRENT LAW

    In applying TANF's 60-month limit on the use of Federal 
funds for assistance to a family with an adult, the law 
requires disregard of months of assistance provided to adults 
living in Indian country in which at least 50 percent of the 
adults are unemployed.

                             COMMITTEE BILL

    For the purposes of TANF's 60 month time limit, the 
Committee Bill requires disregard of months of assistance 
received by an adult living in Indian country if at least 40 
percent of adult recipients are jobless. The 40 percent 
threshold is reduced to 35 percent if the adult is in a state 
that meets the TANF contingency fund ``needy state'' criteria 
or the tribe meets criteria for access to the contingency fund.

                           REASON FOR CHANGE

    Many areas of Indian Country face substantial challenges to 
sustainable employment. Further, areas of Indian Country have 
significant differences with what constitutes work and how much 
work is available. The provision to change the threshold and 
continue flexibility in applying time limits in Indian Country 
is intended to better serve the needs of tribes so they can 
effectively operate tribal TANF programs.

                 Section 111--Penalties Against States


Maintenance of Effort Requirement

                              CURRENT LAW

    To receive a full TANF grant, state spending under all 
state programs in the previous year on behalf of TANF-eligible 
families (defined to include those ineligible because of the 5-
year time limit or the federal ban on benefits to new 
immigrants) must equal at least 75 percent of the state's 
historic level (sum spent in FY1994 on AFDC and related 
programs). If a state fails work participation requirements, 
the required spending level rises to 80 percent. State 
expenditures that qualify for maintenance-of-effort credit are 
cash aid, child care, educational activities designed to 
increase self-sufficiency, job training, and work (but not 
generally available to non-TANF families) administrative costs 
(15 percent limit), child support collection passed through to 
the familywithout benefit reduction, and any other use of funds 
reasonably calculated to accomplish a TANF purpose.

                             COMMITTEE BILL

    The Committee Bill extends the requirement that states 
maintain their own funding at 75 percent of its historic level 
(80 percent in case of failure to satisfy work standards) to 
cover FYs 2006 through 2011. It also specifies that a state's 
required MOE percentage for a given year is to be based on its 
meeting or failing the work requirement for the preceding 
fiscal year.

                           REASON FOR CHANGE

    By basing the MOE requirement on the state's work 
performance in the preceding year, the Committee Bill ensures 
that states know the MOE requirement they will need to meet at 
the start of the year.

States With Work Program Improvement

                              CURRENT LAW

    States are penalized for failure to meet work participation 
standards through a reduction in their block grant. States that 
fail the TANF work standards may enter into a corrective 
compliance plan with HHS which outlines how the state will come 
into compliance with the standards.

                             COMMITTEE BILL

    The Committee Bill provides that a state with a corrective 
compliance plan accepted by the Secretary that also has had a 5 
percentage point improvement in its work participation rate 
from the previous year will not be assessed a financial penalty 
for failure to meet TANF work participation standards.

                           REASON FOR CHANGE

    To ensure that states that are making improvement towards 
increasing their participation rate are not penalized.

               Section 112--Data Collection and Reporting


                              CURRENT LAW

    The law requires states to collect monthly, and report 
quarterly, disaggregated case record information (sample case 
record information may be used) about families who receive 
assistance under the state TANF program (except for information 
relating to activities carried out with welfare-to-work grants 
from the Department of Labor [DOL]). Required information 
includes ages of family members, size of family, employment 
status and earnings of the employed adult, marital status of 
adults, race and educational level of each adult and child, 
whether the family received subsidized housing, Medicaid, food 
stamps, or subsidized child care (and if the latter two, the 
amount). Also required are the number of hours per week that an 
adult participated in specified activities, information needed 
to calculate participation rates, type and amount of assistance 
received under TANF, unearned income received, and citizenship 
of family members.
    Quarterly reports also must include the percentage of funds 
used for administrative costs or overhead, the total amount 
spent on programs for needy families, the number of 
noncustodial parents who participated in work activities, and 
the total amount spent on transitional services (with separate 
accounting for welfare-to-work grants). Quarterly reports also 
must provide the number of families and persons who received 
assistance each month and the total value of this assistance 
(with a breakdown for welfare-to-work grants). From a sample of 
closed cases, the report must provide the number of case 
closures attributed to employment, marriage, time limit 
sanction or state policy. The law requires the Secretary to 
submit annual reports to Congress that include state progress 
in meeting TANF objectives, demographic and financial 
characteristics of applicants, recipients, and ex-recipients, 
characteristics of each TANF-funded program, and trends in 
employment and earnings of needy families with children.

                             COMMITTEE BILL

    The Committee Bill extends quarterly reporting requirements 
to cover families in MOE-funded separate state programs. It 
requires monthly reports from states on the TANF and separate 
state program caseload and annual reports from states on the 
characteristics of their state TANF program and their MOE 
separate state programs. Annual state reports must include 
names of programs, their activities and purpose, eligibility 
criteria, funding sources, number of beneficiaries, sanction 
policies, and work requirements, if any. The Committee Bill 
qualifies the use of samples to provide disaggregated case 
record information, permitting the Secretary to designate core 
data elements that must be reported for all families. The 
Committee Bill also changes some of the data elements required 
in the quarterly reports. It adds the race and educational 
level of each minor parent, deletes the educational level of 
each child, and adds the reason for receipt of assistance for a 
total of more than 60 months. It conforms the reporting of 
hours in work activities to the expanded definition of 
activities that count toward the work participation standards. 
It also requires information needed to calculate progress 
toward universal engagement of each family, the date the family 
first received TANF, whether a self-sufficiency plan is 
established for the family; the marital status of the parents 
at the birth of each child in the family, and whether paternity 
has been established for those who were unwed. Quarterly 
reports must include information on families that became 
ineligible for assistance from TANF- or MOE-funded separate 
state programs during the month, broken down by reason 
(earnings, changes in family composition that result in 
increased earnings, sanctions, time limits, or other specified 
reasons). The Committee Bill requires the Secretary to 
prescribe regulations needed to collect data and to consult 
with the NGA, APHSA, and the National Conference of State 
Legislatures (as well as the Secretary of Labor) in defining 
data elements for required reports. The Committee Bill changes 
the requirements for the Secretary's annual TANF reportsto 
Congress by setting July 1 as the deadline, deleting the requirement 
for information about applicants and requiring that the report include 
information about separate state MOE programs.
    The Committee Bill requires states to report to the 
Secretary annually, beginning with FY2005, on achievement and 
improvement in TANF and MOE-funded separate state programs 
during the past fiscal year under the state's performance goals 
and measures. It also requires states to file annual reports on 
their progress toward the achievement of ``universal 
engagement.''
    The Committee Bill also extends CCDBG case-level reporting 
to TANF-funded child care. It requires the Secretary to 
coordinate reporting so that states are not required to submit 
duplicate information to meet both TANF and CCDBG reporting and 
allows the Secretary to permit a state to fulfill reporting 
requirements with a consolidated TANF/CCDBG report on families 
receiving child care. It also allows the Secretary to waive 
this requirement if the Secretary determines that it would be 
administratively or financially burdensome to a state, but 
states granted such waivers must post data on TANF-funded child 
care on a web site. The Committee Bill provides 2 years for 
states to comply with this requirement.

                           REASON FOR CHANGE

    The Committee Bill extends quarterly reporting requirements 
to ensure consistent data reporting and monitoring of all 
qualified state programs. Annual reports on all TANF and MOE 
programs are needed to provide information (e.g., number of 
beneficiaries) that is not otherwise available on non-cash 
assistance programs. Designation of a few core data elements 
for universal reporting would facilitate performance 
measurement and accountability. These elements are already 
submitted by states as part of the High Performance Bonus data 
collection. Data elements that have been difficult for the TANF 
agency to collect and report, or are not used to any 
significant extent, would be dropped to reduce burden on state 
agencies. A few data elements would be added to monitor 
compliance with universal engagement requirements.

    Section 113--Direct Funding and Administration by Indian Tribes


                              CURRENT LAW

    The allows Indian tribes to operate their own tribal family 
assistance plans. Tribes that opt to operate their own programs 
receive an amount equal to federal pre-TANF payments received 
by the state attributable to Indians for administration of the 
programs. These sums ($115 million in FY2003) are deducted from 
state TANF grants. It also appropriates $7.6 million annually 
for work and training activities (now known as Native 
Employment Works [NEW]) to tribes that operated a pre-TANF work 
and training program.

                             COMMITTEE BILL

    The Committee Bill reauthorizes tribal family assistance 
grants for FY2006-FY2010. It reauthorizes and increases funding 
for the NEW work program to $12.6 million annually for FY2006 
through FY2010. Each NEW program will receive the same percent 
of the $12.6 million appropriation as it received of the $7.6 
million appropriation under current law. The Committee Bill 
also provides that if a tribe elects to incorporate its TANF 
program into a job training, tribal work experience, employment 
opportunities and skill development demonstration project, it 
would be subject to the requirements of the Indian Employment, 
Training, and Related Services Demonstration Act of 1992.
    The Committee Bill establishes tribal improvement grants 
and appropriates $80 million for them to support:
     Tribal capacity grants for tribal human services 
infrastructure ($40 million). The Secretary of HHS shall award 
grants to Indian tribes for improving human services 
infrastructure, including management information systems, 
management information system-related training, equipping 
offices, and renovating (but not constructing) buildings. The 
Secretary is to give first priority to tribes that have applied 
for approval to run tribal family assistance programs; second 
priority to tribes that have an approved tribal family 
assistance plan; and third priority for tribes with approved 
foster care and adoption assistance programs (see Title IV).
     Tribal development grants to provided technical 
assistance in improving reservation economies ($35 million). 
The Secretary of HHS, through the Commissioner of the 
Administration for Native Americans, shall award grants to 
nonprofit organizations, Indian tribes, and tribal 
organizations to enable grantees to provide technical 
assistance to tribes and tribal organizations in the following 
areas: the development of uniform commercial codes; creation or 
expansion of small business or microenterprise programs; the 
development of tort liability codes; creation or expansion of 
tribal marketing efforts; creation or expansion of for-profit 
collaborative business networks; development of innovative uses 
of telecommunications to help with distance learning or 
telecommuting; and development of economic opportunities in 
areas of high joblessness (with 30 percent of the grants 
awarded in this area).
     Technical assistance ($5 million). Of this amount, 
at least $2.5 million is for peer-learning programs among 
tribal administrators; and at least $1 million is for making 
grants to Indian tribes for feasibility studies of their 
capacity to operate tribal family assistance programs.
    The Committee Bill also enhances the information reported 
by HHS on Indians in the TANF annual report; increases 
requirements for consultation and coordination among states and 
tribes in developing TANF state plans; requires States to 
describe how they will provide equitable access to members of 
Indian tribes or tribal organizations not in a tribal TANF 
program; and requires a Government Accountability Office (GAO) 
report on the demographic, economic, and health characteristics 
of Indians who reside in Indian Country, Alaska, or receive 
assistance under a tribal TANF program (due January 1, 2007). 
Other provisions that affect tribal TANF programs include: 
making tribal organizations eligible for the Employment 
Achievement Bonus (Section 105); giving tribes access to the 
Contingency Fund (Section 106); modification to time limit 
rules for persons living in Indian country or Alaskan Native 
villages with high rates of joblessness (Section 110); setting 
aside $2 million to study Indian welfare programs (Section 
114); increasing the tribal set aside for mandatory child care 
funds to a minimum of 2 percent of the appropriation (Section 
116); and providing tribes the authority to receive Federal 
foster care and adoption assistance funds (Section 403).

                           REASON FOR CHANGE

    The 1996 welfare law permitted Indian tribes to operate 
their own welfare programs for the first time. Since 1996, 47 
tribal TANF plans, serving 232 tribes, have been approved by 
HHS. These tribes and intertribal consortia have taken 
advantage of the flexibility allowed under TANF to design 
culturally appropriate programs to support low-income American 
Indians. This important policy, allowing for tribal 
administration of programs to tribal citizens, is consistent 
with the value of tribal sovereignty. Although tribes have 
shown enthusiasm for taking on TANF administration, there is 
more work to be done. Less than \1/3\ of tribes are served by 
tribal TANF programs, largely due to prohibitive start-up costs 
and insufficient administrative support. Tribes that are 
administering TANF have had to supplement the funding they 
receive to implement TANF. Moreover, according to the Census 
Bureau, 25.7 percent of American Indians live in poverty, more 
than twice the national poverty rate. The average household 
income for American Indians is only 72.9 percent of that of the 
rest of Americans.
    The Committee Bill contains critical provisions to support 
tribes in setting up and improving tribal TANF programs while 
exercising their sovereignty to adapt their programs to better 
fit the needs of American Indians residing in tribal 
communities. The Committee Bill includes provisions to support 
economic development and job creation in Indian Country, better 
facilitating opportunities for tribal citizens to move from 
welfare (whether served by state or tribal programs) to work. 
Provisions supporting tribal capacity building, technical 
assistance, and infrastructure development for tribal human 
service programs bring much-needed resources to tribes 
operating their own welfare programs. Funding to expand job 
training programs and lock in tribal child care funding at the 
current rate is also included. Another provision allows tribes 
with high joblessness rates the continued flexibility to 
determine how best to approach work requirements and terms of 
assistance. The addition of a GAO study to identify barriers 
for urban Indians accessing benefits and the new requirements 
for HHS to collect more comprehensive data on receipt of 
benefits among American Indians will contribute to the data 
needed to address poverty and work supports in Indian Country.

        Section 114--Research, Evaluations, and National Studies


                              CURRENT LAW

    The 1996 welfare law required the HHS Secretary to conduct 
research on effects, costs, and benefits of state programs. It 
provides that the Secretary might help states develop 
innovative approaches to employing TANF recipients and 
increasing the well-being of their children and directed the 
Secretary to evaluate these innovative projects. It 
appropriates $15 million yearly, half for TANF research and 
novel approaches cited above and half for the federal share of 
state-initiated TANF studies and the completion and evaluation 
of pre-TANF waiver projects. (Section 413 of the Social 
Security Act also requires the Secretary to rank annually the 
states to which family assistance grants are paid, in the order 
of their placing recipients into long-term private sector jobs, 
reducing the overall welfare caseload, and, when a practicable 
calculation method becomes available, diverting persons from 
formally applying for TANF assistance.)

                             COMMITTEE BILL

    The Committee Bill appropriates $100 million yearly for FYs 
2005 through 2010, of which 80 percent must be spent-on 
marriage promotion activities (described in the section 
establishing marriage grants). It makes these funds available 
to the HHS Secretary for the purpose of conducting and 
supporting research and demonstration projects by public or 
private entities, and providing technical assistance to states, 
Indian tribal organization, and such other TANF grantees as the 
Secretary may specify. It authorizes the Secretary to conduct 
these studies and demonstrations directly or through grants, 
contracts, or interagency agreements. In addition, for 5 years 
(FYs 2006 through 2010) it extends the current law annual 
appropriation of $15 million and it designates a 50-50 
allocation.
    The Committee Bill establishes a limited demonstration 
program for up to 10 states to enhance or to provide for 
improved program integration coordination and delivery of 
public assistance. The only programs eligible for inclusion in 
the demonstration are: TANF, the Social Services Block Grant, 
and child care funded from mandatory child care funds. States 
would need to include a plan for evaluation to demonstrate the 
improved effectiveness of programs included. The Secretary 
would need to approve the state's plan. The following are 
provisions excluded from waiver authority: civil rights or 
prohibition of discrimination; the purposes or goals of any 
program; maintenance of effort requirements; health, safety or 
licencing requirements; requirements relating to the use of 
financial assistance for activities to improve the quality and 
availability of child care; report and audit requirements of 
the Child Care and Development Block Grant Act of 1990 (42 
U.S.C. 9858 et seq.); requirements of that Act that limit what 
financial assistance shall be expended for; the State plan and 
State applications requirements specified in section 658E of 
that Act (42 US.C. 9858c); labor standards under the Fair Labor 
Standards Act of 1938; or environmental protection. Additional 
provisions include: in the case of child care assistance funded 
under section 418 of the Social Security Act (42 US.C. 618), 
with respect to the requirement under the first sentence of 
subsection (b)(1) of that section that funds received by a 
State under that section shall only be used to provide child 
care assistance; with respect to any requirement that a State 
pass through to a sub-State entity part of all of an amount 
paid to the State; if the waiver would waive any funding 
restriction or limitation provided in an appropriations Act, or 
would have the effect of transferring appropriated funds from 
one appropriations account to another; or, except as otherwise 
provided by statute, if the waiver would waiver any funding 
restriction applicable to a program authorized under an Act 
which is not an appropriations Act (but not including program 
requirements such as application procedures, performance 
standards, reporting requirements, or eligibility standards), 
or would have the effect of transferring funds from a program 
for which there is direct spending (as defined in section 250 
(c)(8) of the Balanced Budget and Emergency Deficit Control Act 
of 1985) to another program. Additionally, The Director of the 
Office of Management and Budget shall establish a procedure for 
ensuring that not more than 10 states (including any portion of 
a state) conduct a demonstration project.
    The Committee Bill appropriates $10 million annually for 
the development of comprehensive indicators of child well-
being. The indicators shall include measures related to 
education; social and emotional development; health and safety; 
and family well-being, such asfamily structure, income, 
employment, child care arrangements, and family relationships. Among 
the requirements for the indicators is that they be statistically 
representative at the State level, consistent across states, and over-
sampled with respect to low-income children and families. The Secretary 
is to consult with the Federal Interagency Forum on Child and Family 
Statistics. It also requires the establishment of an advisory panel, 
appointed by the Secretary of HHS; the chairman and ranking members of 
the House Ways and Means and Senate Finance Committees; the Chairman of 
the National Governors Association; the President of the National 
Conference of State Legislatures; and the Director of the National 
Academy of Science.
    The Committee Bill authorizes $20 million for each of the 
FY 2006-2010 for Domestic Violence Prevention Grants. The 
Committee Bill provides that the Secretary of Health and Human 
Services shall award grants to eligible entities to enable such 
entities to carry out domestic violence prevention activities. 
These activities include: developing and disseminating best 
practices for addressing domestic and sexual violence; 
implementing voluntary skills programs on domestic violence as 
a barrier to economic security, including providing caseworker 
training, technical assistance and voluntary services for 
victims of domestic violence; providing broad-based income 
support and supplementation strategies that provide increased 
assistance to low-income working adults, such as housing, 
transportation, and transitional benefits as a means to reduce 
domestic violence, or, carrying out programs to enhance 
relationship skills and financial management skills, teaching 
individuals how to control aggressive behavior, and to 
disseminating information on the causes of domestic violence 
and child abuse.
    The Committee Bill appropriates $2 million for FY2006 to 
fund research on tribal welfare programs and efforts to reduce 
poverty among Indians.
    The Committee Bill requires the Secretary of HHS, in 
consultation with the Attorney General, to submit a report to 
Congress on the enforcement of affidavits of support and 
sponsor deeming required by the Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996 (P.L. 104-193). The 
report is due March 31, 2006.

                           REASON FOR CHANGE

    Healthy marriages are critically important to the well-
being of children, a point recognized in the purposes of the 
original TANF law. The TANF program works with families to help 
them overcome great difficulties and barriers, so they can 
become stronger and self-sufficient. One important way we can 
help many families is to help them build the skills and 
knowledge that will enable them to form and sustain healthy 
marriages.
    However, there is much that we do not yet know about how 
states and communities can effectively promote healthy 
marriages. The Secretary's Fund for Research Demonstrations and 
Technical Assistance serves several purposes. Just as current 
welfare to work programs are built on the foundation of 
considerable research and experience, the ability of states and 
communities to provide effective assistance to families in the 
future will depend on a strong base of research and examined 
experience.
    This section would fund research on the operation and 
impact of various promising healthy marriage promotion services 
and strategies. Funds would also be used to support 
demonstration projects intended to examine how various 
comprehensive community based strategies and programs can help 
to promote the development and strength of healthy marriages.
    Funds would be available for HHS to make technical 
assistance available to program operators, in particular, by 
helping states, tribes and local administrators learn from each 
other.
    Effective service delivery is often inhibited by poor 
coordination and inefficiencies inherent to providing 
complementary services through different programs. Through 
these demonstrations, states could explore ways to build truly 
seamless services and improve the quality of services for 
families and enhance child well-being.
    The domestic violence prevention grants can be used to 
support activities to reduce incidence of domestic and sexual 
violence and child abuse.

                Section 115--Study by the Census Bureau


                              CURRENT LAW

    Appropriates $10 million annually to expand the Survey of 
Income and Program Participation (SIPP) so as to obtain data 
with which to evaluate TANF's impact on a random national 
sample of recipients and, as appropriate, other low-income 
working families.

                             COMMITTEE BILL

    The Committee Bill appropriates $10 million annually for 
FYs 2006 through 2010 for the Census Bureau for a new 
enhancement to the SIPP to allow for an assessment of the 
outcomes of continued welfare reform on the economic and child 
well-being of low income families with children.

                           REASON FOR CHANGE

    Reauthorization of TANF provides an opportunity to 
strengthen the SIPP and build upon the Census Bureau's federal-
state partnership, linking state cross-program administrative 
data and survey data to meet the requirements in the enhanced 
SIPP to understand how low-income families are faring under 
TANF.

                  Section 116--Funding for Child Care


                              CURRENT LAW

    Current law provides $2.7 billion per year for mandatory 
child care funds. These mandatory funds are combined with 
discretionary funds under an expanded Child Care and 
Development Block Grant (CCDBG).

                             COMMITTEE BILL

    The Committee Bill included additional child care funding 
and three revenue provisions. According to the Congressional 
Budget Office (``CBO''), the additional child care funding that 
was added during the Committee's consideration of the bill 
scores as an increase in outlays of approximately $4.516 
billion over the period of 2005-2010 and $4.980 billion over 
the period of 2005-2015 while the three revenue provisions 
produce a net change in the baseline of $2.859 billion over the 
period of 2005-2010 and $5.662 billion over the period of 2005-
2015. According to the Joint Committee on Taxation (``JCT''), 
the three revenue provisions are estimated to increase budget 
receipts by the following amounts over five and ten years: (1) 
a modification to the required Social Security number for 
purposes of the earned income credit ($0 over five and ten 
years), (2) the uniform definition of a qualifying child ($576 
million over five years and $1.253 billion over ten years), and 
(3) the availability of the refundable child credit to 
taxpayers excluding income under section 911 of the Internal 
Revenue Code ($322 million over five years and $440 million 
over ten years), for an estimated total increase in budget 
receipts of $898 million over five years and $1.693 billion 
over ten years. CBO recognizes the modification to the earned 
income credit relating to Social Security Numbers provision 
produces a net change in the baseline of $1.654 billion over 
the period of 2005-2010 and $3.534 billion over the period of 
2005-2015. Because this item is a technical correction of an 
earlier legislative action, the budget effect of which has 
already been taken into account in the legislative process, the 
JCT does not score this change. Since this change is an 
amendment to the Internal Revenue Code, the JCT position 
controls for purposes of the Budget Act.

   A. Clarification of Earned Income Credit Rule Regarding Taxpayer 
                         Identification Numbers


(Sec. 116(d) of the bill and sec. 32 of the Code)

                              PRESENT LAW

    The earned income credit is a refundable tax credit 
available to certain lower-income individuals. Generally, the 
amount of an individual's allowable earned income credit is 
dependent on the individual's earned income, adjusted gross 
income, and number of qualifying children. Individuals are 
ineligible for the credit if they do not include on their tax 
return their taxpayer identification numbers, along with that 
of their spouse (if married) and of each qualifying child.
    If an individual fails to provide the required taxpayer 
identification number, then the earned income credit is denied. 
Such omission is treated as a mathematical and clerical error 
by the Internal Revenue Code, which allows the Internal Revenue 
Service to use certain expedited assessment and collection 
procedures.
    The rule requiring the inclusion of valid taxpayer 
identification numbers for purposes of the earned income credit 
was intended to deny the credit with respect to individuals not 
authorized to work in the United States. Enacted in the 
Personal Responsibility and Work Opportunity Reconciliation Act 
of 1996 (the ``1996 Act''), the rule was intended to operate by 
narrowly defining the term ``taxpayer identification number'' 
for purposes of the earned income credit to include only social 
security numbers issued by the Social Security Administration 
that permit their recipients to work in the United States 
(``valid-for-work'' social security numbers). However, the 
provision in the 1996 Act included an incorrect reference to 
the Social Security Act with respect to taxpayer identification 
numbers.\1\ As a result, present law permits certain taxpayers 
to claim the earned income credit using taxpayer identification 
numbers that are not valid-for-work social security numbers.
---------------------------------------------------------------------------
    \1\ Specifically, the 1996 Act permitted the Internal Revenue 
Service for earned income credit purposes to accept all social security 
numbers issued by the Social Security Administration except those 
issued pursuant to clause II (or that portion of clause III that 
relates to clause II) of section 205(c)(2)(B)(i) of the Social Security 
Act, which relates to social security numbers issued to applicants for 
or recipients of benefits from federally financed programs. However, 
not every social security number issued under other provisions of the 
Social Security Act constitutes a valid-for-work social security 
number.
---------------------------------------------------------------------------

                           REASON FOR CHANGE

    The Committee seeks to correct the earned income credit 
rules to properly reflect the intent of Congress to allow an 
earned income credit only to individuals authorized to work in 
the United States.

                        EXPLANATION OF PROVISION

    The bill makes a technical correction to revise the cross-
reference to the Social Security Act in order to limit 
qualifying taxpayer identification numbers to valid-for-work 
social security numbers.

                             EFFECTIVE DATE

    The provision is effective for taxable years beginning 
after the date of enactment.

   B. Deny the Refundable Child Credit When Section 911 Exclusion Is 
                                Elected


(Sec. 116(e) of the bill and sec. 24 of the Internal Revenue Code)

                              PRESENT LAW

Child credit

            In general
    An individual may claim a $1,000 tax credit for each 
qualifying child under the age of 17.\2\ In general, a child is 
a qualifying child of a taxpayer for this purpose if the child: 
(1) has the same principal place of abode as the taxpayer for 
more than one half the taxable year; (2) has a specified 
relationship to the taxpayer; and (3) has not provided over 
one-half of his or her own support. A tie-breaking rule applies 
if more than one taxpayer claims a child as a qualifying child.
---------------------------------------------------------------------------
    \2\ The credit reverts to $500 in taxable years beginning after 
December 31, 2010, under the sunset provision of the Economic Growth 
and Tax Relief Reconciliation Act.
---------------------------------------------------------------------------
    The child tax credit is phased-out for individuals with 
income over certain thresholds. Specifically, the otherwise 
allowable child tax credit is reduced by $50 for each $1,000 
(or fraction thereof) of modified adjusted gross income over 
$75,000 for single individuals or heads of households, $110,000 
for married individuals filing joint returns, and $55,000 for 
married individuals filing separate returns. For this purpose, 
modified adjusted gross income is computed by increasing the 
individual's adjusted gross income by the amount otherwise 
excluded from gross income under Internal Revenue Code sections 
911, 931, and 933 (relating to the exclusion of income of U.S. 
citizens or residents living abroad; residents of certain U.S. 
possessions; and residents of Puerto Rico; respectively). The 
length of the phase-out range depends on the number of 
qualifying children. For example, the phase-out range for a 
single individual with one qualifying child is between $75,000 
and $95,000 of modified adjusted gross income. The phase-out 
range for a single individual with two qualifying children is 
between $75,000 and $115,000.
    The amount of the child tax credit and the phase-out ranges 
are not adjusted annually for inflation.
            Refundability
    For 2005, the child credit is refundable to the extent of 
15 percent of the taxpayer's earned income in excess of $11,000 
(this amount is indexed for inflation). Families with three or 
more children are allowed a refundable credit for the amount by 
which the taxpayer's social security taxes exceed the 
taxpayer's earned income credit, if that amount is greater than 
the refundable credit based on the taxpayer's earned income in 
excess of $11,000 (for 2005). The amount by which the 
refundable portion of the child credit exceeds the taxpayer's 
Federal income tax liability is payable to the taxpayer as a 
direct transfer payment. The refundable portion of the child 
credit does not constitute income and is not treated as 
resources for purposesof determining eligibility or the amount 
or nature of benefits or assistance under any Federal program or any 
State or local program financed with Federal funds.
    The definition of ``earned income'' for purposes of the 
refundable child credit generally follows that for the earned 
income credit, which includes (1) wages, salaries, tips and 
other employee compensation to the extent includible in gross 
income, plus (2) net earnings from self-employment. Earned 
income must be taken into account in computing taxable income 
in order to be considered earned income for calculating the 
refundable child credit.

Earned income credit

            In general
    Low and moderate-income workers may be eligible for the 
refundable earned income credit (``EIC''). Eligibility for the 
EIC is based on earned income, adjusted gross income, 
investment income, filing status, and immigration and work 
status in the United States. The amount of the EIC is based on 
the presence and number of qualifying children in the worker's 
family, as well as on adjusted gross income and earned income.
    The earned income credit generally equals a specified 
percentage of earned income up to a maximum dollar amount. 
Earned income that is not included in gross income is not 
considered earned income for purposes of determining the earned 
income credit. The maximum amount applies over a certain income 
range and then diminishes to zero over a specified phaseout 
range. For taxpayers with earned income (or adjusted gross 
income (``AGI''), if greater) in excess of the beginning of the 
phaseout range, the maximum EIC amount is reduced by the 
phaseout rate multiplied by the amount of earned income (or 
AGI, if greater) in excess of the beginning of the phaseout 
range. For taxpayers with earned income (or AGI, if greater) in 
excess of the end of the phaseout range, no credit is allowed.
    The EIC is a refundable credit, meaning that if the amount 
of the credit exceeds the taxpayer's Federal income tax 
liability, the excess is payable to the taxpayer as a direct 
transfer payment.
            Interaction of EIC and section 911
    An individual electing to exclude foreign earned income 
under the provisions of section 911 of the Internal Revenue 
Code is not eligible for the EIC.

Foreign earned income and housing cost exclusion (section 911)

    U.S. citizens generally are subject to U.S. income tax on 
all their income, whether derived in the United States or 
elsewhere. U.S. citizens living abroad may be eligible to elect 
to exclude from their income for U.S. tax purposes certain 
foreign earned income and foreign housing costs, in which case 
no residual U.S. tax is imposed to the extent of such 
exclusion.
    The maximum exclusion amount for foreign earned income is 
$80,000 per taxable year for 2005-2007. For taxable years 
beginning after 2007, the maximum foreign earned income 
exclusion amount is indexed for inflation. The amount of the 
employer-provided housing exclusion is equal to the excess of 
the taxpayer's ``housing expenses'' over a base housing amount. 
The term ``housing expenses'' means the reasonable expenses 
paid or incurred during the taxable year with respect to the 
taxpayer's housing in the foreign country. In the case of 
housing costs that are not paid or reimbursed by the taxpayer's 
employer, the amount that would be excludible is treated 
instead as a deduction. The combined foreign earned income 
exclusion and housing cost exclusion may not exceed the 
taxpayer's total foreign earned income for the taxable year.
    In order to qualify for the exclusions for foreign earned 
income and housing costs, an individual must be either: (1) a 
U.S. citizen who is a bona fide resident of a foreign country 
for an uninterrupted period that includes an entire taxable 
year, or (2) a U.S. citizen or resident present overseas for 
330 days out of any 12-consecutive-month period. In addition, 
the taxpayer must have his or her tax home in a foreign 
country.

                           REASONS FOR CHANGE

    The child credit is generally intended to be refundable 
only to working families of sufficiently low economic income. 
Under present law, however, because refundability is a function 
of only that portion of earned income that is taken into 
account in computing taxable income, taxpayers working abroad 
and claiming an exclusion under section 911 are generally 
potentially eligible for a refundable child credit only if 
their income is sufficiently high. For example, a married 
taxpayer with two qualifying children who works abroad and 
earns $100,000, of which $80,000 is excluded under section 911, 
would be eligible for a refundable child credit of $1,350. This 
occurs because after the section 911 exclusion of $80,000, the 
taxpayer's gross income is only $20,000, $9,000 of which 
exceeds the refundable child credit earned income threshold of 
$11,000 for 2005 (15 percent of $9,000 equals the $1,350 
refundable credit). In contrast, a taxpayer with $20,000 less 
income, or $80,000, all of which is excluded under section 911, 
would not be eligible for any refundable child credit because 
the taxpayer's gross income would be zero after the section 911 
exclusion is taken into account. Thus, the first taxpayer with 
more income could receive up to a $1,350 transfer payment from 
the government whereas the second taxpayer could not receive 
any transfer payment at all.
    Under present law, the EIC is denied to taxpayers who claim 
benefits under section 911 of the Internal Revenue Code. In 
general, this rule ensures that the EIC is granted only to low 
and moderate income taxpayers, the intended beneficiaries of 
the EIC. For the same reason, refundability of the child 
credit, which is intended to benefit lower-income taxpayers, 
should not be available to taxpayers who claim benefits under 
section 911. The committee observes that the Joint Committee on 
Taxation staff has recommended that taxpayers be ineligible for 
refundability of the child credit if they claim benefits under 
section 911 of the Internal Revenue Code.\3\
---------------------------------------------------------------------------
    \3\ See Joint Committee on Taxation, Options to Improve Tax 
Compliance and Reform Tax Expenditures (JCS-02-05), January 27, 2005, 
at 47.
---------------------------------------------------------------------------

                        EXPLANATION OF PROVISION

    The bill denies the refundable portion of the child credit 
to anyone claiming benefits under section 911 of the Internal 
Revenue Code.

                             EFFECTIVE DATE

    The provision is effective with respect to taxable years 
beginning after the date of enactment.

 C. Clarify Eligibility of Siblings and Other Family Members for Child 
                          Related Tax Benefits


(Sec. 116(f) of the bill and secs. 24 and 32 of the Code)

                              PRESENT LAW

Uniform definition of qualifying child

            In general
    The Working Families Tax Relief Act of 2004 generally 
established a uniform definition of qualifying child for 
purposes of the dependency exemption, the child credit, the 
earned income credit, the dependent care credit, and head of 
household filing status.
    Under the uniform definition, in general, a child is a 
qualifying child of a taxpayer if the child satisfies each of 
three tests: (1) the child has the same principal place of 
abode as the taxpayer for more than one half the taxable year; 
(2) the child has a specified relationship to the taxpayer; and 
(3) the child has not yet attained a specified age. A tie-
breaking rule applies if more than one taxpayer claims a child 
as a qualifying child.
            Tie-breaking rules
    If a child would be a qualifying child with respect to more 
than one individual (e.g., a child lives with his or her mother 
and grandmother in the same residence) and more than one person 
claims a benefit with respect to that child, then the following 
``tie-breaking'' rules apply. First, if only one of the 
individuals claiming the child as a qualifying child is the 
child's parent, the child is deemed the qualifying child of the 
parent. Second, if both parents claim the child and the parents 
do not file a joint return, then the child is deemed a 
qualifying child first with respect to the parent with whom the 
child resides for the longest period of time, and second with 
respect to the parent with the highest adjusted gross income. 
Third, if the child's parents do not claim the child, then the 
child is deemed a qualifying child with respect to the claimant 
with the highest adjusted gross income.

Earned income credit

    The earned income credit is a refundable tax credit 
available to certain lower-income individuals. Generally, the 
amount of an individual's allowable earned income credit is 
dependent on the individual's earned income, adjusted gross 
income, and the number of qualifying children.
    An individual who is a qualifying child of another 
individual is not eligible to claim the earned income credit. 
Thus, in certain cases, a taxpayer caring for a sibling in a 
home with no parents is ineligible to claim the earned income 
credit based solely on the fact that the taxpayer is a 
qualifying child of the sibling (assuming the taxpayer meets 
the age, relationship and residency tests).

                           REASONS FOR CHANGE

    Present law provides tax planning opportunities for certain 
more affluent families with respect to the child-related tax 
benefits while denying the earned income credit to certain 
lower income siblings. The committee seeks to limit the tax 
planning opportunities while restoring eligibility for the 
earned income credit to certain lower-income siblings. The 
committee also seeks to make certain technical corrections to 
the uniform definition of qualifying child.
    As an example of the present-law tax planning opportunities 
the committee seeks to eliminate, where more than one taxpayer 
within a family can claim a qualifying child for certain tax 
benefits (e.g. in certain multi-generational families), the 
members of the family may arrange to maximize their tax 
benefits. Thus, if a grandparent, parent, and child share the 
same household, under present law the grandparent and parent 
can decide which of them should claim the qualifying child in 
order to maximize tax benefits. If the parent earns $60,000 a 
year and the grandparent $20,000, it may be more advantageous 
for the grandparent to claim the qualifying child in order to 
receive the earned income credit, for which the parent is 
ineligible due to his level of earnings.
    Similarly, it may be possible in certain circumstances, and 
financially advantageous for a family as a whole, for parents 
to forgo claiming a child as a qualifying child so that an 
older child or other family member living at home may claim 
such child as a qualifying child. This would be most 
advantageous in circumstances in which the parents have income 
above the phaseout limits for the child credit or where the 
older sibling or other family member becomes eligible for the 
earned income credit by claiming the child as a qualifying 
child. The committee seeks to eliminate both of these planning 
opportunities by narrowing the uniform definition of qualifying 
child to limit the ability of a non-parent to claim an 
individual as a qualifying child when the individual lives with 
his or her parents for over half the year.
    Regarding lower income siblings, present law limits the 
availability of the earned income credit where two or more 
siblings meet the uniform definition of qualifying child with 
respect to each other. For example, assume that a 20-year-old 
woman works 30 hours a week earning minimum wage while 
attending school full time. Her parents are dead, and she lives 
with her 15-year-old brother, for whom she acts as legal 
guardian. Under these facts, while the woman's younger brother 
is her qualifying child, she is also her younger brother's 
qualifying child. Thus, under present law, the woman is not 
eligible for the earned income credit. The committee seeks to 
restore eligibility for the earned income credit under this and 
similar circumstances.

                        EXPLANATION OF PROVISION

Uniform definition of qualifying child

    Under the bill, if an individual satisfies the qualifying 
child test with respect to one or more parents then generally 
no other taxpayer may claim the child as a qualifying child. An 
exception is provided if: (1) no eligible parent claims the 
individual as a qualifying child; and (2) the taxpayer has a 
higher adjusted gross income than any of the eligible parents.
    The bill retains the following present-law tie-breaker 
rules when a child is a qualifying child with respect to more 
than one individual and more than one individual claims a 
benefit with respect to that child:
    First, if only one of the individuals claiming the child as 
a qualifying child is the child's parent, the child is deemed 
the qualifying child of the parent.
    Second, if both parents claim the child and the parents do 
not file a joint return, then the child is deemed a qualifying 
child first with respect to the parent with whom the child 
resides for the longest period of time, and second with respect 
to the parent with the highest adjusted gross income.

Earned income credit

    The bill expands eligibility for the earned income credit 
by modifying the rule that prohibits anyone who is a qualifying 
child of another individual from claiming the earned income 
credit. The bill provides that, with respect to two or more 
siblings \4\ who are qualifying children with respect to each 
other, the sibling with the highest adjusted gross income may 
claim the earned income credit if otherwise eligible.
---------------------------------------------------------------------------
    \4\ For these purposes, the term ``siblings'' includes brothers, 
sisters, stepbrothers and stepsisters.
---------------------------------------------------------------------------

Technical corrections to the uniform definition of qualifying child

    The bill makes conforming amendments, consistent with those 
enacted with respect to various other provisions, for purposes 
of health savings accounts, the dependent care credit, and the 
dependent care assistance programs. Under these conforming 
amendments, an individual may qualify as a dependent for these 
limited purposes without regard to whether the individual has 
gross income that exceeds an otherwise applicable gross income 
limitation or is married and files a joint return. In addition, 
such an individual who is treated as a dependent under these 
conforming amendments is not subject to the general rule that a 
dependent of a taxpayer shall be treated as having no 
dependents for the taxable year of such individual beginning in 
such taxable year.

                            EFFECTIVE DATES

    The provision generally is effective for taxable years 
beginning after December 31, 2004. The technical corrections to 
the uniform definition of qualifying child are effective as if 
included in the provisions of the Working Families Tax Relief 
Act of 2004 to which they relate.

                           REASON FOR CHANGE

    The need for additional child care resources to assist 
families.

            Section 117--Definitions and General Provisions


                              CURRENT LAW

    The law does not define the term ``assistance,'' but 
regulations define it as cash, payments, vouchers, and other 
forms of benefits designed to meet a family's ongoing basic 
needs (food, clothing, shelter, utilities, household goods, 
personal care items, and general incidental expenses) plus 
supportive services such as transportation and child care 
provided to families who are not employed. It does not include 
nonrecurrent, short-term benefits that are not intended to meet 
recurrent or ongoing needs and will not extend beyond four 
months.

                             COMMITTEE BILL

    The Committee Bill places in statute a modified version of 
the current regulatory definition of assistance. The current 
definition is modified to exclude child care and transportation 
aid for families without a worker (making all child care and 
transportation aid ``nonassistance'').
    The Committee Bill also limits to recipients of TANF 
assistance the application of requirements that the state 
participate in the Income Eligibility and Verification system 
(IEVS). That is, the state need not participate in IEVS for 
families receiving only TANF-funded benefits and services.

                           REASON FOR CHANGE

    The Committee Bill affirms the flexibility of states to 
provide assistance and services to low-income families, 
including temporarily unemployed families, and clarifies that 
rules tied to state spending on ``assistance'' will not apply 
to child care and other non-cash work support services provided 
to the unemployed.

              Section 118--Responsible Fatherhood Program


                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Responsible Fatherhood Program would be added to the 
Social Security Act as a new Part C to Title IV. The Committee 
Bill amends Title 1 of P.L. 104-193 which would make the 
responsible fatherhood program subject to the charitable choice 
provisions. The Committee Bill also includes a list of findings 
with respect to the impact of fathers being absent from the 
home and the purposes of a responsible fatherhood program.
    The Committee Bill establishes four components for the 
responsible fatherhood program. It (1) appropriates $20 million 
for a grant program for up to 10 eligible states to conduct 
demonstration programs; (2) appropriates $30 million for grants 
for eligible entities to conduct demonstration programs; (3) 
authorizes $5 million for a nationally recognized nonprofit 
fatherhood promotion organization to develop and promote a 
responsible fatherhood media campaign; (4) authorizes a $20 
million block grant for states to conduct responsible 
fatherhood media campaigns; and (5) authorizes $1 million for a 
nationally recognized nonprofit research and education 
fatherhood organization to establish a national resource center 
for responsible fatherhood.

Grants to States To Conduct Demonstration Programs

    The Committee Bill appropriates $20 million per year for 
the HHS Secretary to award grants to up to 10 eligible states 
to conduct demonstration programs that carry out the purposes 
described below. An eligible state is a state that submits to 
the Secretary an application for a grant, at such time, in such 
manner, and containing the information required by the 
Secretary. An eligible state must give the Secretary a state 
plan that describes the types of programs or activities that 
the state will fund under the grant, including a good faith 
estimate of the number and characteristics of clients to be 
served under the projects and how the state intends to achieve 
at least two of the purposes described below. The state plan 
also must include a description of how the state will 
coordinate and cooperate with state and local entities 
responsible for carrying out other programs that relate to the 
purposes intended to be achieved under the demonstration 
program, including as appropriate, entities responsible for 
carrying out jobs programs and programs serving children and 
families. In addition, the state plan must include an agreement 
to maintain such records, submit such reports, and cooperate 
with such reviews and audits as the Secretary finds necessary 
to provide oversight of the demonstration program.
    The Committee Bill requires the chief executive officer of 
the state to certify to the HHS Secretary that the state will 
use the demonstration funds to promote at least two of the 
purposes described below; the state will return any unused 
funds to the Secretary; and that the funds provided under the 
grant will be used for programs and activities that target low-
income participants and that at least 50 percent of the 
participants in each program or activity funded must be parents 
of a child who is, or within the past 24 months has been, a 
recipient of assistance or services under a state program 
funded under Title IV-D or Title IV-A, foster care (Title IV-
E), Medicaid (Title XIX), or food stamps; or parents, including 
an expectant parent or a married parent, whose income (after 
adjustment for court-ordered child support paid or received) 
does not exceed 150% of the poverty line. In addition, the 
chief executive officer of the state must certify to the 
Secretary that programs or activities funded under the 
demonstration grant will be provided with information about the 
prevention of domestic violence and that the state will consult 
with representatives of state and local domestic violence 
centers. The state must also certify that funds provided to the 
state for demonstration grants must not be used to supplement 
or supplant other federal, state, or local funds that are used 
to support programs or activities that are related to the 
purposes of the demonstration grants.
    In determining which states to award responsible fatherhood 
demonstration grants, the HHS Secretary must attempt to achieve 
a balance among the eligible states with respect to the size, 
urban or rural location, and use of differing or unique methods 
of the entities that states intend to use to conduct the 
programs and activities funded by the demonstration grants. The 
Secretary must give priority to eligible states that have 
demonstrated progress in achieving at least one of the stated 
purposes through previous state initiatives or that have 
demonstrated need with respect to reducing the incidence of 
out-of-wedlock births or absent fathers in the state.
    The Committee Bill stipulates the purposes of the 
demonstration grants are to promote responsible fatherhood 
through (1) marriage promotion (through counseling, mentoring, 
disseminating information about the advantages of marriage and 
two-parent involvement for children, enhancing relationship 
skills, teaching how to control aggressive behavior, 
disseminating information on the causes of domestic violence 
and child abuse, marriage preparation programs, premarital 
counseling, skills-based marriage education, financial planning 
seminars, and divorce education and reduction programs, 
including mediation and counseling); (2) parenting activities 
(through counseling, mentoring, mediation, disseminating 
information about good parenting practices, skills-based 
parenting education, encouraging child support payments, and 
other methods); and (3) fostering economic stability of fathers 
(through work first services, job search, job training, 
subsidized employment, education, including career-advancing 
education, job retention, job enhancement, dissemination of 
employment materials, coordination with existing employment 
services such as welfare-to-work programs, referrals to local 
employment training initiatives, and other methods).
    The Committee Bill prohibits the use of responsible 
fatherhood demonstration grants for court proceedings on 
matters of child visitation or child custody, or legislative 
advocacy.
    The Committee Bill prohibits a state from being awarded a 
grant unless the state consults with experts of domestic 
violence or with relevant community domestic violence 
coalitions in developing programs or activities funded by the 
grant. The state also must describe in the grant application 
how the proposed programs or activities will address, as 
appropriate, issues of domestic violence and what the state 
will do, to the extent relevant, to ensure that participation 
in such programs or activities is voluntary and to inform 
potential participants that their involvement is voluntary.
    The Committee Bill requires that each eligible state that 
receives a grant must return any unused portion of the grant 
for a fiscal year back to the HHS Secretary not later than the 
last day of the second succeeding fiscal year, together with 
any earnings from interest on the unused portion. The Secretary 
is required to establish an appropriate procedure for 
redistributing to eligible states that have expended the entire 
amount of their grant for a fiscal year any amount that is 
returned to the Secretary by eligible states.
    The Committee Bill appropriates $20 million for each of the 
fiscal years 2006 through 2010 for responsible fatherhood 
demonstration grants. The Committee Bill stipulates that 
theamount of each responsible fatherhood demonstration grant awarded 
must be an amount sufficient to implement the state plan submitted by 
the state, subject to a minimum amount of $1 million per fiscal year in 
the case of the 50 states and the District of Columbia, and $500,000 in 
the case of Puerto Rico, the Virgin Islands, Guam, American Samoa, and 
the Northern Mariana Islands.

Grants to Eligible Entities To Conduct Demonstration Programs

    The Committee Bill appropriates $30 million per year for 
FY2006 through FY2010 for the HHS Secretary to award grants to 
eligible entities to conduct demonstration programs that carry 
out the purposes described above. An eligible entity is a local 
government, local public agency, community-based or nonprofit 
organization, or private entity, including any charitable or 
faith-based organization, an Indian tribe or a tribal 
organization that submits to the Secretary an application for a 
grant, at such time, in such manner, and containing the 
information required by the Secretary. An eligible entity must 
give the Secretary a description of the programs and activities 
that the entity will fund under the grant, including a good 
faith estimate of the number and characteristics of clients to 
be served under the projects and how the entity intends to 
achieve at least two of the purposes described above. The 
project description also must include a description of how the 
entity will coordinate and cooperate with state and local 
entities responsible for carrying out other programs that 
relate to the purposes intended to be achieved under the 
demonstration program, including as appropriate, entities 
responsible for carrying out jobs programs and programs serving 
children and families. In addition, the project description 
must include an agreement to maintain such records, submit such 
reports, and cooperate with such reviews and audits as the 
Secretary finds necessary to provide oversight of the 
demonstration program.
    The Committee Bill requires a certification that the entity 
will use the demonstration funds to promote at least two of the 
purposes described above; the entity will return any unused 
funds to the Secretary; and that the funds provided under the 
grant will be used for programs and activities that target low-
income participants and that at least 50 percent of the 
participants in each program or activity funded must be parents 
of a child who is, or within the past 24 months has been, a 
recipient of assistance or services under a state program 
funded under Title IV-D or Title IV-A, foster care (Title IV-
E), Medicaid (Title XIX), or food stamps; or parents, including 
an expectant parent or a married parent, whose income (after 
adjustment for court-ordered child support paid or received) 
does not exceed 150 percent of the poverty line. In addition, 
the Committee Bill requires a certification that the entity 
will consult with representatives of state and local domestic 
violence centers. The entity must also certify that funds 
provided to the state for demonstration grants must not be used 
to supplement or supplant other federal, state, or local funds 
provided to the entity that are used to support programs or 
activities that are related to the purposes of the 
demonstration grants.
    In determining which entities to which to award responsible 
fatherhood demonstration grants, the HHS Secretary must attempt 
to achieve a balance among the eligible entities with respect 
to the size, urban or rural location, and use of differing or 
unique methods of the entities.
    The Committee Bill prohibits the use of responsible 
fatherhood demonstration grants awarded to entities for court 
proceedings on matters of child visitation or child custody, or 
legislative advocacy.
    The Committee Bill stipulates that the HHS Secretary may 
not award a grant to an eligible entity unless the entity, as a 
condition of receiving the grant, consults with experts in 
domestic violence or with relevant community domestic violence 
coalitions in developing the programs or activities funded by 
the grant; and describes in the grant application how the 
programs or activities will address issues of domestic violence 
and what the entity will do to ensure that participation in the 
programs or activities funded is voluntary and to inform 
potential participants that their involvement is voluntary.
    The Committee Bill requires that each eligible entity that 
receives a grant must return any unused portion of the grant 
for a fiscal year back to the HHS Secretary not later than the 
last day of the second succeeding fiscal year, together with 
any earnings from interest on the unused portion. The Secretary 
is required to establish an appropriate procedure for 
redistributing to eligible entities that have expended the 
entire amount of their grant for a fiscal year any amount that 
is returned to the Secretary by eligible entities.
    The Committee Bill appropriates $30 million for each of the 
fiscal years 2006 through 2010 for responsible fatherhood 
demonstration grants to eligible entities.

National Clearinghouse for Responsible Fatherhood Programs

    The Committee Bill authorizes an appropriation of $5 
million for the HHS Secretary to contract with a nationally 
recognized, nonprofit fatherhood promotion organization to (1) 
develop, promote and distribute to interested states, local 
governments, public agencies, and private entities a media 
campaign that encourages appropriate involvement of both 
parents in the life of their children (with an emphasis on 
responsible fatherhood); and (2) develop a national 
clearinghouse to assist states and communities in efforts to 
promote and support marriage and responsible fatherhood by 
collecting, evaluating, and making available (through the 
Internet and by other means) to other states information on 
state-sponsored media campaigns.
    The Committee Bill requires the HHS Secretary to ensure 
that the selected nationally recognized nonprofit fatherhood 
promotion organization coordinate the media campaign and 
national clearinghouse that are developed with grant funds with 
national, state, or local domestic violence programs.
    The nationally recognized nonprofit fatherhood promotion 
organization must have at least four years of experience in 
designing and disseminating a national public education 
campaign, and in providing consultation and training to 
community-based organizations interested in implementing 
fatherhood programs.
    The Committee Bill authorizes a $5 million appropriation 
for each of the fiscal years 2006 through 2010 to establish a 
national clearinghouse for responsible fatherhood programs.

Block Grants to States To Encourage Media Campaigns

    The Committee Bill authorizes the HHS Secretary to provide 
a $20 million block grant to states for media campaigns for 
each of the fiscal years 2006 through 2010.
    Not later than October 1 of each of the fiscal years for 
which a state wants to receive an allotment of block grant 
funds, the Committee Bill requires the chief executive officer 
of the state to certify to the HHS Secretary that the state 
will use grant funds to promote the formation and maintenance 
of married two-parent families, strengthen fragile families, 
and promote responsible fatherhood through media campaigns. The 
executive officer also must certify that the state will return 
any unused funds to the Secretary and comply with the 
stipulated reporting requirements.
    States have the option of establishing media campaigns via 
radio or television, air-time challenge programs (under which 
the state may purchase air time only if it obtains non-federal 
contributions to purchase additional similar air time), or 
through the distribution of printed or other advertisements. A 
state may administer media campaigns directly or through 
grants, contracts, or cooperative agreements with public 
agencies, local governments, or private entities (including 
charitable and faith-based organizations). In developing 
broadcast and printed advertisements for media campaigns, the 
state or other entity administering the campaign must consult 
with representative of state and local domestic violence 
centers. The Committee Bill defines broadcast advertisement, 
child at risk, poverty line, printed or other advertisement, 
state, and young child.
    Each state's allotment is based on its proportion of poor 
children in the nation, and its portion of children under age 5 
in the nation. Each state and the District of Columbia would 
receive no less than the minimum allotment of $200,000; Guam, 
Puerto Rico, the Virgin Islands, American Samoa, and the 
Northern Mariana Islands would receive no less than $100,000 
per year for FY2004-2008.
    The Committee Bill requires that each eligible entity that 
receives a grant must return any unused portion of the grant 
for a fiscal year back to the HHS Secretary not later than the 
last day of the second succeeding fiscal year, together with 
any earnings from interest on the unused portion. The Secretary 
is required to establish an appropriate procedure for 
redistributing to states that have expended the entire amount 
of their grant for a fiscal year any amount that is returned to 
the Secretary by states, or not allotted to states because the 
state did not submit a certification by October 1 of a fiscal 
year.
    The Committee Bill requires each state that receives an 
allotment to monitor and evaluate media campaigns conducted 
using the allotted grant funds and to submit an annual report 
to the Secretary at such time, in such manner, and containing 
such information as the Secretary may require.
    The Committee Bill authorizes the HHS Secretary to provide 
a $20 million block grant to states for media campaigns for 
each of the fiscal years 2006 through 2010. The Secretary must 
conduct an evaluation of the impact of the media campaigns and 
report to Congress the results of the evaluation no later than 
December 31, 2008. The Committee Bill authorizes a $1 million 
appropriation for FY2006 to conduct the evaluation (the 
evaluation funding is to remain available until expended).

National Resource Center for Responsible Fatherhood

    The Committee Bill authorizes an appropriation of $1 
million for the HHS Secretary to contract with a nationally 
recognized, nonprofit research and education fatherhood 
organization to (1) provide technical assistance and training 
to public and private agencies and grass roots organizations 
that promote responsible fatherhood and healthy marriage; and 
(2) develop a clearinghouse of resource materials to assist 
community-based organizations in developing local responsible 
fatherhood programs, with an emphasis on training and outcome 
evaluation.
    The nationally recognized nonprofit research and education 
fatherhood organization must have at least 12 years of 
experience in (1) developing and distributing research-based 
curriculum that promotes responsible fatherhood and healthy 
marriage with an emphasis on low-income and noncustodial 
fathers; (2) providing consultation and training to community-
based organizations with a track record of working with social 
service, government, and faith-based organizations; and (3) 
providing direct training to fathers, father figures, and 
mothers using research-based curriculum in a variety of 
economic, cultural and family situations.
    The Committee Bill authorizes the HHS Secretary to provide 
$1 million for a national resource center for responsible 
fatherhood for each of the fiscal years 2006 through 2010.

Nondiscrimination Clause

    The Committee Bill requires that the responsible fatherhood 
programs and activities be made available to all fathers and 
expectant fathers, including married and unmarried fathers and 
custodial and non-custodial fathers, with a special focus on 
low-income fathers, on the same basis; and that mothers and 
expectant mothers be able to participate in such programs and 
activities on the same basis as the fathers.

                           REASON FOR CHANGE

    Children do better academically, emotionally and socially 
when raised by their married biological parents. This provision 
in the bill provides states and faith based and community 
organizations and local governments with resources to find 
innovative ways to promote responsible fatherhood through 
marriage promotion and divorce reduction, parenting skill 
building, and where appropriate, expanded opportunities for 
strengthening the employment opportunities of low-income 
fathers. The provision is targeted on families, many of whom 
are unmarried at the time of the birth of their child, who have 
received TANF, Food Stamps or Medicaid Services or who have 
incomes below 150 percent of poverty. The provision requires 
all grantees to ensure that program participation is voluntary 
and that domestic violence experts and coalitions are 
consulted.

                     Section 119--Additional Grants


Social Services Capitalization Grants

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill authorizes $40 million for each of FYs 
2006-2010 for grants to be made by the HHS Secretary to 
entities for the purpose of capitalizing and developing the 
role of sustainable social services that are critical to the 
success of moving TANF recipients to work. Applicants would be 
required to describe the capitalization strategy they intend to 
follow to develop a program that generates its own source of 
on-going revenue while assisting TANF recipients. 
Administrative costs could not exceed 15 percent (except for 
computerization and information technology needed for tracking 
or monitoring required by TANF), but none of the other 
statutory rules regarding use of TANF funds would apply. The 
Committee Bill requires the Secretary to conduct an evaluation 
of the programs developed by these grants.

                           REASON FOR CHANGE

    The provision would support efforts to develop the role of 
self-sustainable social services which are critical in the 
success of moving welfare recipients into work.

Transportation Ownership Demonstration Grants

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill authorizes $25 million for each of FYs 
2006-FY2010 for grants for low-income car ownership. The 
purposes are to improve employment opportunities for low-income 
families and provide incentives to states, Indian tribes, 
localities and nonprofit groups to develop and administer 
programs that promote car ownership by low-income families. No 
more than 5 percent could be used for administrative costs of 
the Secretary in carrying out this program.

                           REASON FOR CHANGE

    State TANF agencies cite a lack of reliable transportation 
as a major barrier to employment. This demonstration will 
promote innovative approaches to solving this problem. Certain 
State agencies and non-profit organizations have begun 
experimenting with car donation programs, in which donated 
vehicles are refurbished and ownership is transferred to 
families on TANF demonstrating need. Outcome studies have shown 
that beneficiaries reduce dependence on public cash-assistance 
by as much as 70 percent. The demonstration provides funds to 
encourage further study and dissemination of this promising 
approach to moving families to independence.

Transitional Jobs/Business Links Grants

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill authorizes $200 million per year for 
FY2006 through FY2010 for business links and transitional jobs 
programs. Grants are to be jointly awarded by the Secretaries 
of HHS and Labor to fund programs:
          (1) to promote ``business linkages.'' These are 
        programs designed to improve the wages of eligible 
        individuals by improving jobs skills in partnership 
        with employers and providing supports and services at 
        or near the worksite. Eligible grantees are private 
        organizations, local workforce investment boards, 
        States, localities, Indian tribes, tribal organizations 
        and employers. Individuals eligible to be served by 
        these programs are TANF recipients, former recipients, 
        individuals with a disability, or noncustodial parents 
        having difficulty in paying child support obligations 
        who also have limited proficiency in the English 
        language or other barriers to employment.
          (2) for ``transitional jobs.'' These programs combine 
        subsidized, time-limited, wage-paying supported work in 
        the public or nonprofit sectors with skill development 
        and activities to remove barriers to employment. 
        Eligible grantees are private organizations, local 
        workforce investment boards, States, localities, Indian 
        tribes, and tribal organizations. Individuals eligible 
        to be served by these programs are TANF recipients, 
        former recipients, individuals with a disability, or 
        noncustodial parents having difficulty in paying child 
        support obligations who also have limited proficiency 
        in the English language or other barriers to 
        employment.
    The Committee Bill requires a minimum of 40 percent of 
funds appropriated be used for businesses linkages and also a 
minimum of 40 percent be used for transitional jobs. Benefits 
and services provided under these programs are not considered 
assistance. The Committee Bill also requires an assessment by 
HHS and DoL of them, and sets aside $3 million per year for 
that assessment. The Committee Bill provides an additional set-
aside of 1.5 percent for evaluation.

                           REASON FOR CHANGE

    Transitional jobs programs have been done in some States 
and have proven to be effective work-based programs where other 
programs have failed. By combining wage-paying subsidized jobs 
that combine real work, skill development and support services, 
these programs provide participants with the opportunity for 
skill development that has long-term impacts. Research shows 
that completers of transitional jobs program have high success 
rates in the labor market--an 81-94 percent employment rate for 
program completers. Partnership programs funded during the 
first round on welfare reform were successful in placing TANF 
parents with major employers ranging from airlines to regional 
and national retailers. This authorization is a targeted 
authorization to provide incentive to place TANF parents in 
jobs where they will stay off welfare rolls.

Nondisplacement of Regular Employees

                              CURRENT LAW

    Under TANF law, a recipient may fill a vacant employment 
position. However, no adult in a work activity that is funded 
in whole or in part by Federal funds may be employed or 
assigned when another person is on layoff from the same or any 
substantially equivalent job, or if the employer has ended the 
employment of any regular employee or otherwise caused an 
involuntary reduction in its workforce in order to fill a 
vacancy with a TANF recipient. These provisions do not preempt 
any provision of State or local law that provides greater 
protection against displacement. States are required to have a 
grievance procedure to resolve complaints of displacement of 
permanent employees.

                             COMMITTEE BILL

    The Committee Bill replaces the current nondisplacement 
provisions of TANF law. It provides that an adult recipient 
cannot displace any employee or position (including partial 
displacement), fill any unfilled vacancy, or perform work when 
any individual is on layoff from the same job or substantially 
equivalent job. TANF work activities cannot impair existing 
contracts or services; be inconsistent with any law, 
regulation, collective bargaining agreement; or infringe on the 
recall rights or promotional opportunities of any worker. TANF 
work activities must be in addition to any activity that would 
otherwise be available and not supplant the hiring of a non-
TANF worker.
    The Committee Bill also requires states to have a grievance 
procedure for resolving complaints, including the opportunity 
for a hearing, and sets time standards for the process. It 
provides remedies for a violation of the non-displacement 
provisions, including termination and suspension of payments, 
prohibition on placement of the participant, reinstatement of 
the employee, or other relief to make the aggrieved employee 
whole. These provisions do not preempt or supercede any State 
or local law that provides greater protection.

                           REASON FOR CHANGE

    The Committee Bill improves protections against 
displacement and strengthens the grievance procedure.

Teen Pregnancy Prevention Resource Center

                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill appropriates $5 million for FY2006 (to 
be available through FY2010) for the Secretary of HHS to award 
a grant to a nationally recognized, nonpartisan, nonprofit 
organization (that meets stipulated requirements) to establish 
and operate a national teen pregnancy prevention resource 
center. The purpose of the resource center is to improve the 
well-being of children and families and encourage young people 
to delay pregnancy until marriage. The resource center will 
provide information and technical assistance to States, Indian 
tribes, local communities, and other private or public 
organizations seeking to reduce rates of teen pregnancy; 
support parents in their role in preventing teen pregnancy; and 
assist the entertainment media industry by encouraging them to 
develop content and messages for teens and adults that can help 
prevent teen pregnancy. The activities of the resource center 
are: synthesizing and disseminating research and information 
regarding effective and promising practices, and providing 
information on how to design and implement effective strategies 
to prevent teen pregnancy; providing information and reaching 
out to diverse populations, with particular attention to 
populations with the highest rates of teen pregnancy; helping 
States, local communities, and other organizations increase 
their knowledge of existing resources and build capacity to 
advance teen pregnancy prevention efforts; raising awareness of 
the importance of increasing the proportion of children born 
to, and raised in, healthy, adult marriages; linking 
organizations working to reduce teen pregnancy with experts and 
peer groups, including the creation of technical assistance 
networks; providing consultation and resources to teachers, 
coaches, mentors and other adults on how to reduce teen 
pregnancies through a broad array of strategies; assisting 
organizations seeking to reduce teen pregnancies to communicate 
effective messages with a variety of audiences; providing 
resources for parents and other adults; and working with 
individuals and organizations in the entertainment industry.

                           REASON FOR CHANGE

    The Committee recognizes the significant declines in 
reducing teen pregnancy over the past decade. However, teen 
pregnancy remains a serious problem with one-third of girls in 
the U.S. still getting pregnant at least once by age 20. Making 
additional progress on this issue is closely linked to the 
goals of welfare reform. Consequently, the Committee 
appropriates funds for a national teen pregnancy prevention 
resource center to provide technical assistance to state, 
tribal, local, community and faith-based organizations seeking 
to reduce rates of teen pregnancy, support parents by equipping 
them with information and resources to promote and strengthen 
communication with their children, and assist the entertainment 
media industry to develop messages that can help prevent teen 
pregnancy.

                   Section 120--Technical Corrections


                             COMMITTEE BILL

    The Committee bill makes a number of corrections to 
punctuation, grammar, and legal references in the law.

                     TITLE II--ABSTINENCE EDUCATION


         Section 201--Extension of Abstinence Education Program


                              CURRENT LAW

    The law appropriated $50 million annually for each of the 
fiscal years 1998-2002 for matching grants to states to provide 
abstinence education and, at state option, mentoring, 
counseling, and adult supervision to promote abstinence from 
sexual activity, with a focus on groups that are most likely to 
bear children out-of-wedlock. Funding has been extended through 
March 31, 2005 by continuing appropriations extension measures. 
Funds must be requested by states when they apply for Maternal 
and Child Health (MCH) block grant funds and must be used 
exclusively for the teaching of abstinence. States must match 
every $4 in federal funds with $3 in state funds.

                             COMMITTEE BILL

    The Committee Bill extends the $50 million annually 
appropriation for the abstinence education block grant program 
for each of the fiscal years 2006-2010. The Committee Bill 
continues funding for the program through September 30, 2005 in 
the same manner authorized for fiscal year 2004. The Committee 
Bill bases a state's funding allotment on the proportion of 
low-income children in the state compared to the total number 
of low-income children in the states that apply for abstinence 
education block grants. Also (beginning with fiscal year 2006), 
the Committee Bill permits the HHS Secretary to reallocate 
abstinence education funds that he or she deems unnecessary to 
carry out a state's program to other states that the Secretary 
determines need additional funding to carry out their 
abstinence education block grant programs.

                           REASON FOR CHANGE

    The Committee Bill continues the program with no change, 
but allows unrequested funds to be reallocated among the states 
with abstinence education programs. This will allow states that 
want to provide abstinence education with more access to 
funding.

                        TITLE III--CHILD SUPPORT


 Section 301--Distribution of Child Support Collect by State on Behalf 
             of Children Receiving Certain Welfare Benefits


Assignment of child support rights

                              CURRENT LAW

    In order to receive benefits TANF recipients must assign 
their child support rights to the state. The assignment covers 
any unpaid child support that accrues while the family receives 
TANF and any support that accrued before the family began 
receiving TANF.
    Any assignment of rights to unpaid child support that was 
in effect on Sept. 30, 1997 must remain in effect. This means 
that any child support collected as a result of the assignment 
must go the state and the federal government.

                             COMMITTEE BILL

    The Committee Bill stipulates that the assignment covers 
only child support that accrues during the period that the 
family receives TANF. (In other words, pre-assistance 
arrearages would be eliminated). In addition, the Committee 
Bill gives states the option to discontinue pre-assistance 
assignments in effect on Sept. 30, 1997. If a state chooses to 
discontinue the child support assignment, the state may 
distribute collections from such assignment to the family. 
States also would have the option to discontinue pre-assistance 
arrearage assignments in effect before 2003. If a state chooses 
to discontinue the child support assignment, the state may 
distribute collections from such assignment to the family.

                           REASON FOR CHANGE

    The Committee Bill would support family self-sufficiency by 
allowing families to keep more of the child support collected 
on their behalf. It would also prevent TANF families from 
losing access to lump sum collections of past-due pre-
assistance support that may help them exit TANF.

Distribution of child support to TANF families

                              CURRENT LAW

    While the family receives TANF benefits, the state is 
permitted to retain any current child support payments and any 
assigned arrearages it collects up to the cumulative amount of 
TANF benefits which has been paid to the family. In other 
words, the state can decide how much, if any, of the state 
share (some, all, none) of the child support payment collected 
on behalf of TANF families to send to the family. The state is 
required to pay the federal government the federal share of the 
child support collected.
    Child support payments collected on behalf of TANF families 
that are passed through to the family and disregarded by the 
state count toward the TANF MOE (maintenance of effort) 
expenditure requirement.

                             COMMITTEE BILL

    For families that receive TANF benefits, the Committee Bill 
requires the federal government to waive its share of child 
support collections passed through to TANF families by the 
state and disregarded by the state-up to an amount equal to 
$400 per month in the case of a family with one child, and up 
to $600 per month in the case of a family with two or more 
children. Like current law, disregarded pass through amounts 
count as TANF MOE expenditures.
    The Committee Bill includes a provision that allows states 
with section 1115 demonstration waivers (on or before October 
1, 1997) related to the child support pass-through provisions 
to continue to pass through payments to families in accordance 
with the terms of the Waiver.

                           REASON FOR CHANGE

    The Committee Bill promotes family self-sufficiency by 
providing an incentive for states to allow families to keep 
more of the child support collected on their behalf. No such 
incentive currently exist. This option would also allow 
noncustodial parents who pay child support to know that their 
support payments are being received by their children.

Distribution of child support to former TANF families

                              CURRENT LAW

    With respect to former TANF families: Current child support 
payments must be paid to the family. Since October 1, 1997, 
child support arrearages that accrue after the family leaves 
TANF also are required to be paid to the family before any 
monies may be retained by the state. Further since October 1, 
2000, child support arrearages that accrued before the family 
began receiving TANF also are required to be distributed to the 
family first.
    However, if child support arrearages are collected through 
the federal income tax refund offset program, the family does 
not have first claim on the arrearage payments. Such arrearage 
payments are retained by the state and the federal government.

                             COMMITTEE BILL

    As mentioned above, the Committee Bill eliminates the 
assignment of pre-assistance arrearages. The Committee Bill 
also eliminates the special treatment of child support 
arrearages collected through the federal income tax refund 
offset program. Such collections also would go to the family 
first.
    To the extent that the arrearage amount payable to a former 
TANF family in any given month under the Committee Bill exceeds 
the amount that would have been payable to the family under 
current law, the state can elect to have the amount paid to the 
family considered an expenditure for Maintenance-of-Effort 
(MOE) purposes. In addition, the Committee Bill amends the 
Child Support Enforcement State Plan to include an election by 
the state to include whether it is using the new option to pass 
through all arrearage payments to former TANF families without 
paying the federal government its share of such collections or 
whether it chooses to maintain the current law distribution 
method. Further, the Committee Bill stipulates that no later 
than 6 months after the date of enactment of this legislation, 
the HHS Secretary, in consultation with the states, must 
establish the procedures to be used to make estimates of excess 
costs associated with new funding option.

                           REASON FOR CHANGE

    The Committee Bill supports self-sufficiency by providing 
former TANF families with more of the child support collected 
on their behalf, regardless of how it is collected. It allows 
states to use the federal tax refund offset remedy to get more 
collections to families. Providing MOE for additional money to 
families provides further incentive for states to exercise this 
option and is consistent with MOE policy on the pass through of 
child support collections to current TANF families.

Distribution of child support to families that never received 
        assistance

                              CURRENT LAW

    The entire amount of the child support collection is 
distributed to families that never received TANF assistance.

                             COMMITTEE BILL

    Same as current law.

                           REASON FOR CHANGE

    No change.

Distribution of child support to families under certain agreements

                              CURRENT LAW

    In the case of a family receiving TANF assistance from an 
Indian tribe or tribal organization, the child support 
collection is to be distributed according to the cooperative 
agreement specified in the Child Support Enforcement State 
Plan.

                             COMMITTEE BILL

    Same as current law.

                           REASON FOR CHANGE

    No change.

Effective date

                              CURRENT LAW

    Not applicable.

                             COMMITTEE BILL

    The amendments made by this section of the bill would take 
effect on October 1, 2009, and would 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. States could 
elect to have the amendments take effect earlier-at any date 
that is 18 months after the date of enactment of the bill but 
not later than September 30, 2009.

                           REASON FOR CHANGE

    This effective date will allow states sufficient time to 
implement required and optional changes in child support 
distribution and assignment, while also allowing states to 
choose to proceed more quickly.

 Section 302--Mandatory Review and Adjustment of Child Support Orders 
                      for Families Receiving TANF


                              CURRENT LAW

    Federal law requires that the state have procedures under 
which every 3 years the state review and adjust (if 
appropriate) child support orders at the request of either 
parent, and that in the case of TANF families, the state review 
and update (if appropriate) child support orders at the request 
of the state Child Support Enforcement (CSE) agency or of 
either parent.

                             COMMITTEE BILL

    The Committee Bill requires states to review and, if 
appropriate, adjust child support orders in TANF cases every 3 
years. The provision would take effect on October 1, 2007.

                           REASON FOR CHANGE

    The mandatory review and, if necessary, modification of 
child support orders will make award amounts more appropriate. 
In some cases this will increase the amount of payment 
required, which will in turn increase collections, and in other 
cases it will reduce the amount of payment required, therefore 
limiting the accumulation of uncollectible arrears.

      Section 303--Report on Undistributed Child Support Payments


                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill requires that within 6 months of 
enactment, the HHS Secretary must submit to the House Ways and 
Means Committee and the Senate Finance Committee a report on 
the procedures states use to locate custodial parents for whom 
child support has been collected but not yet distributed. The 
report must include an estimate of the total amount of 
undistributed child support and the average length of time it 
takes undistributed child support to be distributed. To the 
extent that the HHS Secretary deems appropriate, the report 
would be required to include recommendations as to whether 
additional procedures should be established at the state or 
federal level to expedite the payment of undistributed child 
support.

                           REASON FOR CHANGE

    Undistributed collections are a significant new issue that 
merits further analysis and may require further state or 
federal action in order to ensure that families are receiving 
the support paid on their behalf, as appropriate.

 Section 304--Decrease in Amount of Child Support Arrearage Triggering 
                            Passport Denial


                              CURRENT LAW

    Federal law stipulates that the HHS Secretary is required 
to submit to the Secretary of State the names of noncustodial 
parents who have been certified by the state CSE agency as 
owing more than $5,000 in past-due child support. The Secretary 
of State has authority to deny, revoke, restrict, or limit 
passports to noncustodial parents whose child support 
arrearages exceed $5,000.

                             COMMITTEE BILL

    The Committee Bill authorizes the denial, revocation, or 
restriction of passports to noncustodial parents whose child 
support arrearages exceed $2,500, rather than $5,000 as under 
current law. The provision would take effect on October 1, 
2006.

                           REASON FOR CHANGE

    This provision will increase the success of the passport 
denial program and provide more collections to families. Fewer 
arrears will have to build up before this effective enforcement 
tool can be utilized.

 Section 305--Use of Tax Refund Intercept Program To Collect Past-Due 
         Child Support on Behalf of Children Who Are Not Minors


                              CURRENT LAW

    Federal law prohibits the use of the federal income tax 
offset program to recover past-due child support on behalf of 
non-welfare cases in which the child is not a minor, unless the 
child was determined disabled while he or she was a minor and 
for whom the child support order is still in effect. (Since its 
enactment in 1981 (P.L. 97-35), the federal income tax offset 
program has been used to collect child support arrearages on 
behalf of welfare families regardless of whether the children 
were still minors-as long as the child support order was in 
effect.)

                             COMMITTEE BILL

    The Committee Bill permits the federal income tax refund 
offset program to be used to collect arrearages on behalf of 
non-welfare children who are no longer minors. The provision 
would take effect on October 1, 2007.

                           REASON FOR CHANGE

    This will increase support to families by removing a 
barrier to collecting past due child support on behalf of 
children who are no longer minors.

 Section 306--Garnishment of Compensation Paid to Veterans for Service-
  Connected Disabilities in order To Enforce Child Support Obligations


                              CURRENT LAW

    The disability compensation benefits of veterans are 
treated differently than most forms of government payment for 
purposes of paying child support. Whereas most government 
payments are subject to being automatically withheld to pay 
child support, veterans disabilitycompensation is not subject 
to intercept. The only exception occurs when veterans have elected to 
forego some of their retirement pay in order to collect additional 
disability payments. The advantage of veterans replacing retirement pay 
with disability pay is that the disability pay is not subject to 
taxation. With this exception, which occurs rarely, the only way to 
obtain child support payments from veterans' disability compensation is 
to request that the Secretary of the Veterans Administration intercept 
the disability compensation and make the child support payments.

                             COMMITTEE BILL

    The Committee Bill allows veterans' disability compensation 
benefits to be intercepted (withheld) and paid on a routine 
basis to the custodial parent. The Committee Bill prohibits the 
garnishment of any veteran's disability compensation in order 
to collect alimony, unless that disability compensation is 
being paid because retirement benefits were waived. The 
provision would take effect on October 1, 2007.

                           REASON FOR CHANGE

    This proposal will provide more child support collections 
to families of veterans and make the child support intercept of 
veterans's disability payments more consistent with other forms 
of government payment.

        Section 307--Improving Federal Debt Collection Practices


                              CURRENT LAW

    Federal law stipulates that any federal agency that is owed 
a nontax debt (that is more than 180 days past-due) may notify 
the Secretary of the Treasury to obtain an administrative 
offset of the debt. Currently, states have the authority to 
garnish Social Security benefits (except SSI) for child support 
payments,--but they cannot use the federal administrative 
offset process to do so. However, Social Security payments can 
only be offset for federal debt recovery. (Federal law exempts 
$9,000 annually ($750 per month) from the administrative 
offset.

                             COMMITTEE BILL

    The Committee Bill expands the federal administrative 
offset program by allowing certain Social Security benefits to 
be offset to collect past-due child support (on behalf of 
families receiving CSE [Title IV-D of the Social Security Act] 
services) in appropriate cases selected by the states. 
Moreover, it specifically overrules section 207 of the Social 
Security Act 52 which states that Social Security benefits are 
not transferable by garnishment. The provision would take 
effect on a date that is 18 months after the date of enactment.

                           REASON FOR CHANGE

    The Committee Bill will increase child support collections 
to the families of benefit recipients by allowing offset of 
additional benefits, while maintaining an adequate benefit 
level for the recipient.

        Section 308--Maintenance of Technical Assistance Funding


                              CURRENT LAW

    Federal law authorizes the HHS Secretary to use 1 percent 
of the federal share of child support collected on behalf of 
TANF families the preceding year to provide to the states--
information dissemination and technical assistance, training of 
state and federal staff, staffing studies, and related 
activities needed to improve CSE programs (including technical 
assistance concerning state automated CSE systems), and 
research demonstration and special projects of regional or 
national significance relating to the operation of CSE 
programs. Such funds are available until they are expended.

                             COMMITTEE BILL

    The Committee Bill authorizes the HHS Secretary to use 1 
percent of the federal share of child support collected on 
behalf of TANF families the preceding year, or the amount 
appropriated for FY2002, whichever is greater, to provide to 
the states--information dissemination and technical assistance, 
training of state and federal staff, staffing studies, and 
related activities needed to improve CSE programs (including 
technical assistance concerning state automated CSE systems), 
and research demonstration and special projects of regional or 
national significance relating to the operation of CSE 
programs. Such funds are available until they are expended.

                           REASON FOR CHANGE

    Since the child support assignment and distribution changes 
in the Committee Bill will allow TANF and former TANF families 
to keep more of the child support collected on their behalf, 
TANF collections retained by the federal government will be 
reduced. This provision freezes technical assistance funding at 
least at FY2002 levels to ensure that sufficient funding is 
available for important child support technical assistance 
functions, even as the federal share of collections falls.

   Section 309--Maintenance of Federal Parent Locator Service Funding


                              CURRENT LAW

    Federal law authorizes the HHS Secretary to use 2 percent 
of the federal share of child support collected on behalf of 
TANF families the preceding year for operation of the Federal 
Parent Locator Service to the extent that the costs of the 
Federal Parent Locator Service are not recovered by user fees. 
Federal law allows only such funds that were appropriated for 
FY1997-FY2001 to remain available until expended.

                             COMMITTEE BILL

    The Committee Bill authorizes the HHS Secretary to use 2 
percent of the federal share of child support collected on 
behalf of TANF families the preceding year, or the amount 
appropriated for FY2002, whichever is greater, for operation of 
the Federal Parent Locator Service to the extent that the costs 
of the Federal Parent Locator Service are not recovered by user 
fees. Allows amounts appropriated for the Federal Parent 
Locator Service to remain available until they are expended.

                           REASON FOR CHANGE

    Since the child support assignment and distribution changes 
in the Committee Bill will allow TANF and former TANF families 
to keep more of the child support collected on their behalf, 
TANF collections retained by the federal government will be 
reduced. This provision freezes Federal Parent Locator Service 
funding at least at FY2002 levels to ensure that sufficient 
funding is available for the operation of the Federal Parent 
Locator Service, which is a key child support enforcement tool, 
even as the federal share of collections falls.

 Section 310--Identification and Seizure of Assets Held by Multi-State 
                         Financial Institutions


                              CURRENT LAW

    The 1996 welfare reform law required states to enter into 
agreements with financial institutions conducting business 
within their state for the purpose of conducting a quarterly 
data match. The data match is intended to identify financial 
accounts (in banks, credit unions, money-market mutual funds, 
etc.) belonging to parents who are delinquent in the payment of 
their child support obligation. When a match is identified, 
state CSE agencies may issue liens or levies on the account(s) 
of the delinquent parent to collect the past-due child support. 
In some cases, state law prohibits the placement of liens or 
levies on accounts outside of the state and some financial 
institutions only accept liens and levies from the state where 
the account is located. In 1998, Congress made it easier for 
multi-state financial institutions to match records by 
permitting the Federal Parent Locator Service (FPLS) to help 
them coordinate their information.

                             COMMITTEE BILL

    The Committee Bill authorizes the HHS Secretary, via the 
Federal Parent Locator Service, to assist states to perform 
data matches comparing information from states and 
participating multi-state financial institutions with respect 
to persons owing past-due child support. The Committee Bill 
authorizes the Secretary via the Federal Parent Locator Service 
to seize assets, held by such financial institutions, of 
noncustodial parents who owe child support arrearage payments, 
by issuing a notice of a lien or levy and requiring the 
financial institution to freeze and seize assets in accounts in 
multi-state financial institutions to satisfy child support 
obligations. The Secretary would be required to transmit any 
assets seized under the procedure to the state for accounting 
and distribution. The Committee Bill stipulates that the 
Secretary must inform affected account holders/asset holders of 
their due process rights.

                           REASON FOR CHANGE

    After HHS identifies assets held in multi-state financial 
institutions by persons who owe past due support, many states 
cannot take action to seize financial assets when they are 
located in another state. Therefore, the Committee Bill 
authorizes the Secretary to take administrative action on 
behalf of a state to freeze and seize assets in accounts in 
multi-state financial institutions, identified through the 
multi-state financial institution data match. This will make 
full use of this existing enforcement mechanism and increase 
the collection of past-due child support.

        Section 311--Information Comparisons With Insurance Data


                              CURRENT LAW

    No provision.

                             COMMITTEE BILL

    The Committee Bill authorizes the HHS Secretary, via the 
Federal Parent Locator Service, to compare information of 
noncustodial parents who owe past-due child support with 
information maintained by insurers (or their agents) concerning 
insurance claims, settlements, awards, and payments; and to 
furnish any information resulting from a match to the 
appropriate state CSE agency in order to secure settlements, 
awards, etc. for payment of past-due child support.

                           REASON FOR CHANGE

    States must have in effect laws requiring the use of 
procedures authorizing intercepting or seizing periodic or 
lump-sum payments from settlements to satisfy current support 
obligations. Often states are unable to access the databases 
that contain insurance and settlement information, especially 
when the information is related to an interstate case or when 
an insurance company is located in another state. In order to 
assist states, the Committee Bill permits the Secretary to 
administer an insurance claims matching program. Under the 
proposal, the Federal Offset File (individuals who owe past-due 
support) would be matched against insurance databases to 
identify individuals who have pending insurance claims and 
settlements. The Secretary would notify states if delinquent 
obligors have pending insurance claims and settlements so that 
states could take enforcement actions to freeze and seize these 
payments. Participation by insurance companies would be 
voluntary.

    Section 312--Tribal Access to the Federal Parent Locator Service


                              CURRENT LAW

    The Federal Parent Locator Service (FPLS) is a national 
location system operated by the federal Office of Child Support 
Enforcement to assist states in locating noncustodial parents, 
putative fathers, and custodial parties for the establishment 
of paternity and child support obligations, as well as the 
enforcement and modification of orders for child support, 
custody and visitation. It also identifies support orders or 
support cases involving the same parties in different states. 
The FPLS consists of the Federal Case Registry, Federal Offset 
Program, Multi-state Financial Institution Data Match, National 
Directory of New Hires, and the Passport Denial Program. 
Additionally, the FPLS has access to external locate sources 
such as the Internal Revenue Service (IRS), the Social Security 
Administration (SSA), Veterans Affairs (VA), the Department of 
Defense (DOD), and the Federal Bureau of Investigation (FBI). 
The FPLS is only allowed to transmit information in its 
databases to ``authorized persons,'' which include (1) child 
support enforcement agencies (and their attorneys and agents); 
(2) courts; (3) the resident parent, legal guardian, attorney, 
or agent of a child owed child support; and (4) foster care and 
adoption agencies.

                             COMMITTEE BILL

    The Committee Bill includes Indian tribes and tribal 
organizations that operate a child support enforcement program 
as ``authorized persons.''

                           REASON FOR CHANGE

    The Committee Bill will give tribal child support 
enforcement programs access to the Federal Parent Locator 
Service, to which state child support enforcement agencies 
currently have access, so that they can use it to locate 
noncustodial parents to establish paternity and collect child 
support. This will increase child support collections to 
families, especially tribal families.

    Section 313--Reimbursement of Secretary's Costs of Information 
  Comparisons and Disclosure for Enforcement of Obligations on Higher 
                     Education Act Loans and Grants


                              CURRENT LAW

    Federal law (P.L. 106-113) authorized the Department of 
Education to have access to the National Directory of New 
Hires. The provisions were designed to improve the ability of 
the Department of Education to collect on defaulted loans and 
grant overpayments made to individuals under Title IV of the 
Higher Education Act of 1965. The Federal Office of Child 
Support Enforcement (OCSE) and the Department of Education 
negotiated and implemented a Computer Matching Agreement in 
December 2000. Under the agreement, the Secretary of Education 
is required to reimburse the HHS Secretary for the additional 
costs incurred by the HHS Secretary in furnishing requested 
information.

                             COMMITTEE BILL

    The Committee Bill amends the reimbursement of costs 
provision by eliminating the word additional. Thus, the 
Secretary of Education is to reimburse the HHS Secretary for 
any costs incurred by the HHS Secretary in providing requested 
new hires information.

                           REASON FOR CHANGE

    The Committee Bill makes legislative language governing the 
Department of Education's access to the National Directory of 
New Hires consistent with general reimbursement language that 
applies to other entities.

  Section 314--Technical Amendment Relating to Cooperative Agreements 
                    Between States and Indian Tribes


                              CURRENT LAW

    Federal law requires that any state that has a child 
welfare program and that has Indian country may enter into a 
cooperative agreement with an Indian tribe or tribal 
organization if the tribe demonstrates that it has an 
established tribal court system with several specific 
characteristics related to paternity establishment and the 
establishment and enforcement of child support obligations. The 
HHS Secretary may make direct payments to Indian tribes and 
tribal organizations that have approved child support 
enforcement plans.

                             COMMITTEE BILL

    The Committee Bill deletes the reference to child welfare 
programs.

                           REASON FOR CHANGE

    This reference incorrectly refers to the child welfare 
program rather than the child support enforcement program.

Section 315--Claims Upon Longshore and Harbor Workers' Compensation for 
                             Child Support


                              CURRENT LAW

    The Longshore and Harbor Worker's Compensation Act is the 
federal worker's compensation law for maritime workers and 
persons working in shipyards and on docks, ships, and offshore 
drilling platforms. The Act exempts benefits paid by longshore 
or harbor employers or their insurers from all claims of 
creditors. Thus, Longshore and Harbor Worker's Compensation Act 
benefits that are paid by longshore or harbor employers or 
their insurers are not subject to attachment for payment of 
child support obligations.

                             COMMITTEE BILL

    The Committee Bill amends the Longshore and Harbor Workers' 
Compensation Act to ensure that longshore or harbor workers 
benefits that are provided by the federal government or by 
private insurers are subject to garnishment for purposes of 
paying child support obligations.

                           REASON FOR CHANGE

    The Federal Longshore and Harbor Worker's Compensation Act 
(LHWCA) benefits that are paid by a self-insured entity or 
private insurer are not subject to attachment for payment of 
child support obligations. The Committee Bill would allow 
garnishment of all LHWCA benefits for purpose of child support 
enforcement, thereby increasing child support collections.

 Section 316--State Option To Use Statewide Automated Data Processing 
         and Information Retrieval System for Interstate Cases


                              CURRENT LAW

    The 1996 welfare reform law mandated states to establish 
procedures under which the state would use high-volume 
automated administrative enforcement, to the same extent as 
used for intrastate cases, in response to a request from 
another state to enforce a child support order. This provision 
was designed to enable child support agencies to quickly locate 
and secure assets held by delinquent noncustodial parents in 
another state without opening a full-blown interstate child 
support enforcement case in the other state. The assisting 
state must use automatic data processing to search various 
state data bases including financial institutions, license 
records, employment service data, and state new hire 
registries, to determine whether information is available 
regarding a parent who owes a child support obligation, the 
assisting state is then required to seize any identified 
assets. This provision does not allow states to open/establish 
a child support interstate case.

                             COMMITTEE BILL

    The Committee Bill allows an assisting state to establish a 
child support interstate case based on another state's request 
for assistance; and thereby an assisting state may use the CSE 
statewide automated data processing and information retrieval 
system for interstate cases.

                           REASON FOR CHANGE

    The Committee Bill allows states that cannot now use their 
automated systems to provide high-volume automated 
administrative enforcement services in interstate cases to 
choose to open a case in order to assist other states in 
collecting child support. This will increase interstate child 
support collections.

 Section 317--State Law Requirement Concerning the Uniform Interstate 
                       Family Support Act (UIFSA)


                              CURRENT LAW

    The 1996 welfare reform law (P.L. 104-193) required that on 
and after January 1, 1998, each state must have in effect the 
Uniform Interstate Family Support Act (UIFSA), as approved by 
the American Bar Association on February 9, 1993, and as in 
effect on August 22, 1996, including any amendments officially 
adopted as of such date by the National Conference of 
Commissioners on Uniform State Laws.
    Federal law requires states to treat past-due child support 
obligations as final judgments that are entitled to full faith 
and credit in every state. This means that a person who has a 
child support order in one state does not have to obtain a 
second order in another state to obtain child support due 
should the noncustodial parent move from the issuing court's 
jurisdiction. P.L. 103-383 restricts a state court's ability to 
modify a child support order issued by another state unless the 
child and the custodial parent have moved to the state where 
the modification is sought or have agreed to the modification. 
The 1996 welfare reform law (P.L. 104-193) clarified the 
definition of a child's home state, makes several revisions to 
ensure that the full faith and credit laws can be applied 
consistently with UIFSA, and clarifies the rules regarding 
which child support orders states must honor when there is more 
than one order.

                             COMMITTEE BILL

    The Committee Bill requires that each state's Uniform 
Interstate Family Support Act (UIFSA) must include any 
amendments officially adopted as of August 2001 by the National 
Conference of Commissioners on Uniform State Laws.
    In addition, the Committee Bill clarifies current law by 
stipulating that a court of a state that has established a 
child support order has continuing, exclusive jurisdiction to 
modify its order if the order is the controlling order and the 
state is the child's state or the residence of any individual 
contestant; or if the state is not the residence of the child 
or an individual contestant, the court has the contestant's 
consent in a record or in open court that the court may 
continue to exercise jurisdiction to modify its order. It also 
modifies the current rules regarding the enforcement of 
modified orders.

                           REASON FOR CHANGE

    The Committee Bill updates an outdated reference to an 
older version of UIFSA.

    Section 318--Grants to States for Access and Visitation Programs


                              CURRENT LAW

    The 1996 welfare reform law (P.L. 104-193) authorized 
grants to states (via CSE funding) to establish and operate 
access and visitation programs. The purpose of the grants is to 
facilitate noncustodial parents' access to and visitation of 
their children. An annual entitlement of $10 million from the 
federal CSE budget account is available to states for these 
grants. Eligible activities include but are not limited to 
mediation, counseling, education, development of parenting 
plans, visitation enforcement, and development of guidelines 
for visitation and alternative custody arrangements. The 
allotment formula is based on the ratio of the number of 
children in the state living with only one biological parent in 
relation to the total number of such children in all states. 
The amount of the allotment available to a state will be this 
same ratio to $10 million. The allotments are to be adjusted to 
ensure that there is a minimum allotment amount of $50,000 per 
state for FY1997 and FY1998, and a minimum of $100,000 for any 
year after FY1998. States may use the grants to create their 
own programs or to fund programs operated by courts, local 
public agencies, or nonprofit organizations. The programs do 
not need to be statewide. States must monitor, evaluate, and 
report on their programs in accord with regulations issued by 
the HHS Secretary.

                             COMMITTEE BILL

    The Committee Bill increases funding for Access and 
Visitation grants from $10 million annually to $12 million in 
FY2006, $14 million in FY2007, $16 million in FY2008, and $20 
million annually in FY2009 and each succeeding fiscal year. The 
Committee Bill extends the Access and Visitation program to 
Indian tribes and tribal organizations that have received 
direct child support enforcement payments from the federal 
government for at least one year. The Committee Bill includes a 
specified amount to be set aside for Indian tribes and tribal 
organizations: $250,000 for FY2006; $600,000 for FY2007; 
$800,000 for FY2008; and $1.670 million for FY2009 or any 
succeeding fiscal year.
    The Committee Bill increases the minimum allotment to 
states to $120,000 in FY2006, $140,000 in FY2007, $160,000 in 
FY2008, and $180,000 in FY2009 or any succeeding fiscal year. 
The minimum allotment for Indian tribes and tribal 
organizations is $10,000 for a fiscal year. The tribal 
allotment cannot exceed the minimum state allotment for any 
given fiscal year.
    The allotment formula for Indian tribes and tribal 
organizations that operate child support enforcement programs 
is based on the ratio of the number of children in the tribe or 
tribal organization living with only one parent in relation to 
the total number of children living with only one parent in all 
Indian tribes or tribal organizations. The amount of the 
allotment available to an Indian tribe or tribal organization 
would be this same ratio to the maximum allotment for Indian 
tribes and tribal organizations (i.e., $250,000 for FY2006; 
$600,000 for FY2007; $800,000 for FY2008; and $1.670 million 
for FY2009 or any succeeding fiscal year). (Pro rata reductions 
are to be made if they are necessary.)

                           REASON FOR CHANGE

    The Committee Bill provides additional funding for the 
Access and Visitation Grant Program so that more families can 
benefit from these services. Increasing a child's access to 
both parents may improve child well-being and is associated 
with increased compliance in the payment of child support.

 Section 319--Timing of Corrective Action Year for State Noncompliance 
          With Child Support Enforcement Program Requirements


                              CURRENT LAW

    Federal law requires that audits be conducted at least 
every 3 years to determine whether the standards and 
requirements prescribed by law and regulations have been met by 
the child support program of every state. If a state fails the 
audit, federal TANF funds must be reduced by an amount equal to 
at least 1 but not more than 2 percent for the first failure to 
comply, at least 2 but not more than 3 percent for the second 
failure, and at least 3 but not more than 5 percent for the 
third and subsequent failures.
    The HHS Secretary also must review state reports on 
compliance with federal requirements and provide states with 
recommendations for corrective action. The purpose of the 
audits is to assess the completeness, reliability, and security 
of data reported for use in calculating the performance 
indicators and to assess the adequacy of financial management 
of the state program. Federal law calls for penalties to be 
imposed against states that fail to comply with a corrective 
action plan in the succeeding fiscal year.

                             COMMITTEE BILL

    The Committee Bill changes the timing of the corrective 
action year for states that are found to be in noncompliance of 
child support enforcement program requirements. The Committee 
Bill changes the corrective action year in which the sanction 
is imposed to the fiscal year following the fiscal year in 
which the Secretary makes a finding of noncompliance and 
recommends a corrective action plan. The change is made 
retroactively in order to allow the Secretary to treat all 
findings of noncompliance consistently. The Committee Bill also 
makes a special exception for noncompliances that occur in 
fiscal year 2001. If the HHS Secretary finds that the state has 
corrected such a noncompliance in fiscal year 2002 or fiscal 
year 2003, then the penalty is forgiven and no sanction is 
levied against the state for that noncompliance.

                           REASON FOR CHANGE

    Current language does not recognize the time necessary to 
conduct federal audits and that those audits now occur during 
what is, under current law, a state's corrective action year. 
This technical correction will give states a full year to 
correct identified deficiencies.

Section 320--Requirement That State Child Support Enforcement Agencies 
          Seek Medical Support for Children From Either Parent


                              CURRENT LAW

    Federal law requires that a state CSE agency issue a notice 
to the employer of a noncustodial parent, who is subject to a 
child support order issued by a court or administrative agency, 
informing the employer of the parent's obligation to provide 
health care coverage for the child(ren). The employer must then 
determine whether family health care coverage is available for 
which the dependent child(ren) may be eligible, and if so, the 
employer must notify the plan administrator of each plan 
covered by the National Medical Support Notice. If the 
dependent child(ren) is eligible for coverage under a plan, the 
plan administrator is required to enroll the dependent 
child(ren) in an appropriate plan. The plan administrator also 
must notify the noncustodial parent's employer of the premium 
amount to be withheld from the employee's paycheck.

                             COMMITTEE BILL

    The Committee Bill requires that medical support for a 
child be provided by either or both parents and that it must be 
enforced. The Committee Bill includes language that authorizes 
the state CSE agency to enforce medical support against a 
custodial parent whenever health care coverage is available to 
the custodial parent at reasonable cost. It stipulates that 
medical support may include health care coverage (including 
payment of costs of premiums, co-payments, and deductibles) and 
payment of medical expenses incurred on behalf of a child.

                           REASON FOR CHANGE

    To improve enforcement of medical support.

  Section 321--Notice to State Child Support Enforcement Agency From 
Health Care Plan Administrator Under Certain Circumstance When a Child 
                       Loses Health Care Coverage


                              CURRENT LAW

    Federal law requires the health care plan administrator to 
notify qualified beneficiaries of their beneficiary rights with 
regard to health care coverage when or if one of the following 
events occurs: (1) the noncustodial parent with the health care 
coverage dies; (2) the noncustodial parent with the health care 
coverage loses his or her job or starts working fewer hours; 
(3) the noncustodial parent with the health care coverage 
becomes eligible for Medicaid benefits; (4) the noncustodial 
parent with the health care coverage becomes involved in a 
bankruptcy proceeding pertaining to his or her former employer; 
(5) the noncustodial parent with the health care coverage gets 
divorced or obtains a legal separation; or (6) the child of the 
noncustodial parent with the health care coverage ceases to be 
a dependent child. (With respect to (5) and (6), the 
noncustodial parent (i.e., the covered employee) is required to 
notify the health care plan administrator of such an event.)

                             COMMITTEE BILL

    The Committee Bill requires the health care plan 
administrator to notify the state CSE agency if the 
noncustodial parent with the health care coverage dies, loses 
his or her job or is working fewer hours, becomes eligible for 
Medicaid benefits, or is involved in a bankruptcy proceeding 
pertaining to the noncustodial parent's former employer. In 
addition, the Committee Bill requires the health care plan 
administrator to notify the state CSE agency if the 
noncustodial parent with the health care coverage gets divorced 
or obtains a legal separation, or if the noncustodial parent's 
child ceases to be a dependent child (in cases where the 
noncustodial parent has notified the plan administrator of such 
an occurrence).

                           REASON FOR CHANGE

    To improve notification of a state CSE agency.

  Section 322--Authority To Continue State Program for Monitoring and 
                  Enforcement of Child Support Orders


                              CURRENT LAW

    Federal law stipulates that the following families 
automatically qualify for Child Support Enforcement (CSE) 
services: families receiving Temporary Assistance to Needy 
Families (TANF) benefits (Title IV-A), foster care payments 
(Title IV-E), Medicaid coverage (Title XIX), or food stamps (if 
cooperation is required by the state). Other families (i.e., 
nonwelfare families) must apply for CSE services. The state of 
Texas currently has a waiver of the requirement for a written 
application for CSE services for nonwelfare families (Section 
1115 of the Social Security Act). In participating counties, 
these nonwelfare families are automatically a part of the CSE 
caseload. Texas' five-year waiver is scheduled to expire in 
2006.

                             COMMITTEE BILL

    The Committee Bill allows the state of Texas to continue to 
operate its CSE program for monitoring and enforcement of court 
orders on behalf of a nonwelfare families without applying for 
a federal waiver. Currently the state of Texas does not require 
these families to apply for CSE services.

                           REASON FOR CHANGE

    To continue the improvements to CSE in the state of Texas.

 Section 323--Technical Amendment Relating To Information Comparisons 
          and Disclosure To Assist in Federal Debt Collection


                              CURRENT LAW

    P.L. 108-447, the Consolidated Appropriations Act of 2005, 
added provisions related to the comparison of data from the 
Secretary of the Treasury with data in the National Directory 
of New Hires for the purpose of collecting nontax debt owed to 
the federal government.

                             COMMITTEE BILL

    The Committee Bill makes technical changes to the 
Consolidated Appropriations Act of 2005 with respect to 
references to Title IV-D provisions related to information 
comparisons and other disclosures.

                        TITLE IV--CHILD WELFARE


 Section 401--Extension of Authority To Approve Demonstration Projects


                              CURRENT LAW

    Permits the HHS Secretary to approve waivers (state 
demonstration projects) that are likely to promote the 
objectives of the child welfare programs authorized under Title 
IV-B and Title IV-E. This authority is granted through March, 
31, 2005.

                             COMMITTEE BILL

    Extends this authority through FY2010.

  Section 402--Removal of Commonwealth of Puerto Rico IV-E Funds From 
                         Limitation on Payments


                              CURRENT LAW

    Provides that, with the exception of certain bonus, loan 
and evaluation funding under Title IV-A, the total amount of 
funds Puerto Rico may receive under Title IV-A (TANF), Title 
IV-E (Foster Care, Adoption Assistance, Adoption Incentives, 
and independent living programs), and several other Titles 
(providing assistance to aged, disabled and blind) may not 
exceed a certain sum specified in the law.

                             COMMITTEE BILL

    The Committee Bill would exempt Title IV-E funding from 
this cap but never more than $6,250,000 in a given fiscal year 
and only if the amount of the Title IV-E funds claimed in the 
given year exceed funding for the same purposes in a given 
previous year. It also would provide the adoption incentive 
bonuses would not count against a territories' overall cap.

                           REASON FOR CHANGE

    To provide Puerto Rico flexibility in their Title IV-E 
program.

 Section 403--Authority of Indian Tribes To Receive Federal Funds for 
                  Foster Care and Adoption Assistance


                              CURRENT LAW

    Title IV-E foster care and adoption assistance programs may 
be operated by ``states,'' which are defined as each of the 50 
United States, the District of Columbia, Puerto Rico, the 
Virgin Islands, Guam, and American Samoa. These plans must be 
in effect in all political subdivisions of the state and 
standards established for approving foster care homes must be 
``reasonably'' in accord with recommended standards of national 
organizations concerned with foster care placement. States are 
reimbursed for foster care maintenance and adoption assistance 
payments made on behalf of eligible children at the applicable 
federal medical assistance percentage (ranging from 50 percent-
83 percent); this percentage is based on the state's per capita 
income. Administrative expenditures related to serving children 
eligible for federally reimbursed maintenance payments and 
adoption assistance are generally at 50 percent, with 75 
percent reimbursement for certain training costs.
    States that operate a foster care program must make foster 
care maintenance payments on behalf of eligible children 
removed from their homes if the child's placement and care are 
the responsibility of the state child welfare agency or the 
responsibility of another public agency with whom the state 
child welfare agency has a currently effective agreement.

                             COMMITTEE BILL

    The bill allows, beginning in FY 2006, an Indian tribe or 
intertribal consortium to operate Title IV-E foster care and 
adoption assistance programs under the same provisions as those 
applying to states (with certain specified exceptions). Tribal 
plans will be allowed to define service areas where a plan is 
in effect and to grant approval of foster homes based on tribal 
standards that ensure the safety of, and accountability for, 
children placed in foster care. To establish the applicable 
federal reimbursement rate for eligible foster care maintenance 
and adoption assistance payments made under a tribal plan, the 
HHS Secretary is required to determine a tribe's federal 
medical assistance percentage based on the per capita income of 
the service population defined in the Title IV-E tribal plan.
    The bill also permits an Indian tribe or intertribal 
consortium and a state to enter into a cooperative agreement 
for administering or paying funds under Title IV-E. Any 
cooperative agreement in effect prior to the enactment of this 
law remains in effect unless either party to the agreement 
chooses to revoke or modify the agreement, according to the 
terms of that agreement.
    The bill requires a state to make foster care payments on 
behalf of an eligible child whose placement and care is the 
responsibility of an Indian tribe or intertribal consortium if 
that tribe or consortium is not operating its own Title IV-E 
foster care program and it has a cooperative agreement with the 
state or it has submitted to the HHS Secretary a description of 
the arrangements made between the tribe or consortium and state 
for provision of child welfare services and protections 
required under Title IV-E.
    The HHS Secretary is required to issue regulations to carry 
out provisions related to the tribal IV-E plan within 1 year 
after enactment. Current TANF provisions concerning eligible 
entities in Alaska are applied for this program.

                           REASON FOR CHANGE

    Currently, tribes are able to operate child welfare 
programs and remain ineligible for direct federal funding to do 
so. The provisions in the Committee Bill provide tribes with 
direct access to IV-E funding and opportunities to create 
culturally relative foster care programs while respecting the 
importance of sovereignty.

                   Section 404--Technical Corrections


                              CURRENT LAW

    Provides that the HHS Secretary may not waive compliance 
with certain provisions under Title IV-B and IV-E, including 
those provisions under ``Section 422(b)(9)''.

                             COMMITTEE BILL

    Changes this reference to Section 422(b)(10). This 
technical correction is necessary because the cited language 
was renumbered in 1997 (P.L. 105-33) without the necessary 
conforming amendment to this section.

                 TITLE V--SUPPLEMENTAL SECURITY INCOME


     Section 501--Review of State Agency Blindness and Disability 
                             Determinations


                              CURRENT LAW

    The law has no provision requiring review by the Social 
Security Commissioner of state agency determinations of SSI 
eligibility on grounds of blindness or disability. It does 
require review of blindness or disability determinations for 
Disability Insurance (DI).

                             COMMITTEE BILL

    The Committee Bill requires the Social Security 
Commissioner to review state agency blindness and disability 
determinations for SSI. It calls for review of at least 25 
percent of determinations made in FY2006 and 50 percent in 
FY2007 or thereafter.

                           REASON FOR CHANGE

    Supplemental Security Income (SSI) is designed to help 
aged, blind and disabled. The Committee finds that it helps 
people who have little or no income; and it provides cash to 
meet basic needs for food, clothing and shelter. SSI should be 
for those who qualify; not those who are ineligible.

Section 502--Temporary Expansion of Length of Time-Limited Eligibility 
     for Qualified Aliens for Supplemental Security Income Benefits


                              CURRENT LAW

    Asylees and refugees (as well as Cuban/Haitian entrants, 
certain aliens whose deportation/removal is being withheld for 
humanitarian reasons, and Vietnam-born Amerasians fathered by 
U.S. citizens) are eligible for SSI for 7 years after entry/
grant of such status. Under current law, such aliens are 
ineligible after 7 years unless they become naturalized 
citizens.

                             COMMITTEE BILL

    The Committee Bill extends the period of SSI eligibility 
for 7 to 9 years for the period beginning with the date of 
enactment through September 30, 2008.

                           REASON FOR CHANGE

    The Committee Bill recognizes that some elderly and 
disabled refugees have been unable to obtain U.S. citizenship 
within 7 years due to a combination of processing delay, and, 
for asylees statutory caps on the number who can become 
permanent residents each year.

               TITLE VI--TRANSITIONAL MEDICAL ASSISTANCE


              Section 601--Transitional Medical Assistance


                              CURRENT LAW

    The law requires transitional medical assistance (TMA)--
from 6 to 12 months--for those whose lose Medicaid eligibility 
because of increased income arising from work (higher wages or 
more hours of work). Authorization for 6-12 months of TMA 
expired on September 30, 2002, but was extended through March 
31, 2005. (Permanent provisions of law require 4 months of 
transitional medical benefits to families who lose Medicaid 
eligibility because of income from child or spousal support or 
from earnings.)

                             COMMITTEE BILL

    The Committee Bill provides for the extension and 
simplification of the Transitional Medical Assistance Program 
(TMA). The Committee Bill provides for the option of continuous 
eligibility for 12 months and the option of continuing coverage 
for up to an additional year. The Committee Bill provides for a 
state option to waive receipt of Medicaid for 3 of previous 6 
months to qualify for TMA. The Committee Bill provides for 
additional provisions dealing with the collection and reporting 
of information, coordination and other improvements.

                           REASON FOR CHANGE

    The Committee Bill recognizes that Medicaid is an important 
part of the safety net for needy families, and that health care 
is a critical support for low-income families as they 
transition from welfare to work and self-sufficiency, 
particularly for families with entry-level employment.

                       TITLE VII--EFFECTIVE DATE


                              CURRENT LAW

    Funding for TANF, mandatory child care, and abstinence 
education, along with the authority for Transitional Medicaid, 
expire on March 31, 2005.

                             COMMITTEE BILL

    Funding for TANF, mandatory child care, and abstinence 
education, along with the authority for Transitional Medicaid, 
is extended on current terms through September 30, 2005, except 
where explicitly provided for by this act. FY2005 funding for 
the High Performance Bonus is eliminated.
    Unless otherwise specified, provisions take effect on 
October 1, 2005. However, if the Secretary determines that 
state legislation is required for a State TANF or Child Support 
plan to conform with the Act, the effective date is delayed to 
three months after the first day of the first calendar quarter 
beginning after the close of the first regular session of the 
legislature that begins after enactment of this Act. If the 
state has a 2-year legislative session, each year is to be 
considered a separate regular session.

                      III. VOTES OF THE COMMITTEE

    In compliance with paragraph 7(b) of Rule XXVI of the 
Standing Rules of the Senate, the following statements are made 
concerning the rollcall votes of the Committee's consideration 
of the bill.

Motion To Report the Bill

    The bill was ordered favorably reported by voice vote on 
March 9, 2005. A quorum was present. No amendments were voted 
on.

          IV. REGULATORY IMPACT STATEMENT AND RELATED MATTERS


                          A. Regulatory Impact

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact of the Personal 
Responsibility and Individual Development for Everyone Act 
(PRIDE).

                   IMPACT ON INDIVIDUALS AND BUSINESS

    In general, the bill provides grants to States and certain 
other entities to assist low-income families with children in 
moving toward self-sufficiency. Regulations are needed to 
implement these grants in specified areas but do not affect 
individuals or businesses, unless they choose to apply for such 
grants.

                IMPACT ON PERSONAL PRIVACY AND PAPERWORK

    The bill provides grants to States and certain other 
entities to assist low-income families with children in moving 
toward self-sufficiency. In the context of seeking assistance, 
families may be asked about personal circumstances and to 
provide applications, including paperwork associated with their 
financial situation. The bill should not increase the amount of 
personal information and paperwork required.

                           V. BUDGET EFFECTS

                                                    March 25, 2005.
Hon. Charles E. Grassley,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 667, the Personal 
Responsibility and Individual Development for Everyone Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Sheila 
Dacey (for federal costs), Leo Lex (for the state and local 
impact) and Molly Dahl (for the private-sector impact).
            Sincerely,
                                               Douglas Holtz-Eakin.
    Enclosure.

S. 667--Personal Responsibility and Individual Development for Everyone 
        Act

    Summary: S. 667, the Personal Responsibility and Individual 
Development for Everyone (PRIDE) Act would:
     Reauthorize the Temporary Assistance for Needy 
Families (TANF) program at current funding levels (it would 
increase funding for some grants and establish several new 
grants, but also would eliminate funding for other related 
grants);
     Increase funding for child care programs and the 
Social Services Block Grant (SSBG), and continue funding 
abstinence education programs at $50 million annually;
     Make several changes to eligibility rules relating 
to the earned income credit and various child-related tax 
benefits.
     Make several changes to the child support 
enforcement program, including allowing the distribution to 
families of more collections from child support payments;
     Increase funding for the foster care program for 
Puerto Rico and for Indian tribes;
     Require the Social Security Administration (SSA) 
to change its system of reviewing awards to certain disabled 
adults in the Supplemental Security Income (SSI) program and 
extend the eligibility of certain refugees for benefits in the 
SSI program; and
     Extend by five years the requirement that state 
Medicaid programs provide transitional medical assistance (TMA) 
to certain Medicaid beneficiaries and allow states to simplify 
aspects of TMA administration.
    S. 667 would extend the TANF and child care programs 
through 2010. Those programs are scheduled to expire on June 
30, 2005. Continuing the programs at their current funding 
levels would provide $88 billion for TANF and $14 billion for 
child care over the 2005-2010 period. However, CBO already 
assumes that level of funding in its baseline for those 
programs, as specified in section 257 of the Balanced Budget 
and Emergency Deficit Control Act of 1985 (Deficit Control 
Act). Therefore the bill's extension of those programs would 
have no cost relative to CBO's baseline.
    CBO estimates that other provisions of S. 667 would 
increase direct spending by $45 million in 2005, by $10.8 
billion over the 2005-2010 period, and by $11.5 billion over 
the 2005-2015 period, relative to CBO's baseline projections. 
It also would increase revenues by $606 million over the 2005-
2010 period and by $1.2 billion over the 2005-2015 period.
    S. 667 also would authorize appropriations for new grant 
programs and for the administration of new functions in the SSI 
program. CBO estimates that appropriation of the authorized 
levels would result in outlays of $41 million in 2006, $1.2 
billion over the 2006-2010 period, and $1.7 billion over the 
2006-2015 period.
    S. 667 would impose intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) by preempting state 
laws and by reducing the amount of child support collections 
that states could retain. The preemptions would impose no 
significant costs on state governments. The reduction in the 
amount of child support collections that states retain would be 
a mandate, and its cost would depend on the degree to which 
states could alter responsibilities within their child support 
enforcement programs to make up for that reduction. In total, 
states would face costs ranging from $50 million to $60 million 
per year from 2010 through 2015. The increased costs from all 
mandates in the bill would be below the threshold established 
in UMRA ($62 million in 2005, adjusted annually for inflation).
    Other provisions of the bill would significantly affect the 
way states administer their TANF and Medicaid programs, but 
because of the flexibility in those programs, the new 
requirements would not be intergovernmental mandates as defined 
in UMRA. In general, state, local, and tribal governments would 
benefit from the continuation of existing TANF grants, the 
creation of new grant programs, and broader flexibility and 
options in some areas.
    The bill contains a private-sector mandate as defined in 
UMRA. Section 321 would require the administrator of a group 
health plan to notify a state child support enforcement agency 
under certain circumstances when a child loses health care 
coverage. The cost of this mandate would not exceed the 
threshold established by UMRA ($123 million in 2005, adjusted 
annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 667 is shown in Table 1. For this 
estimate, CBO assumes that it will be enacted in fiscal year 
2005. The costs of this legislation fall within budget 
functions 500 (education, training, employment, and social 
services), 550 (health), and 600 (income security).
    Basis of estimate: Most of PRIDE's budgetary effects would 
stem from new direct spending. A portion of the new spending 
would be offset by savings, resulting in a net increase in 
direct spending of about $11.5 billion over the 2005-2015 
period. The bill also would reduce federal revenues by an 
estimated $1.2 billion and increase discretionary spending by 
$1.7 billion over that period, assuming appropriation of the 
authorized amounts.
    S. 667 would extend the authorization for several programs, 
including the TANF and child care programs, through 2010. The 
Deficit Control Act directs CBO, in constructing its baseline 
projections, to assume that such programs continue beyond their 
final year of authorization. In accordance, we assume that the 
TANF and child care programs and several provisions of the TANF 
program (such as healthy marriage grants, the contingency fund, 
and various research grants) continue beyond 2010. The 
legislation specifies that two provisions, supplemental grants 
for TANF and child care, should not be assumed to continue in 
the baseline after their final year of authorization, 
overriding the Deficit Control Act.

                      DIRECT SPENDING AND REVENUES

    Title I: TANF. S. 667 would reauthorize basic TANF grants 
through 2010 at the current funding level of $16.6 billion. By 
law, that amount is assumed to continue in CBO's current 
baseline; thus, enacting S. 667 would not change basic TANF 
grants relative to that baseline. The TANF program and related 
grants were originally authorized through fiscal year 2002. 
They have been extended several times in subsequent 
legislation, most recently through June 30, 2005, by HR. 1160, 
which cleared the Congress on March 15, 2005.
    Title I would alter the funding of some grants related to 
TANF and make several other changes to program rules and 
reporting requirements. That title would also increase funding 
for the child care and SSBG programs and would alter 
eligibility rules relating to the earned income credit and 
various child-related tax benefits. CBO estimates that enacting 
title I would decrease direct spending by $5 million in 2005 
and increase direct spending by $5.1 billion over the 2005-2015 
period, relative to CBO's baseline projections. In addition, 
title I would increase revenues by $1.2 billion over that 
period (see Table 2).

                      TABLE 1.--ESTIMATED COSTS OF S. 667, THE PERSONAL RESPONSIBILITY AND INDIVIDUAL DEVELOPMENT FOR EVERYONE ACT
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                              2005     2006     2007     2008     2009     2010     2011     2012     2013     2014     2015   2005-2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING
Increase Funding for Child Care:
    Budget Authority......................        0      900    1,000    1,200    1,300    1,600      200      200      200      200      200      7,000
    Estimated Outlays.....................        0      494      917    1,198    1,341    1,496      569      280      215      200      200      6,910
Modify Tax Credits:
    Estimated Budget Authority............       -5      -97     -563     -541     -530     -517     -470     -415     -424     -432     -451     -4,445
    Estimated Outlays.....................       -5      -97     -563     -541     -530     -517     -470     -415     -424     -432     -451     -4,445
Extend and Simplify Transitional Medicaid:
    Estimated Budget Authority............        0      433      791      906    1,015    1,120      757       41       -2      -13       -2      5,046
    Estimated Outlays.....................        0      422      774      898    1,012    1,116      756       42        3       13        3      5,039
Other Changes to Direct Spending:
    Estimated Budget Authority............      -15      808      760      803      751      475      141      125       82       50       10      3,992
    Estimated Outlays.....................       50      593      624      807      762      564      262      144       83       49       10      3,946
 Total Direct Spending:
    Estimated Budget Authority............      -20    2,044    1,988    2,368    2,536    2,678      628      -49     -144     -195     -243     11,593
    Estimated Outlays.....................       45    1,412    1,752    2,362    2,585    2,659    1,117       51     -124     -170     -238     11,450

                                                                   CHANGES IN REVENUES

Estimated Revenues........................        1       32      146      144      142      141      162      107      111      111      120      1,217

                                            NET CHANGES IN DIRECT SPENDING AND REVENUES (EFFECT ON DEFICITS)

Estimated Increase or Decrease (-) in            44    1,380    1,606    2,218    2,443    2,518      955      -57     -235     -281     -358     10,233
 Deficit..................................

                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Additional Spending Subject to
 Appropriations:
    Estimated Authorization Level.........        0      329      332      335      336      336       16       16       17       17       18      1,752
    Estimated Outlays.....................        0       41      205      361      338      288      296      155       30       17       18      1,749

                   Memorandum: Changes in Direct Spending from Program Extensions in S. 667 That Are Already Assumed in CBO's Baseline
TANF:
    Estimated Budget Authority Estimated      3,588   16,870   16,875   16,875   16,875   16,875        0        0        0        0        0     87,958
     Outlays..............................
    Estimated Outlays.....................    2,230   14,530   16,930   17,300   17,000   16,875    3,038       55        0        0        0     87,958
Child Care:
    Estimated Budget Authority............      398    2,717    2,717    2,717    2,717    2,717        0        0        0        0        0     13,983
    Estimated Outlays.....................      287    2,044    2,574    2,694    2,717    2,717      761      163       26        0        0    13,983
--------------------------------------------------------------------------------------------------------------------------------------------------------
TANF = Temporary Assistance for Needy Families.

Notes.--Components may not sum to totals because of rounding.

    State Family Assistance Grant. Section 102 would extend the 
state family assistance grant program through 2010 at the 
current funding level of $16.6 billion. The extension would 
provide more than $80 billion in additional direct spending 
over the 2006-2010 period. As noted above, CBO already assumes 
funding at that level in its baseline in accordance with rules 
for constructing baseline projections, as set forth in section 
257 of the Deficit Control Act. Therefore, CBO estimates this 
provision would have no effect on direct spending over the 
2006-2015 period, relative to the baseline projections.

                                                   TABLE 2.--DIRECT SPENDING EFFECTS OF TITLE I: TANF
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                              2005     2006     2007     2008     2009     2010     2011     2012     2013     2014     2015   2005-2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Eliminate Out-of-Wedlock Bonus:
    TANF:
        Estimated Budget Authority........        0     -100     -100     -100     -100     -100     -100     -100     -100     -100     -100     -1,000
        Estimated Outlays.................        0        0      -57     -119     -105     -100     -100     -100     -100     -100     -100       -881
    Food Stamps:
        Estimated Budget Authority........        0        0        1        1        1        1        1        1        1        1        1          9
        Estimated Outlays.................        0        0        1        1        1        1        1        1        1        1        1          9
          Subtotal:
            Estimated Budget Authority....        0     -100      -99      -99      -99      -99      -99      -99      -99      -99      -99       -991
            Estimated Outlays.............        0        0      -56     -118     -104      -99      -99      -99      -99      -99      -99       -872
Establish Healthy Marriage Promotion
 Grant:
        Budget Authority..................        0      100      100      100      100      100      100      100      100      100      100      1,000
        Estimated Outlays.................        0        1       28       74      124      122      111      100      100      100      100        860
Continue Supplemental Grant at $319
 Million Through 2009:
    TANF:
        Budget Authority..................        0      319      319      319      319        0        0        0        0        0        0      1,276
        Estimated Outlays.................        0      262      311      326      319       57        1        0        0        0        0      1,276
    Food Stamps:
        Estimated Budget Authority........        0       -3       -4        4       -4       -1        0        0        0        0        0        -16
        Estimated Outlays.................        0       -3       -4        4       -4       -1        0        0        0        0        0        -16
          Subtotal:
            Estimated Budget Authority....        0      316      315      315      315       -1        0        0        0        0        0      1,260
            Estimated Outlays.............        0      259      307      322      315       56        1        0        0        0        0      1,260
Reduce High-Performance Bonus:
    TANF:
        Budget Authority..................     -200     -150     -150     -150     -100     -100     -100     -100     -100     -100     -100     -1,350
        Estimated Outlays.................        0      -82     -168     -211     -161     -109     -100     -100     -100     -100     -100     -1,231
    Food Stamps:
        Estimated Budget Authority........        0        1        2        3        2        1        1        1        1        1        1         14
        Estimated Outlays.................        0        1        2        3        2        1        1        1        1        1        1         14
          Subtotal:
            Estimated Budget Authority....     -200     -149     -148     -147      -98      -99      -99      -99      -99      -99      -99     -1,336
            Estimated Outlays.............        0      -81     -166     -208     -159     -108      -99      -99      -99      -99      -99     -1,217
Modify Contingency Fund:
    Estimated Budget Authority............        0       13      -11       -8       -2       -4       -7       -7       -9       -9      -10        -54
    Estimated Outlays.....................        0       13      -11       -8       -2       -4       -7       -7       -9       -9      -10        -54
Reserve Contingency Funding for Tribes:
    Budget Authority......................        0       25        0        0        0        0        5        5        5        5        5         50
    Estimated Outlays.....................        0        4        5        5        5        5        5        5        5        5        5         49
Increase Transfer Authority from TANF to
 SSBG:
    Budget Authority......................        0        0        0        0        0        0        0        0        0        0        0          0
    Estimated Outlays.....................        0       70       -2      -56      -12        0        0        0        0        0        0          0
Increase SSBG Funding:
    Budget Authority......................        0      200      200      200      200      200        0        0        0        0        0      1,000
    Estimated Outlays.....................        0      164      196      200      200      200       36        4        0        0        0      1,000
Increase Tribal JOBS Funding:
    Budget Authority......................        0        5        5        5        5        5        5        5        5        5        5         50
    Estimated Outlays.....................        0        1        4        5        5        5        5        5        5        5        5         45
Establish Tribal TANF Improvement Grants:
    Budget Authority......................        0       80        0        0        0        0        0        0        0        0        0         80
    Estimated Outlays.....................        0        8       26       27       13        5        1        0        0        0        0         80
Establish Secretary's Fund for Research,
 Demonstration, and National Studies:
    Budget Authority......................      100      100      100      100      100      100      100      100      100      100      100      1,100
    Estimated Outlays.....................        0       20      105      148      120      109      101      100      100      100      100      1,003
Extend Funding of Studies and
 Demonstrations:
    Budget Authority......................        0       15       15       15       15       15       15       15       15       15       15        150
    Estimated Outlays.....................        0        1       10       15       15       15       15       15       15       15       15        131
Fund Indicators of Child Well-being:
    Budget Authority......................        0       10       10       10       10       10       10       10       10       10       10        100
    Estimated Outlays.....................        0        1        6       11       12       11       10       10       10       10       10         91
Fund Research in Tribal Welfare Programs:
    Budget Authority......................        0        2        0        0        0        0        0        0        0        0        0          2
    Estimated Outlays.....................        0        *        1        1        0        0        0        0        0        0        0          2
Increase Funding for Child Care:
    Budget Authority......................        0      200      200      200      200      200      200      200      200      200      200      2,000
    Estimated Outlays.....................        0      144      188      198      200      200      200      200      200      200      200      1,930
Establish Supplemental Grant for Child
 Care:
    Budget Authority......................        0      700      800    1,000    1,100    1,400        0        0        0        0        0      5,000
    Estimated Outlays.....................        0      350      729    1,000    1,141    1,296      369       80       15        0        0      4,980
Change EIC Identification Requirements:
    Estimated Budget Authority............        0        0     -399     -377     -365     -352     -310     -295     -302     -312     -326     -3,038
    Estimated Outlays.....................        0        0     -399     -377     -365     -352     -310     -295     -302     -312     -326     -3,038
Change Eligibility for the Child Tax
 Credit:
    Estimated Budget Authority............        0        0      -65      -63      -62      -60      -60       -8       -9       -8      -11       -346
    Estimated Outlays.....................        0        0      -65      -63      -62      -60      -60       -8       -9       -8      -11       -346
Clarify Eligibility for Child-Related Tax
 Benefits:
    Estimated Budget Authority............       -5      -97      -99     -101     -103     -105     -100     -112     -113     -112     -114     -1,061
    Estimated Outlays.....................       -5      -97      -99     -101     -103     -105     -100     -112     -113     -112     -114     -1,061
Establish Fatherhood Grants:
    Budget Authority......................        0       50       50       50       50       50        0        0        0        0        0        250
    Estimated Outlays.....................        0        8       35       55       55       50       38        9        0        0        0        250
Create Resource Center for Teen Pregancy
 Prevention:
    Budget Authority......................        0        5        0        0        0        0        0        0        0        0        0          5
    Estimated Outlays.....................        0        1        1        1        1        1        0        0        0        0        0          5
Effects of Title I Interactions on TANF:
    Budget Authority......................        0        0        0        0        0        0        0        0        0        0        0          0
    Estimated Outlays.....................        0        0      -91       71       20        0        0        0        0        0        0          0
Total Changes in Direct Spending: Title I:
    Estimated Budget Authority............     -105    1,475      974    1,200    1,366    1,360     -240     -185     -196     -204     -224      5,221
    Estimated Outlays.....................       -5      867      752    1,202    1,419    1,347      217      -92     -181     -204     -224      5,098

                                                                   CHANGES IN REVENUES

Change EIC Identification Requirements            0        4       40       40       38       39       66       64       67       66       72        496
Change Eligibility for the Child Tax              0        0       14       14       14       14       13        5        5        5        5         89
 Credit
Clarity Eligibility for Child-Related Tax         1       28       92       90       90       88       83       38       39       40       43        632
 Benefits
                                           -------------------------------------------------------------------------------------------------------------
    Total Changes to Estimated Revenues...        1       32      146      144      142      141      162      107      111      111      120     1,217
--------------------------------------------------------------------------------------------------------------------------------------------------------
TANF = Temporary Assistance for Needy Families. SSBG = Social Services Block Grant.
* = costs or savings of less than $500,000.

Notes.--Components may not sum to total because of rounding.

    Healthy Marriage Promotion Grants. Section 103 would 
eliminate an out-of-wedlock birth grant program, but would 
create a new grant program to promote healthy marriages. CBO 
projects $1 billion in funding for out-of-wedlock birth grants, 
$100 million annually over the2006-2015 period, in accordance 
with the Deficit Control Act. We estimate that eliminating this program 
would reduce outlays by $881 million over the 2007-2015 period, 
relative to CBO's baseline projections. The impact on outlays of the 
reduction in funding is delayed (no effect in 2006) because the grants 
are awarded in the last days of a fiscal year. CBO expects the reduced 
funding would cause states to decrease benefits for families that also 
receive food stamps. As a result, the Food Stamp payment to those 
families would rise, and the cost of Food Stamp benefits would grow by 
an estimated $9 million over the 2007-2015 period.
    Section 103 would establish a new competitive grant to 
states and Indian tribes for developing and implementing 
programs to promote and support marriage. The bill would 
appropriate $100 million annually for grants that could be used 
for a variety of activities, including public advertising 
campaigns, education and training programs on topics related to 
marriage, marriage mentoring programs, and programs to reduce 
disincentives to marriage in means-tested programs. The grants 
could be used to cover up to 50 percent of the cost of the new 
programs. CBO expects that the grants would be spent slowly in 
the first few years because the Department of Health and Human 
Services (HHS) would need to set up a system for awarding 
grants, and states would need to set up programs to use the 
funds. Estimated outlays would total $1 million in 2006 and 
$860 million over the 2006-2015 period.
    Supplemental Grants. Section 104 would provide $319 million 
annually for the supplemental grants for population increases 
over the 2006-2009 period. (These grants are awarded to states 
that have lower-than-average TANF grants per poor person or 
rapidly increasing populations.) Supplemental grants are 
currently funded for the first three quarters of fiscal year 
2005 at $255 million, consistent with an annual level of $319 
million. (Section 702 of the bill would fund the grants for the 
final quarter of 2005.) Current law specifies that supplemental 
grants should not be assumed to continue in baseline 
projections after June 30, 2005, overriding the continuation 
rules specified in section 257 of the Deficit Control Act.
    CBO estimates that states would spend $262 million in 2006 
and $1.3 billion over the 2006-2011 period. We expect that some 
of the additional funding would be used to increase benefits to 
families that also receive food stamps. As a result, the Food 
Stamp payment to those families would fall and the cost of Food 
Stamp benefits would decline by an estimated $16 million over 
the 2006-2010 period.
    Bonuses for High-Performing States. Section 105 would 
reduce funding for a bonus to high-performing states and 
refocus the bonus toward rewarding performance in improving job 
outcomes for TANF recipients. The bonus in current law rewards 
states for moving TANF recipients into jobs, providing support 
for low-income working families, and increasing the percentage 
of children who reside in married-couple families.
    The Secretary would develop criteria for the new bonus--the 
Bonus to Reward Employment Achievement--in consultation with 
the states. The criteria would measure workplace attachment and 
advancement. The bill would make $450 million available for 
bonuses averaging $50 million annually over the 2006-2008 
period and $100 million annually over the 2009-2011 period. 
Pursuant to the Deficit Control Act, CBO's baseline projections 
include $200 million a year in funding for bonuses. Therefore, 
the net effect of section 105 would be a reduction in budget 
authority of $1.35 billion over the 2005-2015 period. Because 
the bonuses are usually granted in the last days of a fiscal 
year, TANF spending would fall by only $1.2 billion over the 
10-year period.
    CBO expects the reduced TANF funding would cause states to 
decrease benefits to families that also receive food stamps. As 
a result, the Food Stamp payment to those families would rise 
and the cost of Food Stamp benefits would grow, by an estimated 
$14 million over the 10-year period.
    Contingency Fund. Section 106 would significantly alter the 
Contingency Fund for State Welfare Programs. Under current law, 
the contingency fund provides additional federal funds to 
states with high and increasing unemployment rates or 
significant growth in Food Stamp participation. To be eligible, 
states are required to maintain their spending at 100 percent 
of their 1994 levels and to match federal payments. CBO 
estimates that states will draw federal funds totaling between 
$30 million and $40 million annually under current law.
    Section 106 would change the eligibility conditions, grant 
determination, and state spending requirements for the 
contingency fund. It would establish new thresholds of growth 
in the unemployment rate and Food Stamp participation for 
states to qualify for funds. The amount of funding a state 
would receive would be derived by multiplying the state's 
caseload increase over the level two years prior to its 
qualification, its TANF benefit level for a family of three, 
and its Medicaid matching rate. A state with high unspent TANF 
balances from prior years would not be eligible for payments 
from the contingency fund. In contrast to current law, a state 
would not need to maintain a high level of historic spending or 
put up any matching funds in order to receive a contingency 
fund grant.
    Based on CBO's projections of unemployment rates, Food 
Stamp participation, TANF caseloads, and state TANF spending, 
CBO estimates that states would qualify for $13 million more 
from the contingency fund in 2006, but between $2 million and 
$11 million per year less over the 2007-2015 period. The net 
effect of the changes would be a reduction in outlays of $54 
million over the 10-year period.Section 106 would also 
appropriate $25 million over the 2006-2010 period for making payments 
to Indian tribes that experience increased economic hardship. Those 
payments would increase outlays by $5 million annually.
    Social Services Block Grant. Section 107 would allow states 
to continue to transfer up to 10 percent of TANF funds to SSBG. 
The 1996 welfare law that established the TANF program set the 
level of the transfer authority at 10 percent. Subsequent 
legislation permanently lowered the authority to 4.25 percent. 
However, the Congress has restored the authority to 10 percent 
every year since, most recently through September 30, 2005. In 
the absence of further legislation, the authority will fall to 
4.25 percent after that date.
    In recent years, states have transferred about $1 billion 
annually. Maintaining the transfer authority at the higher 
level would make it easier for states to spend their TANF 
grants and would accelerate spending relative to current law. 
Based on recent state transfers, CBO expects that states would 
transfer an additional $340 million annually under this 
provision, but because some of this money would have been spent 
within the TANF program anyway, only $70 million of additional 
spending would occur in 2006. Because states would have found 
alternate ways to spend the funds in later years, the increase 
in spending in 2006 would be offset by decreased spending in 
subsequent years. Thus, this provision would have no net impact 
on TANF spending over the 2006-2015 period as a whole.
    Section 107 would also increase the amount of funding for 
the social services block grant by $200 million annually over 
the 2006-2010 period, adding $1.0 billion to outlays over the 
2006-2012 period.
    Work Participation Requirements. Section 109 would require 
states to have an increasing percentage of TANF recipients 
participate in work activities while receiving cash assistance. 
It would generally maintain current penalties for the failure 
to meet those requirements. Those penalties can total up to 5 
percent of the TANF block grant amount for the first failure to 
meet work requirements and increase with each subsequent 
failure. CBO estimates that any penalties for failing to meet 
the new requirements would total less than $500,000 annually.
    Direct Funding and Administration by Indian Tribes. Section 
113 would increase grants to tribes to operate employment 
programs from the current $7.6 million level to $12.6 million 
annually. The new funding would raise outlays by $45 million 
over the 2006-2015 period.
    Section 113 would also appropriate $80 million in 2006 for 
tribal improvement grants. The Secretary of HHS would carry out 
a program of technical assistance and competitive grants to 
Indian tribes focused on improving tribes' capacity to deliver 
human services and promote economic development. CBO estimates 
implementing the program would cost $8 million in 2006 and $80 
million over the 2006-2011 period.
    Research, Demonstrations, and Technical Assistance. Section 
114 would make funds available to the Secretary of Health and 
Human Services to conduct and support research and 
demonstration projects and provide technical assistance, 
primarily on the promotion of marriage. The program would be 
funded at $100 million annually. Because the 2005 grant would 
not be available until late in the year, CBO expects an 
insignificant amount would be spent in 2005. Implementing the 
provision would boost spending by $20 million in 2006 and $1.0 
billion over the 2006-2015 period.
    Section 114 also would continue annual grants of $15 
million for research. Specifically, it would fund research on 
the effects, costs, and benefits of state TANF programs and 
innovative approaches for reducing welfare dependency and 
increasing the well-being of children. It also could fund 
evaluations of TANF programs initiated by the states and 
ongoing demonstration projects approved before 1996. Based on 
recent spending patterns, CBO estimates that this provision 
would increase outlays by $1 million in 2006 and by $131 
million over the 2006-2015 period.
    Section 114 also would provide $10 million annually to the 
Secretary of HHS to develop comprehensive indicators to assess 
the well-being of children in each state. CBO estimates that 
this provision would increase outlays by $1 million in 2006 and 
by $91 million over the 2006-2015 period. Finally, the bill 
would provide $2 million in 2006 for research on tribal welfare 
programs.
    Child Care. The child care entitlement to states provides 
funding to states for child care subsidies to low-income 
families and for other activities. Section 116 would extend the 
grant program through 2010, providing funding of $14 billion 
over the 2006-2010 period. CBO already assumes funding of 
$2.717 billion annually in its baseline in accordance with the 
Deficit Control Act, so the extension would have no effect on 
direct spending relative to the baseline projection. Section 
116 would also raise annual funding by $200 million to $2.917 
billion. CBO estimates that, as a result, outlays would 
increase by $144 million in 2006 and by $1.9 billion over the 
10-year period relative to its baseline projections.
    Section 116 would also create a new supplemental grant for 
child care, with funding of $700 million in 2006, rising to 
$1.4 billion in 2010. States would be required to put up some 
matching funds in 2009 and 2010. Based on current spending 
patterns, CBO expects that some states would not put up the 
full state match, so that a small amount would lapse. The bill 
specifies that the supplemental grants should not be assumed to 
continue in baseline projections after 2010, overriding the 
continuation rules specified in section 257 of the Deficit 
Control Act. Under that assumption, CBO estimates that outlays 
would increase by $350 million in 2006 and by nearly $5.0 
billion over the 10-year period.
    Tax Credits. The bill would make several changes to 
eligibility rules relating to the earned income tax credit and 
various child-related tax benefits. In total, JCT and CBO 
estimate those changes would increase revenues by $606 million 
over the 2005-2010 period and by about $1.2 billion over the 
2005-2015 period. Because some or all of each of those changes 
applies to refundable tax credits, which are recorded in the 
budget as outlays, CBO also estimate that enacting the bill 
would reduce direct spending by about $4.4 billion over the 
2005-2015 period.
    Change Identification Requirements for the Earned Income 
Tax Credit. The bill would change the type of identification 
that taxpayers must possess in order to claim the earned income 
tax credit. To receive the credit, taxpayers would be required 
to possess a Social Security number that authorizes them to 
work in the United States. CBO estimates that the change would 
reduce outlays for the earned income tax credit by about $3.0 
billion over the 2005-2015 period and increase revenues by 
nearly $500 million over the same period.
    This provision was enacted in the Personal Responsibility 
and Work Opportunity Reconciliation Act of 1996, but the 
legislative language contained a drafting oversight that 
negated its effect. For scorekeeping purposes, JCT concluded 
that the provision should not be credited with reducing outlays 
and increasing revenues because it is a technical correction 
necessary to carry out the original intent of the enacted 
provision and the original estimate reflected the intent of the 
legislation. However, CBO's baseline budget projections reflect 
current law as enacted and implemented, and the change made by 
S. 667 would affect future outlays and receipts relative to 
CBO's baseline projections. Therefore, CBO estimates a 
budgetary effect from the provision in S. 667, using an 
estimate of the resulting baseline change provided by JCT.
    Change Eligibility for the Child Tax Credit. The bill would 
prohibit certain taxpayers from claiming the child tax credit. 
Currently, taxpayers living abroad may elect to exclude foreign 
earned income and qualifying housing expenses from their gross 
income and still receive the child credit. Under S. 667, 
taxpayers who choose to exclude such income would no longer be 
eligible to receive the credit. According to JCT, federal 
revenues would increase by an estimated $89 million over the 
2007-2015 period as a result. Outlays from the refundable 
portion ofthe credit would decrease by an estimated $346 
million over the same period.
    Clarify Eligibility Rules for Child-Related Tax Benefits. 
S. 667 would clarify the rules of eligibility of siblings and 
other family members for child-related tax benefits. For 
example, the bill would clarify that if a parent resides with a 
child for more than half of the year, then generally only that 
parent could claim the child for child-related tax benefits. If 
no parent were able to claim the child for such purposes, 
another taxpayer would be allowed to claim the child, provided 
all other criteria are met. JCT estimates that making those 
changes would increase federal revenues by $1 million in 2005 
and by $632 million over the 2005-2015 period. JCT also 
estimates that outlays for the refundable credits would 
decrease by about $1.1 billion between 2005 and 2015.
    Fatherhood Grants. Section 118 would establish two new 
grant programs to promote responsible fatherhood and would 
appropriate $50 million annually over the 2006-2010 period. 
(Section 118 would also authorize appropriations of an 
additional $26 million annually.) CBO estimates that 
implementing the programs would increase direct spending by $8 
million in 2006 and $250 million over the 2006-2015 period.
    Teen Pregnancy Prevention Resource Center. Section 119 
would appropriate $5 million for 2006 to establish a resource 
center to provide information and technical assistance on 
reducing teen pregnancy. CBO estimates implementing the program 
would cost $1 million annually over the 2006-2010 period.
    Interactions. CBO estimates that several provisions in 
title I would accelerate the rate of spending of prior-year 
balances in the TANF program. Provisions that would increase 
the transfer authority to SSBG, eliminate the out-of-wedlock 
grant, and reduce the high-performance bonus would each induce 
states to spend uncommitted TANF funds from prior years sooner 
than under current law. However, those combined effects would 
exceed the amount of uncommitted TANF funds. Consequently, the 
budgetary effect of all the provisions enacted together would 
be smaller than the sum of the estimated effects for the 
individual provisions. CBO estimates that those interactions 
would lower projected TANF spending in 2007 by $91 million, 
relative to the sum of the provisions estimated individually, 
but raise it by the same amount over the 2008-2009 period. 
Thus, there would be no net impact on TANF spending over the 
10-year period as a whole.
    Title II: Abstinence Education. S. 667 would extend the 
authorization for abstinence education grants and provide $50 
million annually over the 2006-2010 period. It would make a 
slight change to the formula for determining state allotments. 
Under the bill, funds would be divided only among those states 
that applied for them. Current allotments are determined by 
dividing available funds among all states and territories, 
regardless of whether they submit an application. In addition, 
any unspent funds allocated to individual states could be 
periodically reallocated by the Secretary. Because projected 
spending in 2010 does not exceed $50 million, CBO does not 
assume that this program would be extended beyond its specific 
authorization.
    Title III: Child Support. S. 667 would change many aspects 
of the operation and financing of the child support program. It 
would allow (and in one case, require) states to share more 
child support collections with current and former recipients of 
TANF, thereby reducing the amount the federal and state 
governments would recoup from previous TANF benefit payments. 
(The federal government's share of child support collections is 
55 percent, on average.) It would require states to 
periodically update child support orders and expand the use of 
certain enforcement tools. It would provide increases in 
funding for HHS and for grants that facilitate noncustodial 
parent access to their children. Finally, title III would 
require states to change the way they seek health coverage for 
children, forgive certain penalties on states, and allow Texas 
to continue to operate under a waiver of program rules. 
Overall, CBO estimates that enacting title III would increase 
direct spending by $5 million in 2005 and $1.8 billion over the 
2005-2015 period (see Table 3).
    Distribute More Collections to Current TANF Recipients. 
When a family applies for TANF, it assigns to the state any 
rights the family has to child support collections. While the 
family receives assistance, the state uses any collections it 
receives to reimburse itself and the federal government for 
TANF payments. Those reimbursements to the federal government 
are recorded as offsetting receipts (a credit against direct 
spending). States may choose to give some ofthe child support 
collected to families, but states must finance those payments 
out of their share of collections.
    Section 301 would allow states to pay up to $400 each month 
of child support to a family receiving assistance (up to $600 
to a family with two or more children), without turning over to 
the federal government its share of those payments, beginning 
18 months after enactment of the bill. The state could not 
count the child support as income in determining the families' 
benefits under the TANF program.
    In recent years, states with about two-thirds of child 
support collections shared some of those collections with 
families receiving TANF. CBO expects states would continue to 
share at least that amount, and under S. 667 the federal 
government would bear part of that cost. In addition, based on 
information from state child-support officials and other policy 
experts, CBO expects that states with about one-third of 
collections would choose to institute a policy of sharing the 
first $50 per month collected, or, if they already have such a 
policy, to increase the amount of child support they share with 
families on assistance. CBO anticipates that states would 
institute those increases slowly and that the increases would 
not be fully effective until 2010. Based on HHS data for child 
support and information supplied by state officials, CBO 
expects that states would raise payments to families in 2010 
from the $104 million anticipated under current practices to 
$161 million under S. 667. CBO estimates that federal 
offsetting receipts (from reimbursements) would fall by $45 
million in 2007, $88 million in 2010, and $753 million over the 
2007-2015 period.

                                              TABLE 3.--DIRECT SPENDING EFFECTS OF TITLE III: CHILD SUPPORT
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                              2005     2006     2007     2008     2009     2010     2011     2012     2013     2014     2015   2005-2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Distribute More Collections to Current
 TANF Families:
    Child Support Collections:
        Estimated Budget Authority........        0        0       45       69       79       88       90       92       94       97       99        753
        Estimated Outlays.................        0        0       45       69       79       88       90       92       94       97       99        753
    Food Stamps:
        Estimated Budget Authority........        0        0       -2       -6      -10      -14      -14      -14      -15      -15      -15       -105
        Estimated Outlays.................        0        0       -2       -6      -10      -14      -14      -14      -15      -15      -15       -105
          Subtotal:
            Estimated Budget Authority....        0        0       43       63       69       74       76       78       79       82       84        648
            Estimated Outlays.............        0        0       43       63       69       74       76       78       79       82       84        648
Distribute More Past-Due Support to
 Current and Former TANF Families:
    Child Support Collections:
        Estimated Budget Authority........        0        0       34       70      106      183      187      191      195      200      204      1,370
        Estimated Outlays.................        0        0       34       70      106      183      187      191      195      200      204      1,370
    Food Stamps:
        Estimated Budget Authority........        0        0       -I       -3       -5       -6       -7       -7       -7       -7       -7        -50
        Estimated Outlays.................        0        0       -I       -3       -5       -6       -7       -7       -7       -7       -7        -50
    Student Loans:
        Estimated Budget Authority........        5        *        *        *        *        *        *        *        *        *        *          5
        Estimated Outlays.................        5        *        *        *        *        *        *        *        *        *        *          5
          Subtotal:
            Estimated Budget Authority....        5        0       33       67      101      177      180      184      188      193      197      1,325
            Estimated Outlays.............        5        0       33       67      101      177      180      184      188      193      197      1,325
Require Triennial Update of Child Support
 Orders:
    Administrative Costs:
        Estimated Budget Authority........        0        0        0       15       15       12       12       13       13       13       13        106
        Estimated Outlays.................        0        0        0       15       15       12       12       13       13       13       13        106
    Child Support Collections:
        Estimated Budget Authority........        0        0        0       -5      -14      -20      -20      -19      -19      -19      -20       -136
        Estimated Outlays.................        0        0        0       -5      -14      -20      -20      -19      -19      -19      -20       -136
    Food Stamps:
        Estimated Budget Authority........        0        0        0       -I       -2       -2       -2       -2       -2       -3       -3        -17
        Estimated Outlays.................        0        0        0       -I       -2       -2       -2       -2       -2       -3       -3        -17
    Medicaid:
        Estimated Budget Authority........        0        0        0       -2       -6      -10      -10       -8       -7       -7       -8        -58
        Estimated Outlays.................        0        0        0       -2       -6      -10      -10       -8       -7       -7       -8        -58
          Subtotal:
            Estimated Budget Authority....        0        0        0        7       -7      -20      -20      -16      -15      -16      -18       -105
            Estimated Outlays.............        0        0        0        7       -7      -20      -20      -16      -15      -16      -18       -105
Reduce Threshold for Passport Denial to
 $2,500:
    Estimated Budget Authority............        0        0       -I       -I       -I       -I       -I       -I       -I       -I       -I         -9
    Estimated Outlays.....................        0        0       -I       -I       -I       -I       -I       -I       -I       -I       -I         -9
Withhold Child Support from Social
 Security Disability Payments:
    Estimated Budget Authority............        0        0       -3       -4       -4       -4       -5       -5       -6       -6       -6        -43
    Estimated Outlays.....................        0        0       -3       -4       -4       -4       -5       -5       -6       -6       -6        -43
Maintain Funding for Technical Assistance
 and Federal Parent-Locator Service:
    Estimated Budget Authority............        0        2        2        I        0        0        0        0        0        0        0          5
    Estimated Outlays.....................        0        2        2        I        0        0        0        0        0        0        0          5
Allow Federal Seizure of Accounts in Multi-
 State Financial Institutions:
    Administrative Costs:
        Estimated Budget Authority........        0        2        2        0        0        0        0        0        0        0        0          4
        Estimated Outlays.................        0        2        2        0        0        0        0        0        0        0        0          4
    Child Support Collections:
        Estimated Budget Authority........        0        0       -I       -3       -5       -5       -5       -5       -5       -5       -5        -39
        Estimated Outlays.................        0        0       -I       -3       -5       -5       -5       -5       -5       -5       -5        -39
          Subtotal:
            Estimated Budget Authority....        0        2        I       -3       -5       -5       -5       -5       -5       -5       -5        -35
            Estimated Outlays.............        0        2        I       -3       -5       -5       -5       -5       -5       -5       -5        -35
Match Databases of Insurance Claims:
    Administrative Costs:
        Estimated Budget Authority........        0        2        2        0        0        0        0        0        0        0        0          4
        Estimated Outlays.................        0        2        2        0        0        0        0        0        0        0        0          4
    Child Support Collections:
        Estimated Budget Authority........        0        0        0       -2       -4       -4       -4       -4       -4       -4       -4        -30
        Estimated Outlays.................        0        0        0       -2       -4       -4       -4       -4       -4       -4       -4        -30
          Subtotal:
            Estimated Budget Authority....        0        2        2       -2       -4       -4       -4       -4       -4       -4       -4        -26
            Estimated Outlays.............        0        2        2       -2       -4       -4       -4       -4       -4       -4       -4        -26
Increase Grants to States for Access and
 Visitation:
    Budget Authority......................        0        2        4        6       10       10       10       10       10       10       10         82
    Estimated Outlays.....................        0        2        4        6       10       10       10       10       10       10       10         82
Forgive Penalties for Noncompliance in
 2001:
    Budget Authority......................        0        4        0        0        0        0        0        0        0        0        0          4
    Estimated Outlays.....................        0        4        0        0        0        0        0        0        0        0        0          4
Require Health Insurance from Either
 Parent:
    Estimated Budget Authority............        0        *       -I       -I       -I       -3       -5       -7      -10      -13      -16        -57
    Estimated Outlays.....................        0        *       -I       -I       -I       -3       -5       -7      -10      -13      -16        -57
Send Notices to Child Support Agency:
    Estimated Budget Authority............        0        I        1        I        I        2        2        2        2        2        2         16
    Estimated Outlays.....................        0        I        I        I        I        2        2        2        2        2        2         16
Make Texas Waiver Permanent:
    Estimated Budget Authority............        0        I        3        3        4        5        6        7        8        9       11         57
    Estimated Outlays.....................        0        I        3        3        4        5        6        7        8        9       11         57
Effect of Title III Provisions on
 Technical Assistance Funding:
    Estimated Budget Authority............        0        0        0        0        0       -I       -2       -3       -4       -5       -6        -21
    Estimated Outlays.....................        0        0        0        0        0       -I       -2       -3       -4       -5       -6        -21
Total Changes in Title III:
    Estimated Budget Authority............        5       14       84      137      163      230      232      240      242      246      248      1,841
    Estimated Outlays.....................        5       14       84      137      163      230      232      240      242      246      248     1,841
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = costs or savings of less than $500,000.
NOTES.--Components may not sum to totals because of rounding. TANF = Temporary Assistance for Needy Families.

    Because additional child support income in many cases would 
reduce the Food Stamp benefits a family receives, CBO estimates 
savings in the Food Stamp program totaling $2 million in 2007 
and $105 million over the 2007-2015 period.
    Distribute More Past-Due Support to Current and Former TANF 
Recipients. Section 301 also would require states to share more 
child support collections with families through a change in 
assignment rules and would allow states to share more of such 
collections with families who used to receive welfare benefits.
    Under current law, families assign to the state the right 
to any child support payments due before and during the period 
the families receive assistance. The bill would eliminate the 
requirement that families assign support due in the period 
before the families receiveassistance. S. 667 would require 
states to implement the new policy by September 30, 2009, but would 
give them the option of implementing it as soon as 18 months after the 
date of enactment.
    When a family ceases to receive public assistance, states 
continue to enforce the family's child support order. All 
amounts of child support collected on time are sent directly to 
the family. However, both the government and the family have a 
claim on collections of past-due child support: the government 
claims the support owed for the period when the family was on 
assistance, up to the amount of the assistance paid, and the 
family claims the remainder. A set of distribution rules 
determines which claim is paid first when a collection is made. 
That order matters because, in many cases, past-due child 
support is never fully paid.
    Section 301 would give states the option to change the 
order of the distribution so that all collections would be paid 
to families first before the government is reimbursed. In 
addition, it would allow states to pay to families part of the 
government's share of support payments.
    CBO estimates that states with 40 percent of collections 
would implement the optional policies by 2010. Based on 
information from state child-support officials and policy 
experts, and on HHS data, CBO estimates that families would 
receive an additional $61 million in 2007, rising to $333 
million by 2010, and $2.5 billion over the 2007-2015 period, as 
a result of these changes. CBO estimates that those increased 
distributions to families would reduce the federal share of 
collections by $34 million in 2007, $183 million in 2010, and 
$1.4 billion over the 2007-2015 period.
    Section 301 would affect federal collections in the student 
loan program. Under a program called the federal tax offset 
refund program, tax refund payments are withheld from 
individuals who owe over-due child support and certain federal 
debts, mainly related to student loans, and used to pay the 
debts. Beginning in 2010, S. 667 would give child support debt 
priority over all other federal debts. In current law, child 
support that is owed to the government is given such priority, 
but child support owed to families is paid after all other 
federal debts. In cases where an individual owes both child 
support debt and other federal debt, the new priority order 
would decrease payments to the federal government in the 
student loan program.
    Currently 0.5 percent of tax filers are subject to a tax 
refund offset for child support owed to a family and 0.5 
percent for student loan debt. Assuming people who owe student 
loan debt are neither more nor less likely to owe child support 
debt, 3,300 filers could be subject to an offset for both child 
support and student loan debt. CBO estimates that the provision 
would reduce recoveries in the student loan program by $4 
million annually beginning in 2010. However, much of the 
resulting losses in recoveries in the student loan program 
would be subsequently recouped through various collecting 
methods.
    The provisions affecting the student loan programs are 
assessed under the requirements of the Federal Credit Reform 
Act. As such, the budget records all the costs and collections 
associated with a new loan on a present-value basis in the year 
the loan is obligated, and the costs of all changes (i.e., 
``modifications'') affecting outstanding loans are displayed in 
the fiscal year the bill is enacted--assumed to be 2005 for 
this estimate. This results in a federal cost of $5 million in 
2005 and insignificant amounts each year from 2006 through 
2015.
    Finally, the new collections paid to former TANF recipients 
would affect spending for the Food Stamp program. CBO expects 
that one-third of the former TANF recipients with increased 
child support income would participate in the Food Stamp 
program, and that benefits would be reduced by 30 cents for 
every extra dollar of income. Increased income from the tax 
refund offset, which is paid as a lump sum, would not count as 
income for determining Food Stamp benefits. For purposes of 
calculating such benefits, incomes of former TANF recipients 
would increase by $14 million in 2007 and $480 million over the 
2007-2015 period. Food Stamp savings would be $1 million in 
2007 and $50 million over the 2007-2015 period.
    Mandatory Three-Year Update of Child Support Orders. 
Section 302 would require states to adjust child support orders 
offamilies on TANF every three years. States could use one of 
three methods to adjust orders: full review and adjustment, 
cost-of-living adjustment (COLA), or automated adjustment. 
Under current law, nearly half of the states perform periodic 
adjustments. Most perform a full review, and the remainder 
apply a COLA. No state currently makes automated adjustments. 
The provision would take effect on October 1, 2007, and CBO 
estimates that it would result in direct spending savings of 
$105 million over the 2008-2015 period.
    CBO estimates that there are 700,000 TANF recipients with 
child support orders in states that do not periodically adjust 
orders and one-third ofthose orders would be adjusted each 
year. We assume that half of the states not already adjusting 
orders would choose to perform full reviews and half would 
apply a COLA.
    Full review and adjustment. When a state performs a full 
review of a child support order, it obtains current financial 
information from the custodial and noncustodial parents and 
determines whether any adjustment in the amount of ordered 
child support is indicated. The state also may revise an order 
to require the noncustodial parent to provide health insurance.
    Based on evaluations of review and modification programs, 
CBO estimates the average cost of a review would be about $200, 
with the federal government paying 66 percent of 
suchadministrative costs. The average adjustment to a child support 
order of a family on TANF would be $95 a month, and about 18 percent of 
the orders reviewed would be adjusted.
    In addition, CBO estimates that 40 percent of orders with a 
monetary adjustment also would be adjusted to include a 
requirement that the noncustodial parent provide health 
insurance for his or her child and that insurance would be 
provided in about half of those cases. After the first few 
years, we assume newly provided medical insurance would decline 
by half, because many families would have already had such 
insurance recently added to their order. Children who receive 
TANF are generally eligible for Medicaid, so the new coverage 
would reduce spending for that program.
    Cost-of-living adjustment. When a state makes a cost-of-
living adjustment it applies a percentage increase reflecting 
the rise in the cost of living to every order, regardless of 
how the financial circumstances of the individuals may have 
changed. The process is considerably less cumbersome and 
expensive than a full review but also results in smaller 
adjustments on average. Based on recent research on COLA 
programs, CBO estimates that the average cost would be $11 per 
case modified, and the average adjustment to a support order 
would be $5 per month. There would be no additional health 
insurance coverage.
    Summary. Under either method of adjustment, CBO expects any 
increased collections for a family would continue for up to 
three years. While a family remains on TANF, the state would 
keep all the increased collections to reimburse itself and the 
federal government for welfare payments. The states would pay 
any increased collections stemming from reviews of child 
support orders to families once they leave assistance. That 
additional child support income for former recipients would 
result in savings in the Food Stamp program.
    Overall, CBO expects the federal share of administrative 
costs for child support to rise by $15 million in 2008 and $106 
million over the 2008-2015 period. Federal collections would 
increase by $5 million in 2008 and $136 million over the 2008-
2015 period. Finally, Food Stamp and Medicaid savings would 
total $17 million and $58 million respectively over the 2008-
2015 period.
    Denial of Passports. Under current law, the State 
Department denies a request for a passport for a noncustodial 
parent if he or she owes more than $5,000 in past-due child 
support. Beginning in fiscal year 2007, section 304 would lower 
that threshold and deny a passport to a noncustodial parent 
owing $2,500 or more. Generally, when a noncustodial parent 
seeks to restore eligibility for a passport, he or she will 
arrange to pay the past-due amount down to the threshold level.
    The State Department currently denies about 15,000 passport 
requests annually. Data from HHS show there are 3.2 million 
noncustodial parents owing more than $5,000 in past-due child 
support and an additional 760,000 owing between $2,500 and 
$5,000. If noncustodial parents owing between $2,500 and $5,000 
apply for passports at the same rate as those owing more than 
$5,000, the proposal would generate an additional 3,600 denials 
annually.
    CBO estimates that 25 percent of noncustodial parents who 
have a passport request denied would make a payment to get 
their passport rather than just doing without one. If the 
threshold is lowered, a noncustodial parent owing more than 
$5,000 would have to pay an additional $2,500 to receive a 
passport. On average, a noncustodial parent owing between 
$2,500 and $5,000 would have to pay $1,250 to receive a 
passport. As a result, CBO estimates the policy would result in 
new payments of child support of about $11 million annually. 
CBO assumes the same share of those payments would be on behalf 
of current and former welfare families as in the overall 
program--10 percent--and that amount would be retained by the 
government as reimbursement for welfare benefits. The federal 
share of such collections would be about $1 million a year and 
$9 million over the 2007-2015 period.
    Improved Debt Collection: SSA Benefit Match. Section 307 
would allow states to collect past-due child support by 
withholding Social Security, Black Lung, and Railroad 
Retirement Board payments. Because parents affected by the 
legislation are generally younger than 62, most of them are 
likely to receive benefits under the Disability Insurance (DI) 
program rather than the retirement or survivors programs. The 
Debt Collection Improvement Act of 1996 limits the amount that 
can be withheld annually from an individual's Social Security 
check to the lesser of any amount over $9,000 or 15 percent of 
benefits.
    Based on an analysis done by the Treasury Department, CBO 
estimates that 50,000 beneficiaries a month could be subject to 
an offset. Based on states' current use of administrative 
offsets for other federal programs, we estimate two out of 
three of those beneficiaries could potentially have their 
checks offset. On average, the offsets could amount to about 
$2,000 by 2010 and could yield $65 million in collections for 
child support from Social Security payments.
    CBO estimates that the additional collections under section 
308 would be only one-half of the potential $65 million because 
of several factors. First, some of this money might be 
collected anyway through other enforcement tools, such as 
offsets currently applied to federal tax refunds. Second, 
noncustodial parents are younger than average DI recipients, 
and younger men receive lower DI benefits than older men. 
Third, children of DI recipients are entitled to a benefit from 
Social Security that averages more than $2,000 annually. Some 
states consider these benefits in determining the amount of 
child support owed by the noncustodial parent. Fourth, in some 
cases the estimated offset would exceed the amount of arrears 
owed. Finally, CBO expects a small percentage of all non-
custodial parents owing past-due support would slip through the 
administrative process.
    The provision would be effective 18 months after enactment, 
so that full savings would not be realized until 2008. As DI 
benefits rise over time, federal receipts under these 
provisions would climb from $3 million in 2007 to $6 million in 
2015, totaling $43 million over the 2007-2015 period.
    Maintenance of Technical Assistance and Federal Parent 
Locator Service Funding. Current law allows the Secretary to 
use 3 percent of the federal share of child support collections 
to fund technical assistance efforts and to operate the federal 
parent-locator service. Sections 308 and 309 would set a 
minimum funding level for those purposes equal to the 2002 
level of $37 million. Because CBO projects that such payments 
will fall below $37 million in 2005-2007 under the current 
formula, this provision would increase payments by $5 million 
over that period.
    Seizure of Assets Held by Multistate Financial 
Institutions. Undercurrent law, HHS matches lists of 
noncustodial parents who owe child support arrears against data 
from financial institutions to identify assets that might be 
seized to pay overdue child support. HHS forwards any matches 
to states so that states can pursue collection. On average, 
states make a collection in 7 percent of cases with a match. 
The reported performance of states varies widely, from 50 
percent of cases to less than 1 percent. States' collection 
rates are low on average for a variety of reasons. In some 
cases, multistate financial institutions will not honor a 
seizure by a state unless the institution has branch offices in 
the state. Also, some states have policies of pursuing matches 
only when a large financial asset is identified or only when 
the arrearage is longstanding or no current payments are being 
made.
    Section 310 would give the federal government the authority 
to act on behalf of states to seize financial assets for the 
purpose of paying child support. The new authority would 
resolve problems of jurisdiction in cases where a state is 
pursuing an asset in a different state. Also, the federal 
government plans to pursue collections in a higher percentage 
of cases.
    Currently, HHS compares a list of about 5 million cases 
with arrears with data from financial institutions and 
identifies potential financial assets in more than 1.7 million 
cases. Some of those cases are later found to be false matches 
or are uncollectible for other reasons. Based on information 
from child-support administrators and policy experts, CBO 
expects that, when this provision is fully implemented, the 
federal government would seize assets 20 percent of the time a 
potential asset is identified, up from 7 percent. Based on data 
from HHS, CBO expects the average collection would be $500 per 
seizure, down from $730 per seizure under current law. (The 
average seizure would go down because the federal government 
would be pursuing a broader set of cases, many of which would 
have lower amounts of assets available.) CBO expects that the 
policy would take some time to implement and would not be fully 
effective until 2009. We estimate that the policy would result 
in new collections of $26 million in 2007 and $742 million over 
the 2007-2015 period. CBO assumes the same share of those 
payments would be on behalf of current and former welfare 
families as in the overall program--10 percent--and that amount 
would be retained by the government as reimbursement for 
welfare benefits. The federal share of such collections would 
be $39 million over the 2006-2015 period. CBO estimates that 
implementing the program would raise administrative costs by 
about $3 million in each of years 2006 and 2007. The federal 
share of those costs would total $4 million over the two years.
    Comparison With Insurance Data. Section 311 would authorize 
the Secretary to compare information on noncustodial parents 
who owe past-due child support with information maintained by 
insurers concerning insurance payments and to furnish any 
information resulting from the match to state agencies to 
pursue payments to pay overdue child support. States 
representing about one-third of child support collections 
currently participate in an existing system operated by the 
Child Support Lien Network that performs a similar function. 
CBO expects that eventually, even without federal intervention, 
about half of the states would participate. Under the proposal, 
CBO expects all states would participate by 2009. Based on data 
for the existing program, CBO expects that collections would 
increase by $15 million annually when fully phased in and that 
half of those collections would be on behalf of current or 
former TANF families. The federal share of collections would be 
$30 million over the 2008-2015 period. CBO estimates that 
implementing the program would raise administrative costs by 
about $3 million in each of years 2006 and 2007. The federal 
share of those costs would total $4 million over the two years.
    Grants to States for Access and Visitation. The 1996 
welfare law authorized grants to states of $10 million annually 
to facilitate noncustodial parents' access to and visitation of 
their children. Section 318 would increase funding to $12 
million in 2006, $14 million in 2007, $16 million in 2008, and 
$20 million in 2009 and in subsequent years. The new funding 
would result in increased outlays of $82 million over the 2006-
2015 period.
    Penalties for Noncompliance. Section 319 would change the 
statutory requirements concerning when states pay penalties for 
failure to meet performance standards in the child support 
program. It also would forgive penalties for certain states 
that failed to meet such standards in 2001, but did so in 2002 
or 2003. CBO expects that the change in timing of penalties 
would not affect the federal budget; the Secretary of HHS is 
generally already operating on the revised schedule. CBO 
estimates that half a dozen states would qualify for penalty 
forgiveness totaling $4 million in 2006.
    Requirement To Seek Medical Support From Either Parent. 
Currently, about half the states explore both parents' ability 
to provide health insurance when setting a child support order. 
Section 320 would require all states to look to either parent 
or both parents to provide health insurance for their child. 
The policy would apply to child support orders that are issued 
or amended after enactment, so it would take effect gradually. 
Based on national survey data, CBO expects that the policy 
would result in additional private health insurance coverage 
for children and that without that coverage some of those 
children would receive Medicaidbenefits. CBO estimates that 
private health coverage would be provided to nearly 300 children who 
would otherwise receive Medicaid benefits in 2006. That number would 
grow to more than 9,000 by 2015. Based on spending per child in the 
Medicaid program, CBO estimates that implementing this provision would 
reduce costs in the Medicaid program by an insignificant amount in 2006 
and by $57 million over the 2006-2015 period.
    Notice of Loss of Health Coverage. Section 321 would 
require administrators of health plans to notify the child 
support agency when a noncustodial parent providing health 
coverage for a child loses that coverage. CBO expects that the 
child support agency would handle 30,000-50,000 such notices 
each year and that in some cases the child support agency would 
take action to secure new health coverage for the children. CBO 
estimates that implementing the provision would raise 
administrative costs in the child support program by $1 million 
to $2 million annually.
    Make Texas Waiver Permanent. Under current law, families 
who receive government assistance may automatically receive 
services from the child support agency, while other families 
must apply for services. The state of Texas currently has a 
waiver of the requirement for a written application for child 
support services for families not receiving assistance. Texas' 
waiver is scheduled to expire in mid-2006, but could be renewed 
by the Secretary. Section 322 would extend the waiver 
permanently.
    Texas currently operates under the waiver in four counties 
and plans to expand to additional counties. In general, new 
cases are added as new orders are issued, so that the child 
support caseload grows gradually in the participating counties. 
CBO estimates that each new case would increase the federal 
share of administrative costs by about $150 in 2010 and that 
under this provision, services would be provided for 65,000 
cases in that year. CBO estimates that extending the waiver 
would result in a higher federal share of administrative costs 
totaling $2 million in 2006 and $112 million over the 2006-2012 
period.
    For its baseline projections, CBO estimates that there is a 
50 percent chance that the Secretary will allow the waiver to 
continue, even without this legislation. So, relative to CBO's 
baseline, the cost of implementing this provision is only half 
of the total cost of extending the waiver. CBO estimates that 
implementing this provision would increase outlays by $1 
million in 2006 and by $57 million over the 2006-2015 period.
    Effect of Title III Provisions on Technical Assistance 
Funds. Several provisions of Title III would affect the amount 
of child support collections the federal government retains. 
Provisions allowing states to share more of those collections 
with families lower the federal share of collections. New 
enforcement mechanisms, such as seizing more financial assets 
or insurance payments, would boost the federal share. The net 
effect of all the provisions of title III would be to lower the 
federal share of collections by an increasing amount each year.
    Current law allows the Secretary to use 3 percent of the 
federal share of child support collections for technical 
assistance efforts and to operate the federal parent-locator 
service. A lower federal share of collections would reduce 
funding for those activities. Because a separate provision of 
title III provides that such funding cannot fall below the 2002 
level of $37 million, the lower collections would not affect 
funding until 2010. CBO estimates that implementing title III 
of the bill would lower funding for technical assistance by $1 
million in 2010 and $21 million over the 2010-2015 period.
    Title IV: Child Welfare. Provisions in Title IV would 
increase spending for federally subsidized foster care by $448 
million from 2007-2015, CBO estimates. (see Table 4).

                                              TABLE 4.--DIRECT SPENDING EFFECTS OF TITLE IV: CHILD WELFARE
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                              2005     2006     2007     2008     2009     2010     2011     2012     2013     2014     2015   2005-2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Disregard of Certain Payments to Puerto
 Rico:
    Estimated Budget Authority............        0        0        6        6        6        6        0        0        0        0        0         25
    Estimated Outlays.....................        0        0        6        6        6        6        0        0        0        0        0         25
Tribal Foster Care:
     Estimated Budget Authority...........        0        0       16       26       37       49       56       59       61       64       66        434
    Estimated Outlays.....................        0        0       13       25       35       47       55       58       61       63       66        423
Total, Title IV:
    Estimated Budget Authority............        0        0       22       32       43       55       56       59       61       64       66        459
    Estimated Outlays.....................        0        0       19       31       41       53       55       58       61       63       66       448
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Components may not sum to totals because of rounding.

    This title would extend a program of demonstration projects 
related to child welfare programs. As of May 2004, 12 states 
had active demonstration projects testing the efficiency of 
innovations in child welfare, such as subsidized guardianship. 
The demonstration projects are required to be cost-neutral to 
the federal government. However, it is possible that the 
demonstrations would lead to increased costs to the federal 
government because of measurement or methodological errors in 
the cost-neutrality calculation. CBO cannot estimate the likely 
amount of such costs, but based on experience with the 
demonstrations, we expect the impact on the federal budget 
would not be significant.
    Beginning in fiscal year 2007, section 402 would allow 
Puerto Rico to claim more federal matching funds for foster 
care expenses by excluding certain amounts from the limitation 
specified in section 1108 of the Social Security Act. The 
Social Security Act limits totalfederal spending in Puerto Rico 
on certain social service programs, including foster care, to $107 
million in any year. The amount of spending above the limitation would 
be capped at $6.25 million for fiscal years 2007 through 2010. CBO 
estimates this provision would increase outlays by $25 million between 
fiscal years 2007 and 2010.
    Section 403 of the bill would permit tribal entities to 
participate in foster care and adoption assistance programs 
authorized under title IV-E of the Social Security Act, 
effective as of October 1, 2006. Based on information from the 
Indian Child Welfare Association, CBO estimates that this 
provision could allow coverage of between 2,000 and 3,000 
children per year. CBO estimates that this section would 
increase costs to the IV-E programs by $423 million over fiscal 
years 2007 through 2015.
    Title V: Supplemental Security Income. Title V would make 
several changes to the Supplemental Security Income (SSI) 
program. It would require that a portion of adult disability 
determinations receive an additional level of review before 
benefits are awarded. In addition, it would extend the period 
of time that refugees and asylees are eligible to collect 
benefits. Together, these proposals would increase direct 
spending by $72 million in 2006 and decrease direct spending by 
$1.3 billion over the 2006-2015 period, CBO estimates (see 
Table 5).
    Section 501 would require the Social Security 
Administration to conduct reviews of initial decisions to award 
SSI benefits to certain disabled adults. The legislation would 
direct the agency to review at least 25 percent of all 
favorable adult-disability determinations made by state-level 
Disability Determination Service (DDS) offices in 2006. Under 
the legislation, the agency would have to review at least 50 
percent of the adult-disability awards made by DDS offices from 
2007 through 2015.
    CBO anticipates state DDS offices will approve between 
350,000 and 400,000 adult disability applications for SSI 
benefits annually between 2006 and 2015. Based on recent data 
for comparable reviews in the Social Security Disability 
Insurance program, CBO projects that by 2015, more than 20,000 
DDS awards would be overturned as a result of this provision, 
resulting in lower outlays for SSI and Medicaid (in most states 
SSI eligibility automatically confers entitlement to Medicaid 
benefits). CBO estimates that section 501 would reduce SSI 
benefits by $3 million and Medicaid outlays by $5 million in 
2006. Over the 2006-2015 period, CBO estimates this provision 
would lower SSI outlays by $461 million and Medicaid spending 
by $1.1 billion. (The administrative costs for these changes 
are discussed later in the section on spending subject to 
appropriation.)

                                       TABLE 5.--DIRECT SPENDING EFFECTS OF TITLE V: SUPPLEMENTAL SECURITY INCOME
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                              2005     2006     2007     2008     2009     2010     2011     2012     2013     2014     2015   2005-2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pre-effectuation Reviews:
    SSI:
        Estimated Budget Authority........        0       -3      -11      -22      -33      -43      -57      -56      -70      -79      -87       -461
        Estimated Outlays.................        0       -3      -11      -22      -33      -43      -57      -56      -70      -79      -87       -461
    Medicaid:
        Estimated Budget Authority........        0       -5      -22      -44      -68      -94     -120     -148     -179     -209     -244     -1,133
        Estimated Outlays.................        0       -5      -22      -44      -68      -94     -120     -148     -179     -209     -244     -1,133
Extended Time Limits for SSI Refugees:
    SSI:
        Estimated Budget Authority........        0       41       49       55        0        0        0        0        0        0        0        145
        Estimated Outlays.................        0       41       49       55        0        0        0        0        0        0        0        145
    Medicaid:
        Estimated Budget Authority........        0       39       51       54        0        0        0        0        0        0        0        144
        Estimated Outlays.................        0       39       51       54        0        0        0        0        0        0        0        144
Total Changes in Title V:
    Estimated Budget Authority............        0       72       67       43     -101     -137     -177     -204     -249     -288     -331     -1,305
    Estimated Outlays.....................        0       72       67       43     -101     -137     -177     -204     -249     -288     -331     -1,305
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 502 would allow refugees and asylees who are 
receiving SSI benefits and lawfully entered the country after 
August 22, 1996, to continue receiving benefits for an 
additional two years. Under current law, refugees and asylees 
who entered the country after that date are eligible to receive 
SSI benefits for a period of up to seven years from the date 
they entered the United States. The additional period of 
benefits would begin immediately after the bill is enacted and 
would last through September 30, 2008, at which point the 
seven-year time limit would again apply to all recipients.
    Based on information from SSA, CBO estimates that about 
4,600 refugees and asylees lose SSI eligibility each year 
because they exceed the seven-year time limit. Extending the 
time limit would provide up to nine years of eligibility for 
these beneficiaries through the end of 2008. Taking into 
account the rates at which people become naturalized citizens 
(and are no longer subject to the time limit) or exit the 
program for other reasons, CBO estimates section 502 would 
increase outlays for SSI benefits by $41 million and Medicaid 
outlays by $39 million in 2006. Over the 2006-2008 period, 
spending on SSI would increase by $145 million and Medicaid 
spending would increase by $144.
    Title VI: Transitional Medical Assistance. Title VI would 
make several changes to Medicaid and the State Children's 
Health Insurance Program (SCHIP). Effective October 1, 2005, 
the bill would extend through 2010 the requirement that state 
Medicaid programs provide transitional medical assistance (TMA) 
to certain Medicaid beneficiaries (usually former welfare 
recipients) who otherwise would be ineligible because they have 
returned to work and have increased earnings. Title VI also 
would allow states to simplify aspects of TMA administration. 
Overall, CBO estimates that enacting title VI would increase 
direct spending by $278 million in 2006 and by $4.9 billion 
over the 2006-2015 period (see Table 6).
    Extension of Transitional Medical Assistance. State 
Medicaid programs are required to provide temporary Medicaid 
coverage, known as transitional medical assistance, for certain 
individuals (usually former TANF recipients) and their 
dependents who otherwise would lose coverage because of 
increased earnings. States currently are required to provide 
TMA to welfare-related beneficiaries who lose their eligibility 
prior to June 30, 2005. Section 601 of the bill would extend 
the requirement from September 30, 2005, through September 30, 
2010. (Section 702 of the bill would extend the requirement 
through September 30, 2005.)
    CBO estimates that this provision would increase federal 
Medicaid outlays by $267 million in 2006 and by $4.1 billion 
over the 2006-2015 period. The budgetary effects of the 
extension would continue beyond 2010 because families who 
qualify for TMA would be entitled to up to 12 months of 
additional eligibility, even if that eligibility runs beyond 
September 30, 2010. Moreover, some states provide more than 12 
months of TMA through Medicaid waivers; families living in 
those states could remain eligible through 2012.
    Without S. 667, CBO anticipates that some of the families 
leaving welfare between 2006 and 2010 would have incomes high 
enough to make their children ineligible for Medicaid, and that 
some of the children in those families would enroll in SCHIP 
instead. By extending TMA, the bill would make those children 
eligible for Medicaid. Because children who are eligible for 
Medicaid cannot receive SCHIP benefits, the bill would lead to 
savings in the SCHIP program.
    CBO estimates that the bill would reduce federal SCHIP 
outlays by a total of $36 million over the 2006-2010 period. 
Because states generally have three years to spend their SCHIP 
allotments, those savings would free up funds that could be 
spent on benefits in later years. CBO estimates that such 
spending would amount to $31 million over the 2011-2015 period.
    Optional TMA Simplifications. Section 601 also would allow 
states to waive or relax various requirements that currently 
apply to TMA. In particular, the bill would allow states to 
expand TMA eligibility to individuals who have not been 
eligible for Medicaid for at least three of the previous six 
months (a requirement under current law), provide up to 12 
additional months of TMA eligibility, and eliminate some or all 
of the requirements for TMA recipients to report their incomes 
periodically.

                                     TABLE 6.--DIRECT SPENDING EFFECTS OF TITLE VI: TRANSITIONAL MEDICAL ASSISTANCE
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   By fiscal year, in millions of dollars--
                                                    ----------------------------------------------------------------------------------------------------
                                                       2006     2007     2008     2009     2010     2011     2012     2013     2014     2015   2006-2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Extension of TMA through 2010:
    Medicaid:
        Estimated Budget Authority.................      267      696      776      833      892      576       36       -2      -11       -2      4,061
        Estimated Outlays..........................      267      696      776      833      892      576       36       -2      -11       -2      4,061
    SCHIP:
        Budget Authority...........................        0        0        0        0        0        0        0        0        0        0          0
        Estimated Outlays..........................       -7      -15       -8       -3       -3        1        *        5       21        4         -5
Optional TMA Simplifications:
    Medicaid:
        Estimated Budget Authority.................       19       82      130      182      228      181        6        *       -2        *        826
        Estimated Outlays..........................       19       82      130      182      228      181        6        *       -2        *        826
    SCHIP:
        Budget Authority...........................        0        0        0        0        0        0        0        0        0        0          0
        Estimated Outlays..........................        0       -2       -2       -1       -1       -1        1        *        4        1         -1
Total Changes in Title VI:
    Estimated Budget Authority.....................      285      778      906    1,015    1,120      757       41       -2      -13       -2      4,885
    Estimated Outlays..............................      278      761      897    1,011    1,116      756       42        3       12        3      4,879
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = costs or savings of less than $500,000.
Notes.--TMA = transitional medical assistance, SCHIP = State Children's Health Insurance Program

    CBO anticipates that those provisions would boost federal 
Medicaid spending by $19 million in 2006 and by $826 million 
over the 2006-2015 period. Most of those costs would stem from 
the elimination of the income-reporting requirements. States 
already have the flexibility under current law to effectively 
waive the three-out-of-six months requirement or to provide 
more than 12 months of TMA by disregarding some or all of an 
individual's income when determining eligibility.
    CBO also estimates that the effect of those provisions 
would have a slight impact on SCHIP, decreasing outlays by $1 
million over the 2006-2015 period. By relaxing TMA rules, the 
bill would make some children newly eligible for Medicaid and 
therefore ineligible for SCHIP.
    Title VII: Effective Date. Title VII would extend several 
provisions of law through September 30, 2005, including 
authorizations of the Temporary Assistance for Needy Families 
(TANF), child care entitlement, and abstinence education 
programs, and eligibility for transitional medical assistance 
(TMA) under Medicaid. CBO estimates that Title VII would 
increase direct spending, relative to the baseline, by $45 
million in 2005, by $238 million over the 2005-2010 and by $239 
million over the 2005-2015 periods (see Table 7).

                                             TABLE 7.--DIRECT SPENDING EFFECTS OF TITLE VII: EFFECTIVE DATE
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                              2005     2006     2007     2008     2009     2010     2011     2012     2013     2014     2015   2005-2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
TANF Supplemental Grants:
    Budget Authority......................       64        0        0        0        0        0        0        0        0        0        0         64
    Estimated Outlays.....................       41       15        8        0        0        0        0        0        0        0        0         64
Abstinence Education Grants:
    Budget Authority......................       13        0        0        0        0        0        0        0        0        0        0         13
    Estimated Outlays.....................        4        5        2        1        1        0        0        0        0        0        0         11
TANF Research Funding:
    Budget Authority......................        3        0        0        0        0        0        0        0        0        0        0          3
    Estimated Outlays.....................        *        1        2        0        0        0        0        0        0        0        0          3
Child Welfare Research Funding:
    Budget Authority......................        1        0        0        0        0        0        0        0        0        0        0          1
    Estimated Outlays.....................        *        *        1        0        0        0        0        0        0        0        0          1
TMA:
    Medicaid:
        Estimated Budget Authority........        0      148       13        *        *        *        *        *        *        *        *        161
        Estimated Outlays.................        0      148       13        *        *        *        *        *        *        *        *        161
    SCHIP:
        Estimated Budget Authority........        0        0        0        0        0        0        0        0        0        0        0          0
        Estimated Outlays.................        0       -4        *        1        1        *        *        *        *        1        *         -1
Total Changes in Title VII:
    Estimated Budget Authority............       81      148       13        *        *        *        *        *        *        *        *        242
    Estimated Outlays.....................       45      165       28        2        2        *        *        *        *        *        *       239
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = costs or savings of less than $500,000.
Notes.--Components may not sum to total because of rounding

    TANF, Child Care, and Abstinence Education. The bill would 
extend the TANF and child care entitlement programs through 
September 30, 2005. Those programs are scheduled to expire on 
June 30, 2005. The extension would provide funding at the 2004 
level--totaling about $3.3 billion for TANF and $400 million 
for child care under the procedures the Office of Management 
and Budget uses for allocating funds for those programs. The 
extension would have no cost relative to CBO's baseline because 
it already assumes annual funding for those programs at the 
2004 level in accordance with the rules set forth in the 
Deficit Control Act.
    The bill would also fund TANF supplemental grants at their 
2004 level of $64 million and would extend funding for two 
research grants totaling $4 million through September 30, 2005. 
It would appropriate $12.5 million for the abstinence education 
program.
    Transitional Medical Assistance. Title VII also would 
extend through September 30, 2005, the requirement that state 
Medicaid programs provide transitional medical assistance to 
certain beneficiaries--usually former TANF recipients--who 
would otherwise lose eligibility because of increased earnings. 
This requirement is set to expire on June 30, 2005.
    CBO estimates that the extension of TMA would have no 
budgetary impact in 2005, but would increase federal Medicaid 
spending by $148 million in 2006 and $161 million over the 
2006-2015 period. The extension would not affect spending in 
2005 because families who qualify for TMA are already eligible 
for four months of additional eligibility under a separate 
provision of Medicaid law. The extension also would decrease 
spending in the State Children's Health Insurance Program by $1 
million over the 2005-2015 period.

                   SPENDING SUBJECT TO APPROPRIATION

    S. 667 would establish several new grant programs that 
would be funded through annual appropriations. Further, it 
would increase the cost of administering the SSI program by 
requiring the Social Security Administration to conduct 
additional reviews of SSI applications. Assuming appropriation 
of the authorized amounts, CBO estimates that implementing the 
legislation would cost $41 million in 2006 and $1.7 billion 
over the 2006-2015 period (see Table 8). Estimated outlays are 
based on historical spending patterns for social service grant 
programs, unless otherwise noted.
    Domestic Violence Prevention Grants. Section 103 would 
authorize appropriations of $10 million annually through 2010 
for the Secretary of HHS to develop and implement a program to 
address domestic violence as a barrier to healthy 
relationships, marriage, and economic security. CBO estimates 
implementing the program would cost $1 million in 2006 and $50 
million over the 2006-2012 period. Section 114 would authorize 
an additional $20 million annually through 2010 for the 
Secretary to award matching grants to states, tribes, and 
nonprofit organizations to operate programs to reduce domestic 
violence. CBO estimates implementing the program would cost $2 
million in 2006 and $100 million over the 10-year period.
    Fatherhood Grants. Section 118 would establish new grant 
programs to promote responsible fatherhood and would authorize 
appropriations of $26 million annually over the 2006-2010 
period. (Section 118 appropriates an additional $50 million 
annually in direct spending.) CBO estimates implementing the 
programs would cost $4 million in 2006 and $130 million over 
the 2006-2012 period.
    Grants To Capitalize and Develop Sustainable Social 
Services. Section 119 would authorize appropriations of $40 
million each year over the 2006-2010 period to make grants for 
the purpose of capitalizing and developing sustainable social 
services. Grantees would develop programs that would generate 
their own sources of revenue while assisting TANF recipients. 
CBO estimates that implementing this provision would increase 
outlays by $4 million in 2006 and by $200 million over the 
2006-2013 period.

                                                TABLE 8.--ESTIMATED COSTS FOR NEW DISCRETIONARY SPENDING
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                              2005     2006     2007     2008     2009     2010     2011     2012     2013     2014     2015   2005-2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Title I: TANF:
    Best Practices for Addressing Domestic
     Violence Grants:
        Authorization Level...............        0       10       10       10       10       10        0        0        0        0        0         50
        Estimated Outlays.................        0        1        6       11       10        8        9        5        0        0        0         50
    Domestic Violence Prevention Grants:
        Authorization Level...............        0       20       20       20       20       20        0        0        0        0        0        100
        Estimated Outlays.................        0        2       12       22       20       16       18       10        0        0        0        100
    Fatherhood Grants:
        Authorization Level...............        0       26       26       26       26       26        0        0        0        0        0        130
        Estimated Outlays.................        0        4       18       29       28       26       20        5        0        0        0        130
    Social Services Capitalization Grants:
        Authorization Level...............        0       40       40       40       40       40        0        0        0        0        0        200
        Estimated Outlays.................        0        4       24       43       40       34       35       18        2        0        0        200
    Car Ownership Grants:
        Authorization Level...............        0       25       25       25       25       25        0        0        0        0        0        125
        Estimated Outlays.................        0        3       15       27       25       21       22       11        1        0        0        125
    Transitional Jobs Grants:
        Authorization Level...............        0      200      200      200      200      200        0        0        0        0        0      1,000
        Estimated Outlays.................        0       20      120      216      200      168      176       90       10        0        0      1,000
          Subtotal Title I:
            Authorization Level...........        0      321      321      321      321      321        0        0        0        0        0      1,605
            Estimated Outlays.............        0       34      195      348      323      273      280      139       13        0        0      1,605
Title V: Supplemental Security Income:
    Administrative Costs of SSI Pre-
     effectuation Revenues:
        Estimated Authorization Level.....        0        8       II       14       15       15       16       16       17       17       18        147
        Estimated Outlays.................        0        7       10       13       15       15       16       16       17       17       18        144
          Total Changes:
            Estimated Authorization Level.        0      329      332      335      336      336       16       16       17       17       18      1,752
            Estimated Outlays.............        0       41      205      361      338      288      296      155       30       17       18      1,749
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Grants for Car Ownership. Section 119 would authorize the 
appropriation of $25 million each year through 2010 for a 
program of grants to states, Indian tribes, localities, and 
nonprofit organizations to assist low-income families with 
children in buying automobiles.
    The program is designed to facilitate employment 
opportunities and access to training by providing low-income 
families with more reliable transportation. CBO estimates that 
the program would cost $3 million in 2006 and $125 million over 
the 2006-2013 period.
    Transitional Jobs Grants. Section 119 would authorize the 
appropriation of $200 million each year through 2010 for a 
program of grants to states, Indian tribes, localities, private 
organizations, and employers to promote job advancement and 
wage growth for low-wage workers. The program would primarily 
serve current and former recipients of TANF benefits, 
individuals at risk of needing TANF benefits, individuals with 
disabilities and noncustodial parents who have difficulty in 
paying child support. CBO estimates that implementing this 
program would cost $20 million in 2006 and $1 billion over the 
2006-2013 period.
    SSI Pre-effectuation Reviews. Section 501 would require the 
Social Security Administration to conduct reviews on initial 
decisions to award SSI benefits to certain disabled adults. CBO 
estimates the provision would increase the number of non-
concurrent SSI determinations reviewed each year by SSA by 
about 135,000. Based on SSA's costs forconducting similar 
reviews in the Disability Insurance program, we estimate this would 
cause SSA's administrative costs, which are subject to appropriation, 
to increase by $8 million in 2006 and $147 million over the next 10 
years.
    Estimated impact on state, local, and tribal governments: 
The bill would extend funding for a number of state programs, 
most notably TANF, and establish new grants that target a 
variety of worker and family programs. The bill also would 
place new requirements and limitations on state programs as 
conditions for receiving federal assistance. Preemptions and 
some other requirements in the bill would be intergovernmental 
mandates as defined in UMRA. The limit on amounts that states 
could retain for state child support enforcement programs also 
could be an intergovernmental mandate because of the narrow 
focus of and limited flexibility in that program.

                                MANDATES

    Generally, conditions of federal assistance are not 
considered intergovernmental mandates as defined in UMRA. 
However, UMRA makes special provisions for identifying 
intergovernmental mandates in provisions affecting large 
entitlement grant programs (those that provide more than $500 
million annually to state, local, or tribal governments), 
including TANF, Medicaid, and child support enforcement. 
Specifically, if a legislative proposal would increase the 
stringency of conditions of assistance, or cap or decrease the 
amount of federal funding for the program, such a change would 
be considered an intergovernmental mandate if the state, local, 
or tribal government lacks authority to amend its financial or 
programmatic responsibilities to continue providing required 
services. The TANF and Medicaid programs allow states 
significant flexibility to alter their programs and accommodate 
new requirements. However, the child support enforcement 
program is narrower in scope; its primary goal is to collect 
and redistribute child support payments. This narrower focus 
does not afford states as much flexibility as other large 
entitlement programs, so reducing the amounts that states may 
retain from child support collections would be an 
intergovernmental mandate, as defined in UMRA, for some states. 
CBO estimates, however, that the cost of the intergovernmental 
mandates would not exceed the threshold established in UMRA 
($62 million in 2005, adjusted annually for inflation).
    Child Support Enforcement. S. 667 would reduce the amounts 
that states may retain from child support collections in order 
to reimburse themselves for public assistance spending, in 
particular for TANF. As a result, states would lose a total of 
about $50 million in 2010 and about $325 million over the 2010-
2015 period, CBO estimates. Retained child support collections 
are intended to reimburse states for their portion of spending 
for public assistance programs. If states are able to carry out 
their responsibilities more efficiently or pare back their 
child support activities while maintaining a basic level of 
compliance, the aggregate costs of the mandate could be 
reduced.
    States also would be required to conduct mandatory reviews 
of child support cases every three years, but this requirement 
is expected to result in net savings to states of about $56 
million in the child support program and $44 million in 
Medicaid over the 2006-2015 period.
    Preemptions. The bill contains two preemptions of state law 
that are intergovernmental mandates as defined in UMRA. The 
bill would preempt state laws that could prevent an individual 
from contesting liens or levies on property seized in an effort 
to collect past-due child support. The bill also would protect 
insurers from state liability laws in cases where they have 
shared information with the Secretary of HHS for the purpose of 
identifying individuals that owe past-due child support. 
Neither of these preemptions would result in significant costs 
to state, local, or tribal governments.
    TANF and Medicaid. The TANF program affords states broad 
flexibility to determine eligibility for benefits and to 
structure the programs offered as part of the state's family 
assistance program. Changes to the program embodied in S. 667 
could alter the way in which states administer the program and 
provide benefits and could increase costs to states. However, 
states could make other changes of their own, adjusting 
eligibility criteria or the structure of programs to avoid or 
offset such costs. Because the TANF program affords states such 
broad flexibility, new requirements generally are not 
considered intergovernmental mandates as defined by UMRA. 
Similarly, a large component of the Medicaid program includes 
optional services that states may alter to accommodate new 
requirements and to offset additional costs in that program.

                             OTHER IMPACTS

    Benefits. Many provisions of the bill would benefit state 
assistance programs by increasing funding, broadening 
flexibility, or providing new grants.
    TANF. S. 667 would reauthorize family assistance grants 
through 2010 and continue supplemental grants for states that 
historically have had rising populations or that provided 
relatively low levels of benefits. The bill would provide more 
than $80 billion over the 2006-2010 period for family 
assistance. In addition, CBO estimates that state and tribal 
governments would receive a total of $1.3 billion for 
supplemental grants over the 2006-2011 period.
    Increased Flexibility. The bill would allow states to use 
unspent funds from prior years to pay for services in addition 
to benefits, and it would increase the portion of TANF funds 
that may be specifically used for SSBG purposes from 4.25 
percent to 10 percent. States also could use a portion of TANF 
funds for projects that foster access to jobs or reverse 
commuting.
    Child Care. S. 667 would provide nearly $14 billion over 
the 2005-2010 period by extending the current child care grant 
program, and would increase funding for child care grants by an 
additional $1 billion over that period. It also would 
appropriate $5 billion in supplemental child care grants over 
the 2006-2010 period.
    Social Services Block Grant. S. 667 would increase funding 
for Social Services Block Grants by $1 billion over the 2006-
2010 period.
    Healthy Marriage Promotion. S. 667 would repeal bonus 
grants for the reduction of illegitimacy, which were available 
to up to five states through 2003, and replace them with grants 
of $100 million annually over the 2006-2010 period for 
developing and implementing innovative programs to promote and 
support healthy, two-parent married families. The new grants 
would be available to states, Indian tribes, and tribal 
organizations. Grants could be used for a variety of education 
and media activities associated with the core goals, but they 
also would have to address domestic violence and ensure that 
participation in any related programs is voluntary. State 
spending on related programs for otherwise non-eligible 
families could be counted toward a state's maintenance-of-
effort requirements in TANF.
    Domestic Violence Prevention and Child Well-Being Grants. 
The bill would authorize appropriations totaling $30 million a 
year over the 2006-2010 period for two new grant programs aimed 
at developing strategies and best practices and providing 
training related to the prevention of domestic violence. The 
bill would appropriate $10 million annually over the same 
period for contracts, interagency agreements or grants for the 
development of comprehensive indicators of the well-being of 
children.
    Fatherhood Grants. S. 667 would authorize appropriations of 
$76 million annually over the 2006-2010 period (of which $50 
million would also be appropriated) for a variety of grant 
programs to promote fatherhood, responsible parenting, and 
marriage, either directly or through educational and media 
campaigns.
    Abstinence Education. The bill would provide $50 million 
annually for abstinence education grants over the 2006-2010 
period. Any unspent funds allocated to individual states would 
be periodically reallocated by the Secretary.
    Tribal Assistance. S. 667 would reauthorize a program that 
currently provides $7.6 million annually for grants to Indian 
tribes and tribal organizations for increasing work 
opportunities. It also would increase appropriations for those 
grants to $12.6 million annually over the 2006-2010 period. 
Finally, the bill would appropriate $80 million over the 2006-
2010 period for grants that could be used for improving the 
infrastructure of human services facilities, developing 
economic programs, and acquiring technical assistance.
    Access and Visitation. Current law provides $10 million 
annually for access and visitation program grants. S. 667 would 
increase grants to states and Indian tribes for such programs 
by $32 million over the 2006-2010 period. The bill also would 
increase the minimum state allotment, increasing it from 
$120,000 in 2006 (up from $100,000 in current law) to $180,000 
in 2009 and thereafter.
    Grants To Support Work Activities. The bill would authorize 
appropriations of $40 million annually over the 2006-2010 
period for grants to capitalize and develop sustainable social 
services that help move recipients of assistance into work 
activities. The bill also would authorize appropriations of $25 
million annually over the same period for grants to state, 
local, tribal, and non-profit entities for programs that help 
low-income families with children acquire and maintain 
dependable cars and insurance. Finally, the bill would 
authorize appropriations of $200 million annually over the 
2006-2010 period for grants to public and private entities that 
promote links among businesses to provide training, create 
transitional work opportunities, and increase the wages of 
individuals who have limited English proficiency or other 
barriers to employment.
    Extension of Texas Waiver. The bill would extend a waiver 
that allows Texas to automatically enroll people with child 
support orders in the child support enforcement program. CBO 
estimates that the state would receive about $16 million over 
the 2006-2010 period for administrative expenses.
    Foster Care Funds for Puerto Rico. S. 667 also would allow 
Puerto Rico to claim more federal matching funds for foster 
care expenses. As a result, CBO estimates that Puerto Rico 
would receive an additional $25 million over the 2007-2010 
period.
    Other Costs and Additional Requirements. Some provisions of 
the bill, while not intergovernmental mandates as defined in 
UMRA, would place additional conditions on state, local, and 
tribal governments or would result in additional spending in 
order to meet federal matching requirements.
    Medicaid. The bill would require states to continue 
providing transitional medical assistance through fiscal year 
2010. TMA provides benefits to certain individuals and their 
dependents who otherwise would lose coverage because of 
increased earnings. The bill also would allow states to 
implement simplifications of the TMA system, enabling them to 
provide TMA foran additional year in some cases and easing the 
qualification requirements. CBO estimates that the total net effect of 
these provisions would be additional state spending of $3.8 billion for 
Medicaid and savings of about $5 million for SCHIP over the 2006-2010 
period.
    Bonus Grants Change to Employment Basis. Under current law, 
states are eligible to receive bonus grants totaling up to 5 
percent of their family assistance grant if they are identified 
by the Secretary as a high-performing state in terms of meeting 
the goals of the TANF program. The bill would reduce those 
grants from an average of $200 million annually to $50 million 
annually in each of the years 2006-2008 and to $100 million in 
each of the years 2009-2011. The bill also would change the 
basis of the grant from general performance to a focus on 
workplace attachment and advancement. Of the total amount 
appropriated, 2 percent would be reserved for Indian tribes.
    Work Participation Requirements. The bill would increase 
work participation requirements in the TANF program by 
requiring states to have an increasing percentage of TANF 
recipients participating in work activities while receiving 
cash assistance. It would maintain current penalties for the 
failure to meet those requirements. Those penalties can total 
up to 5 percent of the TANF block grant amount for the first 
failure to meet work requirements and increase with each 
subsequent failure. CBO expects no state would be subject to 
significant financial penalty for failing to meet the new 
requirements.
    The bill would increase the minimum work participation rate 
from 50 percent to 70 percent over a five-year period. To meet 
those requirements, 70 percent of families would have to be 
engaged in work activities by 2010. The bill would eliminate a 
separate requirement in current law that sets even higher 
participation rates for two-parent families. In addition to 
overall participation rates, the bill would increase the 
minimum number of hours a family would need to participate to 
fully count toward the standard from 30 to 34 hours a week. 
However, it would allow partial credit for recipients who 
participate for between 20 and 33 hours. Two-parent families 
would be required to work more hours, but parents with children 
under the age of six would only have to work 24 hours in order 
to meet the requirements. The increase in the number of hours 
of work per week could result in a modest spending increase by 
states and Indian tribes for administration, worker support 
activities, and child care. As the overall participation rates 
increase, states and Indian tribes would have to direct more 
resources toward programs, such as administrative support, 
child care, and worker supervision to comply with the 70 
percent requirement.
    The bill would expand the types of activities that would 
count toward meeting the work participation requirements and 
the allowed exclusions from the calculation of the work 
participation rate.
    To the extent that states find the new work requirements 
difficult to meet, CBO expects they would employ strategies 
such as moving non-working families into separate state 
programs to effectively reduce the new requirements. For 
example, under current law, some states that fail to meet work 
requirements, particularly the higher requirements applying to 
two-parent families, set up separate state programs to serve 
those families. States can count funds they spend in separate 
state programs toward their maintenance-of-effort requirement 
in TANF, but families served under those programs do not count 
in the work participation rate.
    Replacement of Caseload Reduction Credit. Under current 
law, a state's minimum worker participation rate may be reduced 
by the amount that the average number of families receiving 
assistance declines, assuming the reduction is not the result 
of changes in eligibility requirements. The bill would replace 
the caseload reduction credit with an employment credit that 
would be based on the percentage of individuals who no longer 
receive assistance and who are actively working. Former 
recipients who are earning comparably higher salaries would be 
weighted more heavily in calculating the state's employment 
credit. In total, however, the size of any credit would be 
limited to 40 percentage points in 2006, decreasing to 20 
percentage points by 2010. States could opt to have the shift 
in the basis for the credit delayed until October 1, 2008.
    Contingency Fund. S. 667 would alter the formula for 
contingency funds available to states. CBO estimates that those 
changes would result in a loss of funds to states of $12 
million over the 2006-2010 period. The bill also would reserve 
a portion of contingency funds for tribal governments. CBO 
estimates that they would receive an additional $24 million 
over the same period.
    Family Self Sufficiency Plans. The bill would change the 
requirement that states develop individual responsibility plans 
for beneficiaries to a requirement for family self-sufficiency 
plans. States that fail to implement family self-sufficiency 
plans would be subject to the same penalties that currently 
apply to work participation requirements.
    New Requirements. States would have to implement new 
performance targets and comply with a standardized format for 
submitting amendments to state plans and any subsequent state 
plan submissions for TANF programs. Prior to submitting such 
plans or amendments, a state would have to make the proposals 
publicly available and gather public comments. S. 667 also 
would require states to collect and report additional data on 
families enrolled in TANF programs and on those who leave the 
rolls because of ineligibility. The bill would require monthly 
reports on caseload levels and child care, and it would require 
an annual report on how states are achieving their performance 
goals.
    Child Welfare and Foster Care. The bill would allow Indian 
tribes and tribal organizations to operate their own foster 
care programs, with direct reimbursement from the federal 
government. As a result, CBO estimates that more children would 
be covered by foster care and that on a net basis, states and 
Indian tribes would spend about $60 million over the 2006-2010 
period as a result of this option.
    Supplemental Security Income. The bill would extend from 
seven years to nine years the amount of time that an asylee and 
refugee could remain eligible for SSI benefits. Most states 
provide optional supplemental benefits to SSI recipients. 
Assuming they make no changes to their benefit packages, costs 
would increase. CBO has not estimated these additional costs, 
but they would be incurred at the option of the state and would 
only result from benefits provided to an estimated 4,600 people 
over a two-year period. CBO also estimates that Medicaid 
spending would increase; the state portion of those additional 
costs would total about $110 million over the 2006-2010 period.
    States that provide supplemental benefits to SSI recipients 
would realize net savings as a result of additional eligibility 
reviews required by the bill. States would also save about $175 
million over the 2006-2010 period as a result of lower Medicaid 
spending.
    Estimated impact on the private sector: The bill contains a 
private-sector mandate as defined in the Unfunded Mandates 
Reform Act. Section 321 would require the administrator of a 
group health plan to notify a State child support enforcement 
agency under certain circumstances when a child loses health 
care coverage. The cost of this mandate would not exceed the 
threshold established by UMRA ($123 million in 2005, adjusted 
annually for inflation).
    Estimate prepared by: Federal costs: Sheila Dacey--TANF, 
Child Support, and Child Care; Christina Hawley Sadoti--Child 
Welfare; Geoffrey Gerhardt--Supplemental Security Income; 
Jeanne De Sa and Eric Rollins--Medicaid and SCHIP; Kathleen 
FitzGerald--Abstinence Education. Impact on State, Local, and 
Tribal Governments: Leo Lex. Impact on the Private Sector: 
Molly Dahl.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                      VI. CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

SOCIAL SECURITY ACT

           *       *       *       *       *       *       *



TITLE IV--GRANTS TO STATES FOR AID AND SERVICES TO NEEDY FAMILIES WITH 
CHILDREN AND FOR CHILD-WELFARE SERVICES

           *       *       *       *       *       *       *



   PART A--BLOCK GRANTS TO STATES FOR TEMPORARY ASSISTANCE FOR NEEDY 
                                FAMILIES


SEC. 401. PURPOSE.

  (a) In General.--The purpose of this part is to increase the 
flexibility of States in operating a program designed to--
          (1) provide assistance to needy families so that 
        children may be cared for in their own homes or in the 
        homes of relatives;
          (2) end the dependence of needy parents on government 
        benefits by promoting job preparation, work, and 
        marriage;
          (3) prevent and reduce the incidence of out-of-
        wedlock pregnancies and establish annual numerical 
        goals for preventing and reducing the incidence of 
        these pregnancies; and
          (4) encourage the formation and maintenance of [two-
        parent families] healthy 2-parent married families, and 
        encourage responsible fatherhood.
  (b) No Individual Entitlement.--This part shall not be 
interpreted to entitle any individual or family to assistance 
under any State program funded under this part.

SEC. 402. ELIGIBLE STATES; STATE PLAN.

  (a) In General.--As used in this part, the term ``eligible 
State'' means, with respect to a fiscal year, a State that, 
during the 27-month period ending with the close of the 1st 
quarter of the fiscal year, has submitted to the Secretary a 
plan that the Secretary has found includes the following:
          (1) Outline of family assistance program.--
                  (A) General provisions.--A written document 
                that outlines how the State intends to do the 
                following:
                          (i) Conduct a program, designed to 
                        serve all political subdivisions in the 
                        State (not necessarily in a uniform 
                        manner), that provides assistance to 
                        needy families with (or expecting) 
                        children and provides parents with job 
                        preparation, work, and support services 
                        to enable them to leave the program and 
                        become self-sufficient.
                          [(ii) Require a parent or caretaker 
                        receiving assistance under the program 
                        to engage in work (as defined by the 
                        State) once the State determines the 
                        parent or caretaker is ready to engage 
                        in work, or once the parent or 
                        caretaker has received assistance under 
                        the program for 24 months (whether or 
                        not consecutive), whichever is earlier, 
                        consistent with section 407(e)(2).]
                          [(iii) Ensure that parents and 
                        caretakers receiving assistance under 
                        the program engage in work activities 
                        in accordance with section 407.]
                          (ii) Require an adult or minor child 
                        head of household receiving assistance 
                        under the program to engage in work or 
                        alternative self-sufficiency activities 
                        (as defined by the State), consistent 
                        with section 407(e)(2).
                          (iii)(I) Require families receiving 
                        assistance under the program that--
                                  (I) include an adult or minor 
                                child head of household to 
                                engage in activities in 
                                accordance with family self-
                                sufficiency plans developed 
                                pursuant to section 408(b); and
                                  (II) at State option, only 
                                consist of a child or children, 
                                to engage in activities in 
                                accordance with such plans that 
                                specify the supportive services 
                                the State intends to provide 
                                for such families and provide 
                                for regular interaction with 
                                the families but do not require 
                                participation in a work 
                                activity described in section 
                                407(d) (other than paragraph 
                                (11) of such section).
                          (iv) Take such reasonable steps as 
                        the State deems necessary to restrict 
                        the use and disclosure of information 
                        about individuals and families 
                        receiving assistance under the program 
                        attributable to funds provided by the 
                        Federal Government.
                          [(v) Establish goals and take action 
                        to prevent and reduce the incidence of 
                        out-of-wedlock pregnancies, with 
                        special emphasis on teenage 
                        pregnancies, and establish numerical 
                        goals for reducing the illegitimacy 
                        ratio of the State (as defined in 
                        section 403(a)(2)(C)(iii)) for calendar 
                        years 1996 through 2005.]
                          (v) Establish specific measurable 
                        performance objectives for pursuing the 
                        purposes of the program funded under 
                        this part or with qualified State 
                        expenditures (as defined in section 
                        409(a)(7)(B)(i)) as described in 
                        section 401(a), including by--
                                  (I) establishing objectives 
                                (as determined by the State) 
                                after giving consideration to 
                                the criteria used by the 
                                Secretary in establishing 
                                performance targets under 
                                section 403(a)(4)(C) (with 
                                respect to workplace attachment 
                                and advancement), and such 
                                additional criteria related to 
                                other purposes of the program 
                                under this part as described in 
                                section 401(a) as the 
                                Secretary, in consultation with 
                                the National Governors' 
                                Association, the National 
                                Conference of State 
                                Legislatures, and the American 
                                Public Human Services 
                                Association, shall establish; 
                                and
                                  (II) describing the 
                                methodology that the State will 
                                use to measure State 
                                performance in relation to each 
                                such objective.
                          (vi) Describe any strategies and 
                        programs the State is using or plans to 
                        use to address--
                                  (I) employment retention and 
                                advancement for recipients of 
                                assistance under the program, 
                                including placement into high-
                                demand jobs, and whether the 
                                jobs are identified using labor 
                                market information;
                                  (II) efforts to reduce teen 
                                pregnancy;
                                  (III) services for struggling 
                                and noncompliant families, and 
                                for clients with special 
                                problems; and
                                  (IV) program integration, 
                                including the extent to which 
                                employment and training 
                                services under the program are 
                                provided through the One-Stop 
                                delivery system created under 
                                the Workforce Investment Act of 
                                1998, and the extent to which 
                                former recipients of such 
                                assistance have access to 
                                additional core, intensive, or 
                                training services funded 
                                through such Act.
                          [(vi)] (vii) Conduct a program, 
                        designed to reach State and local law 
                        enforcement officials, the education 
                        system, and relevant counseling 
                        services, that provides education and 
                        training on the problem of statutory 
                        rape so that teenage pregnancy 
                        prevention programs may be expanded in 
                        scope to include men.
                          ``(viii) Encourage equitable 
                        treatment of healthy 2-parent married 
                        families under the program referred to 
                        in clause (i).
                  (B) Special provisions.--
                          [(i) The document shall indicate 
                        whether the State intends to treat 
                        families moving into the State from 
                        another State differently than other 
                        families under the program, and if so, 
                        how the State intends to treat such 
                        families under the program.]
                          [(ii)] (i) The document shall 
                        indicate whether the State intends to 
                        provide assistance under the program to 
                        individuals who are not citizens of the 
                        United States, and if so, shall include 
                        an overview of such assistance.
                          [(iii)] (ii) The document shall set 
                        forth objective criteria for the 
                        delivery of benefits and the 
                        determination of eligibility and for 
                        fair and equitable treatment, including 
                        an explanation of how the State will 
                        provide opportunities for recipients 
                        who have been adversely affected to be 
                        heard in a State administrative or 
                        appeal process.
                          (iii) If the State is undertaking any 
                        strategies or programs to engage faith-
                        based organizations in the delivery of 
                        services funded under this part, or 
                        that otherwise relate to section 104 of 
                        the Personal Responsibility and Work 
                        Opportunity Reconciliation Act of 1996, 
                        the document shall describe such 
                        strategies and programs.
                          (iv) The document shall describe 
                        strategies to improve program 
                        management and performance.
                          (v) The document shall include, to 
                        the extent applicable with respect to 
                        each program that provides assistance 
                        that will be funded under this part or 
                        with qualified State expenditures (as 
                        defined in section 409(a)(7)(B)(i)), a 
                        description of--
                                  (I) the applicable financial 
                                and nonfinancial eligibility 
                                rules for assistance provided 
                                under the program, including 
                                income eligibility thresholds, 
                                the treatment of earnings, 
                                asset eligibility rules, and 
                                excluded forms of income;
                                  (II) the amount of assistance 
                                provided to needy families, and 
                                the methodology for determining 
                                assistance amounts; and
                                  (III) the applicable time 
                                limit policies, including the 
                                length of the time limit, 
                                exemption and extension 
                                policies, and procedures for 
                                providing services to families 
                                reaching the time limit and who 
                                have lost assistance due to 
                                time limits.
                          (vi) The document shall set forth the 
                        criteria for applying section 
                        407(c)(6)(E) to an adult recipient or 
                        minor child head of household who is 
                        the parent or caretaker relative for a 
                        child or adult dependent for care.
                          (vii) The document shall describe how 
                        the State informs families receiving 
                        assistance under the State program 
                        funded under this part that do not 
                        include an adult or minor child head of 
                        household of the information required 
                        to be provided to other families under 
                        section 408(b)(2)(G) (relating to work 
                        support and other assistance for which 
                        the family may be eligible).
                          (viii) The document shall describe 
                        how the State will ensure equitable 
                        access to benefits and services 
                        provided under the program for each 
                        member of an Indian tribe or tribal 
                        organization, who is domiciled in the 
                        State and is not eligible for 
                        assistance under a tribal family 
                        assistance plan approved under section 
                        412.
                          [(iv) Not later than 1 year after the 
                        date of enactment of this section, 
                        unless the chief executive officer of 
                        the State opts out of this provision by 
                        notifying the Secretary, a State shall, 
                        consistent with the exception provided 
                        in section 407(e)(2), require a parent 
                        or caretaker receiving assistance under 
                        the program who, after receiving such 
                        assistance for 2 months is not exempt 
                        from work requirements and is not 
                        engaged in work, as determined under 
                        section 407(c), to participate in 
                        community service employment, with 
                        minimum hours per week and tasks to be 
                        determined by the State.]
          (2) Certification that the state will operate a child 
        support enforcement program.--A certification by the 
        chief executive officer of the State that, during the 
        fiscal year, the State will operate a child support 
        enforcement program under the State plan approved under 
        part D.
          (3) Certification that the state will operate a 
        foster care and adoption assistance program.--A 
        certification by the chief executive officer of the 
        State that, during the fiscal year, the State will 
        operate a foster care and adoption assistance program 
        under the State plan approved under part E, and that 
        the State will take such actions as are necessary to 
        ensure that children receiving assistance under such 
        part are eligible for medical assistance under the 
        State plan under title XIX.
          (4) Certification of the administration of the 
        program.--A certification by the chief executive 
        officer of the State specifying which State agency or 
        agencies will administer and supervise the program 
        referred to in paragraph (1) for the fiscal year, which 
        shall include assurances that local and tribal 
        governments and private sector organizations--
                  (A) have been consulted regarding the plan 
                and design of welfare services in the State so 
                that services are provided in a manner 
                appropriate to local and tribal populations; 
                and
                  (B) have had at least 45 days to submit 
                comments on the plan and the design of such 
                services.
          (5) Certification that the state will provide indians 
        with equitable access to assistance.--A certification 
        by the chief executive officer of the State that, 
        during the fiscal year, the State [will provide each 
        member of an Indian tribe, who is domiciled in the 
        State and is not eligible for assistance under a tribal 
        family assistance plan approved under section 412, with 
        equitable access to assistance under the State program 
        funded under this part attributable to funds provided 
        by the Federal Government.]
                  (A) consult with each Indian tribe and tribal 
                organization located within the State regarding 
                the State plan in order to ensure equitable 
                access to benefits and services provided under 
                the plan for any member of such a tribe or 
                organization who is not eligible for assistance 
                under a tribal family assistance plan approved 
                under section 412; and
                  (B) provide each member of an Indian tribe or 
                tribal organization, who is domiciled in the 
                State and is not eligible for assistance under 
                a tribal family assistance plan approved under 
                section 412, with equitable access to 
                assistance under the State program funded under 
                this part attributable to funds provided by the 
                Federal Government.

           *       *       *       *       *       *       *

  [(b) Plan Amendments.--Within 30 days after a State amends a 
plan submitted pursuant to subsection (a), the State shall 
notify the Secretary of the amendment.]
  (b) Procedures for Submitting and Amending State Plans.--
          (1) Standard state plan format.--The Secretary shall, 
        after notice and public comment, develop a proposed 
        Standard State Plan Form to be used by States under 
        subsection (a) and for purposes of filing an amendment 
        to the State plan in accordance with paragraph (5). 
        Such form shall be finalized by the Secretary for use 
        by States not later than 9 months after the date of 
        enactment of the Personal Responsibility and Individual 
        Development for Everyone Act.
          (2) Requirement for completed plan using standard 
        state plan format by fiscal year 2007.--Notwithstanding 
        any other provision of law, each State shall submit a 
        complete State plan, using the Standard State Plan Form 
        developed under paragraph (1), not later than October 
        1, 2006, and all subsequent State plan submissions, 
        including any State plan amendments, shall be made 
        using such form.
          (3) Public notice and comment.--Prior to submitting a 
        State plan to the Secretary under this section, the 
        State shall--
                  (A) make the proposed State plan available to 
                the public through an appropriate State 
                maintained Internet website and through other 
                means as the State determines appropriate;
                  (B) allow for a reasonable public comment 
                period of not less than 45 days; and
                  (C) make comments received concerning such 
                plan or, at the discretion of the State, a 
                summary of the comments received available to 
                the public through such website and through 
                other means as the State determines 
                appropriate.
          (4) Public availability of state plan.--A State shall 
        ensure that the State plan that is in effect for any 
        fiscal year is available to the public through an 
        appropriate State maintained Internet website and 
        through other means as the State determines 
        appropriate.
          (5) Amending the state plan.--A State shall file an 
        amendment to the State plan with the Secretary if the 
        State determines that there has been a material change 
        in any information required to be included in the State 
        plan or any other information that the State has 
        included in the plan, including substantial changes in 
        the use of funding. Prior to submitting an amendment to 
        the State plan to the Secretary, the State shall--
                  (A) make the proposed amendment available to 
                the public as provided for in paragraph (3)(A);
                  (B) allow for a reasonable public comment 
                period of not less than 45 days; and
                  (C) make the comments available as provided 
                for in paragraph (3)(C).
          (6) State option to delay submission of plan.--A 
        State required to submit a State plan under this part 
        during the period that begins on the date of enactment 
        of the Personal Responsibility and Individual 
        Development for Everyone Act and ends on September 30, 
        2006, may wait until October 1, 2006, to submit such 
        plan using the Standard State Plan Form developed under 
        paragraph (1).
  [(c) Public Availability of State Plan Summary.--The State 
shall make available to the public a summary of any plan or 
plan amendment submitted by the State under this section.]

SEC. 403. GRANTS TO STATES.

  (a) Grants.--
          (1) Family assistance grant.--
                  (A) In general.--Each eligible State shall be 
                entitled to receive from the Secretary, for 
                each of fiscal years [1996, 1997, 1998, 1999, 
                2000, 2001, 2002, and 2003] 2006 through 2010, 
                a grant in an amount equal to the State family 
                assistance grant payable to the State for the 
                fiscal year.
                  (B) State family assistance grant.--The State 
                family assistance grant payable to a State for 
                a fiscal year shall be the amount that bears 
                the same ratio to the amount specified in 
                subparagraph (C) of this paragraph as the 
                amount required to be paid to the State under 
                this paragraph for fiscal year 2002 (determined 
                without regard to any reduction pursuant to 
                section 409 or 412(a)(1)) bears to the total 
                amount required to be paid under this paragraph 
                for fiscal year 2002 (as so determined).
                  (C) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated [for 
                fiscal year 2003 $16,566,542,000 for grants 
                under this paragraph] for each of fiscal years 
                2006 through 2010, $16,566,542,000 for grants 
                under this paragraph.
          [(2) Bonus to reward decrease in illegitimacy 
        ratio.--
                  [(A) In general.--Each eligible State shall 
                be entitled to receive from the Secretary a 
                grant for each bonus year.
                  [(B) Amount of grant.--
                          [(i) In general.--If, for a bonus 
                        year, none of the eligible States is 
                        Guam, the Virgin Islands, or American 
                        Samoa, then the amount of the grant 
                        shall be--
                                  [(I) $20,000,000 if there are 
                                5 eligible States; or
                                  [(II) $25,000,000 if there 
                                are fewer than 5 eligible 
                                States.
                          [(ii) Amount if certain territories 
                        are eligible.--If, for a bonus year, 
                        Guam, the Virgin Islands, or American 
                        Samoa is an eligible State, then the 
                        amount of the grant shall be--
                                  [(I) in the case of such a 
                                territory, 25 percent of the 
                                mandatory ceiling amount (as 
                                defined in section 1108(c)(4)) 
                                with respect to the territory; 
                                and
                                  [(II) in the case of a State 
                                that is not such a territory--
                                          [(aa) if there are 5 
                                        eligible States other 
                                        than such territories, 
                                        $20,000,000, minus \1/
                                        5\ of the total amount 
                                        of the grants payable 
                                        under this paragraph to 
                                        such territories for 
                                        the bonus year; or
                                          [(bb) if there are 
                                        fewer than 5 such 
                                        eligible States, 
                                        $25,000,000, or such 
                                        lesser amount as may be 
                                        necessary to ensure 
                                        that the total amount 
                                        of grants payable under 
                                        this paragraph for the 
                                        bonus year does not 
                                        exceed $100,000,000.
                  [(C) Definitions.--As used in this paragraph:
                          [(i) Eligible state.--
                                  [(I) In general.--The term 
                                ``eligible State'' means a 
                                State that the Secretary 
                                determines meets the following 
                                requirements:
                                          [(aa) The State 
                                        demonstrates that the 
                                        illegitimacy ratio of 
                                        the State for the most 
                                        recent 2-year period 
                                        for which such 
                                        information is 
                                        available decreased as 
                                        compared to the 
                                        illegitimacy ratio of 
                                        the State for the 
                                        previous 2-year period, 
                                        and the magnitude of 
                                        the decrease for the 
                                        State for the period is 
                                        not exceeded by the 
                                        magnitude of the 
                                        corresponding decrease 
                                        for 5 or more other 
                                        States for the period. 
                                        In the case of a State 
                                        that is not a territory 
                                        specified in 
                                        subparagraph (B), the 
                                        comparative magnitude 
                                        of the decrease for the 
                                        State shall be 
                                        determined without 
                                        regard to the magnitude 
                                        of the corresponding 
                                        decrease for any such 
                                        territory.
                                          [(bb) The rate of 
                                        induced pregnancy 
                                        terminations in the 
                                        State for the calendar 
                                        year for which the most 
                                        recent data are 
                                        available is less than 
                                        the rate of induced 
                                        pregnancy terminations 
                                        in the State for 
                                        calendar year 1995.
                                  [(II) Disregard of changes in 
                                data due to changed reporting 
                                methods.--In making the 
                                determination required by 
                                subclause (I), the Secretary 
                                shall disregard--
                                          [(aa) any difference 
                                        between the 
                                        illegitimacy ratio of a 
                                        State for a fiscal year 
                                        and the illegitimacy 
                                        ratio of a State for 
                                        fiscal year 1995 which 
                                        is attributable to a 
                                        change in State methods 
                                        of reporting data used 
                                        to calculate the 
                                        illegitimacy ratio; and
                                          [(bb) any difference 
                                        between the rate of 
                                        induced pregnancy 
                                        terminations in a State 
                                        for a calendar year and 
                                        such rate for calendar 
                                        year 1995 which is 
                                        attributable to a 
                                        change in State methods 
                                        of reporting data used 
                                        to calculate such rate.
                          [(ii) Bonus year.--The term ``bonus 
                        year'' means calendar years 1999, 2000, 
                        2001, 2002, and 2003.
                          [(iii) Illegitimacy ratio.--The term 
                        ``illegitimacy ratio'' means, with 
                        respect to a State and a period--
                                  [(I) the number of out-of-
                                wedlock births to mothers 
                                residing in the State that 
                                occurred during the period; 
                                divided by
                                  [(II) the number of births to 
                                mothers residing in the State 
                                that occurred during the 
                                period.
                  [(D) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated for fiscal 
                years 1999 through 2003, such sums as are 
                necessary for grants under this paragraph.]
          (2) Healthy marriage promotion grants.--
                  (A) Authority.--
                          (i) In general.--The Secretary shall 
                        award competitive grants to States and 
                        Indian tribes and tribal organizations 
                        for not more than 50 percent of the 
                        cost of developing and implementing 
                        innovative programs to promote and 
                        support healthy 2-parent married 
                        families.
                          (ii) Use of other tanf funds.--A 
                        State or Indian tribe or tribal 
                        organization with an approved tribal 
                        family assistance plan may use funds 
                        provided under other grants made under 
                        this part for all or part of the 
                        expenditures incurred for the remainder 
                        of the costs described in clause (i). 
                        In the case of a State, any such funds 
                        expended shall not be considered 
                        qualified State expenditures for 
                        purposes of section 409(a)(7).
                  (B) Healthy marriage promotion activities.--
                Funds provided under subparagraph (A) and 
                corresponding State matching funds shall be 
                used to support any of the following programs 
                or activities:
                          (i) Public advertising campaigns on 
                        the value of marriage and the skills 
                        needed to increase marital stability 
                        and health.
                          (ii) Education in high schools on the 
                        importance of healthy marriages and the 
                        characteristics of other healthy 
                        relationships experienced throughout 
                        life, including education on the 
                        importance of grounding all 
                        relationships in mutual respect and how 
                        earlier healthy relationships are the 
                        building blocks for later healthy 
                        marital relationships.
                          (iii) Marriage education, marriage 
                        skills, and relationship skills 
                        programs, that may include parenting 
                        skills, financial management, conflict 
                        resolution, and job and career 
                        advancement, for non-married pregnant 
                        women, non-married expectant fathers, 
                        and non-married recent parents.
                          (iv) Pre-marital education and 
                        marriage skills training for engaged 
                        couples and for couples or individuals 
                        interested in marriage.
                          (v) Marriage enhancement and marriage 
                        skills training programs for married 
                        couples.
                          (vi) Divorce reduction programs that 
                        teach relationship skills.
                          (vii) Marriage mentoring programs 
                        which use married couples as role 
                        models and mentors.
                          (viii) Programs to reduce the 
                        disincentives to marriage in means-
                        tested aid programs, if offered in 
                        conjunction with any activity described 
                        in this subparagraph.
                  (C) Voluntary participation.--
                          (i) In general.--Participation in 
                        programs or activities described in any 
                        of clauses (iii) through (vii) of 
                        subparagraph (B) shall be voluntary.
                          (ii) Assurance of informed consent 
                        and option to disenroll.--Each State or 
                        Indian tribe or tribal organization 
                        that carries out programs or activities 
                        described in any of clauses (iii) 
                        through (vii) of subparagraph (B) shall 
                        provide the Secretary with an assurance 
                        that each recipient of assistance under 
                        the State program funded under this 
                        part who elects to participate in such 
                        programs or activities shall be 
                        informed, prior to making such 
                        election--
                                  (I) that such participation 
                                is voluntary;
                                  (II) that the recipient may 
                                elect at any time to disenroll 
                                from such programs or 
                                activities by notifying the 
                                State or Indian tribe or tribal 
                                organization that the recipient 
                                no longer wants to participate 
                                in such programs or activities;
                                  (III) of the process, if any, 
                                by which a recipient who 
                                chooses to withdraw from, or 
                                fails to participate in, such 
                                programs or activities may be 
                                required to follow to become 
                                engaged in other programs or 
                                activities that are not 
                                programs or activities 
                                described in clauses (iii) 
                                through (vii) of subparagraph 
                                (B); and
                                  (IV) that the State may 
                                reassign a recipient at any 
                                time, in accordance with the 
                                requirements of section 408(b), 
                                to other activities that are 
                                not programs or activities 
                                described in clauses (iii) 
                                through (vii) of subparagraph 
                                (B).
                          (iii) No sanction for refusal or 
                        failure to participate.--
                                  (I) In general.--No State or 
                                Indian tribe or tribal 
                                organization shall deny or 
                                reduce assistance to a 
                                recipient of assistance under 
                                the State program funded under 
                                this part solely on the basis 
                                of the recipient's withdrawal 
                                from, or failure to, 
                                participate in programs or 
                                activities described in clauses 
                                (iii) through (vii) of 
                                subparagraph (B).
                                  (II) Rule of construction.--
                                Nothing in this subparagraph 
                                shall be construed as 
                                precluding a State or Indian 
                                tribe or tribal organization 
                                from requiring a recipient of 
                                assistance under the State 
                                program funded under this part 
                                to engage in programs or 
                                activities that are not 
                                programs or activities 
                                described in clauses (iii) 
                                through (vii) of subparagraph 
                                (B) or to sanction a recipient 
                                for failure to engage in such 
                                programs or activities or to 
                                follow any such procedures the 
                                State may establish to enroll a 
                                recipient in such other 
                                programs or activities.
                  (D) General rules governing use of funds.--
                The rules of section 404, other than subsection 
                (b) of that section, shall not apply to a grant 
                made under this paragraph.
                  (E) Requirements for receipt of funds.--A 
                State or Indian tribe or tribal organization 
                may not be awarded a grant under this paragraph 
                unless the State or Indian tribe or tribal 
                organization, as a condition of receiving funds 
                under such a grant--
                          (i) consults with domestic violence 
                        organizations that have demonstrated 
                        expertise working with survivors of 
                        domestic violence in developing 
                        policies, procedures, programs and 
                        training necessary to appropriately 
                        address domestic violence in families 
                        served by programs and activities 
                        funded under such grant;
                          (ii) describes in the application for 
                        a grant under this paragraph--
                                  (I) how the programs or 
                                activities proposed to be 
                                conducted will appropriately 
                                address issues of domestic 
                                violence; and
                                  (II) what the State or Indian 
                                tribe or tribal organization, 
                                will do, to the extent 
                                relevant, to ensure that 
                                participation in such programs 
                                or activities is voluntary, and 
                                to inform potential 
                                participants that their 
                                involvement is voluntary;
                          (iii) establishes a written protocol 
                        for providers and administrators of 
                        programs and activities relevant to the 
                        grant that--
                                  (I) provides for helping 
                                identify instances or risks of 
                                domestic violence; and
                                  (II) specifies the procedures 
                                for making service referrals 
                                and providing protections and 
                                appropriate assistance for 
                                identified individuals and 
                                families;
                          (iv) establishes performance goals 
                        for funded programs and activities that 
                        clarify the primary objective of such 
                        funded programs and activities is to 
                        increase the incidence and quality of 
                        healthy marriages and not solely to 
                        expand the number or percentage of 
                        married couples; and
                          (v) submits the annual reports 
                        required under subparagraph (F).
                  (F) Annual reports to the secretary.--Each 
                State and Indian tribe or tribal organization 
                awarded a grant under this paragraph shall 
                submit to the Secretary an annual report on the 
                programs and activities funded under the grant 
                that includes the following:
                          (i) A description of the written 
                        protocols developed in accordance with 
                        the requirements of subparagraph 
                        (E)(iii) for each program or activity 
                        funded under the grant and how such 
                        protocols are used, including specific 
                        policies and procedures for addressing 
                        domestic violence issues within each 
                        program or activity funded under the 
                        grant and how confidentiality issues 
                        are addressed.
                          (ii) The name of each individual, 
                        organization, or entity that was 
                        consulted in the development of such 
                        protocols.
                          (iii) A description of each 
                        individual, organization, or entity (if 
                        any) that provided training on domestic 
                        violence for the State, Indian tribe or 
                        tribal organization, or for any 
                        subgrantees.
                          (iv) A description of any 
                        implementation issues identified with 
                        respect to domestic violence and how 
                        such issues were addressed.
                  (G) Biannual reports to congress.--Not later 
                than 24 months after the date of enactment of 
                the Personal Responsibility and Individual 
                Development for Everyone Act, and every 6 
                months thereafter, the Secretary shall submit 
                to Congress a report regarding the programs and 
                activities funded with grants awarded under 
                this paragraph. Each report submitted in 
                accordance with this subparagraph shall include 
                the following:
                          (i) The name of each program or 
                        activity funded with such grants and 
                        the name of each grantee and 
                        subgrantee.
                          (ii) The total number of individuals 
                        served under programs or activities 
                        funded under the grant.
                          (iii) The total number of individuals 
                        who--
                                  (I) completed a program or 
                                activity funded under the 
                                grant, including the number of 
                                such individuals who received 
                                assistance under the State 
                                program funded under this part 
                                or with qualified State 
                                expenditures (as defined in 
                                section 409(a)(7)(B)(i)) while 
                                participating in such program 
                                or activity; and
                                  (II) did not complete such a 
                                program or activity, including 
                                due to ceasing to receive 
                                assistance under the State 
                                program funded under this part 
                                or with qualified State 
                                expenditures (as defined in 
                                section 409(a)(7)(B)(i)) or for 
                                other reasons.
                          (iv) A description of the types of 
                        services offered under such programs or 
                        activities.
                          (v) The criteria for selection of 
                        programs or activities to be funded 
                        under such grant with respect to the 
                        award of grants by the Secretary and 
                        the awarding of funds to subgrantees.
                          (vi) A description of the activities 
                        carried out by the Secretary to support 
                        grantees and subgrantees in responding 
                        to domestic violence issues.
                          (v) A summary of the written domestic 
                        violence protocols used by grantees and 
                        subgrantees.
                          (vii) A summary of who the grantees 
                        and subgrantees consulted with in 
                        developing such protocols.
                          (viii) A summary of the training 
                        provided to grantees and subgrantees on 
                        domestic violence.
                          (ix) A list of the organizations, 
                        entities, and activities funded under 
                        sections 103(c) and 114(e) of the 
                        Personal Responsibility and Individual 
                        Development for Everyone Act.
                  (H) Domestic violence defined.--In this 
                paragraph, the term `domestic violence' has the 
                meaning given that term in section 
                402(a)(7)(B).
                  (I) Appropriation.--
                          (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 
                        2005 through 2010, $100,000,000 for 
                        grants under this paragraph.
                          (ii) Extended availability of 
                        funds.--
                                  (I) In general.--Funds 
                                appropriated under clause (i) 
                                for each of fiscal years 2006 
                                through 2010 shall remain 
                                available to the Secretary 
                                until expended.
                                  (II) Authority for grant 
                                recipients.--A State or Indian 
                                tribe or tribal organization 
                                may use funds made available 
                                under a grant awarded under 
                                this paragraph without fiscal 
                                year limitation pursuant to the 
                                terms of the grant.
          (3) Supplemental grant for population increases in 
        certain states.--
                  (A) In general.--Each qualifying State shall, 
                subject to subparagraph (F), be entitled to 
                receive from the Secretary--

           *       *       *       *       *       *       *

                  (H) Reauthorization.--Notwithstanding any 
                other provision of this paragraph--
                          (i) any State that was a qualifying 
                        State under this paragraph for fiscal 
                        year 2001 or any prior fiscal year 
                        shall be entitled to receive from the 
                        Secretary for each of fiscal years 
                        [2002 and 2003] 2006 through 2009 a 
                        grant in an amount equal to the amount 
                        required to be paid to the State under 
                        this paragraph for the most recent 
                        fiscal year in which the State was a 
                        qualifying State;
                          (ii) subparagraph (G) shall be 
                        applied as if [``March 31, 2005''] 
                        fiscal year 2009 were substituted for 
                        ``fiscal year 2001''; and
                          (iii) out of any money in the 
                        Treasury of the United States not 
                        otherwise appropriated, there are 
                        appropriated for each of fiscal years 
                        [2002 and 2003] 2006 through 2009 such 
                        sums as are necessary for grants under 
                        this subparagraph.
          [(4) Bonus to reward high performance states.--
                  [(A) In general.--The Secretary shall make a 
                grant pursuant to this paragraph to each State 
                for each bonus year for which the State is a 
                high performing State.
                  [(B) Amount of grant.--
                          [(i) In general.--Subject to clause 
                        (ii) of this subparagraph, the 
                        Secretary shall determine the amount of 
                        the grant payable under this paragraph 
                        to a high performing State for a bonus 
                        year, which shall be based on the score 
                        assigned to the State under 
                        subparagraph (D)(i) for the fiscal year 
                        that immediately precedes the bonus 
                        year.
                          [(ii) Limitation.--The amount payable 
                        to a State under this paragraph for a 
                        bonus year shall not exceed 5 percent 
                        of the State family assistance grant.
                  [(C) Formula for measuring state 
                performance.--Not later than 1 year after the 
                date of the enactment of the Personal 
                Responsibility and Work Opportunity 
                Reconciliation Act of 1996, the Secretary, in 
                consultation with the National Governors' 
                Association and the American Public Welfare 
                Association, shall develop a formula for 
                measuring State performance in operating the 
                State program funded under this part so as to 
                achieve the goals set forth in section 401(a).
                  [(D) Scoring of state performance; setting of 
                performance thresholds.--For each bonus year, 
                the Secretary shall--
                          [(i) use the formula developed under 
                        subparagraph (C) to assign a score to 
                        each eligible State for the fiscal year 
                        that immediately precedes the bonus 
                        year; and
                          [(ii) prescribe a performance 
                        threshold in such a manner so as to 
                        ensure that--
                                  [(I) the average annual total 
                                amount of grants to be made 
                                under this paragraph for each 
                                bonus year equals $200,000,000; 
                                and
                                  [(II) the total amount of 
                                grants to be made under this 
                                paragraph for all bonus years 
                                equals $1,000,000,000.
                  [(E) Definitions.--As used in this paragraph:
                          [(i) Bonus year.--The term ``bonus 
                        year'' means fiscal years 1999, 2000, 
                        2001, 2002, and 2003.
                          [(ii) High performing state.--The 
                        term ``high performing State'' means, 
                        with respect to a bonus year, an 
                        eligible State whose score assigned 
                        pursuant to subparagraph (D)(i) for the 
                        fiscal year immediately preceding the 
                        bonus year equals or exceeds the 
                        performance threshold prescribed under 
                        subparagraph (D)(ii) for such preceding 
                        fiscal year.
                  [(F) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated for fiscal 
                years 1999 through 2003 $1,000,000,000 for 
                grants under this paragraph.]
          (4) Bonus to reward employment achievement.--
                  (A) In general.--The Secretary shall make a 
                grant pursuant to this paragraph to each State 
                for each bonus year for which the State is an 
                employment achievement State.
                  (B) Amount of grant.--
                          (i) In general.--Subject to clause 
                        (ii), the Secretary shall determine the 
                        amount of the grant payable under this 
                        paragraph to an employment achievement 
                        State for a bonus year, which shall be 
                        based on the performance of the State 
                        as determined under subparagraph (D)(i) 
                        for the fiscal year that immediately 
                        precedes the bonus year.
                          (ii) Limitation.--The amount payable 
                        to a State under this paragraph for a 
                        bonus year shall not exceed 5 percent 
                        of the State family assistance grant.
                  (C) Formula for measuring state 
                performance.--
                          (i) In general.--Subject to clause 
                        (ii), not later than October 1, 2006, 
                        the Secretary, in consultation with the 
                        States, shall develop a formula for 
                        measuring State performance in 
                        operating the State program funded 
                        under this part so as to achieve the 
                        goal of workplace attachment and 
                        advancement for families receiving 
                        assistance under the program (and for 
                        families diverted from receiving such 
                        assistance if, and only to the extent 
                        that, the Secretary determines that it 
                        is possible to measure State 
                        performance with respect to such 
                        families), as measured on an absolute 
                        basis and on the basis of improvement 
                        in State performance.
                          (ii) Special rule for bonus years 
                        2006 and 2007.--For the purposes of 
                        awarding a bonus under this paragraph 
                        for bonus year 2006 or 2007, the 
                        Secretary may measure the performance 
                        of a State in fiscal year 2005 or 2006 
                        (as the case may be) using the job 
                        entry rate, job retention rate, and 
                        earnings gain rate components of the 
                        formula developed under section 
                        403(a)(4)(C) as in effect immediately 
                        before the effective date of this 
                        paragraph.
                  (D) Determination of state performance.--For 
                each bonus year, the Secretary shall--
                          (i) use the formula developed under 
                        subparagraph (C) to determine the 
                        performance of each eligible State for 
                        the fiscal year that precedes the bonus 
                        year; and
                          (ii) prescribe performance standards 
                        in such a manner so as to ensure that--
                                  (I) the average annual total 
                                amount of grants to be made 
                                under this paragraph for--
                                          (aa) each of bonus 
                                        years 2006 through 2008 
                                        equals $50,000,000; and
                                          (bb) each of bonus 
                                        years 2009 through 2011 
                                        equals $100,000,000; 
                                        and
                                  (II) the total amount of 
                                grants to be made under this 
                                paragraph for all bonus years 
                                equals $450,000,000.
                  (E) Definitions.--In this paragraph:
                          (i) Bonus year.--The term ``bonus 
                        year'' means each of fiscal years 2006 
                        through 2011.
                          (ii) Employment achievement state.--
                        The term ``employment achievement 
                        State'' means, with respect to a bonus 
                        year, an eligible State whose 
                        performance determined pursuant to 
                        subparagraph (D)(i) for the fiscal year 
                        preceding the bonus year equals or 
                        exceeds the performance standards 
                        prescribed under subparagraph (D)(ii) 
                        for such preceding fiscal year.
                  (F) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated for the 
                period of fiscal years 2006 through 2011, 
                $450,000,000 for grants under this paragraph.
                  (G) Grants for indian tribes.--
                          (i) Reservation of funds.--Of the 
                        amount appropriated under subparagraph 
                        (F), the Secretary shall reserve an 
                        amount equal to 2 percent of such 
                        amount for making grants to Indian 
                        tribes.
                          (ii) Application.--This paragraph 
                        shall apply with respect to Indian 
                        tribes in the same manner in which this 
                        paragraph applies with respect to 
                        States.
                          (iii) Consultation.--The Secretary 
                        shall consult with Indian tribes in 
                        determining the criteria under which to 
                        make grants to Indian tribes and tribal 
                        organizations under this paragraph.
          (5) Welfare-to-work grants.--
                  (A) Formula grants.--

           *       *       *       *       *       *       *

                                  (III) The State has agreed to 
                                negotiate in good faith with 
                                the Secretary of Health and 
                                Human Services with respect to 
                                the substance and funding of 
                                any evaluation under section 
                                [413(j)] 413(i), and to 
                                cooperate with the conduct of 
                                any such evaluation.

           *       *       *       *       *       *       *

                  (F) Funding for evaluations of welfare-to-
                work programs.--0.6 percent of the amount 
                specified in subparagraph (H) for fiscal year 
                1998 and $9,000,000 of the amount so specified 
                for fiscal year 1999 shall be reserved for use 
                by the Secretary to carry out section [413(j)] 
                413(i).
                  (G) Funding for evaluation of abstinence 
                education programs.--
                          (i) In general.--0.2 percent of the 
                        amount specified in subparagraph (H) 
                        for fiscal year 1998 and $3,000,000 of 
                        the amount so specified for fiscal year 
                        1999 shall be reserved for use by the 
                        Secretary to evaluate programs under 
                        section 510, directly or through 
                        grants, contracts, or interagency 
                        agreements.
                          (ii) Authority to use funds for 
                        evaluations of welfare-to-work 
                        programs.--Any such amount not required 
                        for such evaluations shall be available 
                        for use by the Secretary to carry out 
                        section [413(j)] 413(i).

           *       *       *       *       *       *       *

          (6) Grants to capitalize and develop sustainable 
        social services.--
                  (A) Authority to award grants.--The Secretary 
                may award grants to entities for the purpose of 
                capitalizing and developing the role of 
                sustainable social services that are critical 
                to the success of moving recipients of 
                assistance under a State program funded under 
                this part to work.
                  (B) Application.--
                          (i) In general.--An entity desiring a 
                        grant under this paragraph shall submit 
                        an application to the Secretary, at 
                        such time, in such manner, and, subject 
                        to clause (ii), containing such 
                        information as the Secretary may 
                        require.
                          (ii) Strategy for generation of 
                        revenue.--An application for a grant 
                        under this paragraph shall include a 
                        description of the capitalization 
                        strategy that the entity intends to 
                        follow to develop a program that 
                        generates its own source of ongoing 
                        revenue while assisting recipients of 
                        assistance under a State program funded 
                        under this part.
                  (C) Use of funds.--
                          (i) In general.--Funds made available 
                        under a grant made under this paragraph 
                        may be used for the acquisition, 
                        construction, or renovation of 
                        facilities or buildings.
                          (ii) General rules governing use of 
                        funds.--The rules of section 404, other 
                        than subsection (b) of that section, 
                        shall not apply to a grant made under 
                        this paragraph.
                  (D) Evaluation and report.--The Secretary 
                shall, by grant, contract, or interagency 
                agreement, conduct an evaluation of the 
                programs developed with grants awarded under 
                this paragraph and shall submit a report to 
                Congress on the results of such evaluation.
                  (E) Authorization of appropriations.--There 
                is authorized to be appropriated to the 
                Secretary for the purpose of carrying out this 
                paragraph, $40,000,000 for each of fiscal years 
                2006 through 2010.
          (7) Grants for low-income car ownership programs.--
                  (A) Purposes.--The purposes of this paragraph 
                are to--
                          (i) assist low-income families with 
                        children obtain dependable, affordable 
                        automobiles to improve their employment 
                        opportunities and access to training; 
                        and
                          (ii) provide incentives to States, 
                        Indian tribes or tribal organizations, 
                        localities, and nonprofit entities to 
                        develop and administer programs that 
                        provide assistance with automobile 
                        ownership for low-income families.
                  (B) Definitions.--In this paragraph:
                          (i) Locality.--The term ``locality'' 
                        means a municipality that does not 
                        administer a State program funded under 
                        this part.
                          (ii) Low-income family with 
                        children.--The term ``low-income family 
                        with children'' means a household that 
                        is eligible for benefits or services 
                        funded under the State program funded 
                        under this part or under a program 
                        funded with qualified State 
                        expenditures (as defined in section 
                        409(a)(7)(B)(i)).
                          (iii) Nonprofit entity.--The term 
                        ``nonprofit entity'' means a school, 
                        local 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.
                  (C) Authority to award grants.--The Secretary 
                may award grants to States, counties, 
                localities, Indian tribes or tribal 
                organizations, and nonprofit entities to 
                promote improving access to dependable, 
                affordable automobiles by low-income families 
                with children.
                  (D) Grant approval criteria.--The Secretary 
                shall establish criteria for approval of an 
                application for a grant under this paragraph 
                that include consideration of--
                          (i) the extent to which the proposal, 
                        if funded, is likely to improve access 
                        to training and employment 
                        opportunities and child care services 
                        by low-income families with children by 
                        means of car ownership;
                          (ii) the level of innovation in the 
                        applicant's grant proposal; and
                          (iii) any partnerships between the 
                        public and private sector in the 
                        applicant's grant proposal.
                  (E) Use of funds.--
                          (i) In general.--A grant awarded 
                        under this paragraph shall be used to 
                        administer programs that assist low-
                        income families with children with 
                        dependable automobile ownership, and 
                        maintenance of, or insurance for, the 
                        purchased automobile.
                          (ii) Supplement not supplant.--Funds 
                        provided to a State, Indian tribe or 
                        tribal organization, county, or 
                        locality under a grant awarded under 
                        this paragraph shall be used to 
                        supplement and not supplant other 
                        State, county, or local public funds 
                        expended for car ownership programs.
                          (iii) General rules governing use of 
                        funds.--The rules of section 404, other 
                        than subsection (b) of that section, 
                        shall not apply to a grant made under 
                        this paragraph.
                  (F) Application.--Each applicant desiring a 
                grant under this paragraph shall submit an 
                application to the Secretary at such time, in 
                such manner, and accompanied by such 
                information as the Secretary may reasonably 
                require.
                  (G) Reversion of funds.--Any funds not 
                expended by a grantee within 3 years after the 
                date the grant is awarded under this paragraph 
                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 time period to expend 
                such funds.
                  (H) Limitation on administrative costs of the 
                secretary.--Not more than an amount equal to 5 
                percent of the funds appropriated to make 
                grants under this paragraph for a fiscal year 
                shall be expended for administrative costs of 
                the Secretary in carrying out this paragraph.
                  (I) Evaluation.--The Secretary shall, by 
                grant, contract, or interagency agreement, 
                conduct an evaluation of the programs 
                administered with grants awarded under this 
                paragraph.
                  (J) Authorization of appropriations.--There 
                is authorized to be appropriated to the 
                Secretary to make grants under this paragraph, 
                $25,000,000 for each of fiscal years 2006 
                through 2010.
          (8) Innovative business link partnership grants.--
                  (A) In general.--The Secretary and the 
                Secretary of Labor (in this paragraph referred 
                to as the ``Secretaries'') jointly shall award 
                grants in accordance with this paragraph for 
                projects proposed by eligible applicants based 
                on the following:
                          (i) The potential effectiveness of 
                        the proposed project in carrying out 
                        the activities described in 
                        subparagraph (E).
                          (ii) Evidence of the ability of the 
                        eligible applicant to leverage private, 
                        State, or local resources.
                          (iii) Evidence of the ability of the 
                        eligible applicant to coordinate with 
                        other organizations at the State or 
                        local level.
                  (B) Definition of eligible applicant.--
                          (i) In general.--In this paragraph, 
                        the term ``eligible applicant'' means a 
                        private organization, a local workforce 
                        investment board established under 
                        section 117 of the Workforce Investment 
                        Act of 1998 (29 U.S.C. 2832), a State, 
                        a political subdivision of a State, or 
                        an Indian tribe or tribal organization.
                          (ii) Grants to promote business 
                        linkages.--
                                  (I) Additional eligible 
                                applicant.--Only for purposes 
                                of grants to carry out the 
                                activities described in 
                                subparagraph (E)(i), the term 
                                ``eligible applicant'' includes 
                                an employer.
                                  (II) Additional 
                                requirement.--In order to 
                                qualify as an eligible 
                                applicant for purposes of 
                                subparagraph (E)(i), the 
                                applicant must demonstrate that 
                                the application has been 
                                developed by and will be 
                                implemented by a local or 
                                regional consortium that 
                                includes, at minimum, employers 
                                or employer associations, and 
                                education and training 
                                providers, in consultation with 
                                local labor organizations and 
                                social service providers that 
                                work with low-income families 
                                or individuals with 
                                disabilities.
                  (C) Requirements.--
                          (i) In general.--In awarding grants 
                        under this paragraph, the Secretaries 
                        shall--
                                  (I) consider the needs of 
                                rural areas and cities with 
                                large concentrations of 
                                residents with an income that 
                                is less than 150 percent of the 
                                poverty line; and
                                  (II) ensure that--
                                          (aa) all of the funds 
                                        made available under 
                                        this paragraph (other 
                                        than funds reserved for 
                                        use by the Secretaries 
                                        under subparagraph (J)) 
                                        shall be used for 
                                        activities described in 
                                        subparagraph (E);
                                          (bb) not less than 40 
                                        percent of the funds 
                                        made available under 
                                        this paragraph (other 
                                        than funds so reserved) 
                                        shall be used for 
                                        activities described in 
                                        subparagraph (E)(i); 
                                        and
                                          (cc) not less than 40 
                                        percent of the funds 
                                        made available under 
                                        this paragraph (other 
                                        than funds so reserved) 
                                        shall be used for the 
                                        activities described in 
                                        subparagraph (E)(ii).
                          (ii) Continuation of availability.--
                        If any portion of the funds required to 
                        be used for activities referred to in 
                        item (bb) or (cc) of clause (i)(II) are 
                        not awarded in a fiscal year, such 
                        portion shall continue to be available 
                        in the subsequent fiscal year for the 
                        same activity, in addition to other 
                        amounts that may be available for such 
                        activities for that subsequent fiscal 
                        year.
                  (D) Determination of grant amount.--
                          (i) In general.--Subject to clause 
                        (ii), in determining the amount of a 
                        grant to be awarded under this 
                        paragraph for a project proposed by an 
                        eligible applicant, the Secretaries 
                        shall take into account--
                                  (I) the number and 
                                characteristics of the 
                                individuals to be served by the 
                                project;
                                  (II) the level of 
                                unemployment in the area to be 
                                served by the project;
                                  (III) the job opportunities 
                                and job growth in such area;
                                  (IV) the poverty rate for 
                                such area; and
                                  (V) such other factors as the 
                                Secretary deems appropriate in 
                                such area.
                          (ii) Maximum award for grants to 
                        promote business linkages or provide 
                        transitional jobs programs.--
                                  (I) In general.--In the case 
                                of a grant to carry out 
                                activities described in clause 
                                (i) or (ii) of subparagraph 
                                (E), an eligible applicant 
                                awarded a grant under this 
                                paragraph may not receive more 
                                than $10,000,000 per fiscal 
                                year under the grant.
                                  (II) Rule of construction.--
                                Nothing in subclause (I) shall 
                                be construed as precluding an 
                                otherwise eligible applicant 
                                from receiving separate grants 
                                to carry out activities 
                                described in clause (i) or (ii) 
                                of subparagraph (E).
                          (iii) Grant period.--The period in 
                        which a grant awarded under this 
                        paragraph may be used shall be 
                        specified for a period of not less than 
                        36 months and not more than 60 months.
                  (E) Allowable activities.--An eligible 
                applicant awarded a grant under this paragraph 
                shall use funds provided under the grant to do 
                the following:
                          (i) Promote business linkages.--
                                  (I) In general.--To promote 
                                business linkages in which 
                                funds shall be used to fund new 
                                or expanded programs that are 
                                designed to--
                                          (aa) substantially 
                                        increase the wages of 
                                        eligible individuals 
                                        (as defined in 
                                        subparagraph (F)), 
                                        whether employed or 
                                        unemployed, who have 
                                        limited English 
                                        proficiency or other 
                                        barriers to employment 
                                        by creating or 
                                        upgrading job and 
                                        related skills in 
                                        partnership with 
                                        employers, especially 
                                        by providing supports 
                                        and services at or near 
                                        worksites; and
                                          (bb) identify and 
                                        strengthen career 
                                        pathways by expanding 
                                        and linking work and 
                                        training opportunities 
                                        for such individuals in 
                                        collaboration with 
                                        employers.
                                  (II) Consideration of in-
                                kind, in-cash resources.--In 
                                determining which programs to 
                                fund under this clause, an 
                                eligible applicant awarded a 
                                grant under this paragraph 
                                shall consider the ability of a 
                                consortium to provide funds in-
                                kind or in-cash (including 
                                employer-provided, paid release 
                                time) to help support the 
                                programs for which funding is 
                                sought.
                                  (III) Priority.--In 
                                determining which programs to 
                                fund under this clause, an 
                                eligible applicant awarded a 
                                grant under this paragraph 
                                shall give priority to programs 
                                that include education or 
                                training for which participants 
                                receive credit toward a 
                                recognized credential, such as 
                                an occupational certificate or 
                                license.
                                  (IV) Use of funds.--
                                          (aa) In general.--
                                        Funds provided to a 
                                        program under this 
                                        clause may be used for 
                                        a comprehensive set of 
                                        employment and training 
                                        benefits and services, 
                                        including job 
                                        development, job 
                                        placement, workplace 
                                        supports and 
                                        accommodations, 
                                        curricula development, 
                                        wage subsidies, 
                                        retention services, and 
                                        such other benefits or 
                                        services as the program 
                                        deems necessary to 
                                        achieve the overall 
                                        objectives of this 
                                        clause.
                                          (bb) Provision of 
                                        services.--So long as a 
                                        program is principally 
                                        designed to assist 
                                        eligible individuals 
                                        (as defined in 
                                        subparagraph (F)), 
                                        funds may be provided 
                                        to a program under this 
                                        clause that also serves 
                                        low-earning employees 
                                        of 1 or more employers 
                                        even if such 
                                        individuals are not 
                                        within the definition 
                                        of eligible individual 
                                        (as so defined).
                          (ii) Provide for transitional jobs 
                        programs.--
                                  (I) In general.--To provide 
                                for wage-paying transitional 
                                jobs programs which combine 
                                time-limited employment in the 
                                public or nonprofit private 
                                sector that is subsidized with 
                                public funds with skill 
                                development and activities to 
                                remove barriers to employment, 
                                pursuant to an individualized 
                                plan (or, in the case of an 
                                eligible individual described 
                                in subparagraph (F)(i), an 
                                individual responsibility plan 
                                developed for an individual 
                                under section 408(b)). Such 
                                programs also shall provide job 
                                development and placement 
                                assistance to individual 
                                participants to help them move 
                                from subsidized employment in 
                                transitional jobs into 
                                unsubsidized employment, as 
                                well as retention services 
                                after the transition to 
                                unsubsidized employment.
                                  (II) Eligible participants.--
                                The Secretary shall ensure that 
                                individuals who participate in 
                                transitional jobs programs 
                                funded under a grant made under 
                                this paragraph shall be 
                                individuals who have been 
                                unemployed because of limited 
                                skills, experience, or other 
                                barriers to employment, and who 
                                are eligible individuals (as 
                                defined in subparagraph (F)), 
                                provided that so long as a 
                                program is designed to, and 
                                principally serves, eligible 
                                individuals (as so defined), a 
                                limited number of individuals 
                                who are unemployed because of 
                                limited skills, experience, or 
                                other barriers to employment, 
                                and who have an income below 
                                100 percent of the Federal 
                                poverty line but who do not 
                                satisfy the definition of 
                                eligible individual (as so 
                                defined) maybe served in the 
program to the extent the Secretaries determine that the inclusion of 
such individuals in the program is appropriate.
                                  (III) Use of funds.--Funds 
                                provided to a program under 
                                this clause may only be used in 
                                accordance with the following:
                                          (aa) To create 
                                        subsidized transitional 
                                        jobs in which work 
                                        shall be performed 
                                        directly for the 
                                        program operator or at 
                                        other public and 
                                        nonprofit organizations 
                                        (in this subclause 
                                        referred to as 
                                        ``worksite employers'') 
                                        in the community, and 
                                        in which 100 percent of 
                                        the wages shall be 
                                        subsidized, except as 
                                        described in item (ff) 
                                        regarding placements in 
                                        the private, for-profit 
                                        sector.
                                          (bb) Participants 
                                        shall be paid at the 
                                        rate paid to 
                                        unsubsidized employees 
                                        of the worksite 
                                        employer who perform 
                                        comparable work at the 
                                        worksite where the 
                                        individual is placed. 
                                        If no other employees 
                                        perform the same or 
                                        comparable work then 
                                        wages shall be set, at 
                                        a minimum, at 50 
                                        percent of the Lower 
                                        Living Standard Income 
                                        Level (commonly 
                                        referred to as the 
                                        ``LLSIL''), as 
                                        determined under 
                                        section 101(24) of the 
                                        Workforce Investment 
                                        Act of 1998 (29 U.S.C. 
                                        2801(24)), for a family 
                                        of 3 based on 35 hours 
                                        per week.
                                          (cc) Transitional 
                                        jobs shall be limited 
                                        to not less than 6 
                                        months and not more 
                                        than 24 months, 
                                        however, nothing shall 
                                        preclude a participant 
                                        from moving into 
                                        unsubsidized employment 
                                        at a point prior to the 
                                        maximum duration of the 
                                        transitional job 
                                        placement. Participants 
                                        shall be paid wages 
                                        based on a workweek of 
                                        not less than 30 hours 
                                        per week or more than 
                                        40 hours per week, 
                                        except that a parent of 
                                        a child under the age 
                                        of 6, a child who is 
                                        disabled, or a child 
                                        with other special 
                                        needs, or an individual 
                                        who for other reasons 
                                        cannot successfully 
                                        participate for 30 to 
                                        40 hours per week, may 
                                        be allowed to 
                                        participate for more 
                                        limited hours, but not 
                                        less than 20 hours per 
                                        week. In any work week, 
                                        50 percent to 80 
                                        percent of hours shall 
                                        be spent in the 
                                        transitional job and 20 
                                        percent to 50 percent 
                                        of hours shall be spent 
                                        in education or 
                                        training, or other 
                                        services designed to 
                                        reduce or eliminate any 
                                        barriers.
                                          (dd) Program 
                                        operators shall provide 
                                        case management 
                                        services and ensure 
                                        access to appropriate 
                                        education, training, 
                                        and other services, 
                                        including job 
                                        accommodation, work 
                                        supports, and supported 
                                        employment, as 
                                        appropriate and 
                                        consistent with an 
                                        individual employment 
                                        plan (unless the 
                                        individual already has 
                                        an employment plan 
                                        developed by the 
                                        appropriate State 
                                        agency with 
                                        responsibility for the 
                                        administration of the 
                                        State program funded 
                                        under this part or the 
                                        State workforce 
                                        investment board 
                                        established under 
                                        section 111 of the 
                                        Workforce Investment 
                                        Act of 1998 (29 U.S.C. 
                                        2821)) that is based on 
                                        the individual's 
                                        strengths, resources, 
                                        priorities, concerns, 
                                        abilities, 
                                        capabilities, career 
                                        interests, and informed 
                                        choice and that is 
                                        developed with each 
                                        participant. The goal 
                                        of each participant's 
                                        plan shall focus on 
                                        preparation for 
                                        unsubsidized jobs in 
                                        demand in the local 
                                        economy which offer the 
                                        potential for 
                                        advancement and growth. 
                                        Services shall also 
                                        include job placement 
                                        assistance and 
                                        retention services for 
                                        12 months after entry 
                                        into unsubsidized 
                                        placement. Participants 
                                        shall also receive 
                                        support services such 
                                        as subsidized child 
                                        care and 
                                        transportation, on the 
                                        same basis as those 
                                        services are made 
                                        available to recipients 
                                        of assistance under the 
                                        State program funded 
                                        under this part who are 
                                        engaged in work-related 
                                        activities.
                                          (ee) Providers shall 
                                        work with individual 
                                        recipients to determine 
                                        eligibility for other 
                                        employment-related 
                                        supports which may 
                                        include (but are not 
                                        limited to) supported 
                                        employment, other 
                                        vocational 
                                        rehabilitation 
                                        services, and programs 
                                        or services available 
                                        under the Workforce 
                                        Investment Act of 1998 
                                        (29 U.S.C. 2801 et 
                                        seq.), or the ticket to 
                                        work and self-
                                        sufficiency program 
                                        established under 
                                        section 1148, and, to 
                                        the extent possible, 
                                        shall provide 
                                        transitional employment 
                                        in collaboration with 
                                        entities providing, or 
                                        arranging for the 
                                        provision of, such 
                                        other supports.
                                          (ff) Not more than 
                                        \1/3\ of the placements 
                                        for a grantee shall be 
                                        with a private for-
                                        profit company, except 
                                        that such \1/3\ limit 
                                        may be waived by the 
                                        Secretary for programs 
                                        in rural areas when the 
                                        grantee can demonstrate 
                                        insufficient public and 
                                        non-profit worksites. 
                                        When a placement is 
                                        made at a private for-
                                        profit company, the 
                                        company shall pay 50 
                                        percent of program 
                                        costs (including wages) 
                                        for each participant, 
                                        and the company shall 
                                        agree, in writing, to 
                                        hire each participant 
                                        into an unsubsidized 
                                        position at the 
                                        completion of the 
                                        agreed upon subsidized 
                                        placement, or sooner, 
                                        provided that the 
                                        participant's job 
                                        performance has been 
                                        satisfactory.
                                          (gg) Subject to item 
                                        (hh), not more than 15 
                                        percent of the 
                                        workforce of a private 
                                        for-profit company may 
                                        be composed of 
                                        transitional jobs 
                                        participants.
                                          (hh) Notwithstanding 
                                        item (gg), no employer 
                                        shall be precluded from 
                                        employing up to 2 
                                        transitional jobs 
                                        participants.
                                  (IV) Definition of 
                                transitional jobs program.--In 
                                this clause, the term 
                                ``transitional jobs program'' 
                                means a program that is 
                                intended to serve current and 
                                former recipients of assistance 
                                under a State or tribal program 
                                funded under this part and 
                                other low-income individuals 
                                who have been unable to secure 
                                employment through job search 
                                or other employment-related 
                                services because of limited 
                                skills, experience, or other 
                                barriers to employment.
                          (iii) Limitation on administrative 
                        expenditures.--Not more than 5 percent 
                        of the funds awarded to an eligible 
                        applicant under clause (i) or (ii) may 
                        be used for administrative expenditures 
                        incurred in carrying out the activities 
                        described in clause (i) or (ii) or for 
                        expenditures related to carrying out 
                        the assessments and reports required 
                        under subparagraph (H).
                  (F) Definition of eligible individual.--In 
                this paragraph, the term ``eligible 
                individual'' means--
                          (i) an individual who is a parent who 
                        is a recipient of assistance under a 
                        State or tribal program funded under 
                        this part;
                          (ii) an individual who is a parent 
                        who has ceased to receive assistance 
                        under such a State or tribal program;
                          (iii) an individual who is at risk of 
                        receiving assistance under a State or 
                        tribal program funded under this part;
                          (iv) an individual with a disability; 
                        or
                          (v) a noncustodial parent who is 
                        unemployed, or is having difficulty in 
                        paying child support obligations, 
                        including such a parent who is a former 
                        criminal offender.
                  (G) Application.--Each eligible applicant 
                desiring a grant under this paragraph shall 
                submit an application to the Secretaries at 
                such time, in such manner, and accompanied by 
                such information as the Secretaries may 
                require.
                  (H) Assessments and reports by grantees.--
                          (i) In general.--An eligible 
                        applicant that receives a grant under 
                        this paragraph shall assess and report 
                        on the outcomes of programs funded 
                        under the grant, including the identity 
                        of each program operator, demographic 
                        information about each participant, 
                        including education level, literacy 
                        level, prior work experience and 
                        identified barriers to employment, the 
                        nature of education, training, or other 
                        services received by the participant, 
                        the reason for the participant's 
                        leaving the program, and outcomes 
                        related to the placement of the 
                        participant in an unsubsidized job, 
                        including 1-year employment retention, 
                        wage at placement, benefits, and 
                        earnings progression, as specified by 
                        the Secretaries.
                          (ii) Assistance.--The Secretaries 
                        shall--
                                  (I) assist grantees in 
                                conducting the assessment 
                                required under clause (i) by 
                                making available where 
                                practicable low-cost means of 
                                tracking the labor market 
                                outcomes of participants; and
                                  (II) encourage States to 
                                provide such assistance.
                  (I) Application to requirements of the state 
                program.--
                          (i) Participation not considered 
                        assistance.--A benefit or service 
                        provided with funds made available 
                        under a grant made under this paragraph 
                        shall not be considered assistance for 
                        any purpose under a State or tribal 
                        program funded under this part.
                          (ii) General rules governing use of 
                        funds.--The rules of section 404, other 
                        than subsection (b) of that section, 
                        shall not apply to a grant made under 
                        this paragraph.
                  (J) Assessments by the secretaries.--
                          (i) Reservation of funds.--Of the 
                        amount appropriated to carry out this 
                        paragraph for each of fiscal years 2006 
                        and 2007, $3,000,000 of such amount for 
                        each such fiscal year is reserved for 
                        use by the Secretaries to prepare an 
                        interim and final report summarizing 
                        and synthesizing outcomes and lessons 
                        learned from the programs funded 
                        through grants awarded under this 
                        paragraph.
                          (ii) Interim and final assessments.--
                        With respect to the reports prepared 
                        under clause (i), the Secretaries shall 
                        submit--
                                  (I) the interim report not 
                                later than 4 years after the 
                                date of enactment of the 
                                Personal Responsibility and 
                                Individual Development for 
                                Everyone Act; and
                                  (II) the final report not 
                                later than 6 years after such 
                                date of enactment.
                  (K) Evaluations.--
                          (i) Reservation of funds.--Of the 
                        amount appropriated to carry out this 
                        paragraph for a fiscal year, an amount 
                        equal to 1.5 percent of such amount for 
                        each such fiscal year shall be reserved 
                        for use by the Secretaries to conduct 
                        evaluations in accordance with the 
                        requirements of clause (ii).
                          (ii) Requirements.--The Secretaries--
                                  (I) shall develop a plan to 
                                evaluate the extent to which 
                                programs funded under grants 
                                made under this paragraph have 
                                been effective in promoting 
                                sustained, unsubsidized 
                                employment for each group of 
                                eligible participants, and in 
                                improving the skills and wages 
                                of participants in comparison 
                                to the participants' skills and 
                                wages prior to participation in 
                                the programs;
                                  (II) may evaluate the use of 
                                such a grant by a grantee, as 
                                the Secretaries deem 
                                appropriate, in accordance with 
                                an agreement entered into with 
                                the grantee after good-faith 
                                negotiations; and
                                  (III) shall include, as 
                                appropriate, the following 
                                outcome measures in the 
                                evaluation plan developed under 
                                subclause (I):
                                          (aa) Placements in 
                                        unsubsidized 
                                        employment.
                                          (bb) Retention in 
                                        unsubsidized employment 
                                        6 months and 12 months 
                                        after initial 
                                        placement.
                                          (cc) Earnings of 
                                        individuals at the time 
                                        of placement in 
                                        unsubsidized 
                                        employment.
                                          (dd) Earnings of 
                                        individuals 12 months 
                                        after placement in 
                                        unsubsidized 
                                        employment.
                                          (ee) The extent to 
                                        which unsubsidized job 
                                        placements include 
                                        access to affordable 
                                        employer-sponsored 
                                        health insurance and 
                                        paid leave benefits.
                                          (ff) Comparison of 
                                        pre- and post-program 
                                        wage rates of 
                                        participants.
                                          (gg) Comparison of 
                                        pre- and post-program 
                                        skill levels of 
                                        participants.
                                          (hh) Wage growth and 
                                        employment retention in 
                                        relation to occupations 
                                        and industries at 
                                        initial placement in 
                                        unsubsidized employment 
                                        and over the first 12 
                                        months after initial 
                                        placement.
                                          (ii) Recipient of 
                                        cash assistance under 
                                        the State program 
                                        funded under this part.
                                          (jj) Average 
                                        expenditures per 
                                        participant.
                          (iii) Reports to congress.--The 
                        Secretaries shall submit to Congress 
                        the following reports on the 
                        evaluations of programs funded under 
                        grants made under this paragraph:
                                  (I) Interim report.--An 
                                interim report not later than 4 
                                years after the date of 
                                enactment of the Personal 
                                Responsibility and Individual 
                                Development for Everyone Act.
                                  (II) Final report.--A final 
                                report not later than 6 years 
                                after such date of enactment.
                  (L) Authorization of appropriations.--
                          (i) In general.--There is authorized 
                        to be appropriated for the purpose of 
                        carrying out this paragraph, 
                        $200,000,000 for each of fiscal years 
                        2006 through 2010.
                          (ii) Availability.--Amounts 
                        appropriated in accordance with clause 
                        (i) for a fiscal year shall remain 
                        available for obligation for 5 fiscal 
                        years after the fiscal year in which 
                        the amount is appropriated.

           *       *       *       *       *       *       *

  (b) Contingency Fund.--
          [(1) Establishment.--There is hereby established in 
        the Treasury of the United States a fund which shall be 
        known as the ``Contingency Fund for State Welfare 
        Programs'' (in this section referred to as the 
        ``Fund'').
          [(2) Deposits into fund.--Out of any money in the 
        Treasury of the United States not otherwise 
        appropriated, there are appropriated for fiscal years 
        1997, 1998, 1999, 2000, 2001, 2002, and 2003 such sums 
        as are necessary for payment to the Fund in a total 
        amount not to exceed $2,000,000,000, reduced by the sum 
        of the dollar amounts specified in paragraph 
        (6)(C)(ii).
          [(3) Grants.--
                  [(A) Provisional payments.--If an eligible 
                State submits to the Secretary a request for 
                funds under this paragraph during an eligible 
                month, the Secretary shall, subject to this 
                paragraph, pay to the State, from amounts 
                appropriated pursuant to paragraph (2), an 
                amount equal to the amount of funds so 
                requested.
                  [(B) Payment priority.--The Secretary shall 
                make payments under subparagraph (A) in the 
                order in which the Secretary receives requests 
                for such payments.
                  [(C) Limitations.--
                          [(i) Monthly payment to a state.--The 
                        total amount paid to a single State 
                        under subparagraph (A) during a month 
                        shall not exceed \1/12\ of 20 percent 
                        of the State family assistance grant.
                          [(ii) Payments to all states.--The 
                        total amount paid to all States under 
                        subparagraph (A) during fiscal years 
                        1997 through 2005 shall not exceed the 
                        total amount appropriated pursuant to 
                        paragraph (2).]
          (1) Contingency fund grants.--
                  (A) Payments.--Subject to subparagraphs (C) 
                and (D), and out of funds appropriated under 
                subparagraph (F), each State shall receive a 
                contingency fund grant for each eligible month 
                in which the State is a needy State under 
                paragraph (3).
                  (B) Monthly contingency fund grant amount.--
                For each eligible month in which a State is a 
                needy State, the State shall receive a 
                contingency fund grant equal to the product 
                of--
                          (i) the applicable percentage (as 
                        defined under subparagraph (E)(i)) of 
                        the applicable benefit level (as 
                        defined in subparagraph (E)(ii)); and
                          (ii) the amount by which the total 
                        number of families that received 
                        assistance under the State program 
                        funded under this part in the most 
                        recently concluded 3-month period for 
                        which data are available from the State 
                        exceeds a 5-percent increase in the 
                        number of such families in the 
                        corresponding 3-month period in either 
                        of the 2 most recent preceding fiscal 
                        years and that was due, in large 
                        measure, to economic conditions rather 
                        than State policy changes.
                  (C) Limitation.--The total amount paid to a 
                single State under subparagraph (A) during a 
                fiscal year shall not exceed the amount equal 
                to 10 percent of the State family assistance 
                grant (as defined under subparagraph (B) of 
                subsection (a)(1)).
                  (D) Payments to indian tribes.--
                          (i) In general.--Of the total amount 
                        appropriated pursuant to subparagraph 
                        (F), $25,000,000 of such amount shall 
                        be reserved for making payments to 
                        Indian tribes with approved tribal 
                        family assistance plans that are 
                        operating in situations of increased 
                        economic hardship.
                          (ii) Determination of criteria for 
                        tribal access.--
                                  (I) In general.--Subject to 
                                subclause (II), the Secretary, 
                                in consultation with Indian 
                                tribes with approved tribal 
                                family assistance plans, shall 
                                determine the criteria for 
                                access by such tribes to the 
                                amount reserved under clause 
                                (i).
                                  (II) Inclusion of certain 
                                factors.--Such criteria shall 
                                include factors related to 
                                increases in unemployment and 
                                loss of employers.
                          (iii) Application of requirements for 
                        payments to states.--The Secretary, in 
                        consultation with Indian tribes with 
                        approved tribal family assistance plans 
                        located throughout the United States, 
                        shall determine the extent to which 
                        requirements of States for payments 
                        from the contingency fund established 
                        under this subsection shall apply to 
                        Indian tribes receiving payments under 
                        this subparagraph.
                  (E) Definitions.--In this paragraph:
                          (i) Applicable percentage.--The term 
                        ``applicable percentage'' means the 
                        Federal medical assistance percentage 
                        for the State (as defined in section 
                        1905(b)).
                          (ii) Applicable benefit level.--
                                  (I) In general.--Subject to 
                                subclause (II), the term 
                                ``applicable benefit level'' 
                                means the amount equal to the 
                                maximum cash assistance grant 
                                for a family consisting of 3 
                                individuals under the State 
                                program funded under this part.
                                  (II) Rule for states with 
                                more than 1 maximum level.--In 
                                the case of a State that has 
                                more than 1 maximum cash 
                                assistance grant level for 
                                families consisting of 3 
                                individuals, the basic 
                                assistance cost shall be the 
                                amount equal to the maximum 
                                cash assistance grant level 
                                applicable to the largest 
                                number of families consisting 
                                of 3 individuals receiving 
                                assistance under the State 
                                program funded under this part.
                  (F) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there is appropriated for the 
                period of fiscal years 2006 through 2010, such 
                sums as are necessary for making contingency 
                fund grants under this subsection in a total 
                amount not to exceed $2,000,000,000.
          (3) Initial determination of whether a state 
        qualifies as a needy state.--
                  (A) In general.--For purposes of paragraph 
                (1), subject to paragraph (4), a State will be 
                initially determined to be a needy State for a 
                month if, as determined by the Secretary--
                          (i) the monthly average of the 
                        unduplicated number of families that 
                        received assistance under the State 
                        program funded under this part in the 
                        most recently concluded 3-month period 
                        for which data are available from the 
                        State increased by at least 5 percent 
                        over the number of such families that 
                        received such benefits in the 
                        corresponding 3-month period in either 
                        of the 2 most recent preceding fiscal 
                        years;
                          (ii) the increase in the number of 
                        such families for the State was due, in 
                        large measure, to economic conditions 
                        rather than State policy changes; and
                          (iii) the State satisfies any of the 
                        following criteria:
                                  (I) 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 either of the 2 most 
                                recent preceding fiscal years.
                                  (II) The average insured 
                                unemployment rate for the most 
                                recent 13 weeks for which data 
                                are available has increased by 
                                1 percentage point over the 
                                corresponding 13-week period in 
                                either of the 2 most recent 
                                preceding fiscal years.
                                  (III) 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 
                                15 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 
                                either of the 2 most recent 
                                preceding fiscal years, but 
                                only if the Secretary and the 
                                Secretary of Agriculture concur 
                                in the determination that the 
                                State's increased caseload was 
                                due, in large measure, to 
                                economic conditions rather than 
                                changes in Federal or State 
                                policies related to the food 
                                stamp program.
                  (B) Duration.--A State that qualifies as a 
                needy State--
                          (i) under subclause (I) or (II) of 
                        subparagraph (A)(iii), shall be 
                        considered a needy State until the 
                        State's average rate of total 
                        unemployment or the State's insured 
                        unemployment rate, respectively, falls 
                        below the level attained in the 
                        applicable period that was first used 
                        to determine that the State qualified 
                        as a needy State under that 
                        subparagraph (and in the case of the 
                        insured unemployment rate, without 
                        regard to any declines in the rate that 
                        are the result of seasonal variation); 
                        and
                          (ii) under subclause (III) of 
                        subparagraph (A)(iii), shall be 
                        considered a needy State so long as the 
                        State meets the criteria for being 
                        considered a needy State under that 
                        subparagraph.
          (4) Exceptions.--
                  (A) Unexpended balances.--
                          (i) In general.--Notwithstanding 
                        paragraph (3), a State that has 
                        unexpended TANF balances in an amount 
                        that exceeds 30 percent of the total 
                        amount of grants received by the State 
                        under subsection (a) for the most 
                        recently completed fiscal year (other 
                        than welfare-to-work grants made under 
                        paragraph (5) of that subsection prior 
                        to fiscal year 2000), shall not be a 
                        needy State under this subsection.
                          (ii) Definition of unexpended tanf 
                        balances.--In clause (i), the term 
                        ``unexpended TANF balances'' means the 
                        lesser of--
                                  (I) the total amount of 
                                grants made to the State 
                                (regardless of the fiscal year 
                                in which such funds were 
                                awarded) under subsection (a) 
                                (other than welfare-to-work 
                                grants made under paragraph (5) 
                                of that subsection prior to 
                                fiscal year 2000) but not yet 
                                expended as of the end of the 
                                fiscal year preceding the 
                                fiscal year for which the State 
                                would, in the absence of this 
                                subparagraph, be considered a 
                                needy State under this 
                                subsection; and
                                  (II) the total amount of 
                                grants made to the State under 
                                subsection (a) (other than 
                                welfare-to-work grants made 
                                under paragraph (5) of that 
                                subsection prior to fiscal year 
                                2000) but not yet expended as 
                                of the end of such preceding 
                                fiscal year, plus the 
                                difference between--
                                          (aa) the pro rata 
                                        share of the current 
                                        fiscal year grant to be 
                                        made under subsection 
                                        (a) to the State; and
                                          (bb) current year 
                                        expenditures of the 
                                        total amount of grants 
                                        made to the State under 
                                        subsection (a) 
                                        (regardless of the 
                                        fiscal year in which 
                                        such funds were 
                                        awarded) (other than 
                                        such welfare-to-work 
                                        grants) through the end 
                                        of the most recent 
                                        calendar quarter.
                  (B) Failure to satisfy maintenance of effort 
                requirement.--Notwithstanding paragraph (3), a 
                State that fails to satisfy the requirement of 
                section 409(a)(7) with respect to a fiscal year 
                shall not be a needy State under this 
                subsection for that fiscal year.
          [(4)] (2) Eligible month.--As used in paragraph 
        [(3)(A)] (1), the term ``eligible month'' means, with 
        respect to a State, a month in the [2-month period that 
        begins with any] fiscal year quarter that includes a 
        month for which the State is a needy State.
          [(5) Needy state.--For purposes of paragraph (4), a 
        State is a needy State for a month if--
                  [(A) the average rate of--
                          [(i) total unemployment in such State 
                        (seasonally adjusted) for the period 
                        consisting of the most recent 3 months 
                        for which data for all States are 
                        published equals or exceeds 6.5 
                        percent; and
                          [(ii) total unemployment in such 
                        State (seasonally adjusted) for the 3-
                        month period equals or exceeds 110 
                        percent of such average rate for either 
                        (or both) of the corresponding 3-month 
                        periods ending in the 2 preceding 
                        calendar years; or
                  [(B) as determined by the Secretary of 
                Agriculture (in the discretion of the Secretary 
                of Agriculture), the monthly average number of 
                individuals (as of the last day of each month) 
                participating in the food stamp program in the 
                State in the then most recently concluded 3-
                month period for which data are available 
                exceeds by not less than 10 percent the lesser 
                of--
                          [(i) the monthly average number of 
                        individuals (as of the last day of each 
                        month) in the State that would have 
                        participated in the food stamp program 
                        in the corresponding 3-month period in 
                        fiscal year 1994 if the amendments made 
                        by titles IV and VIII of the Personal 
                        Responsibility and Work Opportunity 
                        Reconciliation Act of 1996 had been in 
                        effect throughout fiscal year 1994; or
                          [(ii) the monthly average number of 
                        individuals (as of the last day of each 
                        month) in the State that would have 
                        participated in the food stamp program 
                        in the corresponding 3-month period in 
                        fiscal year 1995 if the amendments made 
                        by titles IV and VIII of the Personal 
                        Responsibility and Work Opportunity 
                        Reconciliation Act of 1996 had been in 
                        effect throughout fiscal year 1995.
          [(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 total amount paid to the 
                        State under paragraph (3) of this 
                        subsection in the fiscal year; exceeds
                          [(ii) the product of--
                                  [(I) the Federal medical 
                                assistance percentage for the 
                                State (as defined in section 
                                1905(b), as such section was in 
                                effect on September 30, 1995);
                                  [(II) the State's 
                                reimbursable expenditures for 
                                the fiscal year; and
                                  [(III) \1/12\ times the 
                                number of months during the 
                                fiscal year for which the 
                                Secretary made a payment to the 
                                State under such paragraph (3).
                  [(B) Definitions.--As used in subparagraph 
                (A):
                          [(i) Reimbursable expenditures.--The 
                        term ``reimbursable expenditures'' 
                        means, with respect to a State and a 
                        fiscal year, the amount (if any) by 
                        which--
                                  [(I) countable State 
                                expenditures for the fiscal 
                                year; exceeds
                                  [(II) historic State 
                                expenditures (as defined in 
                                section 409(a)(7)(B)(iii)), 
                                excluding any amount expended 
                                by the State for child care 
                                under subsection (g) or (i) of 
                                section 402 (as in effect 
                                during fiscal year 1994) for 
                                fiscal year 1994.
                          [(ii) Countable state expenditures.--
                        The term ``countable expenditures'' 
                        means, with respect to a State and a 
                        fiscal year--
                                  [(I) the qualified State 
                                expenditures (as defined in 
                                section 409(a)(7)(B)(i) (other 
                                than the expenditures described 
                                in subclause (I)(bb) of such 
                                section)) under the State 
                                program funded under this part 
                                for the fiscal year; plus
                                  [(II) any amount paid to the 
                                State under paragraph (3) 
                                during the fiscal year that is 
                                expended by the State under the 
                                State program funded under this 
                                part.
                  [(C) Adjustment of state remittances.--
                          [(i) In general.--The amount 
                        otherwise required by subparagraph (A) 
                        to be remitted by a State for a fiscal 
                        year shall be increased by the lesser 
                        of--
                                  [(I) the total adjustment for 
                                the fiscal year, multiplied by 
                                the adjustment percentage for 
                                the State for the fiscal year; 
                                or
                                  [(II) the unadjusted net 
                                payment to the State for the 
                                fiscal year.
                          [(ii) Total adjustment.--As used in 
                        clause (i), the term ``total 
                        adjustment'' means--
                                  [(I) in the case of fiscal 
                                year 1998, $2,000,000;
                                  [(II) in the case of fiscal 
                                year 1999, $9,000,000;
                                  [(III) in the case of fiscal 
                                year 2000, $16,000,000; and
                                  [(IV) in the case of fiscal 
                                year 2001, $13,000,000.
                          [(iii) Adjustment percentage.--As 
                        used in clause (i), the term 
                        ``adjustment percentage'' means, with 
                        respect to a State and a fiscal year--
                                  [(I) the unadjusted net 
                                payment to the State for the 
                                fiscal year; divided by
                                  [(II) the sum of the 
                                unadjusted net payments to all 
                                States for the fiscal year.
                          [(iv) Unadjusted net payment.--As 
                        used in this subparagraph, the term, 
                        ``unadjusted net payment'' means with 
                        respect to a State and a fiscal year--
                                  [(I) the total amount paid to 
                                the State under paragraph (3) 
                                in the fiscal year; minus
                                  [(II) the amount that, in the 
                                absence of this subparagraph, 
                                would be required by 
                                subparagraph (A) or by section 
                                409(a)(10) to be remitted by 
                                the State in respect of the 
                                payment.]
          [(7)] (5) State defined.--As used in this subsection, 
        the term ``State'' means each of the 50 States and the 
        District of Columbia.
          [(8)] (6) Annual reports.--The Secretary shall 
        annually report to the Congress [on the status of the 
        Fund] on the States that qualified for contingency 
        funds and the amount of funding awarded under this 
        subsection.

SEC. 404. [42 U.S.C. 604] USE OF GRANTS.

  (a) General Rules.--Subject to this part, a State to which a 
grant is made under section 403 may use the grant--
          (1) in any manner that is reasonably calculated to 
        accomplish the purpose of this part, including to 
        provide low income households with [assistance] aid in 
        meeting home heating and cooling costs; or
          (2) in any manner that the State was authorized to 
        use amounts received under part A or F, as such parts 
        were in effect on September 30, 1995, or (at the option 
        of the State) August 21, 1996.
  (b) Limitation on Use of Grant for Administrative Purposes.--
          (1) Limitation.--A State to which a grant is made 
        under section 403 shall not expend more than 15 percent 
        of the grant for administrative purposes.
          (2) Exception.--Paragraph (1) shall not apply to the 
        use of a grant for information technology and 
        computerization needed for tracking or monitoring 
        required by or under this part.
  [(c) Authority To Treat Interstate Immigrants Under Rules of 
Former State.--A State operating a program funded under this 
part may apply to a family the rules (including benefit 
amounts) of the program funded under this part of another State 
if the family has moved to the State from the other State and 
has resided in the State for less than 12 months.]
    (c) [Reserved].
  (d) Authority To Use Portion of Grant for Other Purposes.--
          (1) In general.--Subject to paragraph (2), a State 
        may use not more than 30 percent of the amount of any 
        grant made to the State under section 403(a) for a 
        fiscal year to carry out a State program pursuant to 
        any or all of the following provisions of law:
                  (A) Title XX of this Act.
                  (B) The Child Care and Development Block 
                Grant Act of 1990.
          [(2) Limitation on amount transferable to title xx 
        programs.--
                  [(A) In general.--A State may use not more 
                than the applicable percent of the amount of 
                any grant made to the State under section 
                403(a) for a fiscal year to carry out State 
                programs pursuant to title XX.
                  [(B) Applicable percent.--For purposes of 
                subparagraph (A), the applicable percent is 
                4.25 percent in the case of fiscal year 2001 
                and each succeeding fiscal year.
          (3) Applicable rules.--
                  [(A) In general.--Except as provided in 
                subparagraph (B) of this paragraph, any amount 
                paid to a State under this part that is used to 
                carry out a State program pursuant to a 
                provision of law specified in paragraph (1) 
                shall not be subject to the requirements of 
                this part, but shall be subject to the 
                requirements that apply to Federal funds 
                provided directly under the provision of law to 
                carry out the program, and the expenditure of 
                any amount so used shall not be considered to 
                be an expenditure under this part.
                  [(B) Exception relating to title xx 
                programs.--All amounts paid to a State under 
                this part that are used to carry out State 
                programs pursuant to title XX shall be used 
                only for programs and services to children or 
                their families whose income is less than 200 
                percent of the income official poverty line (as 
                defined by the Office of Management and Budget, 
                and revised annually in accordance with section 
                673(2) of the Omnibus Budget Reconciliation Act 
                of 1981) applicable to a family of the size 
                involved.]
          (2) Limitation on amount transferable to title xx 
        programs.--A State may use not more than 10 percent of 
        the amount of any grant made to the State under section 
        403(a) for a fiscal year to carry out State programs 
        pursuant to title XX.
  [(e) Authority To Reserve Certain Amounts for Assistance.--A 
State or tribe may reserve amounts paid to the State or tribe 
under this part for any fiscal year for the purpose of 
providing, without fiscal year limitation, assistance under the 
State or tribal program funded under this part.]
  (e) Authority To Carryover or Reserve Certain Amounts for 
Benefits or Services or for Future Contingencies.--
          (1) Carryover.--A State or Indian tribe may use a 
        grant made to the State or Indian tribe under this part 
        for any fiscal year to provide, without fiscal year 
        limitation, any benefit or service that may be provided 
        under the State or tribal program funded under this 
        part.
          (2) Contingency reserve.--A State or Indian tribe may 
        designate any portion of a grant made to the State or 
        Indian tribe under this part as a contingency reserve 
        for future needs, and may use any amount so designated 
        to provide, without fiscal year limitation, any benefit 
        or service that may be provided under the State or 
        tribal program funded under this part. If a State or 
        Indian tribe so designates a portion of such a grant, 
        the State or Indian tribe shall include in its report 
        under section 411(a) the amount so designated.
  (f) Authority To Operate Employment Placement Program.--A 
State to which a grant is made under section 403 may use the 
grant to make payments (or provide job placement vouchers) to 
State-approved public and private job placement agencies that 
provide employment placement services to individuals who 
receive [assistance] benefits or services under the State 
program funded under this part.

           *       *       *       *       *       *       *

  (l) Authority To Establish Undergraduate Postsecondary or 
Vocational Educational Program.--
          (1) In general.--Subject to the succeeding paragraphs 
        of this subsection, a State to which a grant is made 
        under section 403 may use the grant or State funds that 
        are qualified State expenditures (as defined in section 
        409(a)(7)(B)(i)) to establish a program under which an 
        eligible participant (as defined in paragraph (3)) may 
        be provided support services described in paragraph (5) 
        and, subject to paragraph (6), may have hours of 
        participation in such program counted as being engaged 
        in work for purposes of determining monthly 
        participation rates under section 407(b)(1)(B)(i).
          (2) State plan requirement.--In order to establish a 
        program under this subsection, a State shall describe 
        (in an addendum to the State plan submitted under 
        section 402) the applicable eligibility criteria that 
        is designed to limit participation in the program to 
        only those individuals--
                  (A) whose past earnings indicate that the 
                individuals cannot qualify for employment that 
                pays enough to allow them to obtain self-
                sufficiency (as determined by the State); and
                  (B) for whom enrollment in the program will 
                prepare the individuals for higher-paying 
                occupations that are in demand in the State.
          (3) Definition of eligible participant.--In this 
        subsection, the term `eligible participant' means an 
        individual--
                  (A) who--
                          (i) receives assistance under the 
                        State program funded under this part;
                          (ii) is a former recipient of 
                        assistance under the State program 
                        funded under this part; or
                          (iii) is a needy parent in a family 
                        with children eligible for benefits or 
                        services funded under a grant made 
                        under section 403 or with State funds 
                        that are qualified State expenditures 
                        (as defined in section 
                        409(a)(7)(B)(i)); and
                  (B) who--
                          (i) is enrolled in a postsecondary 2- 
                        or 4-year degree program or a 
                        vocational educational training 
                        program; and
                          (ii) during the period the individual 
                        participates in the program established 
                        under this subsection, maintains 
                        satisfactory academic progress, as 
                        defined by the institution operating 
                        the postsecondary 2- or 4-year degree 
                        program or vocational educational 
                        training program in which the 
                        individual is enrolled.
          (4) Required time periods for completion of degree or 
        vocational educational training program.--
                  (A) In general.--Subject to subparagraph (B), 
                an eligible participant participating in a 
                program established under this subsection shall 
                be required to complete the requirements of a 
                postsecondary 2- or 4-year degree program or a 
                vocational educational training program within 
                the normal timeframe (as determined by the 
                institution operating the 2- or 4-year degree 
                program or a vocational educational training 
                program) for full-time students seeking the 
                particular degree or completing the vocational 
                educational training program.
                  (B) Exception.--
                          (i) In general.--For good cause, the 
                        State may allow an eligible participant 
                        to complete their degree requirements 
                        or vocational educational training 
                        program within a period not to exceed 
                        1\1/2\ times the normal timeframe 
                        established under subparagraph (A) 
                        (unless further modification is 
                        required by the Americans with 
                        Disabilities Act of 1990 (42 U.S.C. 
                        12101 et seq.), or section 504 of the 
                        Rehabilitation Act of 1973 (29 U.S.C. 
                        794)) and may modify the requirements 
                        applicable to an individual 
                        participating in the program. For 
                        purposes of the preceding sentence, 
                        good cause includes, with respect to an 
                        eligible participant, the presence of 1 
                        or more significant barriers, as 
                        determined by the State, to normal 
                        participation by the participant, such 
                        as the need to care for a family member 
                        with special needs.
                          (ii) Inclusion of barriers in state 
                        plan addendum.--A State shall identify 
                        and define in the addendum to the State 
                        plan under paragraph (2) the barriers 
                        that make an eligible participant 
                        eligible for the good cause exception 
                        permitted under clause (i).
          (5) Support services described.--For purposes of 
        paragraph (1), the support services described in this 
        paragraph include any or all of the following during 
        the period the eligible participant is participating in 
        the program established under this subsection:
                  (A) Child care.
                  (B) Transportation services.
                  (C) Payment for books and supplies.
                  (D) Other services provided under policies 
                determined by the State to ensure coordination 
                and lack of duplication with other programs 
                available to provide support services.
          (6) Rules for inclusion in monthly work participation 
        rates.--
                  (A) Families counted as participating if they 
                meet the requirements of subparagraph (b) or 
                (c).--Subject to subparagraph (D), for each 
                eligible participant who receives assistance 
                under the State program funded under this part, 
                a State may elect, for purposes of determining 
                monthly participation rates under section 
                407(b)(1)(B)(i), to include such participant in 
                the determination of such rates in accordance 
                with subparagraph (B) or (C).
                  (B) Full or partial credit for hours of 
                participation in educational or related 
                activities.--
                          (i) In general.--Subject to clause 
                        (iv), an eligible participant who 
                        participates in educational or related 
                        activities (as determined by the State 
                        in accordance with clause (ii)) under a 
                        program established under this 
                        subsection shall be given credit for 
                        the number of hours of such 
                        participation to the extent that an 
                        adult recipient or minor child head of 
                        household would be given credit under 
                        section 407(c) for being engaged in the 
                        same number of hours of work activities 
                        described in paragraph (1), (2), (3), 
                        (4), (5), (6), (7), (8), or (12) of 
                        section 407(d).
                          (ii) Related activities.--For 
                        purposes of clause (i), related 
                        activities shall include--
                                  (I) work activities described 
                                in paragraph (1), (2), (3), 
                                (4), (5), (6), (7), (8), or 
                                (12) of section 407(d);
                                  (II) work study, practicums, 
                                internships, clinical 
                                placements, laboratory or field 
                                work, or such other activities 
                                that will enhance the eligible 
                                participant's employability in 
                                the participant's field of 
                                study, as determined by the 
                                State; or
                                  (III) subject to clause 
                                (iii), study time.
                          (iii) Limitation on inclusion of 
                        study time.--For purposes of 
                        determining hours per week of 
                        participation by an eligible 
                        participant under a program established 
                        under this subsection, a State may not 
                        count study time of less than 1 hour 
                        for every hour of class time or more 
                        than 2 hours for every hour of class 
                        time.
                          (iv) Total number of hours limited to 
                        being counted as 1 family.--In no event 
                        may hours per week of participation by 
                        an eligible participant under a program 
                        established under this subsection 
                        result in the participant's family 
                        being counted as more than 1 family for 
                        purposes of determining monthly 
                        participation rates under section 
                        407(b)(1)(B)(i).
                  (C) Full credit for being engaged in direct 
                work activities for certain hours per week.--
                          (i) In general.--A family that 
                        includes an eligible participant who, 
                        in addition to complying with the full-
                        time educational participation 
                        requirements of the postsecondary 2- or 
                        4-year degree program or vocational 
                        educational training program that the 
                        participant is enrolled in, 
                        participates in an activity described 
                        in subclause (I) or (II) of 
                        subparagraph (B)(ii) for not less than 
                        the number of hours required per week 
                        under clause (ii) shall be counted as 1 
                        family.
                          (ii) Required hours per week.--For 
                        purposes of clause (i), subject to 
                        clause (iii), the number of hours per 
                        week are--
                                  (I) 6 hours per week during 
                                the first 12-month period that 
                                an eligible participant 
                                participates in a program 
                                established under this 
                                subsection;
                                  (II) 8 hours per week during 
                                the second 12-month period of 
                                such participation;
                                  (III) 10 hours per week 
                                during the third 12-month 
                                period of such participation; 
                                and
                                  (IV) 12 hours per week during 
                                the fourth or any other 
                                succeeding 12-month period of 
                                such participation.
                          (iii) Modification of requirements 
                        for good cause.--A State may modify the 
                        number of hours per week required under 
                        clause (ii) for good cause. For 
                        purposes of the preceding sentence, 
                        good cause includes, with respect to an 
                        eligible participant, the presence of 1 
                        or more significant barriers, as 
                        determined by the State, to normal 
                        participation by the participant, such 
                        as the need to care for a family member 
                        with special needs.
                  (D) Cap on number of participants that may be 
                included in monthly work participation rates.--
                The monthly number of families that include an 
                eligible participant and that are treated as 
                being engaged in work may not exceed an amount 
                equal to 10 percent of the families to which 
                assistance is provided under the State program 
                funded under this part for such month.
          (7) Applicability.--Nothing in this subsection shall 
        be construed as restricting the authority or discretion 
        of a State in the use of grants provided under section 
        403 or the expenditure of qualified State expenditures 
        (as defined in section 409(a)(7)(B)(i)) for programs or 
        activities other than the program established under 
        this subsection.

[SEC. 406. FEDERAL LOANS FOR STATE WELFARE PROGRAMS.

  [(a) Loan Authority.--
          [(1) In general.--The Secretary shall make loans to 
        any loan-eligible State, for a period to maturity of 
        not more than 3 years.
          [(2) Loan-eligible state.--As used in paragraph (1), 
        the term ``loan-eligible State'' means a State against 
        which a penalty has not been imposed under section 
        409(a)(1).
  [(b) Rate of Interest.--The Secretary shall charge and 
collect interest on any loan made under this section at a rate 
equal to the current average market yield on outstanding 
marketable obligations of the United States with remaining 
periods to maturity comparable to the period to maturity of the 
loan.
  [(c) Use of Loan.--A State shall use a loan made to the State 
under this section only for any purpose for which grant amounts 
received by the State under section 403(a) may be used, 
including--
          [(1) welfare anti-fraud activities; and
          [(2) the provision of assistance under the State 
        program to Indian families that have moved from the 
        service area of an Indian tribe with a tribal family 
        assistance plan approved under section 412.
  [(d) Limitation on Total Amount of Loans to a State.--The 
cumulative dollar amount of all loans made to a State under 
this section during fiscal years 1997 through 2003 shall not 
exceed 10 percent of the State family assistance grant.
  [(e) Limitation on Total Amount of Outstanding Loans.--The 
total dollar amount of loans outstanding under this section may 
not exceed $1,700,000,000.
  [(f) Appropriation.--Out of any money in the Treasury of the 
United States not otherwise appropriated, there are 
appropriated such sums as may be necessary for the cost of 
loans under this section.]

SEC. 407. MANDATORY WORK REQUIREMENTS.

  [(a) Participation Rate Requirements.--
          [(1) All families.--A State to which a grant is made 
        under section 403 for a fiscal year shall achieve the 
        minimum participation rate specified in the following 
        table for the fiscal year with respect to all families 
        receiving assistance under the State program funded 
        under this part:

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

          [(2) 2-parent families.--A State to which a grant is 
        made under section 403 for a fiscal year shall achieve 
        the minimum participation rate specified in the 
        following table for the fiscal year with respect to 2-
        parent families receiving assistance under the State 
        program funded under this part:

                                                            [The minimum
                                                           participation
        [If the fiscal year is:                                 rate is:
            [1997.......................................           75   
            [1998.......................................           75   
            [1999 or thereafter.........................           90. ]

  (a) Participation Rate Requirements.--
          (1) In general.--A State to which a grant is made 
        under section 403 for a fiscal year shall achieve a 
        minimum participation rate with respect to all families 
        receiving assistance under the State program funded 
        under this part that is equal to not less than--
                  (A) 50 percent for fiscal year 2006;
                  (B) 55 percent for fiscal year 2007;
                  (C) 60 percent for fiscal year 2008;
                  (D) 65 percent for fiscal year 2009; and
                  (E) 70 percent for fiscal year 2010 and each 
                succeeding fiscal year.
          (2) Limitation on reduction of participation rate 
        through application of credits.--Notwithstanding any 
        other provision of this part, the net effect of any 
        percentage reduction in the minimum participation rate 
        otherwise required under this section with respect to 
        families receiving assistance under the State program 
        funded under this part as a result of the application 
        of any employment credit, caseload reduction credit, or 
        other credit against such rate for a fiscal year, shall 
        not exceed--
                  (A) 40 percentage points, in the case of 
                fiscal year 2006;
                  (B) 35 percentage points, in the case of 
                fiscal year 2007;
                  (C) 30 percentage points, in the case of 
                fiscal year 2008;
                  (D) 25 percentage points, in the case of 
                fiscal year 2009; or
                  (E) 20 percentage points, in the case of 
                fiscal year 2010 or any fiscal year thereafter.
  (b) Calculation of Participation Rates.--
          (1) All families.--
                  (A) Average monthly rate.--For purposes of 
                subsection (a)(1), the participation rate for 
                all families of a State for a fiscal year is 
                the average of the participation rates for all 
                families of the State for each month in the 
                fiscal year.
                  (B) Monthly participation rates.--The 
                participation rate of a State for all families 
                of the State for a month, expressed as a 
                percentage, is--
                          (i) the number of families receiving 
                        assistance under the State program 
                        funded under this part that include an 
                        adult or a minor child head of 
                        household who is engaged in work for 
                        the month; divided by
                          (ii) the amount by which--
                                  (I) the number of families 
                                receiving such assistance 
                                during the month that include 
                                an adult or a minor child head 
                                of household receiving such 
                                assistance; exceeds
                                  (II) the number of families 
                                receiving such assistance that 
                                are subject in such month to a 
                                penalty described in subsection 
                                (e)(1) but have not been 
                                subject to such penalty for 
                                more than 3 months within the 
                                preceding 12-month period 
                                (whether or not consecutive).
          [(2) 2-parent families.--
                  [(A) Average monthly rate.--For purposes of 
                subsection (a)(2), the participation rate for 
                2-parent families of a State for a fiscal year 
                is the average of the participation rates for 
                2-parent families of the State for each month 
                in the fiscal year.
                  [(B) Monthly participation rates.--The 
                participation rate of a State for 2-parent 
                families of the State for a month shall be 
                calculated by use of the formula set forth in 
                paragraph (1)(B), except that in the formula 
                the term ``number of 2-parent families'' shall 
                be substituted for the term ``number of 
                families'' each place such latter term appears.
                  [(C) Family with a disabled parent not 
                treated as a 2-parent family.--A family that 
                includes a disabled parent shall not be 
                considered a 2-parent family for purposes of 
                subsections (a) and (b) of this section.]
          (2) Employment credit.--
                  (A) In general.--Subject to subsection 
                (a)(2), beginning with fiscal year 2008, the 
                Secretary shall, by regulation, reduce the 
                minimum participation rate otherwise applicable 
                to a State under this subsection for a fiscal 
                year 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;
                          (ii) with respect to a recipient of 
                        assistance or former 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; or
                          (iii) with respect to families 
                        described in subclause (II) or (III) of 
                        subparagraph (B)(ii), using such other 
                        data (including data relating to 
                        qualified State expenditures (as 
                        defined in section 409(a)(7)(B)(i)) or 
                        any other State programs that are used 
                        to provide nonrecurring short-term 
                        benefits or substantial child care or 
                        transportation assistance to such 
                        families) as the Secretary may require 
                        in order to determine the employment 
                        credit for a State under this 
                        paragraph.
                  (B) Calculation of credit.--
                          (i) In general.--The employment 
                        credit for a State for a fiscal year is 
                        an amount equal to the sum of the 
                        amounts determined under clause (ii), 
                        divided by the amount determined under 
                        clause (iii).
                          (ii) Numerator.--For purposes of 
                        clause (i), the amounts determined 
                        under this clause are the following:
                                  (I) Twice the quarterly 
                                average unduplicated number of 
                                families that include an adult 
                                or minor child head of 
                                household recipient of 
                                assistance under the State 
                                program funded under this part, 
                                that ceased to receive such 
                                assistance for at least 2 
                                consecutive months following 
                                case closure for the family 
                                during the applicable period 
                                (as defined in clause (v)), 
                                that did not receive assistance 
                                under a separate State-funded 
                                program during such 2-month 
                                period, and that were employed 
                                during the calendar quarter 
                                immediately succeeding the 
                                quarter in which the assistance 
                                under the State program funded 
                                under this part ceased.
                                  (II) At the option of the 
                                State, twice the quarterly 
                                average number of families that 
                                received a nonrecurring short-
                                term benefit under the State 
                                program funded under this part 
                                during the applicable period 
                                (as defined in clause (v)), 
                                that were employed during the 
                                calendar quarter immediately 
                                succeeding the quarter in which 
                                the nonrecurring short-term 
                                benefit was so received, and 
                                that earned at least $1,000 
                                during such succeeding calendar 
                                quarter.
                                  (III) At the option of the 
                                State, twice the quarterly 
                                average number of families that 
                                include an adult who is 
                                receiving substantial child 
                                care (including child care 
                                funded by transfers under 
                                section 404(d) to the Child 
                                Care and Development Block 
                                Grant Act of 1990) or 
                                transportation assistance (as 
                                defined by the Secretary, in 
                                consultation with directors of 
                                State programs funded under 
                                this part, which definition 
                                shall specify for each type of 
                                assistance a threshold which is 
                                a dollar value or a length of 
                                time over which the assistance 
                                is received and which takes 
                                into account large one-time 
                                transition payments) during the 
                                applicable period (as defined 
                                in clause (v)) and that were 
                                employed during the calendar 
                                quarter in which the 
                                substantial child care or 
                                transportation assistance was 
                                so received and earned at least 
                                $1,000 during such calendar 
                                quarter.
                          (iii) Denominator.--For purposes of 
                        clause (i), the amount determined under 
                        this clause is the amount equal to the 
                        sum of the following:
                                  (I) The average monthly 
                                number of families that include 
                                an adult or minor child head of 
                                household who received 
                                assistance under the State 
                                program funded under this part 
                                during the applicable period 
                                (as defined in clause (v)).
                                  (II) If the State elected the 
                                option under clause (ii)(II), 
                                twice the quarterly average 
                                number of families that 
                                received a nonrecurring short-
                                term benefit under the State 
                                program funded under this part 
                                during the applicable period 
                                (as defined in clause (v)).
                                  (III) If the State elected 
                                the option under clause 
                                (ii)(III), twice the quarterly 
                                average number of families that 
                                includes an adult who is 
                                receiving substantial child 
                                care (including child care 
                                funded by transfers under 
                                section 404(d) to the Child 
                                Care and Development Block 
                                Grant Act of 1990) or 
                                transportation assistance 
                                during the applicable period 
                                (as defined in clause (v)).
                          (iv) Special rule for former 
                        recipients with higher earnings.--In 
                        calculating the employment credit for a 
                        State for a fiscal year, in the case of 
                        a family that includes an adult or a 
                        minor child head of household that is 
                        to be included in the amount determined 
                        under clause (ii)(I) and that, with 
                        respect to the quarter in which the 
                        family's earnings was examined during 
                        the applicable period, earned at least 
                        33 percent of the average quarterly 
                        earnings in the State (determined on 
                        the basis of State unemployment data), 
                        the family shall be considered to be 
                        1.5 families.
                          (v) Definition of applicable 
                        period.--For purposes of this 
                        paragraph, the term `applicable period' 
                        means, with respect to a fiscal year, 
                        the most recent 4 quarters for which 
                        data are available to the Secretary 
                        providing information on the work 
                        status of--
                                  (I) individuals in the 
                                quarter after the individuals 
                                ceased receiving assistance 
                                under the State program funded 
                                under this part;
                                  (II) at State option, 
                                individuals in the quarter 
                                after the individuals received 
                                a short-term, nonrecurring 
                                benefit; and
                                  (III) at State option, 
                                individuals in the quarter in 
                                which the individuals received 
                                substantial child care or 
                                transportation assistance.
                  (C) Notification to state.--Not later than 
                August 31 of each fiscal year, the Secretary 
                shall--
                          (i) determine, on the basis of the 
                        applicable period, the amount of the 
                        employment credit that will be used in 
                        determining the minimum participation 
                        rate for a State under subsection (a) 
                        for the immediately succeeding fiscal 
                        year; and
                          (ii) notify each State conducting a 
                        State program funded under this part of 
                        the amount of the employment credit for 
                        such program for the succeeding fiscal 
                        year.
          (3) Pro rata reduction of participation rate due to 
        caseload reductions not required by federal law and not 
        resulting from changes in state eligibility criteria.--
                  (A) In general.--The Secretary shall 
                prescribe regulations for reducing the minimum 
                participation rate otherwise required by this 
                section for a fiscal year by the number of 
                percentage points equal to the number of 
                percentage points (if any) by which--
                          (i) the average monthly number of 
                        families receiving assistance during 
                        the immediately preceding fiscal year 
                        under the State program funded under 
                        this part is less than
                          (ii) the average monthly number of 
                        families that received aid under the 
                        State plan approved under part A (as in 
                        effect on September 30, 1995) during 
                        fiscal year 1995.
                The minimum participation rate shall not be 
                reduced to the extent that the Secretary 
                determines that the reduction in the number of 
                families receiving such assistance is required 
                by Federal law.
                  (B) Eligibility changes not counted.--The 
                regulations required by subparagraph (A) shall 
                not take into account families that are 
                diverted from a State program funded under this 
                part as a result of differences in eligibility 
                criteria under a State program funded under 
                this part and eligibility criteria under the 
                State program operated under the State plan 
                approved under part A (as such plan and such 
                part were in effect on September 30, 1995). 
                Such regulations shall place the burden on the 
                Secretary to prove that such families were 
                diverted as a direct result of differences in 
                such eligibility criteria.
          (4) State option to include individuals receiving 
        assistance under a tribal family assistance plan or 
        tribal work program.--For purposes of [paragraphs 
        (1)(B) and (2)(B)] determining monthly participation 
        rates under paragraph (1)(B), a State may, at its 
        option, include families in the State that are 
        receiving assistance under a tribal family assistance 
        plan approved under section 412 or under a tribal work 
        program to which funds are provided under this part.
          [(5) State option for participation requirement 
        exemptions.--For any fiscal year, a State may, at its 
        option, not require an individual who is a single 
        custodial parent caring for a child who has not 
        attained 12 months of age to engage in work, and may 
        disregard such an individual in determining the 
        participation rates under subsection (a) for not more 
        than 12 months.]
          (5) State options for participation requirement 
        exemptions.--At the option of a State, a State may, on 
        a case-by-case basis--
                  (A) not include a family in the determination 
                of the monthly participation rate for the State 
                in the first month for which the family 
                receives assistance from the State program 
                funded under this part on the basis of the most 
                recent application for such assistance; or
                  (B) not require a family in which the 
                youngest child has not attained 12 months of 
                age to engage in work, and may disregard that 
                family in determining the minimum participation 
                rate under subsection (a) for the State for not 
                more than 12 months.
  [(c) Engaged in Work.--
          [(1) General rules.--
                  [(A) All families.--For purposes of 
                subsection (b)(1)(B)(i), a recipient is engaged 
                in work for a month in a fiscal year if the 
                recipient is participating in work activities 
                for at least the minimum average number of 
                hours per week specified in the following table 
                during the month, not fewer than 20 hours per 
                week of which are attributable to an activity 
                described in paragraph (1), (2), (3), (4), (5), 
                (6), (7), (8), or (12) of subsection (d), 
                subject to this subsection:

                                                            [The minimum
        [If the month is                               average number of
          in fiscal year:                             hours per week is:
              [1997.....................................           20   
              [1998.....................................           20   
              [1999.....................................           25   
              [2000 or thereafter.......................           30.  

                  [(B) 2-parent families.--For purposes of 
                subsection (b)(2)(B), an individual is engaged 
                in work for a month in a fiscal year if--
                          [(i) the individual and the other 
                        parent in the family are participating 
                        in work activities for a total of at 
                        least 35 hours per week during the 
                        month, not fewer than 30 hours per week 
                        of which are attributable to an 
                        activity described in paragraph (1), 
                        (2), (3), (4), (5), (6), (7), (8), or 
                        (12) of subsection (d), subject to this 
                        subsection; and
                          [(ii) if the family of the individual 
                        receives federally-funded child care 
                        assistance and an adult in the family 
                        is not disabled or caring for a 
                        severely disabled child, the individual 
                        and the other parent in the family are 
                        participating in work activities for a 
                        total of at least 55 hours per week 
                        during the month, not fewer than 50 
                        hours per week of which are 
                        attributable to an activity described 
                        in paragraph (1), (2), (3), (4), (5), 
                        (6), (7), (8), or (12) of subsection 
                        (d).
          [(2) Limitations and special rules.--
                  [(A) Number of weeks for which job search 
                counts as work.--
                          [(i) Limitation.--Notwithstanding 
                        paragraph (1) of this subsection, an 
                        individual shall not be considered to 
                        be engaged in work by virtue of 
                        participation in an activity described 
                        in subsection (d)(6) of a State program 
                        funded under this part, after the 
                        individual has participated in such an 
                        activity for 6 weeks (or, if the 
                        unemployment rate of the State is at 
                        least 50 percent greater than the 
                        unemployment rate of the United States 
                        or the State is a needy State (within 
                        the meaning of section 403(b)(6)), 12 
                        weeks), or if the participation is for 
                        a week that immediately follows 4 
                        consecutive weeks of such 
                        participation.
                          [(ii) Limited authority to count less 
                        than full week of participation.--For 
                        purposes of clause (i) of this 
                        subparagraph, on not more than 1 
                        occasion per individual, the State 
                        shall consider participation of the 
                        individual in an activity described in 
                        subsection (d)(6) for 3 or 4 days 
                        during a week as a week of 
                        participation in the activity by the 
                        individual.
                  [(B) Single parent or relative with child 
                under age 6 deemed to be meeting work 
                participation requirements if parent or 
                relative is engaged in work for 20 hours per 
                week.--For purposes of determining monthly 
                participation rates under subsection 
                (b)(1)(B)(i), a recipient who is the only 
                parent or caretaker relative in the family of a 
                child who has not attained 6 years of age is 
                deemed to be engaged in work for a month if the 
                recipient is engaged in work for an average of 
                at least 20 hours per week during the month.
                  [(C) Single teen head of household or married 
                teen who maintains satisfactory school 
                attendance deemed to be meeting work 
                participation requirements.--For purposes of 
                determining monthly participation rates under 
                sub-section (b)(1)(B)(i), a recipient who is 
                married or a head of household and has not 
                attained 20 years of age is deemed to be 
                engaged in work for a month in a fiscal year if 
                the recipient--
                          [(i) maintains satisfactory 
                        attendance at secondary school or the 
                        equivalent during the month; or
                          [(ii) participates in education 
                        directly related to employment for an 
                        average of at least 20 hours per week 
                        during the month.
                  [(D) Limitation on number of persons who may 
                be treated as engaged in work by reason of 
                participation in educational activities.--For 
                purposes of determining monthly participation 
                rates under paragraphs (1)(B)(i) and (2)(B) of 
                subsection (b), not more than 30 percent of the 
                number of individuals in all families and in 2-
                parent families, respectively, in a State who 
                are treated as engaged in work for a month may 
                consist of individuals who are determined to be 
                engaged in work for the month by reason of 
                participation in vocational educational 
                training, or (if the month is in fiscal year 
                2000 or thereafter) deemed to be engaged in 
                work for the month by reason of subparagraph 
                (C) of this paragraph.]
  (c) Determination of Countable Hours Engaged in Work.--
          (1) Single parent or relative whose youngest child 
        has attained age 6.--
                  (A) Minimum average number of hours per 
                week.--Subject to the succeeding paragraphs of 
                this subsection, a family in which an adult 
                recipient or minor child head of household in 
                the family is participating in work activities 
                described in subsection (d) shall be treated as 
                engaged in work for purposes of determining 
                monthly participation rates under subsection 
                (b)(1)(B)(i) as follows:
                          (i) In the case of a family in which 
                        the total number of hours in which any 
                        adult recipient or minor child head of 
                        household in the family is 
                        participating in such work activities 
                        for an average of at least 20, but less 
                        than 24, hours per week in a month, as 
                        0.675 of a family.
                          (ii) In the case of a family in which 
                        the total number of hours in which any 
                        adult recipient or minor child head of 
                        household in the family is 
                        participating in such work activities 
                        for an average of at least 24, but less 
                        than 30, hours per week in a month, as 
                        0.75 of a family.
                          (iii) In the case of a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        30, but less than 34, hours per week in 
                        a month, as 0.875 of a family.
                          (iv) In the case of a family in which 
                        the total number of hours in which any 
                        adult recipient or minor child head of 
                        household in the family is 
                        participating in such work activities 
                        for an average of at least 34, but less 
                        than 35, hours per week in a month, as 
                        1 family.
                          (v) In the case of a family in which 
                        the total number of hours in which any 
                        adult recipient or minor child head of 
                        household in the family is 
                        participating in such work activities 
                        for an average of at least 35, but less 
                        than 38, hours per week in a month, as 
                        1.05 families.
                          (vi) In the case of a family in which 
                        the total number of hours in which any 
                        adult recipient or minor child head of 
                        household in the family is 
                        participating in such work activities 
                        for an average of at least 38 hours per 
                        week in a month, as 1.08 families.
                  (B) Direct work activities required for an 
                average of 24 hours per week.--Except as 
                provided in subparagraph (C)(i), a State may 
                not count any hours of participation in work 
                activities specified in paragraph (9), (10), or 
                (11) of subsection (d) of any adult recipient 
                or minor child head of household in a family 
                before the total number of hours of 
                participation by any adult recipient or minor 
                child head of household in the family in work 
                activities described in paragraph (1), (2), 
                (3), (4), (5), (6), (7), (8), or (12) of 
                subsection (d) for the family for the month 
                averages at least 24 hours per week.
                  (C) State flexibility to count participation 
                in certain activities.--
                          (i) Qualified activities for 3-months 
                        in any 24-month period.--
                                  (I) 24-hours per week 
                                required.--Subject to 
                                subclauses (III) and (IV), for 
                                purposes of determining hours 
                                under subparagraph (A), a State 
                                may count the total number of 
                                hours any adult recipient or 
                                minor child head of household 
                                in a family engages in 
                                qualified activities described 
                                in subclause (II) as a work 
                                activity described in 
                                subsection (d), without regard 
                                to whether the recipient has 
                                satisfied the requirement of 
                                subparagraph (B), but only if--
                                          (aa) the total number 
                                        of hours of 
                                        participation in such 
                                        qualified activities 
                                        and in any work 
                                        activities described in 
                                        paragraph (1), (2), 
                                        (3), (4), (5), (6), 
                                        (7), (8), or (12) of 
                                        subsection (d) for the 
                                        family for the month 
                                        average at least 24 
                                        hours per week (except 
                                        that if such hours 
                                        average at least 20, 
                                        but less than 24, hours 
                                        per week, the State may 
                                        count that family in 
                                        accordance with 
                                        subparagraph (A)(i)); 
                                        and
                                          (bb) engaging in such 
                                        qualified activities is 
                                        a requirement of the 
                                        family self-sufficiency 
                                        plan.
                                  (II) Qualified activities 
                                described.--For purposes of 
                                subclause (I), qualified 
                                activities described in this 
                                subclause are any of the 
                                following:
                                          (aa) Postsecondary 
                                        education.
                                          (bb) Adult literacy 
                                        programs or activities, 
                                        including participation 
                                        in a program designed 
                                        to increase proficiency 
                                        in the English 
                                        language.
                                          (cc) Substance abuse 
                                        counseling or treatment 
                                        (including drug or 
                                        alcohol abuse 
                                        counseling or 
                                        treatment).
                                          (dd) Programs or 
                                        activities designed to 
                                        remove barriers to 
                                        work, as defined by the 
                                        State.
                                          (ee) Work activities 
                                        authorized under any 
                                        waiver for any State 
                                        that was continued 
                                        under section 415 
                                        before the date of 
                                        enactment of the 
                                        Personal Responsibility 
                                        and Individual 
                                        Development for 
                                        Everyone Act (without 
                                        regard to whether the 
                                        waiver expired prior to 
                                        such date of 
                                        enactment).
                                          (ff) Financial 
                                        literacy training that 
                                        is not otherwise 
                                        countable under items 
                                        (aa) through (ee), 
                                        except that the State 
                                        may not count more than 
                                        an average of 5 hours 
                                        per week of such 
                                        training.
                                          (gg) Programs or 
                                        activities design to 
                                        develop parenting 
                                        skills.
                                  (III) Limitation.--Except as 
                                provided in clause (ii), in any 
                                period of 24 consecutive 
                                months, subclause (I) shall not 
                                apply to a family for more than 
                                3 months (no more than 1 month 
                                of which may be attributable to 
                                activities described in 
                                subclause (II)(ff)).
                                  (IV) Certain activities.--The 
                                Secretary may allow a State to 
                                count the total hours of 
                                participation in qualified 
                                activities described in 
                                subclause (II) for an adult 
                                recipient or minor child head 
                                of household without regard to 
                                the minimum 24 hour average per 
                                week of participation 
                                requirement under subclause (I) 
                                if the State has demonstrated 
                                conclusively that such 
                                activities are part of a 
                                substantial and supervised 
                                program whose effectiveness in 
                                moving families to self-
                                sufficiency is superior to any 
                                alternative activities and the 
                                effectiveness of the program in 
                                moving families to self-
                                sufficiency would be 
                                substantially impaired if 
                                participating individuals 
                                participated in additional, 
                                concurrent qualified activities 
                                that enabled the individuals to 
                                achieve an average of at least 
                                24 hours per week of 
                                participation.
                          (ii) Additional 3-month period 
                        permitted for certain activities.--
                                  (I) Self-sufficiency plan 
                                requirement combined with 
                                minimum number of hours.--A 
                                State may extend the 3-month 
                                period under clause (i) for an 
                                additional 3 months in the same 
                                period of 24 consecutive months 
                                in the case of an adult 
                                recipient or minor child head 
                                of household who is receiving 
                                qualified rehabilitative 
                                services described in subclause 
                                (II) if--
                                          (aa) the total number 
                                        of hours that the adult 
                                        recipient or minor 
                                        child head of household 
                                        engages in such 
                                        qualified 
                                        rehabilitative services 
                                        and, subject to 
                                        subclause (III), a work 
                                        activity described in 
                                        paragraph (1), (2), 
                                        (3), (4), (5), (6), 
                                        (7), (8), or (12) of 
                                        subsection (d) for the 
                                        month average at least 
                                        24 hours per week; and
                                          (bb) engaging in such 
                                        qualified 
                                        rehabilitative services 
                                        is a requirement of the 
                                        family self-sufficiency 
                                        plan.
                                  (II) Qualified rehabilitative 
                                services described.--For 
                                purposes of subclause (I), 
                                qualified rehabilitative 
                                services described in this 
                                subclause are any of the 
                                following:
                                          (aa) Adult literacy 
                                        programs or activities, 
                                        including participation 
                                        in a program designed 
                                        to increase proficiency 
                                        in the English 
                                        language.
                                          (bb) In the case of 
                                        an adult recipient or 
                                        minor child head of 
                                        household who has been 
                                        certified by a 
                                        qualified medical, 
                                        mental health, or 
                                        social services 
                                        professional (as 
                                        defined by the State) 
                                        as having a physical or 
                                        mental disability, 
                                        substance abuse problem 
                                        (including a drug or 
                                        alcohol abuse problem), 
                                        or other problem that 
                                        requires a 
                                        rehabilitative service, 
                                        substance abuse 
                                        treatment (including 
                                        drug or alcohol abuse 
                                        treatment), or mental 
                                        health treatment, the 
                                        service or treatment 
                                        determined necessary by 
                                        a professional.
                          (iii) Nonapplication of limitations 
                        on job search and vocational 
                        educational training.--An adult 
                        recipient or minor child head of 
                        household who is participating in 
                        qualified activities described in 
                        subclause (II) of clause (i) during a 
                        3-month period under that clause, or 
                        receiving qualified rehabilitative 
                        services described in subclause (II) of 
                        clause (ii) during an additional period 
                        under that clause, may engage in a work 
                        activity described in paragraph (6) or 
                        (8) of subsection (d) for purposes of 
                        satisfying the minimum 24 hour average 
                        per week of participation requirement 
                        under clause (i)(I)(aa) or clause 
                        (ii)(I)(aa), respectively, without 
                        regard to any limit that otherwise 
                        applies to the activity (including the 
                        30 percent limitation on participation 
                        in vocational educational training 
                        under paragraph (6)(C)).
                          (iv) Hours in excess of an average of 
                        24 work activity hours per week.--If 
                        the total number of hours that any 
                        adult recipient or minor child head of 
                        household in a family has participated 
                        in a work activity described in 
                        paragraph (1), (2), (3), (4), (5), (6), 
                        (7), (8), or (12) of subsection (d) 
                        averages at least 24 hours per week in 
                        a month, a State, for purposes of 
                        determining hours under subparagraph 
                        (A), may count any additional hours an 
                        adult recipient or minor child head of 
                        household in the family engages in--
                                  (I) any work activity 
                                described in subsection (d), 
                                without regard to any limit 
                                that otherwise applies to the 
                                activity (including the 6-week 
                                limitation on job search and 
                                job readiness assistance under 
                                paragraph (6)(B) and the 30 
                                percent limitation on 
                                participation in vocational 
                                educational training under 
                                paragraph (6)(C)); and
                                  (II) any qualified activity 
                                described in clause (i)(II), as 
                                a work activity described in 
                                subsection (d).
          (2) Single parent or relative with a child under age 
        6.--
                  (A) In general.--A family in which an adult 
                recipient or minor child head of household in 
                the family is the only parent or caretaker 
                relative in the family of a child who has not 
                attained 6 years of age and who is 
                participating in work activities described in 
                subsection (d) shall be treated as engaged in 
                work for purposes of determining monthly 
                participation rates under subsection 
                (b)(1)(B)(i) as follows:
                          (i) In the case of such a family in 
                        which the total number of hours in 
                        which the adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        20, but less than 24, hours per week in 
                        a month, as 0.675 of a family.
                          (ii) In the case of such a family in 
                        which the total number of hours in 
                        which the adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        24, but less than 35, hours per week in 
                        a month, as 1 family.
                          (iii) In the case of such a family in 
                        which the total number of hours in 
                        which the adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        35, but less than 38, hours per week in 
                        a month, as 1.05 families.
                          (iv) In the case of such a family in 
                        which the total number of hours in 
                        which the adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        38 hours per week in a month, as 1.08 
                        families.
                  (B) Application of rules regarding direct 
                work activities and state flexibility to count 
                participation in certain activities.--
                Subparagraphs (B) and (C) of paragraph (1) 
                apply to a family described in subparagraph (A) 
                in the same manner as such subparagraphs apply 
                to a family described in paragraph (1)(A).
          (3) 2-parent families.--
                  (A) In general.--Subject to paragraph (6)(A), 
                a 2-parent family in which an adult recipient 
                or minor child head of household in the family 
                is participating in work activities described 
                in subsection (d) shall be treated as engaged 
                in work for purposes of determining monthly 
                participation rates under subsection 
                (b)(1)(B)(i) as follows:
                          (i) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        26, but less than 30, hours per week in 
                        a month, as 0.675 of a family.
                          (ii) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        30, but less than 35, hours per week in 
                        a month, as 0.75 of a family.
                          (iii) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        35, but less than 39, hours per week in 
                        a month, as 0.875 of a family.
                          (iv) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        39, but less than 40, hours per week in 
                        a month, as 1 family.
                          (v) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        40, but less than 43, hours per week in 
                        a month, as 1.05 families.
                          (vi) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        43 hours per week in a month, as 1.08 
                        families.
                  (B) Application of rules regarding direct 
                work activities and state flexibility to count 
                participation in certain activities.--
                Subparagraphs (B) and (C) of paragraph (1) 
                apply to a 2-parent family described in 
                subparagraph (A) in the same manner as such 
                subparagraphs apply to a family described in 
                paragraph (1)(A), except that subparagraph (B) 
                of paragraph (1) shall be applied to such a 2-
                parent family by substituting ``34'' for ``24'' 
                each place it appears.
          (4) 2-parent families that receive federally funded 
        child care.--
                  (A) In general.--Subject to paragraph (6)(A), 
                if a 2-parent family receives federally funded 
                child care assistance, an adult recipient or 
                minor child head of household in the family 
                participating in work activities described in 
                subsection (d) shall be treated as engaged in 
                work for purposes of determining monthly 
                participation rates under subsection 
                (b)(1)(B)(i) as follows:
                          (i) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        40, but less than 45, hours per week in 
                        a month, as 0.675 of a family.
                          (ii) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        45, but less than 51, hours per week in 
                        a month, as 0.75 of a family.
                          (iii) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        51, but less than 55, hours per week in 
                        a month, as 0.875 of a family.
                          (iv) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        55, but less than 56, hours per week in 
                        a month, as 1 family.
                          (v) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        56, but less than 59, hours per week in 
                        a month, as 1.05 families.
                          (vi) In the case of such a family in 
                        which the total number of hours in 
                        which any adult recipient or minor 
                        child head of household in the family 
                        is participating in such work 
                        activities for an average of at least 
                        59 hours per week in a month, as 1.08 
                        families.
                  (B) Application of rules regarding direct 
                work activities and state flexibility to count 
                participation in certain activities.--
                Subparagraphs (B) and (C) of paragraph (1) 
                apply to a 2-parent family described in 
                subparagraph (A) in the same manner as such 
                subparagraphs apply to a family described in 
                paragraph (1)(A), except that subparagraph (B) 
                of paragraph (1) shall be applied to such a 2-
                parent family by substituting ``50'' for ``24'' 
                each place it appears.
          (5) Calculation of hours per week.--
                  (A) In general.--The number of hours per week 
                that a family is engaged in work is the 
                quotient of--
                          (i) the total number of hours per 
                        month that the family is engaged in 
                        work; divided by
                          (ii) 4.
                  (B) Determination of total number of hours 
                per month.--The total number of hours per month 
                in which a family is engaged in work is equal 
                to the sum of the number of hours of 
                participation in work activities described in 
                subsection (d) for all adults and minor child 
                head of households in the family for the month.
          (6) Special rules.--
                  (A) Family with a disabled parent not treated 
                as a 2-parent family.--A family that includes a 
                disabled parent shall not be considered a 2-
                parent family for purposes of paragraph (3) or 
                (4).
                  (B) Number of weeks for which job search and 
                job readiness assistance counts as work.--An 
                individual shall not be considered to be 
                engaged in work for a month by virtue of 
                participation in an activity described in 
                subsection (d)(6) of a State program funded 
                under this part, after the individual has 
                participated in such an activity for 6 weeks 
                per fiscal year (or, if the unemployment rate 
                of the State is at least 50 percent greater 
                than the unemployment rate of the United 
                States, or the State meets the criteria of 
                subclause (I), (II), or (III) of section 
                403(b)(3)(A)(iii) or satisfies the applicable 
                duration requirement of section 403(b)(3)(B), 
                12 weeks per fiscal year).
                  (C) Single teen head of household or married 
                teen who maintains satisfactory school 
                attendance deemed to count as 1 family.--For 
                purposes of determining hours under the 
                preceding paragraphs of this subsection, with 
                respect to a month, a State shall count a 
                recipient who is married or a head of household 
                and who has not attained 20 years of age as 1 
                family if the recipient--
                          (i) maintains satisfactory attendance 
                        at a secondary school or the equivalent 
                        during the month; or
                          (ii) participates in education 
                        directly related to employment for an 
                        average of at least 20 hours per week 
                        during the month.
                  (D) Limitation on number of persons who may 
                be treated as engaged in work by reason of 
                participation in educational activities.--
                Except as provided in paragraph (1)(C)(ii)(I), 
                for purposes of subsection (b)(1)(B)(i), not 
                more than 30 percent of the number of 
                individuals in all families in a State who are 
                treated as engaged in work for a month may 
                consist of individuals who are--
                          (i) determined (without regard to 
                        individuals participating in a program 
                        established under section 404(l)) to be 
                        engaged in work for the month by reason 
                        of participation in vocational 
                        educational training (but only with 
                        respect to such training that is used 
                        to meet the requirements of paragraph 
                        (1)(B)); or
                          (ii) deemed to be engaged in work for 
                        the month by reason of subparagraph (C) 
                        of this paragraph.
                  (E) State option to deem parent caring for a 
                child or adult dependent for care with a 
                physical or mental impairment to be meeting all 
                or part of a family's work participation 
                requirements for a month.--
                          (i) In general.--A State may count 
                        the number of hours per week that an 
                        adult recipient or minor child head of 
                        household who is the parent or 
                        caretaker relative for a child or adult 
                        dependent for care with a physical or 
                        mental impairment engages in providing 
                        substantial ongoing care for such child 
                        or adult dependent for care if the 
                        State determines that--
                                  (I) the child or adult 
                                dependent for care has been 
                                verified through a medically 
                                acceptable clinical or 
                                diagnostic technique as having 
                                a significant physical or 
                                mental impairment or 
                                combination of impairments that 
                                require substantial ongoing 
                                care;
                                  (II) the adult recipient or 
                                minor child head of household 
                                providing such care is the most 
                                appropriate means, as 
                                determined by the State, by 
                                which such care can be provided 
                                to the child or adult dependent 
                                for care;
                                  (III) for each month in which 
                                this subparagraph applies to 
                                the adult recipient or minor 
                                child head of household, the 
                                adult recipient or minor child 
                                head of household is in 
                                compliance with the 
                                requirements of the family's 
                                self-sufficiency plan; and
                                  (IV) the recipient is unable 
                                to participate fully in work 
                                activities, after consideration 
                                of whether there are supports 
                                accessible and available to the 
                                family for the care of the 
                                child or adult dependent for 
                                care.
                          (ii) Total number of hours limited to 
                        being counted as 1 family.--In no event 
                        may a family that includes a recipient 
                        to which clause (i) applies be counted 
                        as more than 1 family for purposes of 
                        determining monthly participation rates 
                        under subsection (b)(1)(B)(i).
                          (iii) State requirements.--In the 
                        case of a recipient to which clause (i) 
                        applies, the State shall--
                                  (I) conduct regular, periodic 
                                evaluations of the family of 
                                the adult recipient or minor 
                                child head of household; and
                                  (II) include as part of the 
                                family's self-sufficiency plan, 
                                regular updates on what special 
                                needs of the child or the adult 
                                dependent for care, including 
                                substantial ongoing care, could 
                                be accommodated either by 
                                individuals other than the 
                                adult recipient or minor child 
                                head of household outside of 
                                the home.
                          (iv) Rule of construction.--Nothing 
                        in this subparagraph shall be construed 
                        as prohibiting a State from including 
                        in a recipient's self-sufficiency plan 
                        a requirement to engage in work 
                        activities described in subsection (d).
                  (F) Optional modification of work 
                requirements for recipients residing in areas 
                of indian country or an alaskan native village 
                with high joblessness.--If a State has included 
                in the State plan a description of the State's 
                policies in areas of Indian country or an 
                Alaskan Native village described in section 
                408(a)(7)(D), the State may define the 
                activities that the State will treat as being 
                work activities described in subsection (d) 
                that a recipient who resides in such an area 
                and who is participating in such activities in 
                accordance with a self-sufficiency plan under 
                section 408(b) may engage in for purposes of 
                satisfying work requirements under the State 
                program and for purposes of determining monthly 
                participation rates under subsection 
                (b)(1)(B)(i).
  (d) Work Activities Defined.--As used in this section, the 
term ``work activities'' means--
          (1) unsubsidized employment;

           *       *       *       *       *       *       *

          (8) vocational educational training (not to exceed 12 
        months with respect to any individual other than an 
        individual participating in a program established under 
        section 404(l));
          (9) job skills training directly related to 
        employment;
          (10) education directly related to employment, in the 
        case of a recipient who has not received a high school 
        diploma or a certificate of high school equivalency;
          (11) satisfactory attendance at secondary school or 
        in a course of study leading to a certificate of 
        general equivalence, in the case of a recipient who has 
        not completed secondary school or received such a 
        certificate; [and]
          (12) the provision of child care services to an 
        individual who is participating in a community service 
        program[.]; and
          (13) marriage education, marriage skills training, 
        conflict resolution counseling in the context of 
        marriage, and participation in programs that promote 
        marriage.

           *       *       *       *       *       *       *

  [(f) Nondisplacement in Work Activities.--
          [(1) In general.--Subject to paragraph (2), an adult 
        in a family receiving assistance under a State program 
        funded under this part attributable to funds provided 
        by the Federal Government may fill a vacant employment 
        position in order to engage in a work activity 
        described in subsection (d).
          [(2) No filling of certain vacancies.--No adult in a 
        work activity described in subsection (d) which is 
        funded, in whole or in part, by funds provided by the 
        Federal Government shall be employed or assigned--
                  [(A) when any other individual is on layoff 
                from the same or any substantially equivalent 
                job; or
                  [(B) if the employer has terminated the 
                employment of any regular employee or otherwise 
                caused an involuntary reduction of its 
                workforce in order to fill the vacancy so 
                created with an adult described in paragraph 
                (1).
          [(3) Grievance procedure.--A State with a program 
        funded under this part shall establish and maintain a 
        grievance procedure for resolving complaints of alleged 
        violations of paragraph (2).
          [(4) No preemption.--Nothing in this subsection shall 
        preempt or supersede any provision of State or local 
        law that provides greater protection for employees from 
        displacement.]
  (f) Nondisplacement.--
          (1) In general.--An adult in a family receiving 
        assistance under a State program funded under this 
        part, in order to engage in a work activity, shall not 
        displace any employee or position (including partial 
        displacement, such as a reduction in the hours of 
        nonovertime work, wages, or employment benefits), fill 
        any unfilled vacancy, or perform work when any 
        individual is on layoff from the same or substantially 
        equivalent job.
          (2) Prohibitions.--A work activity engaged in under a 
        program operated with funds provided under this part 
        shall not impair any existing contract for services, be 
        inconsistent with any existing law, regulation, or 
        collective bargaining agreement, or infringe upon the 
        recall rights or promotional opportunities of any 
        worker.
          (3) No supplanting of other hires.--A work activity 
        engaged in under a program operated with funds provided 
        under this part shall be in addition to any activity 
        that otherwise would be available and shall not 
        supplant the hiring of an employed worker not funded 
        under such program.
          (4) Enforcing antidisplacement protections.--
                  (A) In general.--The State shall establish 
                and maintain an impartial grievance procedure, 
                which shall include the opportunity for a 
                hearing, to resolve any complaints alleging 
                violations of the requirements of paragraph 
                (1), (2), or (3) within 60 days of receipt of 
                the complaint and, if a decision is adverse to 
                the party who filed such grievance or no 
                decision has been reached, provide for the 
                completion of an arbitration procedure within 
                75 days of receipt of the complaint or the 
                adverse decision or conclusion of the 60-day 
                period, whichever is earlier.
                  (B) Appeals.--Appeals may be made to the 
                Secretary who shall make a decision within 75 
                days of receipt of an appeal.
                  (C) Remedies.--Remedies for a violation of 
                the requirements of paragraph (1), (2), or (3) 
                shall include--
                          (i) suspension or termination of 
                        payments from funds provided under this 
                        part;
                          (ii) prohibition of placement of a 
                        participant with an employer that has 
                        violated paragraph (1), (2), or (3);
                          (iii) where applicable, reinstatement 
                        of an employee, payment of lost wages 
                        and benefits, and reestablishment of 
                        other relevant terms, conditions and 
                        privileges of employment; and
                          (iv) where appropriate, other 
                        equitable relief.
                  (D) Limitation on placement.--If a grievance 
                is filed regarding a proposed placement of a 
                participant, such placement shall not be made 
                unless such placement is consistent with the 
                resolution of the grievance pursuant to this 
                paragraph.
                  (E) Non-exclusive procedures.--The grievance 
                procedures specified in this paragraph are not 
                exclusive, and an aggrieved employee or 
                participant in a program funded under a grant 
                made under this part may pursue other remedies 
                or procedures available under applicable 
                contracts, collective bargaining agreements, or 
                Federal, State, or local laws.
                  (E) No preemption.--The provisions of this 
                subsection shall not be construed to preempt 
                any provision of State or local law that 
                affords greater protections to employees or to 
                other participants engaged in work activities 
                under a program funded under this part than is 
                afforded by the provisions of this subsection.

           *       *       *       *       *       *       *


SEC. 408. PROHIBITIONS; REQUIREMENTS.

  (a) In General.--

           *       *       *       *       *       *       *

          [(3) No assistance for families not assigning certain 
        support rights to the state.--
                  [(A) In general.--A State to which a grant is 
                made under section 403 shall require, as a 
                condition of providing assistance to a family 
                under the State program funded under this part, 
                that a member of the family assign to the State 
                any rights the family member may have (on 
                behalf of the family member or of any other 
                person for whom the family member has applied 
                for or is receiving such assistance) to support 
                from any other person, not exceeding the total 
                amount of assistance so provided to the family, 
                which accrue (or have accrued) before the date 
                the family ceases to receive assistance under 
                the program, which assignment, on and after 
                such date, shall not apply with respect to any 
                support (other than support collected pursuant 
                to section 464) which accrued before the family 
                received such assistance and which the State 
                has not collected by--
                          [(i)(I) September 30, 2000, if the 
                        assignment is executed on or after 
                        October 1, 1997, and before October 1, 
                        2000; or
                          [(II) the date the family ceases to 
                        receive assistance under the program, 
                        if the assignment is executed on or 
                        after October 1, 2000; or
                          [(ii) if the State elects to 
                        distribute collections under section 
                        457(a)(6), the date the family ceases 
                        to receive assistance under the 
                        program, if the assignment is executed 
                        on or after October 1, 1998.
                  [(B) Limitation.--A State to which a grant is 
                made under section 403 shall not require, as a 
                condition of providing assistance to any family 
                under the State program funded under this part, 
                that a member of the family assign to the State 
                any rights to support described in subparagraph 
                (A) which accrue after the date the family 
                ceases to receive assistance under the 
                program.]
          (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 paying assistance to a family under the State 
        program funded under this part, that a member of the 
        family assign to the State any right the family member 
        may have (on behalf of the family member or of any 
        other person for whom the family member has applied for 
        or is receiving such assistance) to support from any 
        other person, not exceeding the total amount of 
        assistance so paid to the family, which accrues during 
        the period that the family receives assistance under 
        the program.
          (4) No assistance for teenage parents who do not 
        attend high school or other equivalent training 
        program.--A State to which a grant is made under 
        section 403 shall not use any part of the grant to 
        provide assistance to an individual who has not 
        attained 18 years of age, is not married, has a minor 
        child at least 12 weeks of age in his or her care, and 
        has not successfully completed a high-school education 
        (or its equivalent), if the individual does not 
        participate in--
                  (A) educational activities directed toward 
                the attainment of a high school diploma or its 
                equivalent; or
                  (B) an alternative educational or training 
                program that has been approved by the State.
          (5) No assistance for teenage parents not living in 
        adult-supervised settings.--
                  (A) In general.--
                          (i) Requirement.--Except as provided 
                        in [subparagraph (B)] subparagraphs (B) 
                        and (C), a State to which a grant is 
                        made under section 403 shall not use 
                        any part of the grant to provide 
                        assistance to an individual described 
                        in clause (ii) of this subparagraph if 
                        the individual and the minor child 
                        referred to in clause (ii)(II) [do not 
                        reside in a] do not reside in a--
                                  (I) place of residence 
                                maintained by a parent, legal 
                                guardian, or other adult 
                                relative of the individual as 
                                such parent's, guardian's, or 
                                adult relative's own home[.]; 
                                and
                                  (II) transitional living 
                                youth project funded under a 
                                grant made under section 321 of 
                                the Runaway and Homeless Youth 
                                Act (42 U.S.C. 5714-1).
                          (ii) Individual described.--For 
                        purposes of clause (i), an individual 
                        described in this clause is an 
                        individual who--

           *       *       *       *       *       *       *

                  (C) Authority to provide temporary 
                assistance.--A State may use any part of a 
                grant made under section 403 to provide 
                assistance to an individual described in clause 
                (ii) of subparagraph (A) who would otherwise be 
                prohibited from receiving such assistance under 
                clause (i) of that subparagraph, subparagraph 
                (B), or section 408(a)(4) for not more than a 
                single 60-day period in order to assist the 
                individual in meeting the requirement of clause 
                (i) of subparagraph (A), subparagraph (B), or 
                section 408(a)(4) for receipt of such 
                assistance.

           *       *       *       *       *       *       *

          (6) No medical services.--
                  (A) In general.--A State to which a grant is 
                made under section 403 shall not use any part 
                of the grant to provide medical services.

           *       *       *       *       *       *       *

                  (D) Disregard of months of assistance 
                received by adult while living in indian 
                [country or an alaskan native village with 50 
                percent unemployment] country with high 
                joblessness or in an alaskan native village 
                with 50 percent unemployment.
                          (i) [In general.--In determining the 
                        number of months for which an adult has 
                        received assistance under a State or 
                        tribal program funded under this part, 
                        the State or tribe shall disregard any 
                        month during which the adult lived in 
                        Indian country or an Alaskan Native 
                        village if the most reliable data 
                        available with respect to the month (or 
                        a period including the month) indicate 
                        that at least 50 percent of the adults 
                        living in Indian country or in the 
                        village were not employed.]
                          (i) In general.--Subject to clauses 
                        (ii), (iii), and (iv), in determining 
                        the number of months for which an adult 
                        has received assistance under a State 
                        or tribal program funded under this 
                        part, the State or Indian tribe shall 
                        disregard any month during which the 
                        adult lived in Indian country if the 
                        most reliable data available (or such 
                        other data submitted by a State or 
                        tribal program as the Secretary may 
                        approve) with respect to the month (or 
                        a period including the month) indicate 
                        that at least 40 percent of the adult 
                        recipients, who were living in Indian 
                        country were jobless.
                          (ii) Economic downturn.--If--
                                  (I) in the case of a State 
                                program funded under this 
                                part--
                                          (aa) the unemployment 
                                        rate of the State is at 
                                        least 50 percent 
                                        greater than the 
                                        unemployment rate of 
                                        the United States; and
                                          (bb) the State meets 
                                        the criteria of 
                                        subclause (I), (II), or 
                                        (III) of section 
                                        403(b)(3)(A)(iii) and 
                                        satisfies the 
                                        applicable duration 
                                        requirement of section 
                                        403(b)(3)(B): or
                                  (II) in the case of a tribal 
                                program funded under this part, 
                                the Indian tribe satisfies the 
                                criteria specified under 
                                section 403(b)(1)(D)(ii),
                        clause (i) shall be applied by 
                        substituting ``35 percent'' for ``40 
                        percent''.
                          (iii) Requirement.--A month may only 
                        be disregarded under clause (i) with 
                        respect to an adult recipient described 
                        in that clause if the adult is in 
                        compliance with program requirements.
                          (iv) Continuation of 50 percent 
                        unemployment requirement for an alaskan 
                        native village.--In the case of an 
                        Alaskan Native village, this 
                        subparagraph shall be applied without 
                        regard to the amendments made by the 
                        Personal Responsibility and Individual 
                        Development for Everyone Act.
                          [(ii)] (v) Indian country defined.--
                        As used in clause (i), the term 
                        ``Indian country'' has the meaning 
                        given such term in section 1151 of 
                        title 18, United States Code.

           *       *       *       *       *       *       *

  [(b) Individual Responsibility Plans.--
          [(1) Assessment.--The State agency responsible for 
        administering the State program funded under this part 
        shall make an initial assessment of the skills, prior 
        work experience, and employability of each recipient of 
        assistance under the program who--
                  [(A) has attained 18 years of age; or
                  [(B) has not completed high school or 
                obtained a certificate of high school 
                equivalency, and is not attending secondary 
                school.
          [(2) Contents of plans.--
                  [(A) In general.--On the basis of the 
                assessment made under subsection (a) with 
                respect to an individual, the State agency, in 
                consultation with the individual, may develop 
                an individual responsibility plan for the 
                individual, which--
                          [(i) sets forth an employment goal 
                        for the individual and a plan for 
                        moving the individual immediately into 
                        private sector employment;
                          [(ii) sets forth the obligations of 
                        the individual, which may include a 
                        requirement that the individual attend 
                        school, maintain certain grades and 
                        attendance, keep school age children of 
                        the individual in school, immunize 
                        children, attend parenting and money 
                        management classes, or do other things 
                        that will help the individual become 
                        and remain employed in the private 
                        sector;
                          [(iii) to the greatest extent 
                        possible is designed to move the 
                        individual into whatever private sector 
                        employment the individual is capable of 
                        handling as quickly as possible, and to 
                        increase the responsibility and amount 
                        of work the individual is to handle 
                        over time;
                          [(iv) describes the services the 
                        State will provide the individual so 
                        that the individual will be able to 
                        obtain and keep employment in the 
                        private sector, and describe the job 
                        counseling and other services that will 
                        be provided by the State; and
                          [(v) may require the individual to 
                        undergo appropriate substance abuse 
                        treatment.
                  [(B) Timing.--The State agency may comply 
                with paragraph (1) with respect to an 
                individual--
                          [(i) within 90 days (or, at the 
                        option of the State, 180 days) after 
                        the effective date of this part, in the 
                        case of an individual who, as of such 
                        effective date, is a recipient of aid 
                        under the State plan approved under 
                        part A (as in effect immediately before 
                        such effective date); or
                          [(ii) within 30 days (or, at the 
                        option of the State, 90 days) after the 
                        individual is determined to be eligible 
                        for such assistance, in the case of any 
                        other individual.
          [(3) Penalty for noncompliance by individual.--In 
        addition to any other penalties required under the 
        State program funded under this part, the State may 
        reduce, by such amount as the State considers 
        appropriate, the amount of assistance otherwise payable 
        under the State program to a family that includes an 
        individual who fails without good cause to comply with 
        an individual responsibility plan signed by the 
        individual.
          [(4) State discretion.--The exercise of the authority 
        of this subsection shall be within the sole discretion 
        of the State.]
  (b) Family Self-Sufficiency Plans.--
          (1) In general.--A State to which a grant is made 
        under section 403 shall--
                  (A) make an initial screening and assessment, 
                in the manner deemed appropriate by the State, 
                of the skills, prior work experience, education 
                obtained, work readiness, barriers to work, and 
                employability of each adult or minor child head 
                of household recipient of assistance in the 
                family who--
                          (i) has attained age 18; or
                          (ii) has not completed high school or 
                        obtained a certificate of high school 
                        equivalency and is not attending 
                        secondary school;
                  (B) assess, in the manner deemed appropriate 
                by the State, the work support and other 
                assistance and family support services for 
                which each family receiving assistance is 
                eligible; and
                  (C) assess, in the manner deemed appropriate 
                by the State, the well-being of the children in 
                the family, and, where appropriate, activities 
                or resources to improve the well-being of the 
                children.
          (2) Contents of plans.--The State shall, in the 
        manner deemed appropriate by the State establish for 
        each family that includes an individual described in 
        paragraph (1)(A) (and, if the State elects, each family 
        that only consists of a child or children), in 
        consultation as the State deems appropriate with the 
        individual, a self-sufficiency plan that--
                  (A) specifies activities described in the 
                State plan submitted pursuant to section 402, 
                including work activities described in 
                paragraph (1), (2), (3), (4), (5), (6), (7), 
                (8), or (12) of section 407(d), as appropriate;
                  (B) is designed to assist the family in 
                achieving their maximum degree of self-
                sufficiency;
                  (C) provides for the ongoing participation of 
                the individual in the activities specified in 
                the plan;
                  (D) requires, at a minimum, each such 
                individual to participate in activities in 
                accordance with the self-sufficiency plan;
                  (E) sets forth the appropriate supportive 
                services the State intends to provide for the 
                family;
                  (F) establishes for the family a plan that 
                addresses the issue of child well-being and, 
                when appropriate, adolescent well-being, and 
                that may include services such as domestic 
                violence counseling, mental health referrals, 
                and parenting courses; and
                  (G) includes a section designed to assist the 
                family by informing the family, in such manner 
                as deemed appropriate by the State, of the work 
                support and other assistance for which the 
                family may be eligible including (but not 
                limited to)--
                          (i) the food stamp program 
                        established under the Food Stamp Act of 
                        1977 (7 U.S.C. 2011 et seq.);
                          (ii) the medicaid program funded 
                        under title XIX;
                          ``(iii) the State children's health 
                        insurance program funded under title 
                        XXI;
                          (iv) Federal or State funded child 
                        care, including child care funded under 
                        the Child Care Development Block Grant 
                        Act of 1990 (42 U.S.C. 9858 et seq.) 
                        and funds made available under this 
                        title or title XX;
                          (v) the earned income tax credit 
                        under section 32 of the Internal 
                        Revenue Code of 1986;
                          (vi) the low-income home energy 
                        assistance program established under 
                        the Low-Income Home Energy Assistance 
                        Act of 1981 (42 U.S.C. 8621 et seq.);
                          (vii) the special supplemental 
                        nutrition program for women, infants, 
                        and children established under section 
                        17 of the Child Nutrition Act of 1966 
                        (42 U.S.C. 1786);
                          (viii) programs conducted under the 
                        Workforce Investment Act of 1998 (29 
                        U.S.C. 2801 et seq.); and
                          (ix) low-income housing assistance 
                        programs.
          (3) State option to receive work participation rate 
        credit for an individual whose plan specifies that they 
        have a continuing need for rehabilitative services in 
        order to engage in direct work activities.--
                  (A) In general.--A State may elect, on a 
                case-by-case basis, to include direct work 
                activities by an individual described in 
                subparagraph (B) that are combined with 
                rehabilitative services in the determination of 
                monthly participation rates under section 
                407(b)(1)(B)(i).
                  (B) Individual described.--For purposes of 
                this paragraph, an individual described in this 
                subparagraph is an individual who--
                          ``(i) is an adult or minor child head 
                        of household recipient of assistance;
                          (ii) was treated as being engaged in 
                        work during each of the 3-month periods 
                        applicable under clauses (i) and (ii) 
                        of section 407(c)(1)(C); and
                          (iii) the State determines--
                                  (I) has been verified through 
                                a medically acceptable clinical 
                                or diagnostic technique as 
                                having a disability that 
                                impedes the individual's 
                                ability to function in a work 
                                setting; and
                                  (II) continues to need 
                                rehabilitative services in 
                                order to engage in direct work 
                                activities.
                  (C) Requirements.--A State shall not include 
                activities of an individual described in 
                subparagraph (B) in the determination of 
                monthly participation rates under section 
                407(b)(1)(B)(i) unless the following 
                requirements are met:
                          (i) Development and maintenance of 
                        collaborative relationships.--
                                  (I) In general.--The State 
                                agency responsible for 
                                administering the State program 
                                funded under this part has or 
                                is developing collaborative and 
                                referral relationships with 
                                other governmental and private 
                                agencies with expertise in 
                                disability determinations, or 
                                the development of appropriate 
                                services plans for individuals 
                                with disabilities, to address 
                                the needs of adult or minor 
                                child head of household 
                                recipients of assistance who 
                                have a disability and require 
                                such services plans in order to 
                                engage in direct work 
                                activities.
                                  (II) Inclusion of 
                                relationships with agencies 
                                funded under this part.--The 
                                governmental and private 
                                agencies referred to in 
                                subclause (I) include agencies 
                                that may be receiving funds 
                                under this part, such as State 
                                and local mental health 
                                agencies, substance abuse 
                                treatment providers (including 
                                drug or alcohol abuse treatment 
                                providers), disability service 
                                agencies, and providers of 
                                vocational rehabilitation 
                                services.
                          (ii) Self-sufficiency plan specifies 
                        the individual's continuing need for 
                        services and coordination process with 
                        providers.--The plan established under 
                        paragraph (2) for an individual 
                        described in subparagraph (B)--
                                  (I) specifies the 
                                individual's continuing need 
                                for rehabilitative services in 
                                order to engage in direct work 
                                activities; and
                                  (II) describes how the State 
                                will coordinate with each 
                                provider of such services.
                          (iii) State plan description and 
                        assurances.--The State includes in an 
                        addendum to the State plan submitted 
                        under section 402 the following:
                                  (I) Description of process 
                                for developing and maintaining 
                                collaborative relationships.--A 
                                description of the process the 
                                State shall use to develop and 
                                maintain the collaborative and 
                                referral relationships with 
                                other governmental and private 
                                agencies required under clause 
                                (i).
                                  (II) Assurance of regular 
                                contact with service providers, 
                                reevaluation, and modification 
                                of plan.--An assurance that the 
                                State shall--
                                          (aa) ensure that each 
                                        provider of 
                                        rehabilitative services 
                                        for an individual 
                                        described in 
                                        subparagraph (B) is in 
                                        regular contact with 
                                        the individual and that 
                                        the provider will 
                                        inform the State if the 
                                        individual is no longer 
                                        participating in the 
                                        rehabilitation 
                                        services;
                                          (bb) reevaluate the 
                                        individual's continuing 
                                        need for such services 
                                        not less than once each 
                                        fiscal year quarter; 
                                        and
                                          (cc) make appropriate 
                                        modifications to the 
                                        individual's self-
                                        sufficiency plan on the 
                                        basis of such 
                                        information and 
                                        reevaluations.
                          (iv) No determination that the state 
                        has failed to comply with the 
                        requirement to develop and maintain 
                        collaborative relationships.--The 
                        Secretary has not made a determination 
                        that the State has failed to comply 
                        with the requirement to develop and 
                        maintain the collaborative and referral 
                        relationships with other governmental 
                        and private agencies required under 
                        clause (i).
                  (D) Credit for hours of participation in 
                direct work activities and rehabilitation 
                services.--
                          (i) In general.--A State may include 
                        in the determination of monthly 
                        participation rates under section 
                        407(b)(1)(B)(i) the sum of the total 
                        number of hours that an individual 
                        described in subparagraph (B) 
                        participates for a month in--
                                  (I) direct work activities; 
                                and
                                  (II) rehabilitative services 
                                (but only up to the number of 
                                hours of such services that do 
                                not exceed the total number of 
                                hours that the individual 
                                participated in direct work 
                                activities for that month).
                          (ii) Application of rules for 
                        determination of countable hours of 
                        work.--The sum of hours of 
                        participation by such an individual 
                        shall be treated under section 407(c) 
                        in the same manner as a family 
                        participating in work activities 
                        described in section 407(d) is treated 
                        as engaged in work under section 
                        407(c).
                  (E) Definitions.--In this paragraph:
                          (i) Disability.--The term 
                        `disability' means a physical or mental 
                        impairment, including substance abuse 
                        and drug or alcohol abuse, that--
                                  (I) constitutes or results in 
                                a substantial impediment to 
                                employment; or
                                  (II) substantially limits 1 
                                or more major life activities.
                          (ii) Direct work activity.--The term 
                        `direct work activity' means an 
                        activity described in paragraph (1), 
                        (2), (3), (4), (5), (6), (7), (8), or 
                        (12) of section 407(d).
          (4) Review.--
                  (A) Regular review.--A State to which a grant 
                is made under section 403 shall--
                        (i) monitor the participation of each 
                        adult recipient or minor child head of 
                        household in the activities specified 
                        in the self-sufficiency plan, and 
                        regularly review the progress of the 
                        family toward self-sufficiency; and
                        (ii) upon such a review, revise the 
                        plan and activities required under the 
                        plan as the State deems appropriate in 
                        consultation with the family.
                (B) Prior to the imposition of a sanction.--
                Prior to imposing a sanction against an adult 
                recipient, minor child head of household, or a 
                family for failure to comply with a requirement 
                of the self-sufficiency plan or the State 
                program funded under this part, the State 
                shall, in the manner determined appropriate by 
                the State--
                        (i) review the self-sufficiency plan; 
                        and
                        (ii) make a good faith effort (as 
                        defined by the State) to consult with 
                        the family.
        (5) State discretion.--Subject to paragraph (3), a 
        State shall have sole discretion, consistent with 
        section 407, to define and design activities for 
        families for purposes of this subsection, to develop 
        methods for monitoring and reviewing progress pursuant 
        to this subsection, and to make modifications to the 
        plan as the State deems appropriate to assist the 
        individual in increasing their degree of self-
        sufficiency.
        (6) Application to partially sanctioned families.--The 
        requirements of this subsection shall apply in the case 
        of a family that includes an adult or minor child head 
        of household recipient of assistance who is subject to 
        a partial sanction.
        (7) Timing.--The State shall initiate screening and 
        assessment and the establishment of a family self-
        sufficiency plan in accordance with the requirements of 
        this subsection--
                (A) in the case of a family that, as of the 
                date of enactment of the Personal 
                Responsibility and Individual Development for 
                Everyone Act, is not receiving assistance from 
                the State program funded under this part, not 
                later than the later of--
                        (i) 1 year after such date of 
                        enactment; or
                        (ii) 60 days after the family first 
                        receives assistance on the basis of the 
                        most recent application for assistance; 
                        and
                (B) in the case of a family that, as of such 
                date, is receiving assistance under the State 
                program funded under this part, not later than 
                1 year after such date of enactment.
        (8) Rule of interpretation.--Nothing in this subsection 
        shall preclude a State from--
                (A) requiring participation in work and any 
                other activities the State deems appropriate 
                for helping families achieve self-sufficiency 
                and improving child well-being; or
                (B) using job search or other appropriate job 
                readiness or work activities to assess the 
                employability of individuals and to determine 
                appropriate future engagement activities.

           *       *       *       *       *       *       *


SEC. 409. PENALTIES.

(a) In General.--Subject to this section:
        (1) Use of grant in violation of this part.--

           *       *       *       *       *       *       *

        (2) Failure to submit required report.--

           *       *       *       *       *       *       *

        (3) Failure to satisfy minimum participation rates or 
        comply with family self-sufficiency plan 
        requirements.--
                (A) In general.--If the secretary determines 
                that a State to which a grant is made under 
                section 403 for a fiscal year has failed to 
                comply with section 407(a) or 408(b) for the 
                fiscal year, the Secretary shall reduce the 
                grant payable to the State under section 
                403(a)(1) for the immediately succeeding fiscal 
                year by an amount equal to the applicable 
                percentage of the State family assistance 
                grant.

           *       *       *       *       *       *       *

                [(C) 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, and may 
                reduce the penalty if the noncompliance is due 
                to circumstances that caused the State to 
                become a needy State (as defined in section 
                403(b)(6)) during the fiscal year or if the 
                noncompliance is due to extraordinary 
                circumstances such as a natural disaster or 
                regional recession. The Secretary shall provide 
                a written report to Congress to justify any 
                waiver or penalty reduction due to such 
                extraordinary circumstances.]
                  (C) Penalty based on severity of failure.--
                          (i) Failure to satisfy minimum 
                        participation rate.--If, with respect 
                        to fiscal year 2007 or any fiscal year 
                        thereafter, the Secretary finds that a 
                        State has failed or is failing to 
                        substantially comply with the 
                        requirements of section 407(a) for that 
                        fiscal year, the Secretary shall impose 
                        reductions under subparagraph (A) with 
                        respect to the immediately succeeding 
                        fiscal year based on the degree of 
                        substantial noncompliance. In assessing 
                        the degree of substantial noncompliance 
                        under section 407(a) for a fiscal year, 
                        the Secretary shall take into account 
                        factors such as--
                                  (I) the degree to which the 
                                State missed the minimum 
                                participation rate for that 
                                fiscal year;
                                  (II) the change in the number 
                                of individuals who are engaged 
                                in work in the State since the 
                                prior fiscal year; and
                                  (III) the number of 
                                consecutive fiscal years in 
                                which the State failed to reach 
                                the minimum participation rate.
                          (ii) Failure to comply with self-
                        sufficiency plan requirements.--If, 
                        with respect to fiscal year 2007 or any 
                        fiscal year thereafter, the Secretary 
                        finds that a State has failed or is 
                        failing to substantially comply with 
                        the requirements of section 408(b) for 
                        that fiscal year, the Secretary shall 
                        impose reductions under subparagraph 
                        (A) with respect to the immediately 
                        succeeding fiscal year based on the 
                        degree of substantial noncompliance. In 
                        assessing the degree of substantial 
                        noncompliance under section 408(b), the 
                        Secretary shall take into account 
                        factors such as--
                                  (I) the number or percentage 
                                of families for which a self-
                                sufficiency plan is not 
                                established in a timely fashion 
                                for that fiscal year;
                                  (II) the duration of the 
                                delays in establishing a self-
                                sufficiency plan during that 
                                fiscal year;
                                  (III) whether the failures 
                                are isolated and nonrecurring; 
                                and
                                  (IV) the existence of systems 
                                designed to ensure that self-
                                sufficiency plans are 
                                established for all families in 
                                a timely fashion and that 
                                families' progress under such 
                                plans is monitored.
                          (iii) Authority to reduce the 
                        penalty.--The Secretary may reduce the 
                        penalty that would otherwise apply 
                        under this paragraph if the substantial 
                        noncompliance is due to circumstances 
                        that caused the State to meet the 
                        criteria of subclause (I), (II), or 
                        (III) of section 403(b)(3)(A)(iii) or 
                        to satisfy the applicable duration 
                        requirement of section 403(b)(3)(B) 
                        during the fiscal year, or if the 
                        noncompliance is due to extraordinary 
                        circumstances such as a natural 
                        disaster or regional recession. The 
                        Secretary shall provide a written 
                        report to Congress to justify any 
                        waiver or penalty reduction due to such 
                        extraordinary circumstances.

           *       *       *       *       *       *       *

          (7) Failure of any state to maintain certain level of 
        historic effort.--
                  (A) In general.--The Secretary shall reduce 
                the grant payable to the State under section 
                403(a)(1) for fiscal year 1998, 1999, 2000, 
                2001, 2002, 2003, 2004, 2005, [or 2006] 2006, 
                2007, 2008, 2009, 2010, or 2011 by the amount 
                (if any) by which qualified State expenditures 
                for the then immediately preceding fiscal year 
                are less than the applicable percentage of 
                historic State expenditures with respect to 
                such preceding fiscal year.
                  (B) Definitions.--As used in this paragraph:
                          (i) Qualified state expenditures.--
                                  (I) In general.--The term 
                                ``qualified State 
                                expenditures'' means, with 
                                respect to a State and a fiscal 
                                year, the total expenditures by 
                                the State during the fiscal 
                                year, under all State programs, 
                                for any of the following with 
                                respect to eligible families:
                                          (aa) Cash assistance, 
                                        including any amount 
                                        collected by the State 
                                        as support pursuant to 
                                        a plan approved under 
                                        part D, on behalf of a 
                                        family receiving 
                                        assistance under the 
                                        State program funded 
                                        under this part, that 
                                        is distributed to the 
                                        family under section 
                                        [457(a)(1)(B)] 
                                        457(a)(1) and 
                                        disregarded in 
                                        determining the 
                                        eligibility of the 
                                        family for, and the 
                                        amount of, such 
                                        assistance.
                                          (bb) Child care 
                                        assistance.

           *       *       *       *       *       *       *

                                  (III) Exclusion of amounts 
                                expended to replace penalty 
                                grant reductions.--Such term 
                                does not include any amount 
                                expended in order to comply 
                                with paragraph [(12)] (11).

           *       *       *       *       *       *       *

                                  (V) Counting of spending on 
                                non-eligible families to 
                                prevent and reduce incidence of 
                                out-of-wedlock births, 
                                encourage formation and 
                                maintenance of healthy 2-parent 
                                married families, or encourage 
                                responsible fatherhood.--
                                Subject to subclauses (II) and 
                                (III), the term ``qualified 
                                State expenditures'' includes 
                                the total expenditures by the 
                                State during the fiscal year 
                                under all State programs for a 
                                purpose described in paragraph 
                                (3) or (4) of section 401(a).
                                  (VI) 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.
                          (ii) Applicable percentage.--The term 
                        ``applicable percentage'' means [for 
                        fiscal years 1997 through 2005,] 80 
                        percent (or, if the State meets the 
                        requirements of section 407(a) for the 
                        preceding fiscal year, 75 percent).

           *       *       *       *       *       *       *

                                  (III) any State funds which 
                                are used to match Federal funds 
                                provided under section 
                                403(a)(5); or
                                  (IV) any State funds which 
                                are expended as a condition of 
                                receiving Federal funds other 
                                than under this part.
                        Notwithstanding subclause (IV) of the 
                        preceding sentence, such term includes 
                        expenditures by a State for child care 
                        in a fiscal year to the extent that the 
                        total amount of the expenditures does 
                        not exceed the amount of State 
                        expenditures in fiscal year 1994 or 
                        1995 (whichever is the greater) that 
                        equal the non-Federal share for the 
                        programs described in section 
                        418(a)(1)(A).
                          (v) Source of data.--In determining 
                        expenditures by a State for fiscal 
                        years 1994 and 1995, the Secretary 
                        shall use information which was 
                        reported by the State on ACF Form 231 
                        or (in the case of expenditures under 
                        part F) ACF Form 331, available as of 
                        the dates specified in clauses (ii) and 
                        (iii) of section 403(a)(1)(D).
          (8) Noncompliance of state child support enforcement 
        program with requirements of part d.--
                  (A) In general.--If the Secretary finds, with 
                respect to a State's program under part D, [in 
                a fiscal year] for a fiscal year beginning on 
                or after October 1, 1997--
                          (i)(I) on the basis of data submitted 
                        by a State pursuant to section 
                        454(15)(B), or on the basis of the 
                        results of a review conducted under 
                        section 452(a)(4), that the State 
                        program failed to achieve the paternity 
                        establishment percentages (as defined 
                        in section 452(g)(2)), or to meet other 
                        performance measures that may be 
                        established by the Secretary;
                          (II) on the basis of the results of 
                        an audit or audits conducted under 
                        section 452(a)(4)(C)(i) that the State 
                        data submitted pursuant to section 
                        454(15)(B) is incomplete or unreliable; 
                        or
                          (III) on the basis of the results of 
                        an audit or audits conducted under 
                        section 452(a)(4)(C) that a State 
                        failed to substantially comply with 1 
                        or more of the requirements of part D 
                        (other than paragraph (24), or 
                        subparagraph (A) or (B)(i) of paragraph 
                        (27), of section 454); and
                          (ii) [that, with respect to the 
                        succeeding fiscal year--] that, with 
                        respect to the period described in 
                        subparagraph (D)--
                                  (I) the State failed to take 
                                sufficient corrective action to 
                                achieve the appropriate 
                                performance levels or 
                                compliance as described in 
                                subparagraph (A)(i); or
                                  (II) the data submitted by 
                                the State pursuant to section 
                                454(15)(B) is incomplete or 
                                unreliable; the amounts 
                                otherwise payable to the State 
                                under this part for quarters 
                                following [the end of such 
                                succeeding fiscal year] the end 
                                of the period in subparagraph 
                                (D), prior to quarters 
                                following the end of the first 
                                quarter throughout which the 
                                State program has achieved the 
                                paternity establishment 
                                percentages or other 
                                performance measures as 
                                described in subparagraph 
                                (A)(i)(I), or is in substantial 
                                compliance with 1 or more of 
                                the requirements of part D as 
                                described in subparagraph 
                                (A)(i)(III), as appropriate, 
                                shall be reduced by the 
                                percentage specified in 
                                subparagraph (B).
                  (B) Amount of reductions.--The reductions 
                required under subparagraph (A) shall be--
                          (i) not less than 1 nor more than 2 
                        percent;
                          (ii) not less than 2 nor more than 3 
                        percent, if the finding is the 2nd 
                        consecutive finding made pursuant to 
                        subparagraph (A); or
                          (iii) not less than 3 nor more than 5 
                        percent, if the finding is the 3rd or a 
                        subsequent consecutive such finding.
                  (C) Disregard of noncompliance which is of a 
                technical nature.--For purposes of this section 
                and section 452(a)(4), a State determined as a 
                result of an audit--
                          (i) to have failed to have 
                        substantially complied with 1 or more 
                        of the requirements of part D shall be 
                        determined to have achieved substantial 
                        compliance only if the Secretary 
                        determines that the extent of the 
                        noncompliance is of a technical nature 
                        which does not adversely affect the 
                        performance of the State's program 
                        under part D; or
                          (ii) to have submitted incomplete or 
                        unreliable data pursuant to section 
                        454(15)(B) shall be determined to have 
                        submitted adequate data only if the 
                        Secretary determines that the extent of 
                        the incompleteness or unreliability of 
                        the data is of a technical nature which 
                        does not adversely affect the 
                        determination of the level of the 
                        State's paternity establishment 
                        percentages (as defined under section 
                        452(g)(2)) or other performance 
                        measures that may be established by the 
                        Secretary.
                  (D) Period described.--Subject to 
                subparagraph (E), for purposes of this 
                paragraph, the period described in this 
                subparagraph is the period that begins with the 
                date on which the Secretary makes a finding 
                described in subparagraph (A)(i) with respect 
                to State performance in a fiscal year and ends 
                on September 30 of the fiscal year following 
                the fiscal year in which the Secretary makes 
                such a finding.
                  (E) No penalty if state corrects 
                noncompliance in finding year.--The Secretary 
                shall not take a reduction described in 
                subparagraph (A) with respect to a 
                noncompliance described in clause (i) of that 
                subparagraph if the Secretary determines that 
                the State has corrected the noncompliance in 
                the fiscal year in which the Secretary makes 
                the finding of the noncompliance.
          (9) Failure to comply with 5-year limit on 
        assistance.--If the Secretary determines that a State 
        has not complied with section 408(a)(7) during a 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.
          [(10) Failure of state receiving amounts from 
        contingency fund to maintain 100 percent of historic 
        effort.--If, at the end of any fiscal year during which 
        amounts from the Contingency Fund for State Welfare 
        Programs have been paid to a State, the Secretary finds 
        that the qualified State expenditures (as defined in 
        paragraph (7)(B)(i) (other than the expenditures 
        described in subclause (I)(bb) of that paragraph)) 
        under the State program funded under this part for the 
        fiscal year are less than 100 percent of historic State 
        expenditures (as defined in paragraph (7)(B)(iii) of 
        this subsection), excluding any amount expended by the 
        State for child care under subsection (g) or (i) of 
        section 402 (as in effect during fiscal year 1994) for 
        fiscal year 1994, the Secretary shall reduce the grant 
        payable to the State under section 403(a)(1) for the 
        immediately succeeding fiscal year by the total of the 
        amounts so paid to the State that the State has not 
        remitted under section 403(b)(6).]
          [(11)] (10) Failure to maintain assistance to adult 
        single custodial parent who cannot obtain child care 
        for child under age 6.--
                  (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 407(e)(2) 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 not more than 5 percent of the State 
                family assistance grant.
                  (B) Penalty based on severity of failure.--
                The Secretary shall impose reductions under 
                subparagraph (A) with respect to a fiscal year 
                based on the degree of noncompliance.
          [(12)] (11) Requirement to expend additional state 
        funds to replace grant reductions; penalty for failure 
        to do so.--If the grant payable to a State under 
        section 403(a)(1) for a fiscal year is reduced by 
        reason of this subsection, the State shall, during the 
        immediately succeeding fiscal year, expend under the 
        State program funded under this part an amount equal to 
        the total amount of such reductions. If the State fails 
        during such succeeding fiscal year to make the 
        expenditure required by the preceding sentence from its 
        own funds, the Secretary may reduce the grant payable 
        to the State under section 403(a)(1) for the fiscal 
        year that follows such succeeding fiscal year by an 
        amount equal to the sum of--
                  (A) not more than 2 percent of the State 
                family assistance grant; and
                  (B) the amount of the expenditure required by 
                the preceding sentence.
          [(13)] (12) Penalty for failure of state to maintain 
        historic effort during year in which welfare-to-work 
        grant is received.--If a grant is made to a State under 
        section 403(a)(5)(A) for a fiscal year and paragraph 
        (7) of this subsection requires the grant payable to 
        the State under section 403(a)(1) to be reduced for the 
        immediately succeeding fiscal year, then the Secretary 
        shall reduce the grant payable to the State under 
        section 403(a)(1) for such succeeding fiscal year by 
        the amount of the grant made to the State under section 
        403(a)(5)(A) for the fiscal year.
          [(14)] (13) Penalty for failure to reduce assistance 
        for recipients refusing without good cause to work.--

           *       *       *       *       *       *       *

  (b) Reasonable Cause Exception.--
          (1) In general.--The Secretary may not impose a 
        penalty on a State under subsection (a) with respect to 
        a requirement if the Secretary determines that the 
        State has reasonable cause for failing to comply with 
        the requirement.
          (2) Exception.--Paragraph (1) of this subsection 
        shall not apply to any penalty under paragraph [(6),] 
        (7), (8), [(10), (12), or (13)] (11), or (12) of 
        subsection (a).
  (c) Corrective Compliance Plan.--
          (1) In general.--

           *       *       *       *       *       *       *

          (2) Effect of correcting or discontinuing 
        violation.--[The Secretary]
                  (A) In General.--The Secretary may not impose 
                any penalty under subsection (a) with respect 
                to any violation covered by a State corrective 
                compliance plan accepted by the Secretary if 
                the State corrects or discontinues, as 
                appropriate, the violation pursuant to the 
                plan.
                  (B) No penalty if work program improvement.--
                The Secretary shall not impose any penalty 
                under subsection (a)(3) for a State's failure 
                to comply with section 407(a) for a fiscal year 
                if the Secretary determines that the 
                participation rate determined for the State 
                under section 407(b)(1) for that fiscal year 
                increased by at least 5 percentage points above 
                the participation rate for the State for the 
                preceding fiscal year and a State corrective 
                compliance plan accepted by the Secretary 
                specifies how the State will correct the 
                violation.

           *       *       *       *       *       *       *

          (3) Effect of failing to correct or discontinue 
        violation.--The Secretary shall assess some or all of a 
        penalty imposed on a State under subsection (a) with 
        respect to a violation if the State does not, in a 
        timely manner, correct or discontinue, as appropriate, 
        the violation pursuant to a State corrective compliance 
        plan accepted by the Secretary.
          (4) Inapplicability to certain penalties.--This 
        subsection shall not apply to the imposition of a 
        penalty against a State under paragraph [(6),] (7), 
        (8), (10), (12), or (13) of subsection (a).

           *       *       *       *       *       *       *


SEC. 411. DATA COLLECTION AND REPORTING.

  (a) Quarterly Reports by States.--
          (1) General reporting requirement.--
                  (A) Contents of report.--Each eligible State 
                shall collect on a monthly basis, and report to 
                the Secretary on a quarterly basis, the 
                following disaggregated case record information 
                on the families receiving assistance under the 
                State program funded under this part (except 
                for information relating to activities carried 
                out under section 403(a)(5)[)]: and on families 
                receiving assistance under State programs 
                funded with other qualified State expenditures 
                (as defined in section 409(a)(7)(B)(i));

           *       *       *       *       *       *       *

                          (vii) The race and educational level 
                        of each adult and minor parent in the 
                        family.
                          (viii) The race [and educational 
                        level] of each child in the family.
                          (ix) Whether the family received 
                        subsidized housing, medical assistance 
                        under the State plan approved under 
                        title XIX, food stamps, or subsidized 
                        child care[, and if the latter 2, the 
                        amount received].
                          (x) The number of months that the 
                        family has received [each type of] 
                        assistance under the program and, if 
                        applicable, the reason for receipt of 
                        the assistance for a total of more than 
                        60 months.
                          [(xi) If the adults participated in, 
                        and the number of hours per week of 
                        participation in, the following 
                        activities:
                                  [(I) Education.
                                  [(II) Subsidized private 
                                sector employment.
                                  [(III) Unsubsidized 
                                employment.
                                  [(IV) Public sector 
                                employment, work experience, or 
                                community service.
                                  [(V) Job search.
                                  [(VI) Job skills training or 
                                on-the-job training.
                                  [(VII) Vocational education.]
                          (xi) If the adult or minor child head 
                        of household participated in, and the 
                        average number of hours per week of 
                        participation in, each activity listed 
                        in subsections (c)(1)(i)(II) (including 
                        average hours per week in each 
                        different type of rehabilitative 
                        activity as prescribed by the 
                        Secretary) and (d) of section 407 and 
                        other work or self-sufficiency 
                        activities.
                          (xii) Information necessary to 
                        calculate participation rates and 
                        progress toward universal engagement 
                        under section 407.
                          (xiii) The [type and] amount of 
                        assistance received under the program, 
                        including the amount of and reason for 
                        any reduction of assistance (including 
                        sanctions).
                          (xiv) Any amount of unearned income 
                        received by any member of the family.
                          (xv) The citizenship of the members 
                        of the family.
                          (xvi) From a sample of closed cases, 
                        whether the family left the program, 
                        and if so, whether the family left due 
                        to--
                                  [(I) employment;
                                  [(II) marriage;]
                                  [(III)] (II) the prohibition 
                                set forth in section 408(a)(7);
                                  [(IV)] (III) sanction; or
                                  [(V)] (IV) State policy.
                          (xvii) With respect to each 
                        individual in the family who has not 
                        attained 20 years of age, whether the 
                        individual is a parent of a child in 
                        the family.
                          (xviii) The date the family first 
                        received assistance from the State 
                        program on the basis of the most recent 
                        application for such assistance.
                          (xix) Whether a self-sufficiency plan 
                        is established for the family in 
                        accordance with section 408(b).
                          (xx) With respect to any child in the 
                        family, the marital status of the 
                        parents at the birth of the child, and 
                        if the parents were not then married, 
                        whether the paternity of the child has 
                        been established.
                  (B) Use of samples.--
                          (i) Authority.--A State may comply 
                        with subparagraph (A) by submitting 
                        disaggregated case record information 
                        on [a sample] samples of families 
                        selected through the use of 
                        scientifically acceptable sampling 
                        methods approved by the Secretary, 
                        except that the Secretary may designate 
                        core data elements that must be 
                        reported on all families.
                          (ii) Sampling and other methods.--The 
                        Secretary shall provide the States with 
                        such case sampling plans and data 
                        collection procedures as the Secretary 
                        deems necessary to produce 
                        statistically valid estimates of the 
                        performance of State programs [funded 
                        under this part] described in 
                        subparagraph (A). The Secretary may 
                        develop and implement procedures for 
                        verifying the quality of data submitted 
                        by the States.

           *       *       *       *       *       *       *

          [(5) Report on transitional services.--The report 
        required by paragraph (1) for a fiscal quarter shall 
        include the total amount expended by the State during 
        the quarter to provide transitional services to a 
        family that has ceased to receive assistance under this 
        part because of employment, along with a description of 
        such services.]
          [(6)] (5) Report on families receiving assistance.--
        The report required by paragraph (1) for a fiscal 
        quarter shall include for each month in the quarter--

           *       *       *       *       *       *       *

          (6) Report on families that become ineligible to 
        receive assistance.--
                  (A) In general.--The report required by 
                paragraph (1) for a fiscal quarter shall 
                include for each month in the quarter the 
                number of families and total number of 
                individuals that, during the month, became 
                ineligible to receive assistance under the 
                State program funded under this part (broken 
                down by the number of families that become so 
                ineligible due to earnings, changes in family 
                composition that result in increased earnings, 
                sanctions, time limits, or other specified 
                reasons).
                  (B) Information regarding families in 
                separate state programs.--The report required 
                by paragraph (1) for a fiscal quarter shall 
                include for each month in the quarter the 
                number of families and total number of 
                individuals that, during the month, received 
                assistance under State programs funded with 
                qualified State expenditures (as defined in 
                section 409(a)(7)(B)(i)).
          (7) Report on tanf-funded child care.--
                  (A) In general.--Subject to subparagraphs 
                (B), (C), and (D), the report required by 
                paragraph (1) for a fiscal quarter shall 
                include for each month in the quarter the 
                information described in section 658K(a) of the 
                Child Care and Development Block Grant Act of 
                1990 with respect to each family that received 
                child care that was funded in whole or in part 
                with funds provided under section 403 (other 
                than funds transferred under section 404(d)) or 
                with qualified State expenditures (as defined 
                in section 409(a)(7)(B)(i)), without regard to 
                whether the family is a recipient or former 
                recipient of assistance under the State program 
                funded under this part. A State may comply with 
                the requirement of this subparagraph through 
                the use of scientifically acceptable sampling 
                methods approved by the Secretary.
                  (B) Coordination with other reporting 
                requirements.--
                          (i) In general.--The Secretary shall 
                        coordinate the reporting required under 
                        subparagraph (A) with the reporting 
                        required under the Child Care and 
                        Development Block Grant Act of 1990 to 
                        ensure that States are not required to 
                        report duplicate information on the 
                        same families in order to satisfy both 
                        requirements.
                          (ii) Consolidated reporting.--
                        Notwithstanding section 658K(a) of the 
                        Child Care and Development Block Grant 
                        Act of 1990, the Secretary may permit a 
                        State to submit a consolidated report 
                        to satisfy the reporting required under 
                        subparagraph (A) and the reporting 
                        required under section 658K(a) of the 
                        Child Care and Development Block Grant 
                        Act of 1990, so long as the State 
                        identifies in the consolidated report 
                        the funding source for the child care 
                        provided to each family.
                  (C) Waiver of reporting requirement.--The 
                Secretary may grant a State a waiver from the 
                requirement to comply with subparagraph (A) 
                if--
                          (i) the Secretary determines that the 
                        State has demonstrated that it would be 
                        administratively or financially 
                        burdensome for the State to comply with 
                        such subparagraph; and
                          (ii) in the case of a State, the 
                        State agrees to post on a quarterly 
                        basis on the website of the State such 
                        information as the State may have 
                        regarding the characteristics of the 
                        families that received child care that 
                        was funded in whole or in part with 
                        funds provided under this part.
                  (D) Applicability.--Subparagraph (A) shall 
                apply to a State on and after the first fiscal 
                quarter that begins on or after 2 years after 
                the date of enactment of the Personal 
                Responsibility and Individual Development for 
                Everyone Act.
          (8) Report on indians served by the state program.--
        The report required by paragraph (1) for a fiscal 
        quarter shall include information on the demographics 
        and caseload characteristics of Indians served by each 
        State program funded under this part or with qualified 
        State expenditures (as defined in section 
        409(a)(7)(B)(i)) during the quarter.
          [(7)] (9) Regulations.--The Secretary shall prescribe 
        such regulations as may be necessary to define the data 
        elements and to collect the necessary data with respect 
        to which reports are required by this [subsection] 
        section, and shall consult with the Secretary of Labor 
        [in defining the data elements with respect to programs 
        operated with funds provided under section 403(a)(5).]

           *       *       *       *       *       *       *

        (3) the National Governors' Association, the American 
        Public Human Services Association, the National 
        Conference of State Legislatures, and others in 
        defining the data elements.
  (b) Annual Reports on Program Characteristics.--Not later 
than 90 days after the end of fiscal year 2006 and each 
succeeding fiscal year, each eligible State shall submit to the 
Secretary a report on the characteristics of State programs 
funded under this part and other State programs funded with 
qualified State expenditures (as defined in section 
409(a)(7)(B)(i)). The report shall include, with respect to 
each such program, the program name, a description of program 
activities, the program purpose, the program eligibility 
criteria, the sources of program funding, the number of program 
beneficiaries, sanction policies, and any program work 
requirements.
  (c) Monthly Reports on Caseload.--Not later than 3 months 
after the end of each calendar month that begins 1 year or more 
after the date of enactment of this subsection, each eligible 
State shall submit to the Secretary a report on the number of 
families and total number of individuals receiving assistance 
in the calendar month under the State program funded under this 
part and under other State programs funded with qualified State 
expenditures (as defined in section 409(a)(7)(B)(i)).
  (d) Annual Report on Performance Improvement and Progress 
Toward Universal Engagement.--Beginning with fiscal year 2007, 
not later than January 1 of each fiscal year, each eligible 
State shall submit to the Secretary a report--
          (1) on achievement and improvement during the 
        preceding fiscal year under the performance goals and 
        measures under the State program funded under this part 
        or with qualified State expenditures (as defined in 
        section 409(a)(7)(B)(i)) with respect to each of the 
        matters described in section 402(a)(1)(A)(v); and
          (2) that details State progress toward full 
        engagement for all adult or minor child head of 
        household recipients of assistance.
  (a) Funding for Tribal TANF Programs.--
  [(b)] (e) Annual Reports to the Congress by the Secretary.--
Not later than 6 months after the end of fiscal year 1997, [and 
each fiscal year thereafter] and not later than July 1 of each 
fiscal year thereafter, the Secretary shall transmit to the 
Congress a report describing--

           *       *       *       *       *       *       *

          (2) the demographic and financial characteristics of 
        [families applying for assistance,] families receiving 
        assistance[,] and families that become ineligible to 
        receive assistance;
          (3) the characteristics of each State program funded 
        under this part and other programs funded with 
        qualified State expenditures (as defined in section 
        409(a)(7)(B)(i)); [and]
          (4) the trends in employment and earnings of needy 
        families with minor children living at home[.]; and
          (5) State specific information on the demographics 
        and caseload characteristics of Indians served by each 
        State program funded under this part or with qualified 
        State expenditures (as defined in section 
        409(a)(7)(B)(i)).

SEC. 412. DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES.

  (a) Grants for Indian Tribes.--
          (1) Tribal family assistance grant.--
                  (A) In general.--For each of fiscal years 
                [1997, 1998, 1999, 2000, 2001, 2002, and 2003] 
                2006 through 2010, the Secretary shall pay to 
                each Indian tribe that has an approved tribal 
                family assistance plan a tribal family 
                assistance grant for the fiscal year in an 
                amount equal to the amount determined under 
                subparagraph (B), which shall be reduced for a 
                fiscal year, on a pro rata basis for each 
                quarter, in the case of a tribal family 
                assistance plan approved during a fiscal year 
                for which the plan is to be in effect, and 
                shall reduce the grant payable under section 
                403(a)(1) to any State in which lies the 
                service area or areas of the Indian tribe by 
                that portion of the amount so determined that 
                is attributable to expenditures by the State.

           *       *       *       *       *       *       *

          (2) Grants for indian tribes that received jobs 
        funds.--
                  [(A) In general.--For each of fiscal years 
                1997, 1998, 1999, 2000, 2001, 2002, and 2003, 
                the Secretary shall pay to each eligible Indian 
                tribe that proposes to operate a program 
                described in subparagraph (C) a grant in an 
                amount equal to the amount received by the 
                Indian tribe in fiscal year 1994 under section 
                482(i) (as in effect during fiscal year 1994).]
                  (A) Grant authority.--For each of fiscal 
                years 2006 through 2010, the Secretary shall 
                pay to each eligible Indian tribe that proposes 
                to operate a program described in subparagraph 
                (C), a grant in an amount that bears the same 
                ratio to the amount specified in subparagraph 
                (D) of this paragraph as the amount required to 
                be paid to the tribe under this paragraph for 
                fiscal year 2004 bears to the total amount 
                required to be paid under this paragraph for 
                such fiscal year.

           *       *       *       *       *       *       *

                  (D) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated 
                [$7,633,287] $12,633,287 for each fiscal year 
                specified in subparagraph (A) for grants under 
                subparagraph (A).
          (3) Welfare-to-work grants.--
                  (A) In general.--The Secretary of Labor shall 
                award a grant in accordance with this paragraph 
                to an Indian tribe for each fiscal year 
                specified in section 403(a)(5)(H) for which the 
                Indian tribe is a welfare-to-work tribe, in 
                such amount as the Secretary of Labor deems 
                appropriate, subject to subparagraph (B) of 
                this paragraph.
                  (B) Welfare-to-work tribe.--An Indian tribe 
                shall be considered a welfare-to-work tribe for 
                a fiscal year for purposes of this paragraph if 
                the Indian tribe meets the following 
                requirements:

           *       *       *       *       *       *       *

                          (iv) The Indian tribe has agreed to 
                        negotiate in good faith with the 
                        Secretary of Health and Human Services 
                        with respect to the substance and 
                        funding of any evaluation under section 
                        [413(j)] 413(i), and to cooperate with 
                        the conduct of any such evaluation.
                  (C) Limitations on use of funds.--

           *       *       *       *       *       *       *

          (4) Tribal improvement grants.--
                  (A) Tribal capacity grants.--
                          (i) In general.--Of the amount 
                        appropriated under subparagraph (D) for 
                        the period of fiscal years 2006 through 
                        2010, $40,000,000 shall be used by the 
                        Secretary to award grants for tribal 
                        human services program infrastructure 
                        improvement (as defined in clause (v)) 
                        to--
                                  (I) Indian tribes that have 
                                applied for approval of a 
                                tribal family assistance plan 
                                and that meet the requirements 
                                of clause (ii)(I);
                                  (II) Indian tribes with an 
                                approved tribal family 
                                assistance plan and that meet 
                                the requirements of clause 
                                (ii)(II); and
                                  (III) Indian tribes that have 
                                applied for approval of a 
                                foster care and adoption 
                                assistance program under 
                                section 479B or that plan to 
                                enter into, or have in place, a 
                                tribal-State cooperative 
                                agreement under section 479B(c) 
                                and that meet the requirements 
                                of clause (ii)(III).
                          (ii) Priorities for awarding of 
                        grants.--The Secretary shall give 
                        priority in awarding grants under this 
                        subparagraph as follows:
                                  (I) First, for grants to 
                                Indian tribes that have applied 
                                for approval of a tribal family 
                                assistance plan, that have not 
                                operated such a plan as of the 
                                date of enactment of the 
                                Personal Responsibility and 
                                Individual Development for 
                                Everyone Act that will have 
                                such plan approved, and that 
                                include in the plan submission 
                                provisions for tribal human 
                                services program infrastructure 
                                improvement (as so defined) and 
                                related management information 
                                systems training.
                                  (II) Second, for Indian 
                                tribes with an approved tribal 
                                family assistance plan that are 
                                not described in subclause (I) 
                                and that submit an addendum to 
                                such plan that includes 
                                provisions for tribal human 
                                services program infrastructure 
                                improvement that includes 
                                implementing or improving 
                                management information systems 
                                of the tribe (including 
                                management information systems 
                                training), as such systems 
                                relate to the operation of the 
                                tribal family assistance plan.
                                  (III) Third, for Indian 
                                tribes that have applied for 
                                approval of a foster care and 
                                adoption assistance program 
                                under section 479B or that plan 
                                to enter into, or have in 
                                place, a tribal-State 
                                cooperative agreement under 
                                section 479B(c) and that 
                                include in the plan submission 
                                under section 471 (or in an 
                                addendum to such plan) 
                                provisions for tribal human 
                                services program infrastructure 
                                improvement (as so defined) and 
                                related management information 
                                systems training.
                          (iii) Other requirements for awarding 
                        grants.--In awarding grants under this 
                        subparagraph, the Secretary--
                                  (I) may not award an Indian 
                                tribe more than 1 grant under 
                                this subparagraph per fiscal 
                                year;
                                  (II) shall award grants in 
                                such a manner as to maximize 
                                the number of Indian tribes 
                                that receive grants under this 
                                subparagraph; and
                                  (III) shall consult with 
                                Indian tribes located 
                                throughout the United States.
                          (iv) Application.--An Indian tribe 
                        desiring a grant under this 
                        subparagraph shall submit an 
                        application to the Secretary, at such 
                        time, in such manner, and containing 
                        such information as the Secretary may 
                        require.
                          (v) Definition of human services 
                        program infrastructure improvement.--In 
                        this subparagraph, the term ``human 
                        services program infrastructure 
                        improvement'' includes (but is not 
                        limited to) improvement of management 
                        information systems, management 
                        information systems-related training, 
                        equipping offices, and renovating, but 
                        not constructing, buildings, as 
                        described in an application for a grant 
                        under this subparagraph, and subject to 
                        approval by the Secretary.
                  (B) Tribal development grants.--
                          (i) In general.--Of the amount 
                        appropriated under subparagraph (D) for 
                        the period of fiscal years 2006 through 
                        2010, $35,000,000 shall be used by the 
                        Secretary to award, through the 
                        Commissioner of the Administration for 
                        Native Americans, grants to nonprofit 
                        organizations, Indian tribes, and 
                        tribal organizations to enable such 
                        organizations and tribes to provide 
                        technical assistance to Indian tribes 
                        and tribal organizations in any or all 
                        of the following areas:
                                  (I) The development and 
                                improvement of uniform 
                                commercial codes.
                                  (II) The creation or 
                                expansion of small business or 
                                microenterprise programs.
                                  (III) The development and 
                                improvement of tort liability 
                                codes.
                                  (IV) The creation or 
                                expansion of tribal marketing 
                                efforts.
                                  (V) The creation or expansion 
                                of for-profit collaborative 
                                business networks.
                                  (VI) The development of 
                                innovative uses of 
                                telecommunications to assist 
                                with distance learning or 
                                telecommuting.
                                  (VII) The development of 
                                economic opportunities and job 
                                creation in areas of high 
                                joblessness (as defined in 
                                section 408(a)(7)(D)).
                          (ii) Requirements.--
                                  (I) In general.--At least an 
                                amount equal to 30 percent of 
                                the total amount of grants 
                                awarded under this subparagraph 
                                shall be awarded to carry out 
                                clause (i)(VII).
                                  (II) Consultation.--In 
                                awarding grants under this 
                                subparagraph the Secretary 
                                shall consult with other 
                                Federal agencies with expertise 
                                in the areas described in 
                                clause (i).
                          (iii) Application.--A nonprofit 
                        organization, Indian tribe, or tribal 
                        organization desiring a grant under 
                        this subparagraph shall submit an 
                        application to the Secretary at such 
                        time, in such manner, and containing 
                        such information as the Secretary may 
                        require.
                  (C) Technical assistance.--
                          (i) In general.--Of the amount 
                        appropriated under subparagraph (D) for 
                        the period of fiscal years 2006 through 
                        2010, $5,000,000 shall be used by the 
                        Secretary for making grants, or 
                        entering into contracts, to provide 
                        technical assistance to Indian tribes--
                                  (I) in applying for or 
                                carrying out a grant made under 
                                this paragraph;
                                  (II) in applying for or 
                                carrying out a tribal family 
                                assistance plan under this 
                                section; or
                                  (III) related to best 
                                practices and approaches for 
                                State and tribal coordination 
                                on the transfer of the 
                                administration of social 
                                services programs to Indian 
                                tribes.
                          (ii) Reservation of funds.--Not less 
                        than--
                                  (I) $2,500,000 of the amount 
                                described in clause (i) shall 
                                be used by the Secretary to 
                                support, through grants or 
                                contracts, peer-learning 
                                programs among tribal 
                                administrators; and
                                  (II) $1,000,000 of such 
                                amount shall be used by the 
                                Secretary for making grants to 
                                Indian tribes to conduct 
                                feasibility studies of the 
                                capacity of Indian tribes to 
                                operate tribal family 
                                assistance plans under this 
                                part or foster care and 
                                adoption assistance programs 
                                under section 479B.
                  (D) Appropriation.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there is appropriated $80,000,000 
                for the period of fiscal years 2006 through 
                2010 to carry out this paragraph. Amounts 
                appropriated under this subparagraph shall 
                remain available until expended.
  (b) 3-Year Tribal Family Assistance Plan.--
          (1) In general.--Any Indian tribe that desires to 
        receive a tribal family assistance grant shall submit 
        to the Secretary a 3-year tribal family assistance plan 
        that--
                  (A) outlines the Indian tribe's approach to 
                providing welfare-related services for the 3-
                year period, consistent with this section;

           *       *       *       *       *       *       *

                  (E) identifies the employment opportunities 
                in or near the service area or areas of the 
                Indian tribe and the manner in which the Indian 
                tribe will cooperate and participate in 
                enhancing such opportunities for recipients of 
                assistance under the plan consistent with any 
                applicable State standards; [and]
                  (F) applies the fiscal accountability 
                provisions of section 5(f)(1) of the Indian 
                Self-Determination and Education Assistance Act 
                (25 U.S.C. 450c(f)(1)), relating to the 
                submission of a single-agency audit report 
                required by chapter 75 of title 31, United 
                States Code[.]; and
                  (G) describes how the Indian tribe will 
                ensure equitable access to benefits and 
                services provided under the plan for each 
                member of the population to be served by the 
                plan.
          (2) Approval.--The Secretary shall approve each 
        tribal family assistance plan submitted in accordance 
        with paragraph (1).
          (3) Consortium of tribes.--Nothing in this section 
        shall preclude the development and submission of a 
        single tribal family assistance plan by the 
        participating Indian tribes of an intertribal 
        consortium.

           *       *       *       *       *       *       *

  [(f) Eligibility for Federal Loans.--Section 406 shall apply 
to an Indian tribe with an approved tribal assistance plan in 
the same manner as such section applies to a State, except that 
section 406(c) shall be applied by substituting ``section 
412(a)'' for ``section 403(a)''.]
  [(g)] (f) Penalties.--
          (1) Subsections (a)(1), (a)(6), (b), and (c) of 
        section 409, shall apply to an Indian tribe with an 
        approved tribal assistance plan in the same manner as 
        such subsections apply to a State.
          (2) Section 409(a)(3) shall apply to an Indian tribe 
        with an approved tribal assistance plan by substituting 
        ``meet minimum work participation requirements 
        established under section 412(c)'' for ``comply with 
        section 407(a)''.
  [(h)] (g) Data Collection and Reporting.--Section 411 shall 
apply to an Indian tribe with an approved tribal family 
assistance plan.
  [(i)] (h) Special Rule for Indian Tribes in Alaska.--
          (1) In general.--Notwithstanding any other provision 
        of this section, and except as provided in paragraph 
        (2), an Indian tribe in the State of Alaska that 
        receives a tribal family assistance grant under this 
        section shall use the grant to operate a program in 
        accordance with requirements comparable to the 
        requirements applicable to the program of the State of 
        Alaska funded under this part. Comparability of 
        programs shall be established on the basis of program 
        criteria developed by the Secretary in consultation 
        with the State of Alaska and such Indian tribes.
          (2) Waiver.--An Indian tribe described in paragraph 
        (1) may apply to the appropriate State authority to 
        receive a waiver of the requirement of paragraph (1).
  (j) Application of Indian employment, Training and Related 
Services Demonstration Act of 1992.--Notwithstanding any other 
provision of law, if an Indian tribe elects to incorporate the 
services it provides using funds made available under this part 
into a plan under section 6 of the Indian Employment, Training 
and Related Services Demonstration Act of 1992 (25 U.S.C. 
3405), the programs authorized to be conducted with such funds 
shall be--
          (1) considered to be programs subject to section 5 of 
        the Indian Employment, Training and Related Services 
        Demonstration Act of 1992 (25 U.S.C. 3404); and
          (2) subject to the single plan and single budget 
        requirements of section 6 of that Act (25 U.S.C. 3505) 
        and the single report format required under section 11 
        of that Act (25 U.S.C. 3410).

SEC. 413. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES.

           *       *       *       *       *       *       *


  (d) Annual Ranking of States and Review of Most and Least 
Successful Work Programs.--
          [(1) Annual ranking of states.--The Secretary shall 
        rank annually the States to which grants are paid under 
        section 403 in the order of their success in placing 
        recipients of assistance under the State program funded 
        under this part into long-term private sector jobs, 
        reducing the overall welfare caseload, and, when a 
        practicable method for calculating this information 
        becomes available, diverting individuals from formally 
        applying to the State program and receiving assistance. 
        In ranking States under this subsection, the Secretary 
        shall take into account the average number of minor 
        children living at home in families in the State that 
        have incomes below the poverty line and the amount of 
        funding provided each State for such families.]
          (1) Annual ranking of states.--
                  (A) In general.--The Secretary shall rank 
                annually the States to which grants are paid 
                under section 403 in the order of their success 
                in--
                          (i) placing recipients of assistance 
                        under the State program funded under 
                        this part into unsubsidized jobs;
                          (ii) the success of the recipients in 
                        retaining employment;
                          (iii) the ability of the recipients 
                        to increase their wages;
                          (iv) the degree to which recipients 
                        have workplace attachment and 
                        advancement;
                          (v) reducing the overall welfare 
                        caseload; and
                          (vi) when a practicable method for 
                        calculating this information becomes 
                        available, diverting individuals from 
                        formally applying to the State program 
                        and receiving assistance.
                  (B) Consideration of other factors.--In 
                ranking States under this paragraph, the 
                Secretary shall take into account the average 
                number, and the average proportion, of minor 
                children living at home in families in the 
                State that have incomes below the poverty line 
                and the amount of funding provided each State 
                under this part for such families.
          (2) Annual review of most and least successful work 
        programs.--The Secretary shall review the programs of 
        the 3 States most recently ranked highest under 
        paragraph (1) and the 3 States most recently ranked 
        lowest under paragraph (1) that provide parents with 
        work experience, [assistance] aid in finding 
        employment, and other work preparation activities and 
        support services to enable the families of such parents 
        to leave the program and become self-sufficient.

           *       *       *       *       *       *       *

  [(g) Report on Circumstances of Certain Children and 
Families.--
          [(1) In general.--Beginning 3 years after the date of 
        the enactment of this section, the Secretary of Health 
        and Human Services shall prepare and submit to the 
        Committees on Ways and Means and on Education and the 
        Workforce of the House of Representatives and to the 
        Committees on Finance and on Labor and Resources of the 
        Senate annual reports that examine in detail the 
        matters described in paragraph (2) with respect to each 
        of the following groups for the period after such 
        enactment:
                  [(A) Individuals who were children in 
                families that have become ineligible for 
                assistance under a State program funded under 
                this part by reason of having reached a time 
                limit on the provision of such assistance.
                  [(B) Children born after such date of 
                enactment to parents who, at the time of such 
                birth, had not attained 20 years of age.
                  [(C) Individuals who, after such date of 
                enactment, became parents before attaining 20 
                years of age.
          [(2) Matters described.--The matters described in 
        this paragraph are the following:
                  [(A) The percentage of each group that has 
                dropped out of secondary school (or the 
                equivalent), and the percentage of each group 
                at each level of educational attainment.
                  [(B) The percentage of each group that is 
                employed.
                  [(C) The percentage of each group that has 
                been convicted of a crime or has been 
                adjudicated as a delinquent.
                  [(D) The rate at which the members of each 
                group are born, or have children, out-of-
                wedlock, and the percentage of each group that 
                is married.
                  [(E) The percentage of each group that 
                continues to participate in State programs 
                funded under this part.
                  [(F) The percentage of each group that has 
                health insurance provided by a private entity 
                (broken down by whether the insurance is 
                provided through an employer or otherwise), the 
                percentage that has health insurance provided 
                by an agency of government, and the percentage 
                that does not have health insurance.
                  [(G) The average income of the families of 
                the members of each group.
                  [(H) Such other matters as the Secretary 
                deems appropriate.]
  [(h)] (g) Funding of Studies and Demonstrations.--
          (1) In general.--Out of any money in the Treasury of 
        the United States not otherwise appropriated, there are 
        appropriated $15,000,000 for each of fiscal years 1997 
        through 2002 for the purpose of paying--

           *       *       *       *       *       *       *

  [(i)] (h) Child Poverty Rates.--
          (1) In general.--Not later than May 31, 1998, and 
        annually thereafter, the chief executive officer of 
        each State shall submit to the Secretary a statement of 
        the child poverty rate in the State as of such date of 
        enactment or the date of the most recent prior 
        statement under this paragraph.

           *       *       *       *       *       *       *

  [(j)] (i) Evaluation of Welfare-To-Work Programs.--
          (1) Evaluation.--The Secretary, in consultation with 
        the Secretary of Labor and the Secretary of Housing and 
        Urban Development--
          (2) Reports to the congress.--
                  (A) In general.--Subject to subparagraphs (B) 
                and (C), the Secretary, in consultation with 
                the Secretary of Labor and the Secretary of 
                Housing and Urban Development, shall submit to 
                the Congress reports on the projects funded 
                under [section] sections 403(a)(5) and 
                412(a)(3) and on the evaluations of the 
                projects.

           *       *       *       *       *       *       *

  (j) Performance Improvement.--The Secretary, in consultation 
with the States, shall develop uniform performance measures 
designed to assess the degree of effectiveness, and the degree 
of improvement, of State programs funded under this part in 
accomplishing the purposes of this part.
  (k) Best Practices for Addressing Domestic Violence.--
          (1) In general.--The Secretary shall, by grant, 
        contract, or interagency agreement, develop and 
        implement programs that are designed to address 
        domestic violence as a barrier to healthy 
        relationships, marriage, and economic security. 
        Programs developed and implemented under this 
        subsection shall include--
                  (A) training for caseworkers administering 
                the State program funded under this part;
                  (B) technical assistance;
                  (C) the provision of voluntary services for 
                victims of such violence; and
                  (D) activities related to the prevention of 
                domestic violence.
          (2) Domestic violence defined.--In this subsection, 
        the term ``domestic violence'' has the meaning given 
        that term in section 402(a)(7)(B).
          (3) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this 
        subsection, $10,000,000 for each of fiscal years 2006 
        through 2010. Amounts appropriated to carry out this 
        subsection shall be in addition to and not in lieu of 
        amounts otherwise appropriated to carry out programs to 
        address domestic violence.
  (l) Funding for Research, Demonstrations, and Technical 
Assistance.--
          (1) Appropriation.--
                  (A) In general.--Out of any money in the 
                Treasury of the United States not otherwise 
                appropriated, there are appropriated 
                $100,000,000 for each of fiscal years 2005 
                through 2010, which shall remain available to 
                the Secretary until expended.
                  (B) Use of funds.--
                          (i) In general.--Funds appropriated 
                        under subparagraph (A) shall be used 
                        for the purpose of--
                                  (I) conducting or supporting 
                                research and demonstration 
                                projects by public or private 
                                entities; or
                                  (II) providing technical 
                                assistance in connection with a 
                                purpose of the program funded 
                                under this part, as described 
                                in section 401(a), to States, 
                                Indian tribal organizations, 
                                sub-State entities, and such 
                                other entities as the Secretary 
                                may specify.
                          (ii) Requirement.--Not less than 80 
                        percent of the funds appropriated under 
                        subparagraph (A) for a fiscal year 
                        shall be expended for the purpose of 
                        conducting or supporting research and 
                        demonstration projects, or for 
                        providing technical assistance, in 
                        connection with activities described in 
                        section 403(a)(2)(B). Funds 
                        appropriated under subparagraph (A) and 
                        expended in accordance with this clause 
                        shall be in addition to any other funds 
                        made available under this part for 
                        activities described in section 
                        403(a)(2)(B).
          (2) Secretary's authority.--The Secretary may conduct 
        activities authorized by this subsection directly or 
        through grants, contracts, or interagency agreements 
        with public or private entities.
          (3) Requirement for use of funds.--The Secretary 
        shall not pay any funds appropriated under paragraph 
        (1)(A) to an entity for the purpose of conducting or 
        supporting research and demonstration projects 
        involving activities described in section 403(a)(2)(B) 
        unless the entity complies with the requirements of 
        section 403(a)(2)(E).
  (m) Indicators of Child Well-Being.--
          (1) In general.--The Secretary, through grants, 
        contracts, or interagency agreements shall develop 
        comprehensive indicators to assess child well-being in 
        each State.
          (2) Requirements.--
                  (A) In general.--The indicators developed 
                under paragraph (1) shall include measures 
                related to the following:
                          (i) Education.
                          (ii) Social and emotional 
                        development.
                          (iii) Health and safety.
                          (iv) Family well-being, such as 
                        family structure, income, employment, 
                        child care arrangements, and family 
                        relationships.
                  (B) Other requirements.--The data collected 
                with respect to the indicators developed under 
                paragraph (1) shall be--
                          (i) statistically representative at 
                        the State level;
                          (ii) consistent across States;
                          (iii) collected on an annual basis 
                        for at least the 5 years following the 
                        first year of collection;
                          (iv) expressed in terms of rates or 
                        percentages;
                          (v) statistically representative at 
                        the national level;
                          (vi) measured with reliability;
                          (vii) current;
                          (viii) over-sampled, with respect to 
                        low-income children and families; and
                          (ix) made publicly available.
                  (C) Consultation.--In developing the 
                indicators required under paragraph (1) and the 
                means to collect the data required with respect 
                to the indicators, the Secretary shall consult 
                and collaborate with the Federal Interagency 
                Forum on Child and Family Statistics.
          (3) Advisory panel.--
                  (A) Establishment.--The Secretary shall 
                establish an advisory panel to make 
                recommendations regarding the appropriate 
                measures and statistical tools necessary for 
                making the assessment required under paragraph 
                (1) based on the indicators developed under 
                that paragraph and the data collected with 
                respect to the indicators.
                  (B) Membership.--
                          (i) In general.--The advisory panel 
                        established under subparagraph (A) 
                        shall consist of the following:
                                  (I) One member appointed by 
                                the Secretary of Health and 
                                Human Services.
                                  (II) One member appointed by 
                                the Chairman of the Committee 
                                on Ways and Means of the House 
                                of Representatives.
                                  (III) One member appointed by 
                                the Ranking Member of the 
                                Committee on Ways and Means of 
                                the House of Representatives.
                                  (IV) One member appointed by 
                                the Chairman of the Committee 
                                on Finance of the Senate.
                                  (V) One member appointed by 
                                the Ranking Member of the 
                                Committee on Finance of the 
                                Senate.
                                  (VI) One member appointed by 
                                the Chairman of the National 
                                Governors Association, or the 
                                Chairman's designee.
                                  (VII) One member appointed by 
                                the President of the National 
                                Conference of State 
                                Legislatures or the President's 
                                designee.
                                  (VIII) One member appointed 
                                by the Director of the National 
                                Academy of Sciences, or the 
                                Director's designee.
                          (ii) Deadline.--The members of the 
                        advisory panel shall be appointed not 
                        later than 2 months after the date of 
                        enactment of the Personal 
                        Responsibility and Individual 
                        Development for Everyone Act.
                  (C) Meetings.--The advisory panel established 
                under subparagraph (A) shall meet--
                          (i) at least 3 times during the first 
                        year after the date of enactment of the 
                        Personal Responsibility and Individual 
                        Development for Everyone Act; and
                          (ii) annually thereafter for the 3 
                        succeeding years.
          (4) Appropriation.--Out of any money in the Treasury 
        of the United States not otherwise appropriated, there 
        are appropriated for each of fiscal years 2006 through 
        2010, $10,000,000 for the purpose of carrying out this 
        subsection.
  (n) Domestic Violence Prevention Grants.--
          (1) In general.--The Secretary shall award grants to 
        eligible entities to enable such entities to carry out 
        domestic violence prevention activities. In carrying 
        out this subsection, the Secretary shall make public 
        the criteria to be used by the Secretary for awarding 
        such grants.
          (2) Eligibility.--To be eligible to receive a grant 
        under this subsection, an entity shall--
                  (A) be a State, Indian tribe or tribal 
                organization, or nonprofit domestic violence 
                prevention organization; and
                  (B) submit to the Secretary an application at 
                such time, in such manner, and containing such 
                information as the Secretary may require.
          (3) Activities.--An entity shall use amounts received 
        under a grant awarded under this subsection to--
                  (A) develop and disseminate best practices 
                for addressing domestic violence (as defined in 
                section 402(a)(7)(B));
                  (B) implement voluntary skills programs on 
                domestic violence as a barrier to economic 
                security, including providing caseworker 
                training, technical assistance, and voluntary 
                services for victims of domestic violence;
                  (C) provide broad-based income support and 
                supplementation strategies that provide 
                increased assistance to low-income working 
                adults, such as housing, transportation, and 
                transitional benefits as a means to reduce 
                domestic violence; or
                  (D) carry out programs to enhance 
                relationship skills and financial management 
                skills, to teach individuals how to control 
                aggressive behavior, and to disseminate 
                information on the causes of domestic violence 
                and child abuse.
          (4) Matching requirement.--The Secretary may not 
        award a grant to an entity under this subsection unless 
        the entity agrees that, with respect to the costs to be 
        incurred by the entity in carrying out the program for 
        which the grant was awarded, the entity will make 
        available (directly or through donations from public or 
        private entities) non-Federal contributions toward such 
        costs in an amount equal to not less than 25 percent of 
        such costs ($1 for each $3 of Federal funds provided 
        under the grant).
          (5) Required consultation.--The Secretary may not 
        award a grant to a State or an Indian tribe or tribal 
        organization under this subsection unless such State, 
        tribe, or tribal organization agrees, in carrying out 
        activities under the grant, to consult with National, 
        State, local, or tribal organizations with demonstrated 
        expertise in providing aid to victims of domestic 
        violence.
          (6) Evaluation and report.--The Secretary shall, by 
        grant, contract, or interagency agreement, conduct an 
        evaluation of the activities carried out with grants 
        awarded under this subsection and shall submit a report 
        to Congress on the results of such evaluation.
          (7) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this 
        subsection, $20,000,000 for each of fiscal years 2006 
        through 2010.
  (o) Tribal Welfare Programs and Efforts To Reduce Poverty 
Among Indians.--
          (1) In general.--The Secretary, directly or through 
        grants, contracts, or interagency agreements, shall 
        conduct research on tribal family assistance programs 
        conducted under section 412 and other tribal welfare 
        programs and on efforts to reduce poverty among 
        Indians.
          (2) Priority for certain applications.--With respect 
        to applications for grants under paragraph (1), the 
        Secretary shall give priority to applications to 
        conduct research in cooperation with tribal governments 
        or tribally controlled colleges or universities.
          (3) Technical assistance.--The Secretary may use 
        funds appropriated under paragraph (4) to provide 
        technical assistance concerning data reporting and 
        collection with respect to research conducted under 
        this subsection.
          (4) Appropriation.--Out of any money in the Treasury 
        of the United States not otherwise appropriated, there 
        are appropriated $2,000,000 for fiscal year 2006 for 
        the purpose of carrying out this subsection. Funds 
        appropriated under this paragraph shall remain 
        available to the Secretary until expended.
  (p) Teen Pregnancy Prevention Resource Center.--
          (1) Authority.--
                  (A) In general.--The Secretary shall make a 
                grant to 1 nationally recognized, nonpartisan, 
                nonprofit organization that meets the 
                requirements described in subparagraph (B) to 
                establish and operate a national teen pregnancy 
                prevention resource center (in this subsection 
                referred to as the ``Resource Center'') to 
                carry out the purposes and activities described 
                in paragraph (2).
                  (B) Requirements.--The requirements described 
                in this subparagraph are the following:
                          (i) The organization focuses 
                        exclusively on preventing teen 
                        pregnancy and has at least 9 years of 
                        experience in working with diverse 
                        sectors of society to reduce teen 
                        pregnancy.
                          (ii) The organization has a 
                        demonstrated ability to work with, and 
                        provide assistance to, a broad range of 
                        individuals and entities with a variety 
                        of perspectives, including teens and 
                        youth leaders, parents, the 
                        entertainment and news media, State, 
                        tribal, and local organizations, 
                        networks of teen pregnancy prevention 
                        practitioners, businesses, faith and 
                        community leaders, and researchers.
                          (iii) The organization is research-
                        based and has capabilities in 
                        scientific analysis and evaluation.
                          (iv) The organization has 
                        comprehensive knowledge and data about 
                        teen pregnancy prevention strategies.
                          (v) The organization has experience 
                        carrying out activities similar to the 
                        activities described in paragraph 
                        (2)(B).
          (2) Purposes and activities.--
                  (A) Purposes.--The purposes of the Resource 
                Center are to improve the well-being of 
                children and families and encourage young 
                people to delay pregnancy until marriage. 
                Specifically, the Resource Center shall--
                          (i) provide information and technical 
                        assistance to States, Indian tribes, 
                        local communities, and other public or 
                        private organizations seeking to reduce 
                        rates of teen pregnancy;
                          (ii) support parents in their 
                        essential role in preventing teen 
                        pregnancy by equipping them with 
                        information and resources to promote 
                        and strengthen communication with their 
                        children about sex, values, and 
                        positive relationships, including 
                        healthy marriage; and
                          (iii) assist the entertainment media 
                        industry by providing information and 
                        encouraging the industry to develop 
                        content and messages for teens and 
                        adults that can help prevent teen 
                        pregnancy.
                  (B) Activities.--The Resource Center shall 
                carry out the purposes described in 
                subparagraph (A) through the following 
                activities:
                          (i) Synthesizing and disseminating 
                        research and information regarding 
                        effective and promising practices, and 
                        providing information on how to design 
                        and implement effective strategies to 
                        prevent teen pregnancy.
                          (ii) Providing information and 
                        reaching out to diverse populations, 
                        with particular attention to areas and 
                        populations with the highest rates of 
                        teen pregnancy.
                          (iii) Helping States, local 
                        communities, and other organizations 
                        increase their knowledge of existing 
                        resources that can be used to advance 
                        teen pregnancy prevention efforts, and 
                        build their capacity to access such 
                        resources and develop partnerships with 
                        other programs and funding streams.
                          (iv) Raising awareness of the 
                        importance of increasing the proportion 
                        of children born to, and raised in, 
                        healthy, adult marriages.
                          (v) Linking organizations working to 
                        reduce teen pregnancy with experts and 
                        peers, including the creation of 
                        technical assistance networks that use 
                        cost-effective and efficient 
                        communication tools (such as the 
                        Internet).
                          (vi) Providing consultation and 
                        resources about how to reduce teen 
                        pregnancy to various sectors of society 
                        including parents, other adults (such 
                        as teachers, coaches, and mentors), 
                        community and faith-based groups, the 
                        entertainment and news media, 
                        businesses, and teens themselves, 
                        through a broad array of strategies and 
                        messages, including a focus on 
                        abstinence, responsible behavior, 
                        family communication, relationships, 
                        and values.
                          (vii) Assisting organizations seeking 
                        to reduce teen pregnancy in their 
                        efforts to communicate effective 
                        messages about preventing teen 
                        pregnancy with a variety of audiences 
                        (including teens, parents, and 
                        ethnically diverse groups).
                          (viii) Providing resources for 
                        parents and other adults that help to 
                        foster strong relationships with 
                        children, a strategy that research has 
                        shown is effective in reducing sexual 
                        activity and teen pregnancy, including 
                        online access to research, parent 
                        guides, tips, advice from experts, and 
                        information about the media environment 
                        of teens.
                          (ix) Working directly with 
                        individuals and organizations in the 
                        entertainment industry to provide 
                        consultation and serve as a source of 
                        factual information on issues related 
                        to teen pregnancy prevention.
          (3) Collaboration with other organizations.--The 
        organization operating the Resource Center shall 
        collaborate with other organizations that have 
        expertise and interest in teen pregnancy prevention, 
        and that can help reach out to diverse audiences.
          (4) Appropriation.--Out of any money in the Treasury 
        of the United States not otherwise appropriated, there 
        is appropriated to carry out this subsection, 
        $5,000,000 for fiscal year 2006. Funds appropriated 
        under this subparagraph shall remain available for 
        expenditure through fiscal year 2010.

           *       *       *       *       *       *       *


SEC. 414. STUDY BY THE CENSUS BUREAU.

  [(a) In General.--The Bureau of the Census shall continue to 
collect data on the 1992 and 1993 panels of the Survey of 
Income and Program Participation as necessary to obtain such 
information as will enable interested persons to evaluate the 
impact of the amendments made by title I of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 
on a random national sample of recipients of assistance under 
State programs funded under this part and (as appropriate) 
other low-income families, and in doing so, shall pay 
particular attention to the issues of out-of-wedlock birth, 
welfare dependency, the beginning and end of welfare spells, 
and the causes of repeat welfare spells, and shall obtain 
information about the status of children participating in such 
panels.]
  (a) In General.--The Bureau of the Census shall implement or 
enhance a longitudinal survey of program participation, 
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. The content of the survey 
should include such information as may be necessary to examine 
the issues of out-of-wedlock childbearing, marriage, welfare 
dependency and compliance with work requirements, the beginning 
and ending of spells of assistance, work, earnings and 
employment stability, and the well-being of children.
  (b) Reports on the Well-Being of Children and Families.--
          (1) In general.--Not later than 24 months after the 
        date of enactment of the Personal Responsibility and 
        Individual Development for Everyone Act, the Secretary 
        of Commerce shall prepare and submit to the Committee 
        on Finance of the Senate and the Committee on Ways and 
        Means of the House of Representatives a report on the 
        well-being of children and families using data 
        collected under subsection (a).
          (2) Second report.--Not later than 60 months after 
        such date of enactment, the Secretary of Commerce shall 
        submit a second report to the Committee on Finance of 
        the Senate and the Committee on Ways and Means of the 
        House of Representatives on the well-being of children 
        and families using data collected under subsection (a).
          (3) Inclusion of comparable measures.--Where 
        comparable measures for data collected under subsection 
        (a) exist in surveys previously administered by the 
        Bureau of the Census, appropriate comparisons shall be 
        made and included in each report required under this 
        subsection on the well-being of children and families 
        to assess changes in such measures.
  [(b)] (c) Appropriation.--Out of any money in the Treasury of 
the United States not otherwise appropriated, there are 
appropriated $10,000,000 for each of fiscal years [1996, 1997, 
1998, 1999, 2000, 2001, 2002, and 2003 for payment to the 
Bureau of the Census to carry out subsection (a).] 2006 through 
2010 for payment to the Bureau of the Census to carry out this 
section. Funds appropriated under this subsection for a fiscal 
year shall remain available through fiscal year 2010 to carry 
out this section.

           *       *       *       *       *       *       *


SEC. 418. FUNDING FOR CHILD CARE.

  (a) General Child Care Entitlement.--
          (1) General entitlement.--Subject to the amount 
        appropriated under paragraph (3), each State shall, for 
        the purpose of providing child care assistance, be 
        entitled to payments under a grant under this 
        subsection for a fiscal year in an amount equal to the 
        greater of--

           *       *       *       *       *       *       *

          (3) Appropriation.--For grants under this section, 
        there are appropriated--
                  (A) $1,967,000,000 for fiscal year 1997;
                  (B) $2,067,000,000 for fiscal year 1998;
                  (C) $2,167,000,000 for fiscal year 1999;
                  (D) $2,367,000,000 for fiscal year 2000;
                  (E) $2,567,000,000 for fiscal year 2001; 
                [and]
                  (F) $2,717,000,000 for each of fiscal years 
                2002 and 2003[.]  and
                  (G) $2,917,000,000 for each of fiscal years 
                2006 through 2010.
          [(4) Indian tribes.--The Secretary shall reserve not 
        less than 1 percent, and not more than 2 percent, of 
        the aggregate amount appropriated to carry out this 
        section in each fiscal year for payments to Indian 
        tribes and tribal organizations.]
          (4) Amounts reserved.--
                  (A) Indian tribes and tribal organizations.--
                          (i) In general.--The Secretary shall 
                        reserve 2 percent of the aggregate 
                        amount appropriated to carry out this 
                        section for a fiscal year for payments 
                        to Indian tribes and tribal 
                        organizations for such fiscal year for 
                        the purpose of providing child care 
                        assistance.
                          (ii) Application of ccdbg 
                        requirements.--Payments made under this 
                        subparagraph shall be subject to the 
                        requirements that apply to payments 
                        made to Indian tribes and tribal 
                        organizations under the Child Care and 
                        Development Block Grant Act of 1990.
                  (B) Territories.--
                          (i) Puerto rico.--The Secretary shall 
                        reserve 1.5 percent of the amount 
                        appropriated under paragraph (5)(A)(i) 
                        for a fiscal year for payments to the 
                        Commonwealth of Puerto Rico for such 
                        fiscal year for the purpose of 
                        providing child care assistance.
                          (ii) Other territories.--The 
                        Secretary shall reserve 0.5 percent of 
                        the amount appropriated under paragraph 
                        (5)(A)(i) for a fiscal year for 
                        payments to Guam, American Samoa, the 
                        Virgin Islands of the United States, 
                        and the Commonwealth of the Northern 
                        Mariana Islands in amounts which bear 
                        the same ratio to such amount as the 
                        amounts allotted to such territories 
                        under section 658O of the Child Care 
                        and Development Block Grant Act of 1990 
                        for the fiscal year bear to the total 
                        amount reserved under such section for 
                        that fiscal year.
                          (iii) Application of ccdbg 
                        requirements.--Payments made under this 
                        subparagraph shall be subject to the 
                        requirements that apply to payments 
                        made to territories under the Child 
                        Care and Development Block Grant Act of 
                        1990.
          (5) Supplemental grants.--
                  (A) Appropriation.--
                          (i) In general.--For supplemental 
                        grants under this section, there are 
                        appropriated--
                                  (I) $700,000,000 for fiscal 
                                year 2006;
                                  (II) $800,000,000 for fiscal 
                                year 2007;
                                  (III) $1,000,000,000 for 
                                fiscal year 2008;
                                  (IV) $1,100,000,000 for 
                                fiscal year 2009; and
                                  (V) $1,400,000,000 for fiscal 
                                year 2010.
                          (ii) Availability.--Amounts 
                        appropriated under clause (i) for a 
                        fiscal year shall be in addition to 
                        amounts appropriated under paragraph 
                        (3) for such fiscal year and shall 
                        remain available for expenditure 
                        through fiscal year 2010.
                  (B) Supplemental grant.--In addition to the 
                grants paid to a State under paragraphs (1) and 
                (2) for each of fiscal years 2006 through 2010, 
                the Secretary, after reserving the amounts 
                described in subparagraphs (A) and (B) of 
                paragraph (4) and subject to the requirements 
                described in paragraph (6), shall pay each 
                State an amount which bears the same ratio to 
                the amount specified in subparagraph (A)(i) for 
                the fiscal year (after such reservations), as 
                the amount allotted to the State under 
                paragraph (2)(B) for fiscal year 2003 bears to 
                the amount allotted to all States under that 
                paragraph for such fiscal year.
                  (C) Budget scoring.--Notwithstanding section 
                257(b)(2) of the Balanced Budget and Emergency 
                Deficit Control Act of 1985, the baseline shall 
                assume that no grant shall be made under this 
                paragraph after fiscal year 2010.
          (6) Requirements.--
                  (A) Maintenance of effort.--A State may not 
                be paid a supplemental grant under paragraph 
                (5) for a fiscal year unless the State ensures 
                that the level of State expenditures for child 
                care for such fiscal year is not less than the 
                sum of--
                          (i) the level of State expenditures 
                        for child care that were matched under 
                        a grant made to the State under 
                        paragraph (2) for fiscal year 2003; and
                          (ii) the level of State expenditures 
                        for child care that the State reported 
                        as maintenance of effort expenditures 
                        for purposes of paragraph (2) for 
                        fiscal year 2003.
                  (B) Matching requirement for fiscal years 
                2009 and 2010.--With respect to the amount of 
                the supplemental grant made to a State under 
                paragraph (5) for each of fiscal years 2009 and 
                2010 that is in excess of the amount of the 
                grant made to the State under paragraph (5) for 
                fiscal year 2008, subparagraph (C) of paragraph 
                (2) shall apply to such excess amount in the 
                same manner as such subparagraph applies to 
                grants made under subparagraph (A) of paragraph 
                (2) for each of fiscal years 2009 and 2010, 
                respectively.
                  (C) Redistribution.--In the case of a State 
                that fails to satisfy the requirement of 
                subparagraph (A) for a fiscal year, the 
                supplemental grant determined under paragraph 
                (5) for the State for that fiscal year shall be 
                redistributed in accordance with paragraph 
                (2)(D).
          [(5)] (7) Data used to determine state and federal 
        shares of expenditures.--In making the determinations 
        concerning expenditures required under paragraphs (1) 
        and (2)(C), the Secretary shall use information that 
        was reported by the State on ACF Form 231 and available 
        as of the applicable dates specified in clauses (i)(I), 
        (ii), and (iii)(III) of section 403(a)(1)(D).

           *       *       *       *       *       *       *


SEC. 419. DEFINITIONS.

  As used in this part:
          (1) Adult.--The term ``adult'' means an individual 
        who is not a minor child.

           *       *       *       *       *       *       *

          (6) Assistance.--
                  (A) In general.--The term ``assistance'' 
                means cash, payments, vouchers, and other forms 
                of benefits designed to meet a family's ongoing 
                basic needs (including for food, clothing, 
                shelter, utilities, household goods, personal 
                care items and general incidental expenses).
                  (B) Inclusion of certain benefits.--Such term 
                includes benefits even when they are--
                          (i) provided in the form of payments 
                        by a State agency responsible for 
                        administering the State program funded 
                        under this part, or other agency on its 
                        behalf, to individual recipients; and
                          (ii) conditioned on participation in 
                        work experience or community service 
                        (or any other work activity under the 
                        State program funded under this part or 
                        with qualified State expenditures (as 
                        defined in section 409(a)(7)(B)(i)).
                  (C) Exclusion of certain benefits.--Such term 
                does not include--
                          (i) nonrecurrent, short-term benefits 
                        that--
                                  (I) are designed to deal with 
                                a specific crisis situation or 
                                episode of need;
                                  (II) are not intended to meet 
                                recurrent or ongoing needs; and
                                  (III) will not extend beyond 
                                4 months;
                          (ii) work subsidies (such as payments 
                        to employers or third parties to help 
                        cover the costs of employee wages, 
                        benefits, supervision, and training);
                          (iii) supportive services such as 
                        child care and transportation;
                          (iv) refundable earned income tax 
                        credits;
                          (v) contributions to, and 
                        distributions from, Individual 
                        Development Accounts;
                          (vi) services such as counseling, 
                        case management, peer support, child 
                        care information and referral, 
                        transitional services, job retention, 
                        job advancement, and other employment-
                        related services that do not provide 
                        basic income support; and
                          (v) transportation benefits provided 
                        under a Job Access or Reverse Commute 
                        project, pursuant to section 404(k), to 
                        an individual who is not otherwise 
                        receiving assistance.
                  (D) Applicability.--Unless otherwise 
                provided, the definition of ``assistance'' 
                under this paragraph--
                          (i) only applies for purposes of the 
                        State program funded under this part or 
                        a program funded with qualified State 
                        expenditures (as defined in section 
                        409(a)(7)(B)(i)); and
                          (ii) does not preclude a State from 
                        providing other types of benefits and 
                        services in support of the purposes of 
                        the State program funded under this 
                        part or a program funded with qualified 
                        State expenditures (as so defined).

Part D--Child Support and Establishment of Paternity

           *       *       *       *       *       *       *



                        DUTIES OF THE SECRETARY

  Sec. 452. (a) The Secretary shall establish, within the 
Department of Health and Human Services a separate 
organizational unit, under the direction of a designee of the 
Secretary, who shall report directly to the Secretary and who 
shall--

           *       *       *       *       *       *       *

                          (II) whether collections and 
                        disbursements of support payments are 
                        carried out correctly and are fully 
                        accounted for; and
                  (iii) for such other purposes as the 
                Secretary may find necessary;
          (5) assist States in establishing adequate reporting 
        procedures and maintain records of the operations of 
        programs established pursuant to this part in each 
        State, and establish procedures to be followed by 
        States for collecting and reporting information 
        required to be provided under this part, and establish 
        uniform definitions (including those necessary to 
        enable the measurement of State compliance with the 
        requirements of this part relating to expedited 
        processes) to be applied in following such procedures;
          (6) maintain records of all amounts collected and 
        disbursed under programs established pursuant to the 
        provisions of this part and of the costs incurred in 
        collecting such amounts;
          (7) provide technical assistance to the States to 
        help them establish effective systems for collecting 
        child and spousal support and establishing paternity, 
        and specify the minimum requirements of an affidavit to 
        be used for the voluntary acknowledgment of paternity 
        which shall include the social security number of each 
        parent and, after consultation with the States, other 
        common elements as determined by such designee;
          (8) receive applications from States for permission 
        to utilize the courts of the United States to enforce 
        court orders for support against noncustodial parents 
        and, upon a finding that (A) another State has not 
        undertaken to enforce the court order of the 
        originating State against the noncustodial parent 
        within a reasonable time, and (B) that utilization of 
        the Federal courts is the only reasonable method of 
        enforcing such order, approve such applications;
          (9) operate the Federal Parent Locator Service 
        established by section 453;
          (10) not later than three months after the end of 
        each fiscal year, beginning with the year 1977, submit 
        to the Congress a full and complete report on all 
        activities undertaken pursuant to the provisions of 
        this part, which report shall include, but not be 
        limited to, the following:
                  (A) total program costs and collections set 
                forth in sufficient detail to show the cost to 
                the States and the Federal Government, the 
                distribution of collections to families, State 
                and local governmental units, and the Federal 
                Government; and an identification of the 
                financial impact of the provisions of this 
                part, including--
                          (i) the total amount of child support 
                        payments collected as a result of 
                        services furnished during the fiscal 
                        year to individuals receiving services 
                        under this part;
                          (ii) the cost to the States and to 
                        the Federal Government of so furnishing 
                        the services; and
                          (iii) the number of cases involving 
                        families--
                                  (I) who became ineligible for 
                                assistance under State programs 
                                funded under part A during a 
                                month in the fiscal year; and
                                  (II) with respect to whom a 
                                child support payment was 
                                received in the month;
                  (B) costs and staff associated with the 
                Office of Child Support Enforcement;
                  (C) the following data, separately stated for 
                cases where the child is receiving assistance 
                under a State program funded under part A (or 
                foster care maintenance payments under part E), 
                or formerly received such assistance or 
                payments and the State is continuing to collect 
                support assigned to it pursuant to section 
                408(a)(3) or under section 471(a)(17) or 1912, 
                and for all other cases under this part:
                          (i) the total number of cases in 
                        which a support obligation has been 
                        established in the fiscal year for 
                        which the report is submitted;
                          (ii) the total number of cases in 
                        which a support obligation has been 
                        established;
                          (iii) the number of cases in which 
                        support was collected during the fiscal 
                        year;
                          (iv) the total amount of support 
                        collected during such fiscal year and 
                        distributed as current support;
                          (v) the total amount of support 
                        collected during such fiscal year and 
                        distributed as arrearages;
                          (vi) the total amount of support due 
                        and unpaid for all fiscal years; and
                          (vii) the number of child support 
                        cases filed in each State in such 
                        fiscal year, and the amount of the 
                        collections made in each State in such 
                        fiscal year, on behalf of children 
                        residing in another State or against 
                        parents residing in another State;
                  (D) the status of all State plans under this 
                part as of the end of the fiscal year last 
                ending before the report is submitted, together 
                with an explanation of any problems which are 
                delaying or preventing approval of State plans 
                under this part;
                  (E) data, by State, on the use of the Federal 
                Parent Locator Service, and the number of 
                locate requests submitted without the 
                noncustodial parent's social security account 
                number;
                  (F) the number of cases, by State, in which 
                an applicant for or recipient of assistance 
                under a State program funded under part A has 
                refused to cooperate in identifying and 
                locating the noncustodial parent and the number 
                of cases in which refusal so to cooperate is 
                based on good cause (as determined by the 
                State);
                  (G) data, by State, on use of the Internal 
                Revenue Service for collections, the number of 
                court orders on which collections were made, 
                the number of paternity determinations made and 
                the number of parents located, in sufficient 
                detail to show the cost and benefits to the 
                States and to the Federal Government;
                  (H) the major problems encountered which have 
                delayed or prevented implementation of the 
                provisions of this part during the fiscal year 
                last ending prior to the submission of such 
                report; and
                  (I) compliance, by State, with the standards 
                established pursuant to subsections (h) and 
                (i); and
          (11) not later than October 1, 1996, after consulting 
        with the State directors of programs under this part, 
        promulgate forms to be used by States in interstate 
        cases for--
                  (A) collection of child support through 
                income withholding;
                  (B) imposition of liens; and
                  (C) administrative subpoenas.
  (b) The Secretary shall, upon the request of any State having 
in effect a State plan approved under this part, certify to the 
Secretary of the Treasury for collection pursuant to the 
provisions of section 6305 of the Internal Revenue Code of 1954 
the amount of any child support obligation (including any 
support obligation with respect to the parent who is living 
with the child and receiving assistance under the State program 
funded under part A) which is assigned to such State or is 
undertaken to be collected by such State pursuant to section 
454(4). No amount may be certified for collection under this 
subsection except the amount of the delinquency under a court 
or administrative order for support and upon a showing by the 
State that such State has made diligent and reasonable efforts 
to collect such amounts utilizing its own collection 
mechanisms, and upon an agreement that the State will reimburse 
the Secretary of the Treasury for any costs involved in making 
the collection. All reimbursements shall be credited to the 
appropriation accounts which bore all or part of the costs 
involved in making the collections. The Secretary after 
consultation with the Secretary of the Treasury may, by 
regulation, establish criteria for accepting amounts for 
collection and for making certification under this subsection 
including imposing such limitations on the frequency of making 
such certifications under this subsection.
  (c) The Secretary of the Treasury shall from time to time pay 
to each State for distribution in accordance with the 
provisions of section 457 the amount of each collection made on 
behalf of such State pursuant to subsection (b).
  (d)(1) Except as provided in paragraph (3), the Secretary 
shall not approve the initial and annually updated advance 
automated data processing planning document, referred to in 
section 454(16), unless he finds that such document, when 
implemented, will generally carry out the objectives of the 
management system referred to in such subsection, and such 
document--
          (A) provides for the conduct of, and reflects the 
        results of, requirements analysis studies, which 
        include consideration of the program mission, 
        functions, organization, services, constraints, and 
        current support, of, in, or relating to, such system,
          (B) contains a description of the proposed management 
        system referred to in section 454(16), including a 
        description of information flows, input data, and 
        output reports and uses,
          (C) sets forth the security and interface 
        requirements to be employed in such management system,
          (D) describes the projected resource requirements for 
        staff and other needs, and the resources available or 
        expected to be available to meet such requirements,
          (E) contains an implementation plan and backup 
        procedures to handle possible failures,
          (F) contains a summary of proposed improvement of 
        such management system in terms of qualitative and 
        quantitative benefits, and
          (G) provides such other information as the Secretary 
        determines under regulation is necessary.
  (2)(A) The Secretary shall through the separate 
organizational unit established pursuant to subsection (a), on 
a continuing basis, review, assess, and inspect the planning, 
design, and operation of, management information systems 
referred to in section 454(16), with a view to determining 
whether, and to what extent, such systems meet and continue to 
meet requirements imposed under paragraph (1) and the 
conditions specified under section 454(16).
  (B) If the Secretary finds with respect to any statewide 
management information system referred to in section 454(16) 
that there is a failure substantially to comply with criteria, 
requirements, and other undertakings, prescribed by the advance 
automated data processing planning document theretofore 
approved by the Secretary with respect to such system, then the 
Secretary shall suspend his approval of such document until 
there is no longer any such failure of such system to comply 
with such criteria, requirements, and other undertakings so 
prescribed.
  (3) The Secretary may waive any requirement of paragraph (1) 
or any condition specified under section 454(16), and shall 
waive the single statewide system requirement under sections 
454(16) and 454A, with respect to a State if--
          (A) the State demonstrates to the satisfaction of the 

        Secretary that the State has or can develop an 
        alternative system or systems that enable the State--
                  (i) for purposes of section 409(a)(8), to 
                achieve the paternity establishment percentages 
                (as defined in section 452(g)(2)) and other 
                performance measures that may be established by 
                the Secretary;
                  (ii) to submit data under section 454(15)(B) 
                that is complete and reliable;
                  (iii) to substantially comply with the 
                requirements of this part; and
                  (iv) in the case of a request to waive the 
                single statewide system requirement, to--
                          (I) meet all functional requirements 
                        of sections 454(16) and 454A;
                          (II) ensure that calculation of 
                        distributions meets the requirements of 
                        section 457 and accounts for 
                        distributions to children in different 
                        families or in 
                        different States or sub-State 
                        jurisdictions, and for distributions to 
                        other States;
                          (III) ensure that there is only one 
                        point of contact in the State which 
                        provides seamless case processing for 
                        all interstate case processing and 
                        coordinated, automated intrastate case 
                        management;
                          (IV) ensure that standardized data 
                        elements, forms, and definitions are 
                        used throughout the State;
                          (V) complete the alternative system 
                        in no more time than it would take to 
                        complete a single statewide system that 
                        meets such requirement; and
                          (VI) process child support cases as 
                        quickly, 
                        efficiently, and effectively as such 
                        cases would be processed through a 
                        single statewide system that meets such 
                        requirement;
          (B)(i) the waiver meets the criteria of paragraphs 
        (1), (2), and (3) of section 1115(c); or
          (ii) the State provides assurances to the Secretary 
        that steps will be taken to otherwise improve the 
        State's child support enforcement program; and
          (C) in the case of a request to waive the single 
        statewide system requirement, the State has submitted 
        to the Secretary separate estimates of the total cost 
        of a single statewide system that meets such 
        requirement, and of any such alternative system or 
        systems, which shall include estimates of the cost of 
        developing and completing the system and of operating 
        and maintaining the system for 5 years, and the 
        Secretary has agreed with the estimates.
  (e) The Secretary shall provide such technical assistance to 
States as he determines necessary to assist States to plan, 
design, develop, or install and provide for the security of, 
the management information systems referred to in section 
454(16).
  (f) The Secretary shall issue regulations to require that 
State agencies administering the child support enforcement 
program under this part [include medical support as part of any 
child support order whenever and enforce medical support] 
enforce medical support included as part of a child support 
order health care coverage is available to the noncustodial 
parent at a reasonable cost.
A State agency administering the program under this part is 
authorized to enforce medical support against a custodial 
parent whenever health care coverage is available to the 
custodial parent at a reasonable cost, notwithstanding any 
provision of this part (other than this sentence) that might be 
construed to limit or bar such enforcement actions.
    Such regulation shall also provide for improved information 
exchange between such State agencies and the State agencies 
administering the State medicaid programs under title XIX with 
respect to the availability of health insurance coverage.
    For purposes of this part, the term ``medical support'' may 
include health care coverage, such as coverage under a health 
insurance plan (including payment of costs of premiums, co-
payments, and deductibles) and payment for medical expenses 
incurred on behalf of a child.
  (g)(1) A State's program under this part shall be found, for 
purposes of section 409(a)(8), not to have complied 
substantially with the requirements of this part unless, for 
any fiscal year beginning on or after October 1, 1994, its 
paternity establishment percentage for such fiscal year is 
based on reliable data and (rounded to the nearest whole 
percentage point) equals or exceeds--
          (A) 90 percent;
          (B) for a State with a paternity establishment 
        percentage of not less than 75 percent but less than 90 
        percent for such fiscal year, the paternity 
        establishment percentage of the State for the 
        immediately preceding fiscal year plus 2 percentage 
        points;
          (C) for a State with a paternity establishment 
        percentage of not less than 50 percent but less than 75 
        percent for such fiscal year, the paternity 
        establishment percentage of the State for the 
        immediately preceding fiscal year plus 3 percentage 
        points;
          (D) for a State with a paternity establishment 
        percentage of not less than 45 percent but less than 50 
        percent for such fiscal year, the paternity 
        establishment percentage of the State for the 
        immediately preceding fiscal year plus 4 percentage 
        points;
          (E) for a State with a paternity establishment 
        percentage of not less than 40 percent but less than 45 
        percent for such fiscal year, the paternity 
        establishment percentage of the State for the 
        immediately preceding fiscal year plus 5 percentage 
        points; or
          (F) for a State with a paternity establishment 
        percentage of less than 40 percent for such fiscal 
        year, the paternity establishment percentage of the 
        State for the immediately preceding fiscal year plus 6 
        percentage points.
In determining compliance under this section, a State may use 
as its paternity establishment percentage either the State's 
IV-D paternity establishment percentage (as defined in 
paragraph (2)(A)) or the State's statewide paternity 
establishment percentage (as defined in paragraph (2)(B)).
  (2) For purposes of this section--
          (A) the term ``IV-D paternity establishment 
        percentage'' means, with respect to a State for a 
        fiscal year, the ratio (expressed as a percentage) that 
        the total number of children--
                  (i) who have been born out of wedlock,
                  (ii)(I) except as provided in the last 
                sentence of this paragraph, with respect to 
                whom assistance is being provided under the 
                State program funded under part A in the fiscal 
                year or, at the option of the State, as of the 
                end of such year, or (II) with respect to whom 
                services are being provided under the State's 
                plan approved under this part in the fiscal 
                year or, at the option of the State, as of the 
                end of such year pursuant to an application 
                submitted under section 454(4)(A)(ii), and
                  (iii) the paternity of whom has been 
                established or acknowledged,
        bears to the total number of children born out of 
        wedlock and (except as provided in such last sentence) 
        with respect to whom assistance was being provided 
        under the State program funded under part A as of the 
        end of the preceding fiscal year or with respect to 
        whom services were being provided under the State's 
        plan approved under this part as of the end of the 
        preceding fiscal year pursuant to an application 
        submitted under section 454(4)(A)(ii);
          (B) the term ``statewide paternity establishment 
        percentage'' means, with respect to a State for a 
        fiscal year, the ratio (expressed as a percentage) that 
        the total number of minor children--
                  (i) who have been born out of wedlock, and
                  (ii) the paternity of whom has been 
                established or acknowledged during the fiscal 
                year,
        bears to the total number of children born out of 
        wedlock during the preceding fiscal year; and
          (C) the term ``reliable data'' means the most recent 
        data available which are found by the Secretary to be 
        reliable for purposes of this section.
For purposes of subparagraphs (A) and (B), the total number of 
children shall not include any child with respect to whom 
assistance is being provided under the State program funded 
under part A by reason of the death of a parent unless 
paternity is established for such child or any child with 
respect to whom an applicant or recipient is found by the State 
to qualify for a good cause or other exception to cooperation 
pursuant to section 454(29).
  (3)(A) The Secretary may modify the requirements of this 
subsection to take into account such additional variables as 
the Secretary identifies (including the percentage of children 
in a State who are born out of wedlock or for whom support has 
not been established) that affect the ability of a State to 
meet the requirements of this subsection.
  (B) The Secretary shall submit an annual report to the 
Congress that sets forth the data upon which the paternity 
establishment percentages for States for a fiscal year are 
based, lists any additional variables the Secretary has 
identified under subparagraph (A), and describes State 
performance in establishing paternity.
  (h) The standards required by subsection (a)(1) shall include 
standards establishing time limits governing the period or 
periods within which a State must accept and respond to 
requests (from States, jurisdictions thereof, or individuals 
who apply for services furnished by the State agency under this 
part or with respect to whom an assignment pursuant to section 
408(a)(3) is in effect) for assistance in establishing and 
enforcing support orders, including requests to locate 
noncustodial parents, establish paternity, and initiate 
proceedings to establish and collect child support awards.
  (i) The standards required by subsection (a)(1) shall include 
standards establishing time limits governing the period or 
periods within which a State must distribute, in accordance 
with section 457, amounts collected as child support pursuant 
to the State's plan approved under this part.
  (j) Out of any money in the Treasury of the United States not 
otherwise appropriated, there is hereby appropriated to the 
Secretary for each fiscal year an amount equal to 1 percent of 
the total amount paid to the Federal Government pursuant to a 
plan approved under this part during the immediately preceding 
fiscal year (as determined on the basis of the most recent 
reliable data available to the Secretary as of the end of the 
third calendar quarter following the end of such preceding 
fiscal year) or the amount appropriated under this paragraph 
for fiscal year 2002, whichever is greater, which shall be 
available for use by the Secretary, either directly or through 
grants, contracts, or interagency agreements, for--
          (1) information dissemination and technical 
        assistance to States, training of State and Federal 
        staff, staffing studies, and related activities needed 
        to improve programs under this part (including 
        technical assistance concerning State automated systems 
        required by this part); and
          (2) research, demonstration, and special projects of 
        regional or national significance relating to the 
        operation of State programs under this part.
The amount appropriated under this subsection shall remain 
available until expended.
  (k)(1) If the Secretary receives a certification by a State 
agency in accordance with the requirements of section 454(31) 
that an individual owes arrearages of child support in an 
amount exceeding [$5,000,] $2,500 the Secretary shall transmit 
such certification to the Secretary of State for action (with 
respect to denial, revocation, or limitation of passports) 
pursuant to paragraph (2).
  (2) The Secretary of State shall, upon certification by the 
Secretary transmitted under paragraph (1), refuse to issue a 
passport to such individual, and may revoke, restrict, or limit 
a passport issued previously to such individual.
  (3) The Secretary and the Secretary of State shall not be 
liable to an individual for any action with respect to a 
certification by a State agency under this section.
  [(l) The Secretary, through the Federal Parent Locator 
Service, may aid State agencies providing services under State 
programs operated pursuant to this part and financial 
institutions doing business in two or more States in reaching 
agreements regarding the receipt from such institutions, and 
the transfer to the State agencies, of information that may be 
provided pursuant to section 466(a)(17)(A)(i), except that any 
State that, as of the date of the enactment of this subsection, 
is conducting data matches pursuant to section 466(a)(17)(A)(i) 
shall have until January 1, 2000, to allow the Secretary to 
obtain such information from such institutions that are 
operating in the State. For purposes of section 1113(d) of the 
Right to Financial Privacy Act of 1978, a disclosure pursuant 
to this subsection shall be considered a disclosure pursuant to 
a Federal statute.]
  (l) Identification and Seizure of Assets Held by Multistate 
Financial Institutions.--
          (1) In general.--The Secretary, through the Federal 
        Parent Locator Service, is authorized--
                  (A) to assist State agencies operating 
                programs under this part and financial 
                institutions doing business in 2 or more States 
                in reaching agreements regarding the receipt 
                from such institutions, and the transfer to the 
                State agencies, of information that may be 
                provided pursuant to section 466(a)(17)(A)(i) 
                or 469A(a);
                  (B) to perform data matches comparing 
                information from such State agencies and 
                financial institutions entering into such 
                agreements with respect to individuals owing 
                past-due support; and
                  (C) to seize assets, held by such financial 
                institutions, of individuals identified through 
                such data matches who owe past-due support, 
                by--
                          (i) issuing a notice of lien or levy 
                        to such financial institutions 
                        requiring them to encumber such assets 
                        for 30 calendar days and to 
                        subsequently transfer such assets to 
                        the Secretary (except that the 
                        Secretary shall promptly release such 
                        lien or levy within such 30-day period 
                        upon request of the State agencies 
                        responsible for collecting past-due 
                        support from such individuals); and
                          (ii) providing notice to such 
                        individuals of the lien or levy upon 
                        their assets and informing them--
                                  (I) of their procedural due 
                                process rights, including the 
                                opportunity to contest such 
                                lien or levy to the appropriate 
                                State agency; and
                                  (II) in the case of jointly 
                                owned assets, of the process by 
                                which other owners may secure 
                                their respective share of such 
                                assets, according to such 
                                policies and procedures as the 
                                Secretary may specify with 
                                respect to seizure of such 
                                assets.
          (2) Transfer of funds to states.--Assets seized from 
        individuals under paragraph (1)(C) shall be promptly 
        transferred by the Secretary to the State agencies 
        responsible for collecting past-due support from such 
        individuals for distribution pursuant to section 457.
          (3) Relationship to state laws.--Notwithstanding any 
        provision of State law, an individual receiving a 
        notice under paragraph (1)(C) shall have 21 calendar 
        days from the date of such notice to contest the lien 
        or levy imposed under such paragraph by requesting an 
        administrative review by the State agency responsible 
        for collecting past-due support from such individual.
          (4) Treatment of disclosures.--For purposes of 
        section 1113(d) of the Right to Financial Privacy Act 
        of 1978, a disclosure pursuant to this subsection shall 
        be considered a disclosure pursuant to a Federal 
        statute.
  (m) Comparisons With Insurance Information.--
          (1) In general.--The Secretary, through the Federal 
        Parent Locator Service, is authorized--
                  (A) to compare information concerning 
                individuals owing past-due support with 
                information maintained by insurers (or their 
                agents) concerning insurance claims, 
                settlements, awards, and payments; and
                  (B) to furnish information resulting from 
                such data matches to the State agencies 
                responsible for collecting child support from 
                such individuals.
          (2) Liability.--No insurer (including any agent of an 
        insurer) shall be liable under any Federal or State law 
        to any person for any disclosure provided for under 
        this subsection, or for any other action taken in good 
        faith in accordance with the provisions of this 
        subsection.

                     FEDERAL PARENT LOCATOR SERVICE

  Sec. 453. (a)(1) The Secretary shall establish and conduct a 
Federal Parent Locator Service, under the direction of the 
designee of the Secretary referred to in section 452(a), which 
shall be used for the purposes specified in paragraphs (2) and 
(3).
  (2) For the purpose of establishing parentage or 
establishing, setting the amount of, modifying, or enforcing 
child support obligations, the Federal Parent Locator Service 
shall obtain and transmit to any authorized person specified in 
subsection (c)--
          (A) information on, or facilitating the discovery of, 
        the location of any individual--
                  (i) who is under an obligation to pay child 
                support;
                  (ii) against whom such an obligation is 
                sought;
                  (iii) to whom such an obligation is owed; or
                  (iv) who has or may have parental rights with 
                respect to a child,
        including the individual's social security number (or 
        numbers), most recent address, and the name, address, 
        and employer identification number of the individual's 
        employer;
          (B) information on the individual's wages (or other 
        income) from, and benefits of, employment (including 
        rights to or enrollment in group health care coverage); 
        and
          (C) information on the type, status, location, and 
        amount of any assets of, or debts owed by or to, any 
        such individual.
  (3) For the purpose of enforcing any Federal or State law 
with respect to the unlawful taking or restraint of a child, or 
making or enforcing a child custody or visitation 
determination, as defined in section 463(d)(1), the Federal 
Parent Locator Service shall be used to obtain and transmit the 
information specified in section 463(c) to the authorized 
persons specified in section 463(d)(2).
  (b)(1) Upon request, filed in accordance with subsection (d), 
of any authorized person, as defined in subsection (c) for the 
information described in subsection (a)(2), or of any 
authorized person, as defined in section 463(d)(2) for the 
information described in section 463(c), the Secretary shall, 
notwithstanding any other provision of law, provide through the 
Federal Parent Locator Service such information to such person, 
if such information--
          (A) is contained in any files or records maintained 
        by the Secretary or by the Department of Health and 
        Human Services; or
          (B) is not contained in such files or records, but 
        can be obtained by the Secretary, under the authority 
        conferred by subsection (e), from any other department, 
        agency, or instrumentality of the United States or of 
        any State,
and is not prohibited from disclosure under paragraph (2).
  (2) No information shall be disclosed to any person if the 
disclosure of such information would contravene the national 
policy or security interests of the United States or the 
confidentiality of census data. The Secretary shall give 
priority to requests made by any authorized person described in 
subsection (c)(1). No information shall be disclosed to any 
person if the State has notified the Secretary that the State 
has reasonable evidence of domestic violence or child abuse and 
the disclosure of such information could be harmful to the 
custodial parent or the child of such parent, provided that--
          (A) in response to a request from an authorized 
        person (as defined in subsection (c) of this section 
        and section 463(d)(2)), the Secretary shall advise the 
        authorized person that the Secretary has been notified 
        that there is reasonable evidence of domestic violence 
        or child abuse and that information can only be 
        disclosed to a court or an agent of a court pursuant to 
        subparagraph (B); and
          (B) information may be disclosed to a court or an 
        agent of a court described in subsection (c)(2) of this 
        section or section 463(d)(2)(B), if--
                  (i) upon receipt of information from the 
                Secretary, the court determines whether 
                disclosure to any other person of that 
                information could be harmful to the parent or 
                the child; and
                  (ii) if the court determines that disclosure 
                of such information to any other person could 
                be harmful, the court and its agents shall not 
                make any such disclosure.
  (3) Information received or transmitted pursuant to this 
section shall be subject to the safeguard provisions contained 
in section 454(26).
  (c) As used in subsection (a), the term ``authorized person'' 
means--
          (1) any agent or attorney of any State or Indian 
        tribe or tribal organization having in effect a plan 
        approved under this part, who has the duty or authority 
        under such plans to seek to recover any amounts owed as 
        child and spousal support (including, when authorized 
        under the State plan, any official of a political 
        subdivision);
          (2) the court which has authority to issue an order 
        or to serve as the initiating court in an action to 
        seek an order against a noncustodial parent for the 
        support and maintenance of a child, or any agent of 
        such court;
          (3) the resident parent, legal guardian, attorney, or 
        agent of a child (other than a child receiving 
        assistance under a State program funded under part A 
        (as determined by regulations prescribed by the 
        Secretary) without regard to the existence of a court 
        order against a noncustodial parent who has a duty to 
        support and maintain any such child; and
          (4) a State agency that is administering a program 
        operated under a State plan under subpart 1 of part B, 
        or a State plan approved under subpart 2 of part B or 
        under part E.
  (d) A request for information under this section shall be 
filed in such manner and form as the Secretary shall by 
regulation prescribe and shall be accompanied or supported by 
such documents as the Secretary may determine to be necessary.
  (e)(1) Whenever the Secretary receives a request submitted 
under subsection (b) which he is reasonably satisfied meets the 
criteria established by subsections (a), (b), and (c), he shall 
promptly undertake to provide the information requested from 
the files and records maintained by any of the departments, 
agencies, or instrumentalities of the United States or of any 
State.
  (2) Notwithstanding any other provision of law, whenever the 
individual who is the head of any department, agency, or 
instrumentality of the United States receives a request from 
the Secretary for information authorized to be provided by the 
Secretary under this section, such individual shall promptly 
cause a search to be made of the files and records maintained 
by such department, agency, or instrumentality with a view to 
determining whether the information requested is contained in 
any such files or records. If such search discloses the 
information requested, such individual shall immediately 
transmit such information to the Secretary, except that if any 
information is obtained the disclosure of which would 
contravene national policy or security interests of the United 
States or the confidentiality of census data, such information 
shall not be transmitted and such individual shall immediately 
notify the Secretary. If such search fails to disclose the 
information requested, such individual shall immediately so 
notify the Secretary. The costs incurred by any such 
department, agency, or instrumentality of the United States or 
of any State in providing such information to the Secretary 
shall be reimbursed by him in an amount which the Secretary 
determines to be reasonable payment for the information 
exchange (which amount shall not include payment for the costs 
of obtaining, compiling, or maintaining the information). 
Whenever such services are furnished to an individual specified 
in subsection (c)(3), a fee shall be charged such individual. 
The fee so charged shall be used to reimburse the Secretary or 
his delegate for the expense of providing such services.
  (3) The Secretary of Labor shall enter into an agreement with 
the Secretary to provide prompt access for the Secretary (in 
accordance with this subsection) to the wage and unemployment 
compensation claims information and data maintained by or for 
the Department of Labor or State employment security agencies.
  (f) The Secretary, in carrying out his duties and functions 
under this section, shall enter into arrangements with State 
agencies administering State plans approved under this part for 
such State agencies to accept from resident parents, legal 
guardians, or agents of a child described in subsection (c)(3) 
and to transmit to the Secretary requests for information with 
regard to the whereabouts of noncustodial parents and otherwise 
to cooperate with the Secretary in carrying out the purposes of 
this section.
  (g) Reimbursement for Reports by State Agencies.--The 
Secretary may reimburse Federal and State agencies for the 
costs incurred by such entities in furnishing information 
requested by the Secretary under this section in an amount 
which the Secretary determines to be reasonable payment for the 
information exchange (which amount shall not include payment 
for the costs of obtaining, compiling, or maintaining the 
information).
  (h) Federal Case Registry of Child Support Orders.--
          (1) In general.--Not later than October 1, 1998, in 
        order to assist States in administering programs under 
        State plans approved under this part and programs 
        funded under part A, and for the other purposes 
        specified in this section, the Secretary shall 
        establish and maintain in the Federal Parent Locator 
        Service an automated registry (which shall be known as 
        the ``Federal Case Registry of Child Support Orders''), 
        which shall contain abstracts of support orders and 
        other information described in paragraph (2) with 
        respect to each case and order in each State case 
        registry maintained pursuant to section 454A(e), as 
        furnished (and regularly updated), pursuant to section 
        454A(f), by State agencies administering programs under 
        this part.
          (2) Case and order information.--The information 
        referred to in paragraph (1) with respect to a case or 
        an order shall be such information as the Secretary may 
        specify in regulations (including the names, social 
        security numbers or other uniform identification 
        numbers, and State case identification numbers) to 
        identify the individuals who owe or are owed support 
        (or with respect to or on behalf of whom support 
        obligations are sought to be established), and the 
        State or States which have the case or order. Beginning 
        not later than October 1, 1999, the information 
        referred to in paragraph (1) shall include the names 
        and social security numbers of the children of such 
        individuals.
          (3) Administration of federal tax laws.--The 
        Secretary of the Treasury shall have access to the 
        information described in paragraph (2) for the purpose 
        of administering those sections of the Internal Revenue 
        Code of 1986 which grant tax benefits based on support 
        or residence of children.
  (i) National Directory of New Hires.--
          (1) In general.--In order to assist States in 
        administering programs under State plans approved under 
        this part and programs funded under part A, and for the 
        other purposes specified in this section, the Secretary 
        shall, not later than October 1, 1997, establish and 
        maintain in the Federal Parent Locator Service an 
        automated directory to be known as the National 
        Directory of New Hires, which shall contain the 
        information supplied pursuant to section 453A(g)(2).
          (2) Data entry and deletion requirements.--
                  (A) In general.--Information provided 
                pursuant to section 453A(g)(2) shall be entered 
                into the data base maintained by the National 
                Directory of New Hires within two business days 
                after receipt, and shall be deleted from the 
                data base 24 months after the date of entry.
                  (B) 12-month limit on access to wage and 
                unemployment compensation information.--The 
                Secretary shall not have access for child 
                support enforcement purposes to information in 
                the National Directory of New Hires that is 
                provided pursuant to section 453A(g)(2)(B), if 
                12 months has elapsed since the date the 
                information is so provided and there has not 
                been a match resulting from the use of such 
                information in any information comparison under 
                this subsection.
                  (C) Retention of data for research 
                purposes.--Notwithstanding subparagraphs (A) 
                and (B), the Secretary may retain such samples 
                of data entered in the National Directory of 
                New Hires as the Secretary may find necessary 
                to assist in carrying out subsection ( j)(5).
          (3) Administration of federal tax laws.--The 
        Secretary of the Treasury shall have access to the 
        information in the National Directory of New Hires for 
        purposes of administering section 32 of the Internal 
        Revenue Code of 1986, or the advance payment of the 
        earned income tax credit under section 3507 of such 
        Code, and verifying a claim with respect to employment 
        in a tax return.
          (4) List of multistate employers.--The Secretary 
        shall maintain within the National Directory of New 
        Hires a list of multistate employers that report 
        information regarding newly hired employees pursuant to 
        section 453A(b)(1)(B), and the State which each such 
        employer has designated to receive such information.
          ``(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(b)(2).''.

           *       *       *       *       *       *       *

  (j) Information Comparisons and Other Disclosures.--
          (1) Verification by social security administration.--
                  (A) In general.--The Secretary shall transmit 
                information on individuals and employers 
                maintained under this section to the Social 
                Security Administration to the extent necessary 
                for verification in accordance with 
                subparagraph (B).
                  (B) Verification by ssa.--The Social Security 
                Administration shall verify the accuracy of, 
                correct, or supply to the extent possible, and 
                report to the Secretary, the following 
                information supplied by the Secretary pursuant 
                to subparagraph (A):
                          (i) The name, social security number, 
                        and birth date of each such individual.
                          (ii) The employer identification 
                        number of each such employer.
          (2) Information comparisons.--For the purpose of 
        locating individuals in a paternity establishment case 
        or a case involving the establishment, modification, or 
        enforcement of a support order, the Secretary shall--
                  (A) compare information in the National 
                Directory of New Hires against information in 
                the support case abstracts in the Federal Case 
                Registry of Child Support Orders not less often 
                than every 2 business days; and
                  (B) within 2 business days after such a 
                comparison reveals a match with respect to an 
                individual, report the information to the State 
                agency responsible for the case.
          (3) Information comparisons and disclosures of 
        information in all registries for title iv program 
        purposes.--To the extent and with the frequency that 
        the Secretary determines to be effective in assisting 
        States to carry out their responsibilities under 
        programs operated under this part and programs funded 
        under part A, the Secretary shall--
                  (A) compare the information in each component 
                of the Federal Parent Locator Service 
                maintained under this section against the 
                information in each other such component (other 
                than the comparison required by paragraph (2)), 
                and report instances in which such a comparison 
                reveals a match with respect to an individual 
                to State agencies operating such programs; and
                  (B) disclose information in such components 
                to such State agencies.
          (4) Provision of new hire information to the social 
        security administration.--The National Directory of New 
        Hires shall provide the Commissioner of Social Security 
        with all information in the National Directory.
          (5) Research.--The Secretary may provide access to 
        data in each component of the Federal Parent Locator 
        Service maintained under this section and to 
        information reported by employers pursuant to section 
        453A(b) for research purposes found by the Secretary to 
        be likely to contribute to achieving the purposes of 
        part A or this part, but without personal identifiers.
          (6) Information comparisons and disclosure for 
        enforcement of obligations on higher education act 
        loans and grants.--
                  (A) Furnishing of information by the 
                secretary of education.--The Secretary of 
                Education shall furnish to the Secretary, on a 
                quarterly basis or at such less frequent 
                intervals as may be determined by the Secretary 
                of Education, information in the custody of the 
                Secretary of Education for comparison with 
                information in the National Directory of New 
                Hires, in order to obtain the information in 
                such directory with respect to individuals 
                who--
                          (i) are borrowers of loans made under 
                        title IV of the Higher Education Act of 
                        1965 that are in default; or
                          (ii) owe an obligation to refund an 
                        overpayment of a grant awarded under 
                        such title.
                  (B) Requirement to seek minimum information 
                necessary.--The Secretary of Education shall 
                seek information pursuant to this section only 
                to the extent essential to improving collection 
                of the debt described in subparagraph (A).
                  (C) Duties of the secretary.--
                          (i) Information comparison; 
                        disclosure to the secretary of 
                        education.--The Secretary, in 
                        cooperation with the Secretary of 
                        Education, shall compare information in 
                        the National Directory of New Hires 
                        with information in the custody of the 
                        Secretary of Education, and disclose 
                        information in that Directory to the 
                        Secretary of Education, in accordance 
                        with this paragraph, for the purposes 
                        specified in this paragraph.
                          (ii) Condition on disclosure.--The 
                        Secretary shall make disclosures in 
                        accordance with clause (i) only to the 
                        extent that the Secretary determines 
                        that such disclosures do not interfere 
                        with the effective operation of the 
                        program under this part. Support 
                        collection under section 466(b) shall 
                        be given priority over collection of 
                        any defaulted student loan or grant 
                        overpayment against the same income.
                  (D) Use of information by the secretary of 
                education.--The Secretary of Education may use 
                information resulting from a data match 
                pursuant to this paragraph only--
                          (i) for the purpose of collection of 
                        the debt described in subparagraph (A) 
                        owed by an individual whose annualized 
                        wage level (determined by taking into 
                        consideration information from the 
                        National Directory of New Hires) 
                        exceeds $16,000; and
                          (ii) after removal of personal 
                        identifiers, to conduct analyses of 
                        student loan defaults.
                  (E) Disclosure of information by the 
                secretary of education.--
                          (i) Disclosures permitted.--The 
                        Secretary of Education may disclose 
                        information resulting from a data match 
                        pursuant to this paragraph only to--
                                  (I) a guaranty agency holding 
                                a loan made under part B of 
                                title IV of the Higher 
                                Education Act of 1965 on which 
                                the individual is obligated;
                                  (II) a contractor or agent of 
                                the guaranty agency described 
                                in subclause (I);
                                  (III) a contractor or agent 
                                of the Secretary; and
                                  (IV) the Attorney General.
                          (ii) Purpose of disclosure.--The 
                        Secretary of Education may make a 
                        disclosure under clause (i) only for 
                        the purpose of collection of the debts 
                        owed on defaulted student loans, or 
                        overpayments of grants, made under 
                        title IV of the Higher Education Act of 
                        1965.
                          (iii) Restriction on redisclosure.--
                        An entity to which information is 
                        disclosed under clause (i) may use or 
                        disclose such information only as 
                        needed for the purpose of collecting on 
                        defaulted student loans, or 
                        overpayments of grants, made under 
                        title IV of the Higher Education Act of 
                        1965.
                  (F) Reimbursement of hhs costs.--The 
                Secretary of Education shall reimburse the 
                Secretary, in accordance with subsection 
                (k)(3), for the [additional] costs incurred by 
                the Secretary in furnishing the information 
                requested under this subparagraph.
          (7) Information comparisons for housing assistance 
        programs.--
                  (A) Furnishing of information by hud.--
                Subject to subparagraph (G), the Secretary of 
                Housing and Urban Development shall furnish to 
                the Secretary, on such periodic basis as 
                determined by the Secretary of Housing and 
                Urban Development in consultation with the 
                Secretary, information in the custody of the 
                Secretary of Housing and Urban Development for 
                comparison with information in the National 
                Directory of New Hires, in order to obtain 
                information in such Directory with respect to 
                individuals who are participating in any 
                program under--
                          (i) the United States Housing Act of 
                        1937 (42 U.S.C. 1437 et seq.);
                          (ii) section 202 of the Housing Act 
                        of 1959 (12 U.S.C. 1701q);
                          (iii) section 221(d)(3), 221(d)(5), 
                        or 236 of the National Housing Act (12 
                        U.S.C. 1715l(d) and 1715z-1);
                          (iv) section 811 of the Cranston-
                        Gonzalez National Affordable Housing 
                        Act (42 U.S.C. 8013); or
                          (v) section 101 of the Housing and 
                        Urban Development Act of 1965 (12 
                        U.S.C. 1701s).
                  (B) Requirement to seek minimum 
                information.--The Secretary of Housing and 
                Urban Development shall seek information 
                pursuant to this section only to the extent 
                necessary to verify the employment and income 
                of individuals described in subparagraph (A).
                  (C) Duties of the secretary.--
                          (i) Information disclosure.--The 
                        Secretary, in cooperation with the 
                        Secretary of Housing and Urban 
                        Development, shall compare information 
                        in the National Directory of New Hires 
                        with information provided by the 
                        Secretary of Housing and Urban 
                        Development with respect to individuals 
                        described in subparagraph (A), and 
                        shall disclose information in such 
                        Directory regarding such individuals to 
                        the Secretary of Housing and Urban 
                        Development, in accordance with this 
                        paragraph, for the purposes specified 
                        in this paragraph.
                          (ii) Condition on disclosure.--The 
                        Secretary shall make disclosures in 
                        accordance with clause (i) only to the 
                        extent that the Secretary determines 
                        that such disclosures do not interfere 
                        with the effective operation of the 
                        program under this part.
                  (D) Use of information by hud.--The Secretary 
                of Housing and Urban Development may use 
                information resulting from a data match 
                pursuant to this paragraph only--
                          (i) for the purpose of verifying the 
                        employment and income of individuals 
                        described in subparagraph (A); and
                          (ii) after removal of personal 
                        identifiers, to conduct analyses of the 
                        employment and income reporting of 
                        individuals described in subparagraph 
                        (A).
                  (E) Disclosure of information by hud.--
                          (i) Purpose of disclosure.--The 
                        Secretary of Housing and Urban 
                        Development may make a disclosure under 
                        this subparagraph only for the purpose 
                        of verifying the employment and income 
                        of individuals described in 
                        subparagraph (A).
                          (ii) Disclosures permitted.--Subject 
                        to clause (iii), the Secretary of 
                        Housing and Urban Development may 
                        disclose information resulting from a 
                        data match pursuant to this paragraph 
                        only to a public housing agency, the 
                        Inspector General of the Department of 
                        Housing and Urban Development, and the 
                        Attorney General in connection with the 
                        administration of a program described 
                        in subparagraph (A). Information 
                        obtained by the Secretary of Housing 
                        and Urban Development pursuant to this 
                        paragraph shall not be made available 
                        under section 552 of title 5, United 
                        States Code.
                          (iii) Conditions on disclosure.--
                        Disclosures under this paragraph shall 
                        be--
                                  (I) made in accordance with 
                                data security and control 
                                policies established by the 
                                Secretary of Housing and Urban 
                                Development and approved by the 
                                Secretary;
                                  (II) subject to audit in a 
                                manner satisfactory to the 
                                Secretary; and
                                  (III) subject to the 
                                sanctions under subsection 
                                (l)(2).
                          (iv) Additional disclosures.--
                                  (I) Determination by 
                                secretaries.--The Secretary of 
                                Housing and Urban Development 
                                and the Secretary shall 
                                determine whether to permit 
                                disclosure of information under 
                                this paragraph to persons or 
                                entities described in subclause 
                                (II), based on an evaluation 
                                made by the Secretary of 
                                Housing and Urban Development 
                                (in consultation with and 
                                approved by the Secretary), of 
                                the costs and benefits of 
                                disclosures made under clause 
                                (ii) and the adequacy of 
                                measures used to safeguard the 
                                security and confidentiality of 
                                information so disclosed.
                                  (II) Permitted persons or 
                                entities.--If the Secretary of 
                                Housing and Urban Development 
                                and the Secretary determine 
                                pursuant to subclause (I) that 
                                disclosures to additional 
                                persons or entities shall be 
                                permitted, information under 
                                this paragraph may be disclosed 
                                by the Secretary of Housing and 
                                Urban Development to a private 
                                owner, a management agent, and 
                                a contract administrator in 
                                connection with the 
                                administration of a program 
                                described in subparagraph (A), 
                                subject to the conditions in 
                                clause (iii) and such 
                                additional conditions as agreed 
                                to by the Secretaries.
                          (v) Restrictions on redisclosure.--A 
                        person or entity to which information 
                        is disclosed under this subparagraph 
                        may use or disclose such information 
                        only as needed for verifying the 
                        employment and income of individuals 
                        described in subparagraph (A), subject 
                        to the conditions in clause (iii) and 
                        such additional conditions as agreed to 
                        by the Secretaries.
                  (F) Reimbursement of hhs costs.--The 
                Secretary of Housing and Urban Development 
                shall reimburse the Secretary, in accordance 
                with subsection (k)(3), for the costs incurred 
                by the Secretary in furnishing the information 
                requested under this paragraph.
                  (G) Consent.--The Secretary of Housing and 
                Urban Development shall not seek, use, or 
                disclose information under this paragraph 
                relating to an individual without the prior 
                written consent of such individual (or of a 
                person legally authorized to consent on behalf 
                of such individual).
          (8)  Information comparisons and disclosure to assist 
        in administration of unemployment compensation 
        programs.--
                  (A) In general.--If, for purposes of 
                administering an unemployment compensation 
                program under Federal or State law, a State 
                agency responsible for the administration of 
                such program transmits to the Secretary the 
                names and social security account numbers of 
                individuals, the Secretary shall disclose to 
                such State agency information on such 
                individuals and their employers maintained in 
                the National Directory of New Hires, subject to 
                this paragraph.
                  (B) Condition on disclosure by the 
                secretary.--The Secretary shall make a 
                disclosure under subparagraph (A) only to the 
                extent that the Secretary determines that the 
                disclosure would not interfere with the 
                effective operation of the program under this 
                part.
                  (C) Use and disclosure of information by 
                state agencies.--
                          (i) In general.--A State agency may 
                        not use or disclose information 
                        provided under this paragraph except 
                        for purposes of administering a program 
                        referred to in subparagraph (A).
                          (ii) Information security.--The State 
                        agency shall have in effect data 
                        security and control policies that the 
                        Secretary finds adequate to ensure the 
                        security of information obtained under 
                        this paragraph and to ensure that 
                        access to such information is 
                        restricted to authorized persons for 
                        purposes of authorized uses and 
                        disclosures.
                          (iii) Penalty for misuse of 
                        information.--An officer or employee of 
                        the State agency who fails to comply 
                        with this subparagraph shall be subject 
                        to the sanctions under subsection 
                        (l)(2) to the same extent as if such 
                        officer or employee was an officer or 
                        employee of the United States.
                  (D) Procedural requirements.--State agencies 
                requesting information under this paragraph 
                shall adhere to uniform procedures established 
                by the Secretary governing information requests 
                and data matching under this paragraph.
                  (E) Reimbursement of costs.--The State agency 
                shall reimburse the Secretary, in accordance 
                with subsection (k)(3), for the costs incurred 
                by the Secretary in furnishing the information 
                requested under this paragraph.
          [(7)] (9) Information comparisons and disclosure to 
        assist in federal debt collection.--
                  (A) Furnishing of information by the 
                secretary of the treasury.--The Secretary of 
                the Treasury shall furnish to the Secretary, on 
                such periodic basis as determined by the 
                Secretary of the Treasury in consultation with 
                the Secretary, information in the custody of 
                the Secretary of the Treasury for comparison 
                with information in the National Directory of 
                New Hires, in order to obtain information in 
                such Directory with respect to persons--
                          (i) who owe delinquent nontax debt to 
                        the United States; and
                          (ii) whose debt has been referred to 
                        the Secretary of the Treasury in 
                        accordance with 31 U.S.C. 3711(g).
                  (B) Requirement to seek minimum 
                information.--The Secretary of the Treasury 
                shall seek information pursuant to this section 
                only to the extent necessary to improve 
                collection of the debt described in 
                subparagraph (A).
                  (C) Duties of the secretary.--
                          (i) Information disclosure.--The 
                        Secretary, in cooperation with the 
                        Secretary of the Treasury, shall 
                        compare information in the National 
                        Directory of New Hires with information 
                        provided by the Secretary of the 
                        Treasury with respect to persons 
                        described in subparagraph (A) and shall 
                        disclose information in such Directory 
                        regarding such persons to the Secretary 
                        of the Treasury in accordance with this 
                        paragraph, for the purposes specified 
                        in this paragraph. Such comparison of 
                        information shall not be considered a 
                        matching program as defined in 5 U.S.C. 
                        552a.
                          (ii) Condition on disclosure.--The 
                        Secretary shall make disclosures in 
                        accordance with clause (i) only to the 
                        extent that the Secretary determines 
                        that such disclosures do not interfere 
                        with the effective operation of the 
                        program under this part. Support 
                        collection under section 466(b) of this 
                        title shall be given priority over 
                        collection of any delinquent Federal 
                        nontax debt against the same income.
                  (D) Use of information by the secretary of 
                the treasury.--The Secretary of the Treasury 
                may use information provided under this 
                paragraph only for purposes of collecting the 
                debt described in subparagraph (A).
                  (E) Disclosure of information by the 
                secretary of the treasury.--
                          (i) Purpose of disclosure.--The 
                        Secretary of the Treasury may make a 
                        disclosure under this subparagraph only 
                        for purposes of collecting the debt 
                        described in subparagraph (A).
                          (ii) Disclosures permitted.--Subject 
                        to clauses (iii) and (iv), the 
                        Secretary of the Treasury may disclose 
                        information resulting from a data match 
                        pursuant to this paragraph only to the 
                        Attorney General in connection with 
                        collecting the debt described in 
                        subparagraph (A).
                          (iii) Conditions on disclosure.--
                        Disclosures under this subparagraph 
                        shall be--
                                  (I) made in accordance with 
                                data security and control 
                                policies established by the 
                                Secretary of the Treasury and 
                                approved by the Secretary;
                                  (II) subject to audit in a 
                                manner satisfactory to the 
                                Secretary; and
                                  (III) subject to the 
                                sanctions under subsection 
                                (l)(2).
                          (iv) Additional disclosures.--
                                  (I) Determination by 
                                secretaries.--The Secretary of 
                                the Treasury and the Secretary 
                                shall determine whether to 
                                permit disclosure of 
                                information under this 
                                paragraph to persons or 
                                entities described in subclause 
                                (II), based on an evaluation 
                                made by the Secretary of the 
                                Treasury (in consultation with 
                                and approved by the Secretary), 
                                of the costs and benefits of 
                                such disclosures and the 
                                adequacy of measures used to 
                                safeguard the security and 
                                confidentiality of information 
                                so disclosed.
                                  (II) Permitted persons or 
                                entities.--If the Secretary of 
                                the Treasury and the Secretary 
                                determine pursuant to subclause 
                                (I) that disclosures to 
                                additional persons or entities 
                                shall be permitted, information 
                                under this paragraph may be 
                                disclosed by the Secretary of 
                                the Treasury, in connection 
                                with collecting the debt 
                                described in subparagraph (A), 
                                to a contractor or agent of 
                                either Secretary and to the 
                                Federal agency that referred 
                                such debt to the Secretary of 
                                the Treasury for collection, 
                                subject to the conditions in 
                                clause (iii) and such 
                                additional conditions as agreed 
                                to by the Secretaries.
                          (v) Restrictions on redisclosure.--A 
                        person or entity to which information 
                        is disclosed under this subparagraph 
                        may use or disclose such information 
                        only as needed for collecting the debt 
                        described in subparagraph (A), subject 
                        to the conditions in clause (iii) and 
                        such additional conditions as agreed to 
                        by the Secretaries.
                  (F) Reimbursement of hhs costs.--The 
                Secretary of the Treasury shall reimburse the 
                Secretary, in accordance with subsection 
                (k)(3), for the costs incurred by the Secretary 
                in furnishing the information requested under 
                this paragraph. Any such costs paid by the 
                Secretary of the Treasury shall be considered 
                costs of implementing 31 U.S.C. 3711(g) in 
                accordance with 31 U.S.C. 3711(g)(6) and may be 
                paid from the account established pursuant to 
                31 U.S.C. 3711(g)(7).
  (k) Fees.--
          (1) For ssa verification.--The Secretary shall 
        reimburse the Commissioner of Social Security, at a 
        rate negotiated between the Secretary and the 
        Commissioner, for the costs incurred by the 
        Commissioner in performing the verification services 
        described in subsection (j).
          (2) For information from state directories of new 
        hires.--The Secretary shall reimburse costs incurred by 
        State directories of new hires in furnishing 
        information as required by section 453A(g)(2), at rates 
        which the Secretary determines to be reasonable (which 
        rates shall not include payment for the costs of 
        obtaining, compiling, or maintaining such information).
          (3) For information and enforcement services 
        furnished to state and federal agencies.--A State or 
        Federal agency that receives information  or 
        enforcement services from the Secretary pursuant to 
        this section or subsection (l) or (m) of section 452 
        shall reimburse the Secretary for costs incurred by the 
        Secretary [in furnishing the information] in furnishing 
        such information or enforcement services, at rates 
        which the Secretary determines to be reasonable (which 
        rates shall include payment for the costs of obtaining, 
        verifying, maintaining, and comparing the information).
  (l) Restriction on Disclosure and Use.--
          (1) In general.--Information in the Federal Parent 
        Locator Service, and information resulting from 
        comparisons using such information, shall not be used 
        or disclosed except as expressly provided in this 
        section, subject to section 6103 of the Internal 
        Revenue Code of 1986.
          (2) Penalty for misuse of information in the national 
        directory of new hires.--The Secretary shall require 
        the imposition of an administrative penalty (up to and 
        including dismissal from employment), and a fine of 
        $1,000, for each act of unauthorized access to, 
        disclosure of, or use of, information in the National 
        Directory of New Hires established under subsection (i) 
        by any officer or employee of the United States or any 
        other person who knowingly and willfully violates this 
        paragraph.
  (m) Information Integrity and Security.--The Secretary shall 
establish and implement safeguards with respect to the entities 
established under this section designed to--
          (1) ensure the accuracy and completeness of 
        information in the Federal Parent Locator Service; and
          (2) restrict access to confidential information in 
        the Federal Parent Locator Service to authorized 
        persons, and restrict use of such information to 
        authorized purposes.
  (n) Federal Government Reporting.--Each department, agency, 
and instrumentality of the United States shall on a quarterly 
basis report to the Federal Parent Locator Service the name and 
social security number of each employee and the wages paid to 
the employee during the previous quarter, except that such a 
report shall not be filed with respect to an employee of a 
department, agency, or instrumentality performing intelligence 
or counterintelligence functions, if the head of such 
department, agency, or instrumentality has determined that 
filing such a report could endanger the safety of the employee 
or compromise an ongoing investigation or intelligence mission.
  (o) Use of Set-Aside Funds.--Out of any money in the Treasury 
of the United States not otherwise appropriated, there is 
hereby appropriated to the Secretary for each fiscal year an 
amount equal to 2 percent of the total amount paid to the 
Federal Government pursuant to a plan approved under this part 
during the immediately preceding fiscal year (as determined on 
the basis of the most recent reliable data available to the 
Secretary as of the end of the third calendar quarter following 
the end of such preceding fiscal year),  or the amount 
appropriated under this paragraph for fiscal year 2002, 
whichever is greater which shall be available for use by the 
Secretary, either directly or through grants, contracts, or 
interagency agreements, for operation of the Federal Parent 
Locator Service under this section, to the extent such costs 
are not recovered through user fees. Amounts appropriated under 
this subsection [for each of fiscal years 1997 through 2001] 
shall remain available until expended.
  (p) Support Order Defined.--As used in this part, the term 
``support order'' means a judgment, decree, or order, whether 
temporary, final, or subject to modification, issued by a court 
or an administrative agency of competent jurisdiction, for the 
support and maintenance of a child, including a child who has 
attained the age of majority under the law of the issuing 
State, or of the parent with whom the child is living, which 
provides for monetary support, health care, arrearages, or 
reimbursement, and which may include related costs and fees, 
interest and penalties, income withholding, attorneys' fees, 
and other relief.

SEC. 453A. [42 U.S.C. 653A] STATE DIRECTORY OF NEW HIRES.

  (a) Establishment.--
          (1) In general.--
                  (A) Requirement for states that have no 
                directory.--Except as provided in subparagraph 
                (B), not later than October 1, 1997, each State 
                shall establish an automated directory (to be 
                known as the ``State Directory of New Hires'') 
                which shall contain information supplied in 
                accordance with subsection (b) by employers on 
                each newly hired employee.
                  (B) States with new hire reporting law in 
                existence.--A State which has a new hire 
                reporting law in existence on the date of the 
                enactment of this section may continue to 
                operate under the State law, but the State must 
                meet the requirements of subsection (g)(2) not 
                later than October 1, 1997, and the 
                requirements of this section (other than 
                subsection (g)(2)) not later than October 1, 
                1998.
          (2) Definitions.--As used in this section:
                  (A) Employee.--The term ``employee''--
                          (i) means an individual who is an 
                        employee within the meaning of chapter 
                        24 of the Internal Revenue Code of 
                        1986; and
                          (ii) does not include an employee of 
                        a Federal or State agency performing 
                        intelligence or counterintelligence 
                        functions, if the head of such agency 
                        has determined that reporting pursuant 
                        to paragraph (1) with respect to the 
                        employee could endanger the safety of 
                        the employee or compromise an ongoing 
                        investigation or intelligence mission.
                  (B) Employer.--
                          (i) In general.--The term 
                        ``employer'' has the meaning given such 
                        term in section 3401(d) of the Internal 
                        Revenue Code of 1986 and includes any 
                        governmental entity and any labor 
                        organization.
                          (ii) Labor organization.--The term 
                        ``labor organization'' shall have the 
                        meaning given such term in section 2(5) 
                        of the National Labor Relations Act, 
                        and includes any entity (also known as 
                        a ``hiring hall'') which is used by the 
                        organization and an employer to carry 
                        out requirements described in section 
                        8(f)(3) of such Act of an agreement 
                        between the organization and the 
                        employer.
  (b) Employer Information.--
          (1) Reporting requirement.--
                  (A) In general.--Except as provided in 
                subparagraphs (B) and (C), each employer shall 
                furnish to the Directory of New Hires of the 
                State in which a newly hired employee works, a 
                report that contains the name, address, and 
                social security number of the employee, and the 
                name and address of, and identifying number 
                assigned under section 6109 of the Internal 
                Revenue Code of 1986 to, the employer.
                  (B) Multistate employers.--An employer that 
                has employees who are employed in 2 or more 
                States and that transmits reports magnetically 
                or electronically may comply with subparagraph 
                (A) by designating 1 State in which such 
                employer has employees to which the employer 
                will transmit the report described in 
                subparagraph (A), and transmitting such report 
                to such State. Any employer that transmits 
                reports pursuant to this subparagraph shall 
                notify the Secretary in writing as to which 
                State such employer designates for the purpose 
                of sending reports.
                  (C) Federal government employers.--Any 
                department, agency, or instrumentality of the 
                United States shall comply with subparagraph 
                (A) by transmitting the report described in 
                subparagraph (A) to the National Directory of 
                New Hires established pursuant to section 453.
          (2) Timing of report.--Each State may provide the 
        time within which the report required by paragraph (1) 
        shall be made with respect to an employee, but such 
        report shall be made--
                  (A) not later than 20 days after the date the 
                employer hires the employee; or
                  (B) in the case of an employer transmitting 
                reports magnetically or electronically, by 2 
                monthly transmissions (if necessary) not less 
                than 12 days nor more than 16 days apart.
  (c) Reporting Format and Method.--Each report required by 
subsection (b) shall be made on a W-4 form or, at the option of 
the employer, an equivalent form, and may be transmitted by 1st 
class mail, magnetically, or electronically.
  (d) Civil Money Penalties on Noncomplying Employers.--The 
State shall have the option to set a State civil money penalty 
which shall not exceed--
          (1) $25 per failure to meet the requirements of this 
        section with respect to a newly hired employee; or
          (2) $500 if, under State law, the failure is the 
        result of a conspiracy between the employer and the 
        employee to not supply the required report or to supply 
        a false or incomplete report.
  (e) Entry of Employer Information.--Information shall be 
entered into the data base maintained by the State Directory of 
New Hires within 5 business days of receipt from an employer 
pursuant to subsection (b).
  (f) Information Comparisons.--
          (1) In general.--Not later than May 1, 1998, an 
        agency designated by the State shall, directly or by 
        contract, conduct automated comparisons of the social 
        security numbers reported by employers pursuant to 
        subsection (b) and the social security numbers 
        appearing in the records of the State case registry for 
        cases being enforced under the State plan.
          (2) Notice of match.--When an information comparison 
        conducted under paragraph (1) reveals a match with 
        respect to the social security number of an individual 
        required to provide support under a support order, the 
        State Directory of New Hires shall provide the agency 
        administering the State plan approved under this part 
        of the appropriate State with the name, address, and 
        social security number of the employee to whom the 
        social security number is assigned, and the name

           *       *       *       *       *       *       *


                STATE PLAN FOR CHILD AND SPOUSAL SUPPORT

  Sec. 454. A State plan for child and spousal support must--

           *       *       *       *       *       *       *

          (31) provide that the State agency will have in 
        effect a procedure for certifying to the Secretary, for 
        purposes of the procedure under section 452(k), 
        determinations that individuals owe arrearages of child 
        support in an amount exceeding [$5,000] $2,500, under 
        which procedure--

           *       *       *       *       *       *       *

          (C) provide that no applications will be required 
        from, and no costs will be assessed for such services 
        against, the foreign reciprocating country or foreign 
        obligee (but costs may at State option be assessed 
        against the obligor); [and]
          (33) provide that a State [that receives funding 
        pursuant to section 428 and] that has within its 
        borders Indian country (as defined in section 1151 of 
        title 18, United States Code) may enter into 
        cooperative agreements with an Indian tribe or tribal 
        organization (as defined in subsections (e) and (l) of 
        section 4 of the Indian Self-Determination and 
        Education Assistance Act (25 U.S.C. 450b)), if the 
        Indian tribe or tribal organization demonstrates that 
        such tribe or organization has an established tribal 
        court system or a Court of Indian Offenses with the 
        authority to establish paternity, establish, modify, or 
        enforce support orders, or to enter support orders in 
        accordance with child support guidelines established or 
        adopted by such tribe or organization, under which the 
        State and tribe or organization shall provide for the 
        cooperative delivery of child support enforcement 
        services in Indian country and for the forwarding of 
        all collections pursuant to the functions performed by 
        the tribe or organization to the State agency, or 
        conversely, by the State agency to the tribe or 
        organization, which shall distribute such collections 
        in accordance with such agreement.
The State may allow the jurisdiction which makes the collection 
involved to retain any application fee under paragraph (6)(B) 
or any late payment fee under paragraph (21). Nothing in 
paragraph (33) shall void any provision of any cooperative 
agreement entered into before the date of the enactment of such 
paragraph, nor shall such paragraph deprive any State of 
jurisdiction over Indian country (as so defined) that is 
lawfully exercised under section 402 of the Act entitled ``An 
Act to prescribe penalties for certain acts of violence or 
intimidation, and for other purposes'', approved April 11, 1968 
(25 U.S.C. 1322)[.];
          (34) include an election by the State to apply 
        section 457(a)(2)(B) of this Act or former section 
        457(a)(2)(B) of this Act (as in effect for the State 
        immediately before the date this paragraph first 
        applies to the State) to the distribution of the 
        amounts which are the subject of such sections and, for 
        so long as the State elects to so apply such former 
        section, the amendments made by section 301(d)(1) of 
        the Personal Responsibility and Individual Development 
        for Everyone Act shall not apply with respect to the 
        State, notwithstanding section 301(e) of that Act; and

           *       *       *       *       *       *       *

          (35) provide that the State shall--
                  (A) upon furnishing the Secretary with 
                information under section 452(l) with respect 
                to individuals owing past-due support, provide 
                notice to such individuals that their assets 
                held in financial institutions shall be subject 
                to seizure to pay such past-due support, and 
                shall--
                          (i) instruct such individuals of the 
                        steps which may be taken to contest the 
                        State's determination that past-due 
                        support is owed or the amount of the 
                        past-due support; and
                          (ii) include, in the case of jointly 
                        owned assets, a description of the 
                        process by which other owners may 
                        secure their share of such assets, in 
                        accordance with such policies and 
                        procedures as the Secretary may specify 
                        with respect to seizure of such assets;
                  (B) promptly resolve cases in which such 
                individuals contest the State's determination 
                with respect to past-due support, and provide 
                for expedited refund of any assets erroneously 
                seized and transferred to the State under such 
                section 452(l); and
                  (C) except as otherwise specified under this 
                paragraph or by the Secretary, ensure that the 
                due process protections afforded under this 
                paragraph to individuals whose assets are 
                subject to seizure under section 452(l) are 
                generally consistent with, and to the extent 
                practicable conform to, the due process 
                protections afforded by the State to 
                individuals subject to offset of tax refunds 
                under section 464.

SEC. 457. DISTRIBUTION OF COLLECTED SUPPORT.

  [(a) In General.--Subject to subsections (d) and (e), an 
amount collected on behalf of a family as support by a State 
pursuant to a plan approved under this part shall be 
distributed as follows:
          [(1) Families receiving assistance.--In the case of a 
        family receiving assistance from the State, the State 
        shall--
                  [(A) pay to the Federal Government the 
                Federal share of the amount so collected; and
                  [(B) retain, or distribute to the family, the 
                State share of the amount so collected.
        In no event shall the total of the amounts paid to the 
        Federal Government and retained by the State exceed the 
        total of the amounts that have been paid to the family 
        as assistance by the State.
          [(2) Families that formerly received assistance.--In 
        the case of a family that formerly received assistance 
        from the State:
                  [(A) Current support payments.--To the extent 
                that the amount so collected does not exceed 
                the amount required to be paid to the family 
                for the month in which collected, the State 
                shall distribute the amount so collected to the 
                family.
                  [(B) Payments of arrearages.--To the extent 
                that the amount so collected exceeds the amount 
                required to be paid to the family for the month 
                in which collected, the State shall distribute 
                the amount so collected as follows:
                          [(i) Distribution of arrearages that 
                        accrued after the family ceased to 
                        receive assistance.--
                                  [(I) Pre-october 1997.--
                                Except as provided in subclause 
                                (II), the provisions of this 
                                section as in effect and 
                                applied on the day before the 
                                date of the enactment of 
                                section 302 of the Personal 
                                Responsibility and Work 
                                Opportunity Reconciliation Act 
                                of 1996 (other than subsection 
                                (b)(1) (as so in effect)) shall 
                                apply with respect to the 
                                distribution of support 
                                arrearages that--
                                          [(aa) accrued after 
                                        the family ceased to 
                                        receive assistance, and
                                          [(bb) are collected 
                                        before October 1, 1997.
                                  [(II) Post-september 1997.--
                                With respect to the amount so 
                                collected on or after October 
                                1, 1997 (or before such date, 
                                at the option of the State)--
                                          [(aa) In general.--
                                        The State shall first 
                                        distribute the amount 
                                        so collected (other 
                                        than any amount 
                                        described in clause 
                                        (iv)) to the family to 
                                        the extent necessary to 
                                        satisfy any support 
                                        arrearages with respect 
                                        to the family that 
                                        accrued after the 
                                        family ceased to 
                                        receive assistance from 
                                        the State.
                                          [(bb) Reimbursement 
                                        of governments for 
                                        assistance provided to 
                                        the family.--After the 
                                        application of division 
                                        (aa) and clause 
                                        (ii)(II)(aa) with 
                                        respect to the amount 
                                        so collected, the State 
                                        shall retain the State 
                                        share of the amount so 
                                        collected, and pay to 
                                        the Federal Government 
                                        the Federal share (as 
                                        defined in subsection 
                                        (c)(2)) of the amount 
                                        so collected, but only 
                                        to the extent necessary 
                                        to reimburse amounts 
                                        paid to the family as 
                                        assistance by the 
                                        State.
                                          [(cc) Distribution of 
                                        the remainder to the 
                                        family.--To the extent 
                                        that neither division 
                                        (aa) nor division (bb) 
                                        applies to the amount 
                                        so collected, the State 
                                        shall distribute the 
                                        amount to the family.
                          [(ii) Distribution of arrearages that 
                        accrued before the family received 
                        assistance.--
                                  [(I) Pre-october 2000.--
                                Except as provided in subclause 
                                (II), the provisions of this 
                                section as in effect and 
                                applied on the day before the 
                                date of the enactment of 
                                section 302 of the Personal 
                                Responsibility and Work 
                                Opportunity Reconciliation Act 
                                of 1996 (other than subsection 
                                (b)(1) (as so in effect)) shall 
                                apply with respect to the 
                                distribution of support 
                                arrearages that--
                                          [(aa) accrued before 
                                        the family received 
                                        assistance, and
                                          [(bb) are collected 
                                        before October 1, 2000.
                                  [(II) Post-september 2000.--
                                Unless, based on the report 
                                required by paragraph (5), the 
                                Congress determines otherwise, 
                                with respect to the amount so 
                                collected on or after October 
                                1, 2000 (or before such date, 
                                at the option of the State)--
                                          [(aa) In general.--
                                        The State shall first 
                                        distribute the amount 
                                        so collected (other 
                                        than any amount 
                                        described in clause 
                                        (iv)) to the family to 
                                        the extent necessary to 
                                        satisfy any support 
                                        arrearages with respect 
                                        to the family that 
                                        accrued before the 
                                        family received 
                                        assistance from the 
                                        State.
                                          [(bb) Reimbursement 
                                        of governments for 
                                        assistance provided to 
                                        the family.--After the 
                                        application of clause 
                                        (i)(II)(aa) and 
                                        division (aa) with 
                                        respect to the amount 
                                        so collected, the State 
                                        shall retain the State 
                                        share of the amount so 
                                        collected, and pay to 
                                        the Federal Government 
                                        the Federal share (as 
                                        defined in subsection 
                                        (c)(2)) of the amount 
                                        so collected, but only 
                                        to the extent necessary 
                                        to reimburse amounts 
                                        paid to the family as 
                                        assistance by the 
                                        State.
                                          [(cc) Distribution of 
                                        the remainder to the 
                                        family.--To the extent 
                                        that neither division 
                                        (aa) nor division (bb) 
                                        applies to the amount 
                                        so collected, the State 
                                        shall distribute the 
                                        amount to the family.
                          [(iii) Distribution of arrearages 
                        that accrued while the family received 
                        assistance.--In the case of a family 
                        described in this subparagraph, the 
                        provisions of paragraph (1) shall apply 
                        with respect to the distribution of 
                        support arrearages that accrued while 
                        the family received assistance.
                          [(iv) Amounts collected pursuant to 
                        section 464.--Notwithstanding any other 
                        provision of this section, any amount 
                        of support collected pursuant to 
                        section 464 shall be retained by the 
                        State to the extent past-due support 
                        has been assigned to the State as a 
                        condition of receiving assistance from 
                        the State, up to the amount necessary 
                        to reimburse the State for amounts paid 
                        to the family as assistance by the 
                        State. The State shall pay to the 
                        Federal Government the Federal share of 
                        the amounts so retained. To the extent 
                        the amount collected pursuant to 
                        section 464 exceeds the amount so 
                        retained, the State shall distribute 
                        the excess to the family.
                          [(v) Ordering rules for 
                        distributions.--For purposes of this 
                        subparagraph, unless an earlier 
                        effective date is required by this 
                        section, effective October 1, 2000, the 
                        State shall treat any support 
                        arrearages collected, except for 
                        amounts collected pursuant to section 
                        464, as accruing in the following 
                        order:
                                  [(I) To the period after the 
                                family ceased to receive 
                                assistance.
                                  [(II) To the period before 
                                the family received assistance.
                                  [(III) To the period while 
                                the family was receiving 
                                assistance.
          [(3) Families that never received assistance.--In the 
        case of any other family, the State shall distribute 
        the amount so collected to the family.
          [(4) Families under certain agreements.--In the case 
        of an amount collected for a family in accordance with 
        a cooperative agreement under section 454(33), 
        distribute the amount so collected pursuant to the 
        terms of the agreement.
          [(5) Study and report.--Not later than October 1, 
        1999, the Secretary shall report to the Congress the 
        Secretary's findings with respect to--
                  [(A) whether the distribution of post-
                assistance arrearages to families has been 
                effective in moving people off of welfare and 
                keeping them off of welfare;
                  [(B) whether early implementation of a pre-
                assistance arrearage program by some States has 
                been effective in moving people off of welfare 
                and keeping them off of welfare;
                  [(C) what the overall impact has been of the 
                amendments made by the Personal Responsibility 
                and Work Opportunity Reconciliation Act of 1996 
                with respect to child support enforcement in 
                moving people off of welfare and keeping them 
                off of welfare; and
                  [(D) based on the information and data the 
                Secretary has obtained, what changes, if any, 
                should be made in the policies related to the 
                distribution of child support arrearages.
          [(6) State option for applicability.--Notwithstanding 
        any other provision of this subsection, a State may 
        elect to apply the rules described in clauses (i)(II), 
        (ii)(II), and (v) of paragraph (2)(B) to support 
        arrearages collected on and after October 1, 1998, and, 
        if the State makes such an election, shall apply the 
        provisions of this section, as in effect and applied on 
        the day before the date of enactment of section 302 of 
        the Personal Responsibility and Work Opportunity 
        Reconciliation Act of 1996 (Public Law 104-193, 110 
        Stat. 2200), other than subsection (b)(1) (as so in 
        effect), to amounts collected before October 1, 1998.]
  (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.--Except as otherwise provided 
                in an election made under section 454(34), 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 (3), 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's share of the amount payable to a family 
        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 pursuant to former section 457(a)(2)(B) (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 have the payment considered a qualified State 
        expenditure for purposes of section 409(a)(7).
          (7) State option to pass through additional support 
        with federal financial participation.--
                  (A) Families that formerly received 
                assistance.--Notwithstanding paragraph (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 
                formerly received assistance from the State to 
                the extent that the State pays the amount to 
                the family.
                  (B) Families that currently receive 
                assistance.--
                          (i) In general.--Notwithstanding 
                        paragraph (1), in the case of a family 
                        that receives assistance from the 
                        State, a State shall not be required to 
                        pay to the Federal Government the 
                        Federal share of the excepted portion 
                        (as defined in clause (ii)) of any 
                        amount collected on behalf of such 
                        family during a month to the extent 
                        that--
                                  (I) the State pays the 
                                excepted portion to the family; 
                                and
                                  (II) the excepted portion is 
                                disregarded in determining the 
                                amount and type of assistance 
                                provided to the family under 
                                such program.
                          (ii) Excepted portion defined.--For 
                        purposes of this subparagraph, the term 
                        ``excepted portion'' means that portion 
                        of the amount collected on behalf of a 
                        family during a month that does not 
                        exceed $400 per month, or in the case 
                        of a family that includes 2 or more 
                        children, that does not exceed an 
                        amount established by the State that is 
                        not more than $600 per month.
          (8) States with demonstration waivers.--
        Notwithstanding the preceding paragraphs, in the case 
        of a State that, on the date of enactment of this 
        paragraph, has had in effect since October 1, 1997, a 
        waiver under section 1115 permitting pass-through 
        payments of child support collections--
                  (A) the State may continue to distribute such 
                payments to families without regard to the 
                expiration date of such waiver; and
                  (B) the requirement under paragraph (1) to 
                pay to the Federal Government the Federal share 
                of the amount collected on behalf of a family 
                shall not apply to the extent that--
                          (i) the State distributes such amount 
                        to the family; and
                          (ii) such amount is disregarded in 
                        determining the amount and type of 
                        assistance paid to the family.[(b)
(b) Continuation of Assignments.--Any rights to support 
obligations, assigned to a State as a condition of receiving 
assistance from the State under part A and in effect on 
September 30, 1997 (or such earlier date, on or after August 
22, 1996, as the State may choose). shall remain assigned after 
such date.]
  (b) Continuation of Assignments.--
          (1) State option to discontinue pre-1997 support 
        assignments.--
                  (A) In general.--Any rights to support 
                obligations assigned to a State as a condition 
                of receiving assistance from the State under 
                part A and in effect on September 30, 1997 (or 
                such earlier date on or after August 22, 1996, 
                as the State may choose), may remain assigned 
                after such date.
                  (B) Distribution of amounts after assignment 
                discontinuation.--If a State chooses to 
                discontinue the assignment of a support 
                obligation described in subparagraph (A), the 
                State may treat amounts collected pursuant to 
                such assignment as if such amounts had never 
                been assigned and may distribute such amounts 
                to the family in accordance with subsection 
                (a)(4).
          (2) State option to discontinue post-1997 
        assignments.--
                  (A) In general.--Any rights to support 
                obligations accruing before the date on which a 
                family first receives assistance under part A 
                that are assigned to a State under that part 
                and in effect before the implementation date of 
                this section may remain assigned after such 
                date.
                  (B) Distribution of amounts after assignment 
                discontinuation.--If a State chooses to 
                discontinue the assignment of a support 
                obligation described in subparagraph (A), the 
                State may treat amounts collected pursuant to 
                such assignment as if such amounts had never 
                been assigned and may distribute such amounts 
                to the family in accordance with subsection 
                (a)(4).
    (c) Definitions.--As used in subsection (a):
            (1) Assistance.--The term ``assistance from the 
        State'' means--

           *       *       *       *       *       *       *

          ``(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 
        or calculated by the State based on such order.

           *       *       *       *       *       *       *


SEC. 459. CONSENT BY THE UNITED STATES TO INCOME WITHHOLDING, 
                    GARNISHMENT, AND SIMILAR PROCEEDINGS FOR 
                    ENFORCEMENT OF CHILD SUPPORT AND ALIMONY 
                    OBLIGATIONS.

  (a) * * *

           *       *       *       *       *       *       *

  (h) Moneys Subject to Process.--
          (1) In general.--Subject to paragraph (2), moneys 
        payable to an individual which are considered to be 
        based upon remuneration for employment, for purposes of 
        this section--
                  (A) consist of--

           *       *       *       *       *       *       *

                                  (V) by the Secretary of 
                                Veterans Affairs as 
                                compensation for a service-
                                connected disability paid by 
                                the Secretary to a former 
                                member of the Armed Forces [who 
                                is in receipt of retired or 
                                retainer pay if the former 
                                member has waived a portion of 
                                the retired or retainer pay in 
                                order to receive such 
                                compensation;] , except that 
                                such compensation shall not be 
                                subject to withholding pursuant 
                                to this section for payment of 
                                alimony unless the former 
                                member to whom it is payable is 
                                in receipt of retired or 
                                retainer pay and has waived a 
                                portion of such pay in order to 
                                receive such compensation;

           *       *       *       *       *       *       *


        COLLECTION OF PAST-DUE SUPPORT FROM FEDERAL TAX REFUNDS

  Sec. 464. (a)(1) * * *
  (2)(A) Upon receiving notice from a State agency 
administering a plan approved under this part that a named 
individual owes past-due support [(as that term is defined for 
purposes of this paragraph under subsection (c))] which such 
State has agreed to collect under section 454(4)(A)(ii), and 
that the State agency has sent notice to such individual in 
accordance with paragraph (3)(A), the Secretary of the Treasury 
shall determine whether any amounts, as refunds of Federal 
taxes paid, are payable to such individual (regardless of 
whether such individual filed a tax return as a married or 
unmarried individual). If the Secretary of the Treasury finds 
that any such amount is payable, he shall withhold from such 
refunds an amount equal to such past-due support, and shall 
concurrently send notice to such individual that the 
withholding has been made, including in or with such notice a 
notification to any other person who may have filed a joint 
return with such individual of the steps which such other 
person may take in order to secure his or her proper share of 
the refund. The Secretary of the Treasury shall pay the amount 
withheld to the State agency, and the State shall pay to the 
Secretary of the Treasury any fee imposed by the Secretary of 
the Treasury to cover the costs of the withholding and any 
required notification. The State agency shall, subject to 
paragraph (3)(B), distribute such amount to or on behalf of the 
child to whom the support was owed in accordance with section 
457. This subsection may be executed by the Secretary of the 
Department of the Treasury or his designee.

           *       *       *       *       *       *       *

          (B) The fee which the Secretary of the Treasury may 
        impose to cover the costs of the withholding and 
        notification may not exceed $25 per case submitted.
  (c)[(1) Except as provided in paragraph (2), as used in] In 
this part the term ``past-due support'' means the amount of a 
delinquency, determined under a court order, or an order of an 
administrative process established under State law, for support 
and maintenance of a child (whether or not a minor), or of a 
child (whether or not a minor) and the parent with whom the 
child is living.
  [(2) For purposes of subsection (a)(2), the term ``past-due 
support'' means only past-due support owed to or on behalf of a 
qualified child (or a qualified child and the parent with whom 
the child is living if the same support order includes support 
for the child and the parent).
  [(3) For purposes of paragraph (2), the term ``qualified 
child'' means a child--
          [(A) who is a minor; or
          [(B)(i) who, while a minor, was determined to be 
        disabled under title II or XVI; and
          [(ii) for whom an order of support is in force.]

           *       *       *       *       *       *       *


      REQUIREMENT OF STATUTORILY PRESCRIBED PROCEDURES TO IMPROVE 
               EFFECTIVENESS OF CHILD SUPPORT ENFORCEMENT

  Sec. 466. (a) In order to satisfy section 454(20)(A), each 
State must have in effect laws requiring the use of the 
following procedures, consistent with this section and with 
regulations of the Secretary, to increase the effectiveness of 
the program which the State administers under this part:

           *       *       *       *       *       *       *

          (10) Review and adjustment of support orders upon 
        request.--
                  (A) 3-year cycle.--
                          (i) In general.--Procedures under 
                        which every 3 years (or such shorter 
                        cycle as the State may determine), upon 
                        the request of either [parent, or,] 
                        parent or if there is an assignment 
                        under part A, [upon the request of the 
                        State agency under the State plan or of 
                        either parent,] the State shall with 
                        respect to a support order being 
                        enforced under this part, taking into 
                        account the best interests of the child 
                        involved--

           *       *       *       *       *       *       *

          (14) High-volume, automated administrative 
        enforcement in interstate cases.--
                  (A) In general.--Procedures under which--
                          (i) the State shall use high-volume 
                        automated administrative enforcement, 
                        to the same extent as used for 
                        intrastate cases, in response to a 
                        request made by another State to 
                        enforce support orders, and shall 
                        promptly report the results of such 
                        enforcement procedure to the requesting 
                        State;

           *       *       *       *       *       *       *

                          (iii) if the State provides 
                        assistance to another State pursuant to 
                        this paragraph with respect to a case, 
                        neither State shall consider the case 
                        to be transferred to the caseload of 
                        such other State (but the assisting 
                        State may establish a corresponding 
                        case based on such other State's 
                        request for assistance); and
                          (iv) the State shall maintain records 
                        of--

           *       *       *       *       *       *       *

          (17) Financial institution data matches.--
                  (A) In general.--Procedures under which the 
                State agency shall enter into agreements with 
                financial institutions doing business in the 
                State--
                          (i) to develop and operate, in 
                        coordination with such financial 
                        institutions, and the Federal Parent 
                        Locator Service pursuant to section 
                        452(l) in the case of financial 
                        institutions doing business in two or 
                        more States, a data match system, using 
                        automated data exchanges to the maximum 
                        extent feasible, in which each such 
                        financial institution is required to 
                        provide for each calendar quarter the 
                        name, record address, social security 
                        number or other taxpayer identification 
                        number, and other identifying 
                        information for each noncustodial 
                        parent who maintains an account at such 
                        institution and who owes past-due 
                        support, as identified by the State by 
                        name and social security number or 
                        other taxpayer identification number; 
                        and
                          (ii) in response to a notice of lien 
                        or levy issued by the State agency or 
                        by the Secretary under section 452(l), 
                        encumber or surrender, as the case may 
                        be, assets held by such institution on 
                        behalf of any noncustodial parent who 
                        is subject to a child support lien 
                        pursuant to paragraph (4).
                  (B) Reasonable fees.--The State agency may 
                pay a reasonable fee to a financial institution 
                for conducting the data match provided for in 
                subparagraph (A)(i), not to exceed the actual 
                costs incurred by such financial institution.
                  (C) Liability.--A financial institution shall 
                not be liable under any Federal or State law to 
                any person--
                          (i) for any disclosure of information 
                        to the State agency or to the Federal 
                        Parent Locator Service under 
                        subparagraph (A)(i);
                          (ii) for encumbering or surrendering 
                        any assets held by such financial 
                        institution in response to a notice of 
                        lien or levy [issued by the State 
                        agency] as provided for in subparagraph 
                        (A)(ii); or

           *       *       *       *       *       *       *

          (19) Health care coverage.--Procedures under which--
                  (A) effective as provided in [section 
                401(c)(3)] section 401(e) of the Child Support 
                Performance and Incentive Act of 1998, all 
                child support orders enforced pursuant to this 
                part [which include a provision for the health 
                care coverage of the child are enforced] shall 
                include a provision for medical support for the 
                child to be provided by either or both parents, 
                and shall be enforced, where appropriate, 
                through the use of the National Medical Support 
                Notice promulgated pursuant to section 401(b) 
                of the Child Support Performance and Incentive 
                Act of 1998 (and referred to in section 
                609(a)(5)(C) of the Employee Retirement Income 
                Security Act of 1974 in connection with group 
                health plans covered under title I of such Act, 
                in section 401(e)(3)(C) of the Child Support 
                Performance and Incentive Act of 1998 in 
                connection with State or local group health 
                plans, and in section [401(f )(5)(C)] section 
                401(f) of such Act in connection with church 
                group health plans);
                  (B) unless alternative coverage is allowed 
                for in any order of the court (or other entity 
                issuing the child support order), in any case 
                in which a [noncustodial] parent is required 
                under the child support order to provide such 
                health care coverage and the employer of such 
                [noncustodial] parent is known to the State 
                agency--
                          (i) the State agency uses the 
                        National Medical Support Notice to 
                        transfer notice of the provision for 
                        the health care coverage of the child 
                        to the employer;
                          (ii) within 20 business days after 
                        the date of the National Medical 
                        Support Notice, the employer is 
                        required to transfer the Notice, 
                        excluding the severable employer 
                        withholding notice described in section 
                        401(b)(2)(C) of the Child Support 
                        Performance and Incentive Act of 1998, 
                        to the appropriate plan providing any 
                        such health care coverage for which the 
                        child is eligible;
                          (iii) in any case in which the 
                        noncustodial parent is a newly hired 
                        employee entered in the State Directory 
                        of New Hires pursuant to section 
                        453A(e), the State agency provides, 
                        where appropriate, the National Medical 
                        Support Notice, together with an income 
                        withholding notice issued pursuant to 
                        [section 466(b)] subsection (b), within 
                        two days after the date of the entry of 
                        such employee in such Directory; and
                          (iv) in any case in which the 
                        employment of the noncustodial parent 
                        with any employer who has received a 
                        National Medical Support Notice is 
                        terminated, such employer is required 
                        to notify the State agency of such 
                        termination; and
                  (C) any liability of the [noncustodial] 
                obligated parent to such plan for employee 
                contributions which are required under such 
                plan for enrollment of the child is effectively 
                subject to appropriate enforcement, unless the 
                [noncustodial] obligated parent contests such 
                enforcement based on a mistake of fact.

           *       *       *       *       *       *       *

  (f) Uniform Interstate Family Support Act.--In order to 
satisfy section 454(20)(A), on and after January 1, 1998, each 
State must have in effect the Uniform Interstate Family Support 
Act, as approved by the American Bar Association on February 9, 
1993, [and as in effect on August 22, 1996,] including any 
amendments officially [adopted as of such date] adopted as of 
August, 2001 by the National Conference of Commissioners on 
Uniform State Laws.

           *       *       *       *       *       *       *


SEC. 469A. [42 U.S.C. 669A] NONLIABILITY FOR FINANCIAL INSTITUTIONS 
                    PROVIDING FINANCIAL RECORDS TO STATE CHILD SUPPORT 
                    ENFORCEMENT AGENCIES IN CHILD SUPPORT CASES.

  (a) In General.--Notwithstanding any other provision of 
Federal or State law, a financial institution shall not be 
liable under any Federal or State law to any person for 
disclosing any financial record of an individual to a State 
child support enforcement agency attempting to establish, 
modify, or enforce a child support obligation of such 
individual, or for disclosing any such record to the Federal 
Parent Locator Service pursuant to section 452(l) or section 
466(a)(17)(A).

           *       *       *       *       *       *       *


SEC. 469B. GRANTS TO STATES AND INDIAN TRIBES FOR ACCESS AND VISITATION 
                    PROGRAMS.

  (a) In General.--The Administration for Children and Families 
shall make grants under this section to enable States and 
Indian tribes or tribal organizations to establish and 
administer programs to support and facilitate noncustodial 
parents' access to and visitation of their children, by means 
of activities including mediation (both voluntary and 
mandatory), counseling, education, development of parenting 
plans, visitation enforcement (including monitoring, 
supervision and neutral drop-off and pickup), and development 
of guidelines for visitation and alternative custody 
arrangements.
  [(b) Amount of Grant.--The amount of the grant to be made to 
a State under this section for a fiscal year shall be an amount 
equal to the lesser of--
          [(1) 90 percent of State expenditures during the 
        fiscal year for activities described in subsection (a); 
        or
          [(2) the allotment of the State under subsection (c) 
        for the fiscal year.]
  (b) Amount of Grants.--
          (1) Grants to states.--The amount of the grant to be 
        made to a State under this section for a fiscal year 
        shall be an amount equal to the lesser of--
                  (A) 90 percent of State expenditures during 
                the fiscal year for activities described in 
                subsection (a); or
                  (B) the allotment of the State under 
                subsection (c) for the fiscal year.
          (2) Grants to indian tribes.--An Indian tribe or 
        tribal organization operating a program under section 
        455 that has operated such program throughout the 
        preceding fiscal year and has an application under this 
        section approved by the Secretary shall receive a grant 
        under this section for a fiscal year in an amount equal 
        to the allotment of such Indian tribe or tribal 
        organization under subsection (c)(2) for the fiscal 
        year.
  [(c) Allotments to States.--
          [(1) In general.--The allotment of a State for a 
        fiscal year is the amount that bears the same ratio to 
        $10,000,000 for grants under this section for the 
        fiscal year as the number of children in the State 
        living with only 1 biological parent bears to the total 
        number of such children in all States.
          [(2) Minimum allotment.--The Administration for 
        Children and Families shall adjust allotments to States 
        under paragraph (1) as necessary to ensure that no 
        State is allotted less than--
                  [(A) $50,000 for fiscal year 1997 or 1998; or
                  [(B) $100,000 for any succeeding fiscal 
                year.]
  (c) Allotments.--
          (1) Allotments to states.--
                  (A) In general.--Subject to the subparagraph 
                (C), the allotment of a State for a fiscal year 
                is the amount that bears the same ratio to the 
                amount specified in subparagraph (B) for such 
                fiscal year as the number of children in the 
                State living with only 1 parent bears to the 
                total number of such children in all States.
                  (B) Amount available for allotment.--For 
                purposes of subparagraph (A), the amount 
                specified in this subparagraph is the following 
                amount, reduced by the total allotments to 
                Indian tribes or tribal organizations in 
                accordance with paragraph (2):
                          (i) $12,000,000 for fiscal year 2006.
                          (ii) $14,000,000 for fiscal year 
                        2007.
                          (iii) $16,000,000 for fiscal year 
                        2008.
                          (iv) $20,000,000 for fiscal year 2009 
                        and each succeeding fiscal year.
                  (C) Minimum state allotment.--The Secretary 
                shall adjust allotments to States under 
                subparagraph (A) as necessary to ensure that no 
                State is allotted less than--
                          (i) $120,000 for fiscal year 2006;
                          (ii) $140,000 for fiscal year 2007;
                          (iii) $160,000 for fiscal year 2008; 
                        and
                          (iv) $180,000 for fiscal year 2009 
                        and each succeeding fiscal year.
          (2) Allotments to indian tribes.--
                  (A) In general.--Subject to subparagraph (C), 
                the allotment of an Indian tribe or tribal 
                organization described in subsection (b)(2) for 
                a fiscal year is an amount that bears the same 
                ratio to the amount specified in subparagraph 
                (B) for such fiscal year as the number of 
                children in the Indian tribe or tribal 
                organization living with only 1 parent bears to 
                the total number of such children in all Indian 
                tribes and tribal organizations eligible to 
                receive grants under this section for such 
                year.
                  (B) Amount available for allotment.--For 
                purposes of subparagraph (A), the amount 
                available under this subparagraph is an amount, 
                deducted from the amount specified in paragraph 
                (1)(B), not to exceed--
                          (i) $250,000 for fiscal year 2006;
                          (ii) $600,000 for fiscal year 2007;
                          (iii) $800,000 for fiscal year 2008; 
                        and
                          (iv) $1,670,000 for fiscal year 2009 
                        and each succeeding year.
                  (C) Minimum and maximum tribal allotment.--
                The Secretary shall adjust allotments to Indian 
                tribes and tribal organizations under 
                subparagraph (A) as necessary to ensure that no 
                Indian tribe or tribal organization is 
                allotted, for a fiscal year, an amount which is 
                less than $10,000 or more than the minimum 
                State allotment for such fiscal year.
  (d) No Supplantation of State Expenditures for Similar 
Activities.--A State to which a grant is made under this 
section may not use the grant to supplant expenditures by the 
State for activities specified in subsection (a), but shall use 
the grant to supplement such expenditures at a level at least 
equal to the level of such expenditures for fiscal year 1995.
  [(e) State Administration.--Each State to which a grant is 
made under this section--
          [(1) may administer State programs funded with the 
        grant, directly or through grants to or contracts with 
        courts, local public agencies, or nonprofit private 
        entities;
          [(2) shall not be required to operate such programs 
        on a statewide basis; and
          [(3) shall monitor, evaluate, and report on such 
        programs in accordance with regulations prescribed by 
        the Secretary.]
  (e) Administration.--
          (1) Grants to states.--Each State to which a grant is 
        made under this section--
                  (A) may administer State programs funded with 
                the grant, directly or through grants to or 
                contracts with courts, local public agencies, 
                or nonprofit private entities; and
                  (B) shall not be required to operate such 
                programs on a statewide basis.
          (2) Grants to states or indian tribes.--Each State or 
        Indian tribe or tribal organization to which a grant is 
        made under this section shall monitor, evaluate, and 
        report on such programs in accordance with regulations 
        prescribed by the Secretary.

    Part E--Federal Payments for Foster Care and Adoption Assistance


                         PURPOSE: APPROPRIATION

  Sec. 470. * * *

           *       *       *       *       *       *       *


                FOSTER CARE MAINTENANCE PAYMENTS PROGRAM

  Sec. 472. (a) Each State with a plan approved under this part 
shall make foster care maintenance payments (as defined in 
section 475(4)) under this part with respect to a child who 
would have met the requirements of section 406(a) or of section 
407 (as such sections were in effect on July 16, 1996) but for 
his removal from the home of a relative (specified in section 
406(a)), if--
          (1) the removal from the home occurred pursuant to a 
        voluntary placement agreement entered into by the 
        child's parent or legal guardian, or was the result of 
        a judicial determination to the effect that 
        continuation therein would be contrary to the welfare 
        of such child and (effective October 1, 1983) that 
        reasonable efforts of the type described in section 
        471(a)(15) for a child have been made;
          (2) such child's placement and care are the 
        responsibility of (A) the State agency administering 
        the State plan approved under section 471, [or (B)] (B) 
        any other public agency with whom the State agency 
        administering or supervising the administration of the 
        State plan approved under section 471 has made an 
        agreement which is still in effect, or (C) an Indian 
        tribe or tribal organization (as defined in section 
        479B(e)) or an intertribal consortium if the Indian 
        tribe, tribal organization, or consortium (i) is 
        operating a program pursuant to section 479B, (ii) has 
        a cooperative agreement with a State pursuant to 
        section 479B(c), or (iii) submits to the Secretary a 
        description of the arrangements (jointly developed or 
        developed in consultation with the State) made by the 
        Indian tribe, tribal organization, or consortium for 
        the payment of funds and the provision of the child 
        welfare services and protections required by this title

           *       *       *       *       *       *       *


TITLE V--MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT

           *       *       *       *       *       *       *


               SEPARATE PROGRAM FOR ABSTINENCE EDUCATION

    Sec. 510. (a) For the purpose described in subsection (b), 
the Secretary shall, for fiscal year 1998 and each subsequent 
fiscal year, allot to each State which has transmitted [an 
application for the fiscal year under section 505(a)], for the 
fiscal year, an application under section 505(a), and an 
application under this section (in such form and meeting such 
terms and conditions as determined appropriate by the 
Secretary), an amount equal to the product of--
          (1) the amount appropriated in subsection (d) for the 
        fiscal year; and
          [(2) the percentage determined for the State under 
        section 502(c)(1)(B)(ii).]
          (2) the percentage described in section 
        502(c)(1)(B)(ii) that would be determined for the State 
        under section 502(c) if such determination took into 
        consideration only those States that transmitted both 
        such applications for such fiscal year.
    (b)(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, 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.

           *       *       *       *       *       *       *

    (d) For the purpose of allotments under subsection (a), 
there is appropriated, out of any money in the Treasury not 
otherwise appropriated, an additional $50,000,000 for each of 
the fiscal years 1998 through [2002] 2010. The appropriation 
under the preceding sentence for a fiscal year is made on 
October 1 of the fiscal year.
    (e)(1) With respect to allotments under subsection (a) for 
fiscal year 2006 and subsequent fiscal years, the amount of any 
allotment to a State for a fiscal year that the Secretary 
determines will not be expended to carry out a program under 
this section during such fiscal year or the succeeding fiscal 
year shall be available for reallotment from time to time 
during such fiscal years on such dates as the Secretary may 
fix, to other States that the Secretary determines--
          (A) require amounts in excess of amounts previously 
        allotted under subsection (a) to carry out a program 
        under this section; and
          (B) will expend such excess amounts during such 
        fiscal years.
    (2) Reallotments under paragraph (1) shall be made on the 
basis of such States' applications under this section, after 
taking into consideration the population of low-income children 
in each such State as compared with the population of low-
income children in all such States with respect to which a 
determination under paragraph (1) has been made by the 
Secretary.
    (3) Any amount reallotted under paragraph (1) to a State is 
deemed to be part of its allotment under subsection (a).

     TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE 
                             SIMPLIFICATION

Part A--General Provisions

           *       *       *       *       *       *       *



    ADDITIONAL GRANTS TO PUERTO RICO, THE VIRGIN ISLANDS, GUAM, AND 
              AMERICAN SAMOA; LIMITATION ON TOTAL PAYMENTS

    Sec. 1108. (a) Limitation on Total Payments to Each 
Territory.--
          (1) In general.--Notwithstanding any other provision 
        of this Act (except for paragraph (2) of this 
        subsection), the total amount certified by the 
        Secretary of Health and Human Services under titles I, 
        X, XIV, and XVI, under parts A and E of title IV, and 
        under subsection (b) of this section, for payment to 
        any territory for a fiscal year shall not exceed the 
        ceiling amount for the territory for the fiscal year.
          (2) Certain payments disregarded.--[Paragraph (1)]
                  (A) In general.--Paragraph (1) of this 
                subsection shall be applied without regard to 
                any payment made under section 403(a)(2), 
                403(a)(4), 403(a)(5), [406, or 
413(f)]``418(a)(4)(B), 473A, or, subject to clause (ii) of subparagraph 
(B), payments to Puerto Rico described in clause (i) of that 
subparagraph'' before the period; and
                  (B) Certain payments to puerto rico.--
                  (i) Payments described.--For purposes of 
                subparagraph (A), payments described in this 
                subparagraph are payments made to Puerto Rico 
                under section 474 for each of fiscal years 2007 
                through 2010 that exceed the total amount of 
                payments made to Puerto Rico under that section 
                for fiscal year 2003.
                  (ii) Limitation.--The total amount of 
                payments to Puerto Rico described in clause (i) 
                that are disregarded under subparagraph (A) may 
                not exceed $6,250,000 for each of fiscal years 
                2007 through 2010.
    (b) Entitlement to Matching Grant.--
          (1) In general.--Each territory shall be entitled to 
        receive from the Secretary for each fiscal year a grant 
        in an amount equal to 75 percent of the amount (if any) 
        by which--
                  (A) the total expenditures of the territory 
                during the fiscal year under the territory 
                programs funded under parts A and E of title 
                IV, including any amount paid to the State 
                under part A of title IV that is transferred in 
                accordance with section 404(d) and expended 
                under the program to which transferred; exceeds
                  (B) the sum of--
                          (i) the amount of the family 
                        assistance grant payable to the 
                        territory without regard to section 
                        409; and
                          (ii) the total amount expended by the 
                        territory during fiscal year 1995 
                        pursuant to parts A and F of title IV 
                        (as so in effect), other than for child 
                        care.
          (2) Appropriation.--Out of any money in the Treasury 
        of the United States not otherwise appropriated, there 
        are appropriated for fiscal years [1997 through 2003] 
        2006 through 2010, such sums as are necessary for 
        grants under this paragraph.

           *       *       *       *       *       *       *


                         DEMONSTRATION PROJECTS

    Sec. 1130. (a) Authority To Approve Demonstration 
Projects.--
          (1) In general.--The Secretary may authorize States 
        to conduct demonstration projects pursuant to this 
        section which the Secretary finds are likely to promote 
        the objectives of part B or E of title IV.
          (2) Limitation.--The Secretary may authorize not more 
        than 10 demonstration projects under paragraph (1) in 
        each of fiscal years 1998 through [2003] 2010.
          (3) Certain types of proposals required to be 
        considered.--

           *       *       *       *       *       *       *

    (b) Waiver Authority.--The Secretary may waive compliance 
with any requirement of part B or E of title IV which (if 
applied) would prevent a State from carrying out a 
demonstration project under this section or prevent the State 
from effectively achieving the purpose of such a project, 
except that the Secretary may not waive--
          (1) any provision of section 427 (as in effect before 
        April 1, 1996), section [422(b)(9)] 422(b)(10) (as in 
        effect after such date), or section 479; or

           *       *       *       *       *       *       *


            INCOME AND ELIGIBILITY VERIFICATION SYSTEM \60\

    Sec. 1137 * * *

           *       *       *       *       *       *       *

    (b) The programs which must participate in the income and 
eligibility verification system are--
          (1) any State program funded under part A of title IV 
        of this Act but only with respect to applicants for, or 
        recipients of, assistance (as defined in section 
        419(6)) under such program;

           *       *       *       *       *       *       *


TITLE XVI--GRANTS TO STATES FOR AID TO THE AGED, BLIND, OR DISABLED

           *       *       *       *       *       *       *


                             ADMINISTRATION

    Sec. 1633. (a) Subject to subsection (b), the Commissioner 
of Social Security may make such administrative and other 
arrangements (including arrangements for the determination of 
blindness and disability under section 1614(a)(2) and (3) in 
the same manner and subject to the same conditions as provided 
with respect to disability determinations under section 221) as 
may be necessary or appropriate to carry out the Commissioner's 
functions under this title.
    (b) In determining, for purposes of this title, whether an 
individual is blind, there shall be an examination of such 
individual by a physician skilled in the diseases of the eye or 
by an optometrist, whichever the individual may select.

           *       *       *       *       *       *       *

    (e)(1) The Commissioner of Social Security shall review 
determinations, made by State agencies pursuant to subsection 
(a) in connection with applications for benefits under this 
title on the basis of blindness or disability, that individuals 
who have attained 18 years of age are blind or disabled. Any 
review by the Commissioner of Social Security of a State agency 
determination under this paragraph shall be made before any 
action is taken to implement the determination.
    (2)(A) In carrying out paragraph (1), the Commissioner of 
Social Security shall review--
          (i) with respect to fiscal year 2006, at least 25 
        percent of all determinations referred to in paragraph 
        (1) that are made in such fiscal year; and
          (ii) with respect to each of fiscal years 2006 
        through 2015, at least 50 percent of all such 
        determinations that are made in each such fiscal year.
    (B) In conducting reviews pursuant to subparagraph (A), the 
Commissioner of Social Security shall, to the extent feasible, 
select for review those determinations which the Commissioner 
of Social Security identifies as being the most likely to be 
incorrect.

           *       *       *       *       *       *       *


TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS

           *       *       *       *       *       *       *


                   STATE PLANS FOR MEDICAL ASSISTANCE

    Sec. 1902. (a) A State plan for medical assistance must--

           *       *       *       *       *       *       *

    (e)(1)(A) Notwithstanding any other provision of this 
title, effective January 1, 1974, subject to subparagraph (B) 
each State plan approved under this title must provide that 
each family which was receiving aid pursuant to a plan of the 
State approved under part A of title IV in at least 3 of the 6 
months immediately preceding the month in which such family 
became ineligible for such aid because of increased hours of, 
or increased income from, employment, shall, while a member of 
such family is employed, remain eligible for assistance under 
the plan approved under this title (as though the family was 
receiving aid under the plan approved under part A of title IV) 
for 4 calendar months beginning with the month in which such 
family became ineligible for aid under the plan approved under 
part A of title IV because of income and resources or hours of 
work limitations contained in such plan.
    (B) Subparagraph (A) shall not apply with respect to 
families that cease to be eligible for aid under part A of 
title IV during the period beginning on April 1, 1990, and 
ending on [September 30, 2003], the last date (if any) on which 
section 1925 applies under subsection (i) of that section. 
During such period, for provisions relating to extension of 
eligibility for medical assistance for certain families who 
have received aid pursuant to a State plan approved under part 
A of title IV and have earned income, see section 1925.

           *       *       *       *       *       *       *

          (55) provide for receipt and initial processing of 
        applications of individuals for medical assistance 
        under subsection (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), 
        (a)(10)(A)(i)(VII), or (a)(10)(A)(ii)(IX) and under 
        section 1931--

           *       *       *       *       *       *       *


            EXTENSION OF ELIGIBILITY FOR MEDICAL ASSISTANCE

    Sec. 1925. (a) Initial 6-Month Extension.--
          (1) Requirement.--Notwithstanding any other provision 
        of this title, but subject to subsection (h), each 
        State plan approved under this title must provide that 
        each family which was receiving aid pursuant to a plan 
        of the State approved under part A of title IV in at 
        least 3 of the 6 months immediately preceding the month 
        in which such family becomes ineligible for such aid, 
        because of hours of, or income from, employment of the 
        caretaker relative (as defined in subsection (e)) or 
        because of section 402(a)(8)(B)(ii)(II) (providing for 
        a time-limited earned income disregard), shall, subject 
        to paragraph (3) and without any re-application for 
        benefits under the plan, remain eligible for assistance 
        under the plan approved under this title during the 
        immediately succeeding 6-month period in accordance 
        with this subsection.
          (2) Notice of benefits.--Each State, in the notice of 
        termination of aid under part A of title IV sent to a 
        family meeting the requirements of paragraph (1)--
                  (A) shall notify the family of its right to 
                extended medical assistance under this 
                subsection and include in the notice a 
                description of the reporting requirement of 
                subsection (b)(2)(B)(i) and of the 
                circumstances (described in paragraph (3)) 
                under which such extension may be terminated; 
                and
                  (B) shall include a card or other evidence of 
                the family's entitlement to assistance under 
                this title for the period provided in this 
                subsection.

           *       *       *       *       *       *       *

        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 1-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. Such notice shall 
        further be supplemented by information on how to apply 
        for child health assistance under the State children's 
        health insurance program under title XXI and how to 
        apply for medical assistance under this title.

           *       *       *       *       *       *       *

    (b) Additional 6-Month Extension.--
          (1) Requirement.--Notwithstanding any other provision 
        of this title, but subject to subsection (h), each 
        State plan approved under this title shall provide that 
        the State shall offer to each family, which has 
        received assistance during the entire 6-month period 
        under subsection (a) and which, at the option of a 
        State, meets the requirement of paragraph (2)(B)(i), in 
        the last month of the period the option of extending 
        coverage under this subsection for the succeeding 6-
        month period, subject to paragraph (3).
          (2) Notice and reporting requirements.--
                  (A) Notices.--Subject to subparagraph (c)

           *       *       *       *       *       *       *

                  (B) Reporting requirements.--Subject to 
                subparagraph (c)
                          (i) During initial extension 
                        period.--Each State shall require (as a 
                        condition for additional extended 
                        assistance under this subjection) that 
                        a family receiving extended assistance 
                        under subsection (a) report to the 
                        State, not later than the 21st day of 
                        the 4th month in the period of extended 
                        assistance under subsection (a), on the 
                        family's gross monthly earnings and on 
                        the family's costs for such child care 
                        as is necessary for the employment of 
                        the caretaker relative in each of the 
                        first 3 months of that period. A State 
                        may permit such additional extended 
                        assistance under this subsection 
                        notwithstanding a failure to report 
                        under this clause if the family has 
                        established, to the satisfaction of the 
                        State, good cause for the failure to 
                        report on a timely basis.

           *       *       *       *       *       *       *

                  (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.
          (3) Termination of extension.--
                  (A) In general.--Subject to subparagraphs (B) 
                and (C), extension of assistance during the 6-
                month period described in paragraph (1) to a 
                family shall terminate (during the period) as 
                follows:
                          (i) No dependent child.--The 
                        extension shall terminate at the close 
                        of the first month in which the family 
                        ceases to include a child, whether or 
                        not the child is (or would if need be) 
                        a dependent child under part A of title 
                        IV.

           *       *       *       *       *       *       *

                          (iii) Quarterly income reporting and 
                        test.--The extension under this 
                        subsection shall terminate at the close 
                        of the 1st or 4th month of the 6-month 
                        period if the State has not waived 
                        under paragraph (2)(C) the reporting 
                        requirement with respect to such month 
                        under paragraph (2)(B) and if--

           *       *       *       *       *       *       *

  (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.
    [(c)] (d) Applicability in States and Territories.--
          (1) States operating under demonstration projects.--
        In the case of any State which is providing medical 
        assistance to its residents under a waiver granted 
        under section 1115(a), the Secretary shall require the 
        State to meet the requirements of this section in the 
        same manner as the State would be required to meet such 
        requirement if the State had in effect a plan approved 
        under this title.
          (2) Inapplicability in commonwealths and 
        territories.--The provisions of this section shall only 
        apply to the 50 States and the District of Columbia.
    [(d)] (e) General Disqualification for Fraud.--
          (1) Ineligibility for aid.--This section shall not 
        apply to an individual who is a member of a family 
        which has received aid under part A of title IV if the 
        State makes a finding that, at any time during the last 
        6 months in which the family was receiving such aid 
        before otherwise being provided extended eligibility 
        under this section, the individual was ineligible for 
        such aid because of fraud.
           (2) General disqualifications.--For additional 
        provisions relating to fraud and program abuse, see 
        sections 1128, 1128A, and 1128B.
      [(e)] (f) Caretaker Relative Defined.--In this section, 
the term ``caretaker relative'' has the meaning of such term as 
used in part A of title IV.
  (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.
          (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.
  ``(h) Provisions Optional for States That Extend Coverage to 
Children and Parents Through 185 Percent of Poverty.--A State 
may meet (but is not required to meet) the requirements of 
subsections (a) and (b) if it provides for medical assistance 
under section 1931 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.
    [(f)] (i) Sunset.--This section shall not apply with 
respect to families that cease to be eligible for aid under 
part A of title IV after September 30, [2003] 2010.

           *       *       *       *       *       *       *


TITLE XX--BLOCK GRANTS TO STATES FOR SOCIAL SERVICES

           *       *       *       *       *       *       *


           PURPOSES OF TITLE; AUTHORIZATION OF APPROPRIATIONS

    Sec. 2001. For the purposes of consolidating Federal 
assistance to States for social services into a single grant, 
increasing State flexibility in using social services grants, 
and encouraging each state, as far as practicable under the 
conditions in that State, to furnish services directed at the 
goals of--

           *       *       *       *       *       *       *


                               ALLOTMENTS

    Sec. 2003. * * *

           *       *       *       *       *       *       *

    (c) The amount specified for purposes of subsections (a) 
and (b) shall be--
          (1) $2,400,000,000 for the fiscal year 1982;
          (2) $2,450,000,000 for the fiscal year 1983;
          (3) $2,700,000,000 for the fiscal years 1984, 1985, 
        1986, 1987, and 1989;
          (4) $2,750,000,000 for the fiscal year 1988;
          (5) $2,800,000,000 for each of the fiscal years 1990 
        through 1995;
          (6) $2,381,000,000 for the fiscal year 1996;
          (7) $2,380,000,000 for the fiscal year 1997;
          (8) $2,299,000,000 for the fiscal year 1998;
          (9) $2,380,000,000 for the fiscal year 1999;
          (10) $2,380,000,000 for the fiscal year 2000; and
          (11) $1,700,000,000 for the fiscal year 2001 and each 
        fiscal year thereafter, except that with respect to 
        each of fiscal years 2006 through 2010, the amount 
        shall be $1,900,000,000'' after ``thereafter''.

           *       *       *       *       *       *       *


CONSOLIDATED APPROPRIATIONS ACT, 2005

           *       *       *       *       *       *       *


DIVISION H--TRANSPORTATION, TREASURY, INDEPENDENT AGENCIES, AND GENERAL 
GOVERNMENT APPROPRIATIONS ACT, 2005

           *       *       *       *       *       *       *



Title VI--General Provisions

           *       *       *       *       *       *       *


    Sec. 643. [Section 653(j) of title 42, United States Code, 
is amended by adding at the end the following new paragraph] 
Section 453(j) of the Social Security Act (42 U.S.C. 653(j) is 
amended by adding at the end the following new paragraph:

           *       *       *       *       *       *       *

          ``(7) Information comparisons and disclosure to 
        assist in federal debt collection.--

           *       *       *       *       *       *       *

    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.

FOOD STAMP ACT OF 1977

           *       *       *       *       *       *       *


                          ELIGIBLE HOUSEHOLDS

    Sec. 5. * * *
    (g)(1) The Secretary shall prescribe the types and 
allowable amounts of financial resources (liquid and nonliquid 
assets) an eligible household may own, and shall, in so doing, 
assure that a household otherwise eligible to participate in 
the food stamp program will not be eligible to participate if 
its resources exceed $2,000, or, in the case of a household 
which consists of or includes an elderly or disabled member, if 
its resources exceed $3,000.
          (2) Included assets.--
                  (D) Alternative vehicle allowance.--[If the 
                vehicle allowance]
                          (i) In general.--If the vehicle 
                        allowance standards that a State agency 
                        uses to determine eligibility for 
                        assistance under the State program 
                        funded under part A of title IV of the 
                        Social Security Act (42 U.S.C. 601 et 
                        seq.) would result in a lower 
                        attribution of resources to certain 
                        households than under subparagraph 
                        (B)(iv), in lieu of applying 
                        subparagraph (B)(iv), the State agency 
                        may elect to apply the State vehicle 
                        allowance standards.
                          (ii) Definition of assistance.--In 
                        clause (i), the term ``assistance'' 
                        shall have the meaning given such term 
                        in section 260.31 of title 45 of the 
                        Code of Federal Regulations, as in 
                        effect on June 1, 2002.

           *       *       *       *       *       *       *


INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *


CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Sec. 21. Expenses for household and dependent care services 
necessary for gainful employment.
(a) Allowance of credit.

           *       *       *       *       *       *       *

(b) Definitions of qualifying individual and employment-related 
expenses.
    For purposes of this section--

           *       *       *       *       *       *       *

    (1) Qualifying individual. The term ``qualifying 
individual'' means--
          (A) a dependent of the taxpayer (as defined in 
        section 152(a)(1)) who has not attained age 13,
          (B) a dependent of the taxpayer (as defined in 
        section 152, determined without regard to subsections 
        (b)(1), (b)(2), and (d)(1)(B)) who is physically or 
        mentally incapable of caring for himself or herself and 
        who has the same principal place of abode as the 
        taxpayer for more than one-half of such taxable year, 
        or
          (C) the spouse of the taxpayer, if the spouse is 
        physically or mentally incapable of caring for himself 
        or herself and who has the same principal place of 
        abode as the taxpayer for more than one-half of such 
        taxable year.

           *       *       *       *       *       *       *

Sec. 24. Child tax credit.
(a) Allowance of credit.

           *       *       *       *       *       *       *

(b) Limitation based on adjusted gross income.
    (1) In general. The amount of the credit allowable under 
subsection (a) shall be reduced (but not below zero) by $50 for 
each $1,000 (or fraction thereof) by which the taxpayer's 
modified adjusted gross income exceeds the threshold amount. 
For purposes of the preceding sentence, the term ``modified 
adjusted gross income'' means adjusted gross income increased 
by any amount excluded from gross income under [section 911, 
931, or 933] section 931 or 933.

           *       *       *       *       *       *       *

(f) Taxable Year Must Be Full Taxable Year.--

           *       *       *       *       *       *       *

(g) Denial of Credit for Individuals Electing Section 911.
    No credit shall be allowed under this section for any 
taxable year to a taxpayer who claims the benefits of section 
911 (relating to citizens or residents living abroad) for such 
taxable year.

           *       *       *       *       *       *       *

Sec. 32. Earned income.
(a) Allowance of credit.

           *       *       *       *       *       *       *

(c) Definitions and special rules.
    For purposes of this section--
    (1) Eligible individual.
          (A) In general. The term ``eligible individual'' 
        means--

           *       *       *       *       *       *       *

          (B) Qualifying child ineligible. If an individual is 
        the qualifying child of a taxpayer for any taxable year 
        of such taxpayer beginning in a calendar year, such 
        individual shall not be treated as an eligible 
        individual for any taxable year of such individual 
        beginning in such calendar year. The preceding sentence 
        shall not apply with respect to any individual who is a 
        qualifying child of 1 or more brothers, sisters, 
        stepbrothers, and stepsisters who are also qualifying 
        children of such individual if among all such 
        qualifying children, such individual has the highest 
        adjusted gross income.
[(m) Identification numbers.
    [Solely for purposes of subsections (c)(1)(E) and 
(c)(3)(D), a taxpayer identification number means a social 
security number issued to an individual by the Social Security 
Administration (other than a social security number issued 
pursuant to clause (II) (or that portion of clause (III) that 
relates to clause (II) of section 205(c)(2)(B)(i) of the Social 
Security Act).]
(m) Identification numbers.
    Solely for purposes of subsections (c)(1)(E) and (c)(3)(D), 
a taxpayer identification number means a social security number 
assigned by the Social Security Administration--
          (1) to a citizen of the United States, or
          (2) to an individual pursuant to subclause (I) (or 
        that portion of subclause (III) that relates to 
        subclause (I)) of section 205(c)(2)(B)(i) of the Social 
        Security Act.

           *       *       *       *       *       *       *


SEC. 152. DEPENDENT DEFINED.

(a) In general.

           *       *       *       *       *       *       *

(c) Qualifying child.
    For purposes of this section--
    (1) In general. The term ``qualifying child'' means, with 
respect to any taxpayer for any taxable year, an individual--

           *       *       *       *       *       *       *

    [(4) Special rule relating to 2 or more claiming qualifying 
child.
          [(A) In general. Except as provided in subparagraph 
        (B), if (but for this paragraph) an individual may be 
        and is claimed as a qualifying child by 2 or more 
        taxpayers for a taxable year beginning in the same 
        calendar year, such individual shall be treated as the 
        qualifying child of the taxpayer who is--
                  [(i) a parent of the individual, or
                  [(ii) if clause (i) does not apply, the 
                taxpayer with the highest adjusted gross income 
                for such taxable year.
          [(B) More than 1 parent claiming qualifying child. If 
        the parents claiming any qualifying child do not file a 
        joint return together, such child shall be treated as 
        the qualifying child of--
                  [(i) the parent with whom the child resided 
                for the longest period of time during the 
                taxable year, or
                  [(ii) if the child resides with both parents 
                for the same amount of time during such taxable 
                year, the parent with the highest adjusted 
                gross income.]
      (4) Special rules for claiming qualifying child.
          (A) Rules involving parents.
                  (i) In general. A taxpayer other than a 
                parent of an individual may not claim such 
                individual as a qualifying child for any 
                taxable year beginning in a calendar year if--
                          (I) a parent is eligible to claim and 
                        claims such individual as a qualifying 
                        child for any taxable year beginning in 
                        such calendar year, or
                          (II) the taxpayer has a lower 
                        adjusted gross income than any parent 
                        who may claim such individual as a 
                        qualifying child for any taxable year 
                        beginning in such calendar year.
                  (ii) More than 1 parent claiming qualifying 
                child. If the parents claiming any qualifying 
                child do not file a joint return together, such 
                child shall be treated as the qualifying child 
                of--
                          (I) the parent with whom the child 
                        resided for the longest period of time 
                        during the taxable year, or
                          (II) if the child resides with both 
                        parents for the same amount of time 
                        during such taxable year, the parent 
                        with the highest adjusted gross income.
          (B) Rule for 2 or more nonparents claiming qualifying 
        child.
                  If an individual may be and is claimed as a 
                qualifying child by 2 or more taxpayers, 
                neither of whom is a parent of the individual, 
                for a taxable year beginning in the same 
                calendar year, such individual shall be treated 
                as the qualifying child of the taxpayer with 
                the highest adjusted gross income for such 
                taxable year.

           *       *       *       *       *       *       *


SEC. 223. HEALTH SAVINGS ACCOUNTS.

(a) Deduction allowed.

           *       *       *       *       *       *       *

(d) Health savings account.
    For purposes of this section--
    (1) In general. The term ``health savings account'' means a 
trust created or organized in the United States as a health 
savings account exclusively for the purpose of paying the 
qualified medical expenses of the account beneficiary, but only 
if the written governing instrument creating the trust meets 
the following requirements:

           *       *       *       *       *       *       *

    (2) Qualified medical expenses.
          (A) In general. The term ``qualified medical 
        expenses'' means, with respect to an account 
        beneficiary, amounts paid by such beneficiary for 
        medical care (as defined in section 213(d) for such 
        individual, the spouse of such individual, and any 
        dependent (as defined in section 152, determined 
        without regard to subsections (b)(1), (b)(2), and 
        (d)(1)(B) thereof) of such individual, but only to the 
        extent such amounts are not compensated for by 
        insurance or otherwise.

           *       *       *       *       *       *       *


CHAPTER 43--QUALIFIED PENSION, ETC., PLANS

           *       *       *       *       *       *       *



SEC. 4980B. FAILURE TO SATISFY CONTINUATION COVERAGE REQUIREMENTS OF 
                    GROUP HEALTH PLANS.

(a) General rule.

           *       *       *       *       *       *       *

(f) Continuation coverage requirements of group health plans.
    (1) In general. * * *

           *       *       *       *       *       *       *

    (6) Notice requirement. In accordance with regulations 
prescribed by the Secretary--
          (A) * * *

           *       *       *       *       *       *       *

          (D) The plan administrator shall notify--
                  (i) in the case of a qualifying event 
                described in subparagraph (A), (B), (D), or (F) 
                of paragraph (3), any qualified beneficiary 
                with respect to such event, [and]
                  (ii) in the case of a qualifying event 
                described in subparagraph (C) or (E) of 
                paragraph (3) where the covered employee 
                notifies the plan administrator under 
                subparagraph (C), any qualified beneficiary 
                with respect to such event, and 
                  (iii) in any case in which the qualifying 
                event with respect to which notice to a 
                qualified beneficiary is required by clause (i) 
                or (ii) is a qualifying event with respect to 
                the parent of a qualified beneficiary who is an 
                alternative recipient under a qualified medical 
                child support order (as such terms are defined 
                in section 609(a)(2) of the Employee Retirement 
                Income Security Act of 1974), the State agency 
                administering the program under part D of title 
                IV of the Social Security Act which issued, or 
                is authorized to enforce, such order,
          of such beneficiary's rights under this subsection.

           *       *       *       *       *       *       *


CHAPTER 65.--ABATEMENTS, CREDITS, AND REFUNDS

           *       *       *       *       *       *       *



SEC. 6402. AUTHORITY TO MAKE CREDITS OR REFUNDS.

           *       *       *       *       *       *       *


    (C) Offset of Past-Due Support Against Overpayments.--The 
amount of any overpayment to be refunded to the person making 
the overpayment shall be reduced by the amount of any past-due 
support (as defined in section 464(c) of the Social Security 
Act) owed by that person of which the Secretary has been 
notified by a State in accordance with section 464 of [the 
Social Security Act] such Act. The Secretary shall remit the 
amount by which the over-payment is so reduced to the State 
collecting such support and notify the person making the 
overpayment that so much of the over-payment was necessary to 
satisfy his obligation for past-due support has been paid to 
the State. [A reduction under this subsection shall be applied 
first to satisfy any past-due support which has been assigned 
to the State under section 402(a)(26) or 471(a)(17) of the 
Social Security Act, and shall be applied to satisfy any other 
past-due support after any other reductions allowed by law (but 
before a credit against future liability for an internal 
revenue tax) have been made.] The Secretary shall apply a 
reduction under this subsection first to an amount certified by 
the State as past due support under section 464 of the Social 
Security Act before any other reductions allowed by law. This 
subsection shall be applied to any overpayment prior to its 
being credited to a person's future liability for an internal 
revenue tax.

           *       *       *       *       *       *       *


PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1966

           *       *       *       *       *       *       *


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

    Sec. 101. Findings.

           *       *       *       *       *       *       *

    Sec. 117. Responsible fatherhood program.

           *       *       *       *       *       *       *


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

           *       *       *       *       *       *       *


SEC. 116. EFFECTIVE DATE; TRANSITION RULE.

    (a) Effective Dates.--* * *

           *       *       *       *       *       *       *


SEC. 117. FATHERHOOD PROGRAM.

    (a) In General.--Title IV (42 U.S.C. 601-679b) is amended 
by inserting after part B the following:

                ``PART C--RESPONSIBLE FATHERHOOD PROGRAM

``SEC. 441. RESPONSIBLE FATHERHOOD GRANTS.

    ``(a) Grants to States To Conduct Demonstration Programs.--
          ``(1) Authority To Award Grants.--
                  ``(A) In general.--The Secretary shall award 
                grants to up to 10 eligible States to conduct 
                demonstration programs to carry out the 
                purposes described in paragraph (2).
                  ``(B) Eligible state.--For purposes of this 
                subsection, an eligible State is a State that 
                submits to the Secretary the following:
                          ``(i) Application.--An application 
                        for a grant under this subsection, at 
                        such time, in such manner, and 
                        containing such information as the 
                        Secretary may require.
                          (ii) State plan.--A State plan that 
                        includes the following:
                                  ``(I) Project description.--A 
                                description of the programs or 
                                activities the State will fund 
                                under the grant, including a 
                                good faith estimate of the 
                                number and characteristics of 
                                clients to be served under such 
                                projects and how the State 
                                intends to achieve at least 2 
                                of the purposes described in 
                                paragraph (2).
                                ``(II) Coordination efforts.--A 
                                description of how the State 
                                will coordinate and cooperate 
                                with State and local entities 
                                responsible for carrying out 
                                other programs that relate to 
                                the purposes intended to be 
                                achieved under the 
                                demonstration program, 
                                including as appropriate, 
                                entities responsible for 
                                carrying out jobs programs and 
                                programs serving children and 
                                families.
                                  ``(III) Records, reports, and 
                                audits.--An agreement to 
                                maintain such records, submit 
                                such reports, and cooperate 
                                with such reviews and audits as 
                                the Secretary finds necessary 
                                for purposes of oversight of 
                                the demonstration program.
                          ``(iii) Certifications.--The 
                        following certifications from the chief 
                        executive officer of the State:
                                  ``(I) A certification that 
                                the State will use funds 
                                provided under the grant to 
                                promote at least 2 of the 
                                purposes described in paragraph 
                                (2).
                                  ``(II) A certification that 
                                the State will return any 
                                unused funds to the Secretary 
                                in accordance with the 
                                reconciliation process under 
                                paragraph (5).
                                  ``(III) A certification that 
                                the funds provided under the 
                                grant will be used for programs 
                                and activities that target low-
                                income participants and that 
                                not less than 50 percent of the 
                                participants in each program or 
                                activity funded under the grant 
                                shall be--
                                          ``(aa) parents of a 
                                        child who is, or within 
                                        the past 24 months has 
                                        been, a recipient of 
                                        assistance or services 
                                        under a State program 
                                        funded under part A, D, 
                                        or E of this title, 
                                        title XIX, or the Food 
                                        Stamp Act of 1977; or
                                          ``(bb) parents, 
                                        including an expectant 
                                        parent or a married 
                                        parent, whose income 
                                        (after adjustment for 
                                        court-ordered child 
                                        support paid or 
                                        received) does not 
                                        exceed 150 percent of 
                                        the poverty line.
                                  ``(IV) A certification that 
                                the State has or will comply 
                                with the requirements of 
                                paragraph (4).
                                  ``(V) A certification that 
                                funds provided to a State under 
                                this subsection shall not be 
                                used to supplement or supplant 
                                other Federal, State, or local 
                                funds that are used to support 
                                programs or activities that are 
                                related to the purposes 
                                described in paragraph (2).
                  ``(C) Preferences and factors of 
                consideration.--In awarding grants under this 
                subsection, the Secretary shall take into 
                consideration the following:
                          ``(i) Diversity of entities used to 
                        conduct programs and activities.--The 
                        Secretary shall, to the extent 
                        practicable, achieve a balance among 
                        the eligible States awarded grants 
                        under this subsection with respect to 
                        the size, urban or rural location, and 
                        employment of differing or unique 
                        methods of the entities that the 
                        eligible States intend to use to 
                        conduct the programs and activities 
                        funded under the grants.
                          ``(ii) Priority for certain states.--
                        The Secretary shall give priority to 
                        awarding grants to eligible States that 
                        have--
                                  ``(I) demonstrated progress 
                                in achieving at least 1 of the 
                                purposes described in paragraph 
                                (2) through previous State 
                                initiatives; or
                                  ``(II) demonstrated need with 
                                respect to reducing the 
                                incidence of out-of-wedlock 
                                births or absent fathers in the 
                                State.
          ``(2) Purposes.--The purposes described in this 
        paragraph are the following:
                  ``(A) Promoting responsible fatherhood 
                through marriage promotion.--To promote 
                marriage or sustain marriage through activities 
                such as counseling, mentoring, disseminating 
                information about the benefits of marriage and 
                2-parent involvement for children, enhancing 
                relationship skills, education regarding how to 
                control aggressive behavior, disseminating 
                information on the causes of domestic violence 
                and child abuse, marriage preparation programs, 
                premarital counseling, marital inventories, 
                skills-based marriage education, financial 
                planning seminars, including improving a 
                family's ability to effectively manage family 
                business affairs by means such as education, 
                counseling, or mentoring on matters related to 
                family finances, including household 
                management, budgeting, banking, and handling of 
                financial transactions and home maintenance, 
                and divorce education and reduction programs, 
                including mediation and counseling.
                  ``(B) Promoting responsible fatherhood 
                through parenting promotion.--To promote 
                responsible parenting through activities such 
                as counseling, mentoring, and mediation, 
                disseminating information about good parenting 
                practices, skills-based parenting education, 
                encouraging child support payments, and other 
                methods.
                  ``(C) Promoting responsible fatherhood 
                through fostering through fostering economic 
                stability of fathers.--To foster economic 
                stability by helping fathers improve their 
                economic status by providing activities such as 
                work for services, job search, job training, 
                subsidized employment, job retention, job 
                enhancement, and encouraging education, 
                including career-advancing education, 
                dissemination of employment materials, 
                coordination with existing employment services 
                such as welfare-to-work programs, referrals to 
                local employment training initiatives, and 
                other methods.
          ``(3) Restriction on use of funds.--No funds provided 
        under this subsection may be used for costs 
        attributable to court proceedings regarding matters of 
        child visitation or custody, or for legislative 
        advocacy.
          ``(4) Requirements for receipt of funds.--A State may 
        not be awarded a grant under this section unless the 
        State, as a condition of receiving funds under such a 
        grant--
                  ``(A) consults with experts in domestic 
                violence or with relevant community domestic 
                violence coalitions in dveloping such programs 
                or activities; and
                  ``(B) describes in the application for a 
                grant under this section--
                          ``(i) how the programs or activities 
                        proposed to be conducted will address, 
                        as appropriate, issues of domestic 
                        violence; and
                          ``(ii) what the State will do, to the 
                        extent relevant, to ensure that 
                        participation in such programs or 
                        activities is voluntary, and to inform 
                        potential participants that their 
                        involvement is voluntary.
          ``(5) Reconciliation process.--
                  ``(A) 3-Year availability of amounts 
                alloted.--Each eligible State that receives a 
                grant under this subsection for a fiscal year 
                shall return to the Secretary any unused 
                portion of the grant for such fiscal year not 
                later than the last day of the second 
                succeeding fiscal year, together with any 
                earnings on such unused portion.
                  ``(B) Procedure for redistribution.--The 
                Secretary shall establish an appropriate 
                procedure for the redistributing to eligible 
                States that have expended the entire amount of 
                a grant made under this subsection for a fiscal 
                year any amount that is returned to the 
                Secretary by eligible States under subparagraph 
                (A).
          ``(6) Amount of grants.--
                  ``(A) In General.--Subject to subparagraph 
                (B), the amount of each grant awarded under 
                this subsection shall be an amount sufficient 
                to implement the State plan submitted under 
                paragraph (1)(B)(ii).
                  ``(B) Minimum amounts.--No eligible State 
                shall--
                          ``(i) in the case of the District of 
                        Columbia or a State other than the 
                        Commonwealth of Puerto Rico, the United 
                        States Virgin Islands, Guam, American 
                        Samoa, and the Commonwealth of the 
                        Northern Mariana Islands, receive a 
                        grant for a fiscal year in an amount 
                        that is less than $1,000,000; and
                          ``(ii) in the case of the 
                        Commonwealth of Puerto Rico, the United 
                        States Virgin Islands, Guam, American 
                        Samoa, and the Commonwealth of the 
                        Northern Mariana Islands, receive a 
                        grant for a fiscal year in an amount 
                        that is less than $500,000.
          ``(7) Definition of state.--In this subsection the 
        term `State' means each of the 50 States, the District 
        of Columbia, the Commonwealth of Puerto Rico, the 
        United State Virgin Islands, Guam, American Samoa, and 
        the Commonwealth of the Northern Mariana Islands.
          ``(8) Appropriation.--Out of any money in the 
        Treasury of the United States not otherwise 
        appropriated, there are appropriated for each of fiscal 
        years 2006 through 2010, $20,000,000 for purposes of 
        making grants to eligible States under this subseciton.
    ``(b) Grants to Eligible Entities To Conduct Demonstration 
Programs.--
          ``(1) Authority to award grants.--
                  ``(A) In general.--The Secretary shall award 
                grants to eligible entities to conduct 
                demonstration programs to carry out the 
                purposes described in subsection (a)(2).
                  ``(B) Eligibility entity.--For purposes of 
                this subsection, an eligible entity is a local 
                government, local public agency, community-
                based or nonprofit organization, or private 
                entity, including any charitable or faith-based 
                organization, or an Indian tribe or tribal 
                organization (as defined in sectin 419(4)), 
                that submits to the Secretary the following:
                          ``(i) Application.--An application 
                        for a grant under this subsection, at 
                        such time, in such manner, and 
                        containing such information as the 
                        Secretary may require.
                          ``(ii) Project description.--A 
                        description of the programs or 
                        activities the entity intends to carry 
                        out with funds provided under the 
                        grant, including a good faith estimate 
                        of the number and chracteristics of 
                        clients tob e served under such 
                        programs or activities and how the 
                        entity intends to achieve at least 20 
                        of the purposes described in subsection 
                        (a)(2).
                          ``(iii) Coordination efforts.--A 
                        description of how the entity will 
                        coordinate and cooperate with State and 
                        local entities responsible for carrying 
                        out other programs that relate to the 
                        purposes intended to be achieved under 
                        the demonstration program, including as 
                        appropriate, entities responsible for 
                        carrying out jobs programs and programs 
                        serving children and families.
                          ``(iv) Records, reports, and 
                        audits.--An agreement to maintain such 
                        records, submit such reports, and 
                        cooperate with such reviews and audits 
                        as the Secretary finds necessary for 
                        purposes of oversight of the 
                        demonstration program.
                          ``(v) Certifications.--The following 
                        certifications:
                                  ``(I) A certification that 
                                the entity will use funds 
                                provided udner the grant to 
                                promote at least 2 of the 
                                purposes described in 
                                subsection (a)(2).
                                  ``(II) A certification that 
                                the entity will return any 
                                unused funds to the Secretary 
                                in accordance with the 
                                reconcilation process under 
                                paragraph (3).
                                  (III) A certification that 
                                the funds provided under the 
                                grant will be used for programs 
                                and activities that target low-
                                income participants in each 
                                program or activity funded 
                                under the grant shall be--
                                          ``(aa) parents of a 
                                        child who is, or within 
                                        the past 24 months has 
                                        been, a recipient of 
                                        assistance or services 
                                        under a State program 
                                        funded under part A, D, 
                                        or E of this title, 
                                        title XIX, or the Food 
                                        Stamp Act of 1977; or
                                          ``(bb) parents, 
                                        including an expectant 
                                        parent or a married 
                                        parent, whose income 
                                        (after adjustment for 
                                        court-ordered child 
                                        support paid or 
                                        received) does not 
                                        exceed 150 percent of 
                                        the poverty line.
                                  ``(IV) A certification that 
                                the entity has or will comply 
                                with the requirements of 
                                paragraph (3).
                                  ``(V) A certification that 
                                funds provided to an entity 
                                under this subsection shall not 
                                be used to supplement or 
                                supplant other Federal, State, 
                                or local fundsprovided to the 
                                entity that are used to support 
                                programs or activities that are 
                                related to the purposes 
                                described in subsection (a)(2).
                  ``(C) Preferences and factors of 
                consideration.--In awarding grants under this 
                subsection, the Secretary shall, to the extent 
                practicable, achieve a balance mong the 
                eligible entities awarded grants under this 
                subsectinw ith respect to the size, urban or 
                rural location, and employment of differing or 
                unique methods of the entities.
          ``(2) Restriction on use of funds.-- No funds provded 
        under this subsection may be used for costs 
        attributable to court proceedings regarding matters of 
        child visitation or custody, or for legislative 
        advocacy.
          ``(3) Requirements for use of funds.--The Secretary 
        may not award a grant under this subsection to an 
        eligible entity unless the entity, as a condition of 
        receiving funds under such a grant--
                  ``(A) consults with experts in domestic 
                violence or with relevant community domestic 
                violence coalitions in developing the programs 
                or activities to be conducted with such funds 
                awarded under the grant; and
                  ``(B) describes in the application for a 
                grant under this section--
                          ``(i) how the programs or activities 
                        proposed to be conducted will address, 
                        as appropriate, issues of domestic 
                        violence; and
                          ``(ii) what the entity will do, to 
                        the extent relevant, to ensure that 
                        participation in such programs or 
                        activities is voluntary, and to inform 
                        potential participants that their 
                        involvement is voluntary.
          ``(4) Reconcilitation process.--
                  ``(A) 3-Year availability of amounts 
                allotted.--Each eligible entity that receives a 
                grant under this subseciton for a fiscal year 
                shll return tot he Secretary any unused portion 
                of the grant for such fiscal year not later 
                than the last day of the second succeeding 
                fiscal year, together with any earnings on such 
                unused portion.
                  ``(B) Procedure for redistribution.--The 
                Secretary shall establish an appropriate 
                procedure for redistributing to eligible 
                entities that have expended the entire amount 
                of a grant made under this subsection for 
                fiscal year any amount that is returned to the 
                Secretary by eligible entities amount that is 
                returned to the Secretary by eligible entities 
                under subparagraph (A).
          ``(5) Appropriation.--Out of any money in the 
        Treasury oft he United States not otherwise 
        appropriated, there are appropriated for each of fiscal 
        years 2006 through 2010, $30,000,000 for purposes of 
        making grant to eligible entities under this 
        subsection.

``SEC. 442. NATIONAL CLEARINGHOUSE FOR RESPONSIBLE FATHERHOOD PROGRAMS.

    ``(a) Media Campaign National Clearinghouse for Responsible 
Fatherhood.--
          ``(1) In general.--From any funds appropriated under 
        subsection (c), the Secretary shall contract with a 
        nationally recognized, nonprofit fatherhood promotion 
        organization described in subsection (b) to--
                  ``(A) develop, promote, and distribute to 
                interested States, local governments, public 
                agencies, and private entities a media campaign 
                that encourages the appropriate involvement of 
                parents in the life of any child, with a 
                priority forprograms that specifically address 
the issue of responsible fatherhood; and
                  ``(B) develop a national clearinghouse to 
                assist States and communities in efforts to 
                promote and support marriage and responsible 
                fatherhood by collecting, evaluating, and 
                making available (through the Internet and by 
                other means) to other States information 
                regarding the media campaigns established under 
                section 443.
          ``(2) Coordination with domestic violence programs.--
        The Secretary shall ensure that the nationally 
        recognized non-profit fatherhood promotion organization 
        with a contract under paragraph (1) coordinates the 
        media campaign developed under subparagraph (A) of such 
        paragraph and the national clearinghouse developed 
        under subparagraph (B) of such paragraph with national, 
        State, or local domestic violence programs.
    ``(b) Nationally Recognized, Nonprofit Fatherhood Promotion 
Organization Described.--The nationally recognized, nonprofit 
fatherhood promotion organization described in this subsection 
is an organization that has at least 4 years of experience in--
          ``(1) designing and disseminating a national public 
        education campaign, as evidenced by the production and 
        successful placement of television, radio, and print 
        public service announcements that promote the 
        importance of responsible fatherhood, a track record of 
        service to Spanish-speaking populations and 
        historically underserved or minority populations, the 
        capacity to fulfill requests for information and a 
        proven history of fulfilling such requests, and a 
        mechanism through which the public can request 
        additional information about the campaign; and
          ``(2) providing consultation and training to 
        community-based organizations interested in 
        implementing fatherhood outreach, support, or skill 
        development programs with an emphasis on promoting 
        married fatherhood as the ideal.
    ``(c) Authorization of Appropriations.--There is authorized 
to be appropriated $5,000,000 for each of fiscal years 2006 
through 2010 to carry out this section.

``SEC. 443. BLOCK GRANTS TO STATES TO ENCOURAGE MEDIA CAMPAIGNS.

    ``(a) Definitions.--In this section:
          ``(1) Broadcast advertisement.--The term `broadcast 
        advertisement' means a communication intended to be 
        aired by a television or radio broadcast station, 
        including a communication intended to be transmitted 
        through a cable channel.
          ``(2) Child at risk.--The term `child at risk' means 
        each young child whose family income does not exceed 
        the poverty line.
          ``(3) Poverty line.--The term `poverty line' has the 
        meaning given such term in section 673(2) of the 
        Community Services Block Grant Act (42 U.S.C. 9902(2)), 
        including any revision required by such section, that 
        is applicable to a family of the size involved.
          ``(4) Printed or other advertisement.--The term 
        `printed or other advertisement' includes any 
        communication intended to be distributed through a 
        newspaper, magazine, outdoor advertising facility, 
        mailing, or any other type of general public 
        advertising, but does not include any broadcast 
        advertisement.
          ``(5) State.--The term `State' means each of the 50 
        States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the United States Virgin Islands, Guam, 
        American Samoa, and the Commonwealth of the Northern 
        Mariana Islands.
          ``(6) Young child.--The term `young child' means an 
        individual under age 5.
    ``(b) State Certifications.--Not later than October 1 of 
each of fiscal year for which a State desires to receive an 
allotment under this section, the chief executive officer of 
the State shall submit to the Secretary a certification that 
the State shall--
          ``(1) use such funds to promote the formation and 
        maintenance of healthy 2-parent married families, 
        strengthen fragile families, and promote responsible 
        fatherhood through media campaigns conducted in 
        accordance with the requirements of subsection (d);
          ``(2) return any unused funds to the Secretary in 
        accordance with the reconciliation process under 
        subsection (e); and
          ``(3) comply with the reporting requirements under 
        subsection (f).
    ``(c) Payments to States.--For each of fiscal years 2006 
through 2010, the Secretary shall pay to each State that 
submits a certification under subsection (b), from any funds 
appropriated under subsection (i), for the fiscal year an 
amount equal to the amount of the allotment determined for the 
fiscal year under subsection (g).
    ``(d) Establishment of Media Campaigns.--Each State 
receiving an allotment under this section for a fiscal year 
shall use the allotment to conduct media campaigns as follows:
          ``(1) Conduct of media campaigns.--
                  ``(A) Radio and television media campaigns.--
                          ``(i) Production of broadcast 
                        advertisements.--At the option of the 
                        State, to produce broadcast 
                        advertisements that promote the 
                        formation and maintenance of healthy 2-
                        parent married families, strengthen 
                        fragile families, and promote 
                        responsible fatherhood.
                          ``(ii) Airtime challenge program.--At 
                        the option of the State, to establish 
                        an airtime challenge program under 
                        which the State may spend amounts 
                        allotted under this section to purchase 
                        time from a broadcast station to air a 
                        broadcast advertisement produced under 
                        clause (i), but only if the State 
                        obtains an amount of time of the same 
                        class and during a comparable period to 
                        air the advertisement using non-Federal 
                        contributions.
                  ``(B) Other media campaigns.--At the option 
                of the State, to conduct a media campaign that 
                consists of the production and distribution of 
                printed or other advertisements that promote 
                the formation and maintenance of healthy 2-
                parent married families, strengthen fragile 
                families, and promote responsible fatherhood.
          ``(2) Administration of media campaigns.--A State may 
        administer media campaigns funded under this section 
        directly or through grants, contracts, or cooperative 
        agreements with public agencies, local governments, or 
        private entities, including charitable and faith-based 
        organizations.
          ``(3) Consultation with domestic violence assistance 
        centers.--In developing broadcast and printed 
        advertisements to be used in the media campaigns 
        conducted under paragraph (1), the State or other 
        entity administering the campaign shall consult with 
        representatives of State and local domestic violence 
        centers.
          ``(4) Non-federal contributions.--In this section, 
        the term `non-Federal contributions' includes 
        contributions by the State and by public and private 
        entities. Such contributions may be in cash or in kind. 
        Such term does not include any amounts provided by the 
        Federal Government, or services assisted or subsidized 
        to any significant extent by the Federal Government, or 
        any amount expended by a State before October 1, 2005.
    ``(e) Reconciliation Process.--
          ``(1) 3-year availability of amounts allotted.--Each 
        Stated that receives an allotment under this section 
        shall return to the Secretary any unused portion of the 
        amount allotted to a State for a fiscal year not later 
        than the last day of the second succeeding fiscal year 
        together with any earnings on such unused portion.
          ``(2) Procedure for redistribution of unused 
        allotments.--The Secretary shall establish an 
        appropriate procedure for redistributing to States that 
        have expended the entire amount allotted under this 
        section any amount that is--
                  ``(A) returned to the Secretary by States 
                under paragraph (1); or
                  ``(B) not allotted to a State under this 
                section because the State did not submit a 
                certification under subsection (b) by October 1 
                of a fiscal year.
    ``(f) Reporting Requirements.--
          ``(1) Monitoring and evaluation.--Each State 
        receiving an allotment under this section for a fiscal 
        year shall monitor and evaluate the media campaigns 
        conducted using funds made available under this section 
        in such manner as the Secretary, in consultation with 
        the States, determines appropriate.
          ``(2) Annual reports.--Not less frequently than 
        annually, each State receiving an allotment under this 
        section for a fiscal year shall submit to the Secretary 
        reports on the media campaigns conducted using funds 
        made available under this section at such time, in such 
        manner, and containing such information as the 
        Secretary may require.
    ``(g) Amount of Allotments.--
          ``() In general.--Except as provided in paragraph 
        (2), of the amount appropriated for the purpose of 
        making allotments under this section for a fiscal year, 
        the Secretary shall allot to each State that submits a 
        certification under subsection (b) for the fiscal year 
        an amount equal to the sum of--
                  ``(A) the amount that bears the same ratio to 
                50 percent of such funds as the number of young 
                children in the State (as determined by the 
                Secretary based on the most current reliable 
                data available) bears to the number of such 
                children in all States; and
                  ``(B) the amount that bears the same ratio to 
                50 percent of such funds as the number of 
                children at risk in the State (as determined by 
                the Secretary based on the most current 
                reliable data available) bears to the number of 
                such children in all States.
          ``(2) Minimum allotments.--No allotment for a fiscal 
        year under this section shall be less than--
                  ``(A) in the case of the District of Columbia 
                or a State other than the Commonwealth of 
                Puerto Rico, the United States Virgin Islands, 
                Guam, American Samoa, and the Commonwealth of 
                the Northern Mariana Islands, 1 percent of the 
                amount appropriated for the fiscal year under 
                subsection (i); and
                  ``(B) in the case of the Commonwealth of 
                Puerto Rico, the United States Virgin Islands, 
                Guam, American Samoa, and the Commonwealth of 
                the Northern Mariana Islands, 0.5 percent of 
                such amount.
          ``(3) Pro rata reductions.--The Secretary shall make 
        such pro rata reductions to the allotments determined 
        under this subsection as are necessary to comply with 
        the requirements of paragraph (2).
    ``(h) Evaluation.--
          ``(1) In general.--The Secretary shall conduct an 
        evaluation of the impact of the media campaigns funded 
        under this section.
          ``(2) Report.--Not later than December 31, 2008, the 
        Secretary shall report to Congress the results of the 
        evaluation under paragraph (1).
          ``(3) Funding.--Of the amount appropriated under 
        subsection (i) for fiscal year 2006, $1,000,000 of such 
        amount shall be transferred and made available for 
        purposes of conducting the evaluation required under 
        this subsection, and shall remain available until 
        expended.
    ``(i) Authorization of Appropriations.--There is authorized 
to be appropriated $20,000,000 for each of fiscal years 2006 
through 2010 for purposes of making allotments to States under 
this section.

``SEC. 444. NATIONAL RESOURCE CENTER FOR RESPONSIBLE FATHERHOOD

    ``(a) In General.--The Secretary shall contract with a 
nationally recognized, nonprofit research and education 
fatherhood organization described in subsection (b) to--
          ``(1) provide technical assistance and training to 
        public and private agencies and grass roots 
        organizations that promote responsible fatherhood and 
        healthy marriage; and
          ``(2) develop a clearinghouse of resource materials 
        to assist community-based organizations in developing 
        local responsible fatherhood programs, with an emphasis 
        on training and outcome evaluation.
    ``(b) Nationally Recognized Nonprofit Research and 
Education Fatherhood Organization Described.--A nationally 
recognized nonprofit research and education fatherhood 
organization described in this subsection is an organization 
that has been in existence for at least 12 years with 
experience in--
          ``(1) developing and distributing research-based 
        curriculum that promotes responsible fatherhood and 
        healthy marriage with an emphasis on low-income and 
        noncustodial fathers;
          ``(2) providing consultation and training to 
        community-based organizations with a track record of 
        working with social service, government, and faith-
        based organizations; and
          ``(3) providing direct training to fathers, father 
        figures, and mothers using research-based curriculum in 
        a variety of economic, cultural and family situations.
    ``(c) Authorization of Appropriations.--There is authorized 
to be appropriated to the Secretary to carry out this section, 
$1,000,000 for each of fiscal years 2006 through 2010.

``SEC. 445. NONDISCRIMINATION.

    ``The projects and activities assisted under this part 
shall be available on the same basis to all fathers and 
expectant fathers able to benefit from such projects and 
activities, including married and unmarried fathers and 
custodial and noncustodial fathers, with particular attention 
to low-income fathers, and to mothers and expectant mothers on 
the same basis as to fathers.
    ``(b) Inapplicability of Effective Date Provisions.--
Section 116 shall not apply to the amendment made by subsection 
(a) of this section.''.

           *       *       *       *       *       *       *


               TITLE 28--JUDICIARY AND JUDICIAL PROCEDURE

                           PART V--PROCEDURE

                   CHAPTER 115--EVIDENCE; DOCUMENTARY


SEC. 1738B. FULL FAITH AND CREDIT FOR CHILD SUPPORT ORDERS.

    (a) General Rule.--The appropriate authorities of each 
State--

           *       *       *       *       *       *       *

    [(d) Continuing Jurisdiction.--A court of a State that has 
made a child support order consistently with this section has 
continuing, exclusive jurisdiction over the order if the State 
is the child's State or the residence of any individual 
contestant unless the court of another State, acting in 
accordance with subsections (e) and (f), has made a 
modification of the order.]
    (d) Continuing Exclusive Jurisdiction.--
          (1) In general.--Subject to paragraph (2), a court of 
        a State that has made a child support order consistent 
        with this section has continuing, exclusive 
        jurisdiction to modify its order if the order is the 
        controlling order and--
                  (A) the State is the child's State or the 
                residence of any individual contestant; or
                  (B) if the State is not the residence of the 
                child or an individual contestant, the 
                contestants consent in a record or in open 
                court that the court may continue to exercise 
                jurisdiction to modify its order.
          (2) Requirement.--A court may not exercise its 
        continuing, exclusive jurisdiction to modify the order 
        if the court of another State, acting in accordance 
        with subsections (e) and (f), has made a modification 
        of the order.
    (e) Authority To Modify Orders.--A court of a State may 
modify a child support order issued by a court of another state 
if--
          (1) the court has jurisdiction to make such a child 
        support order pursuant to subsection (i); and
          (2)(A) the court of the other State no longer has 
        continuing, exclusive jurisdiction of the child support 
        order [because that State no longer is the child's 
        State or the residence of any individual contestant;] 
        pursuant to paragraph (1) or (2) of subsection (d); or
          (B) each individual contestant has filed written 
        consent with the State of continuing, exclusive 
        jurisdiction for a court of another State with 
        jurisdiction over at least 1 of the individual 
        contestants or that is located in the child's State to 
        modify the order and assume continuing, exclusive 
        jurisdiction over the order.
    (f) [Recognition of] Determination of Controlling Child 
Support Orders.--If 1 or more child support orders have been 
issued with regard to an obligor and a child, a court [shall 
apply the following rules in determining which order to 
recognize for purposes of continuing, exclusive jurisdiction 
and enforcement:] having personal jurisdiction over both 
individual contestants shall apply the following rules and by 
order shall determine which order controls:
          (1) If only 1 court has issued a child support order, 
        the order of that court [must be] controls and must be 
        so recognized.
          (2) If 2 or more courts have issued child support 
        orders for the same obligor and child, and only 1 of 
        the courts would have continuing, exclusive 
        jurisdiction under this section, the order of that 
        court [must be recognized] controls.
          (3) If 2 or more courts have issued child support 
        orders for the same obligor and child, and more than 1 
        of the courts would have continuing, exclusive 
        jurisdiction under this section, an order issued by a 
        court in the current home State of the child [must be 
        recognized] controls, but if an order has not been 
        issued in the current home State of the child, the 
        order most recently issued [must be recognized] 
        controls.
          (4) If 2 or more courts have issued child support 
        orders for the same obligor and child, and none of the 
        courts would have continuing, exclusive jurisdiction 
        under this section, a court having jurisdiction over 
        the parties [may] shall issue a child support order, 
        which [must be recognized] controls.
          [(5) The court that has issued an order recognized 
        under this subsection is the court having continuing, 
        exclusive jurisdiction under subsection (d).]
    [(g) Enforcement of Modified Orders.--A court of a State 
that no longer has continuing, exclusive jurisdiction of a 
child support order may enforce the order with respect to 
nonmodifiable obligations and unsatisfied obligations that 
accrued before the date on which a modification of the order is 
made under subsections (e) and (f).]
    (g) Enforcement of Modified Orders.--If a child support 
order issued by a court of a State modified by a court of 
another State which properly assumed jurisdiction, the issuing 
court--
          (1) may enforce its order that was modified only as 
        to arrears and interest accruing before the 
        modification;
          (2) may provide appropriate relief for violations of 
        its order which occurred before the effective date of 
        the modification; and
          (3) shall recognize the modifying order of the other 
        State for the purpose of enforcement.
    (h) Choice of Law--
          (1) In general.--In a proceeding to establish, modify 
        or enforce a child support order, the forum State's law 
        shall apply except as provided in paragraphs (2) [and 
        (3)], (3), and (4).
          (2) Law of state of issuance of order.--In 
        interpreting a child support order including the 
        duration of current payments and other obligations of 
        support the computation and payment of arrearages, and 
        the accrual of interest on the arrearages, a court 
        shall apply the law of the State of the court that 
        issued the order.

           *       *       *       *       *       *       *

          (4) Prospective application.--After a court 
        determines which is the controlling order and issues an 
        order consolidating arrears, if any, a court shall 
        prospectively apply the law of the State issuing the 
        controlling order, including that State's law with 
        respect to interest on arrears, current and future 
        support, and consolidated arrears.

           *       *       *       *       *       *       *

    (i) Registrtion for Modification.--If there is no 
individual contestant or child residing in the issuing State 
and subsection (d)(2) does not apply, the party or support 
enforcement agency seeking to modify, or to modify and enforce, 
a child support order issued in another State shall register 
that order in a State with jurisdiction over the nonmovant for 
the purpose of modification.

           *       *       *       *       *       *       *


                            TITLE 29--LABOR

                   Subtitle B--Regulatory Provisions

        CHAPTER 18--EMPLOYEE RETIREMENT INCOME SECURITY PROGRAM


          Subchapter I--Protection of employee benefit rights


SEC. 1166. NOTICE REQUIREMENTS

(a) In general
    In accordance with regulations prescribed by the 
Secretary--
          (1) * * *

           *       *       *       *       *       *       *

          (4) the administrator shall notify--
                  (A) in the case of a qualifying event 
                described in paragraph (1), (2), (4), or (6) of 
                section 1163 of this title, any qualified 
                beneficiary with respect to such event, [and]
                  (B) in the case of a qualifying event 
                described in paragraph (3) or (5) of section 
                1163 of this title where the covered employee 
                notifies the administrator under paragraph (3), 
                any qualified beneficiary with respect to such 
                event, and
                  (C) in any case in which the qualifying event 
                with respect to which notice to a qualified 
                beneficiary is required by subparagraph (A) or 
                (B) is a qualifying event with respect to the 
                parent of a qualified beneficiary who is an 
                alternative recipient under a qualified medical 
                child support order (as such terms are defined 
                in section 609(a)(2)), the State agency 
                administering the program under part D of title 
                IV of the Social Security Act that issued, or 
                is authorized to enforce, such order, of such 
                beneficiary's rights under this subsection.

           *       *       *       *       *       *       *


SEC. 1169. ADDITIONAL STANDARDS FOR GROUP HEALTH PLANS

(a) Group health plan coverage pursuant to medical child 
support orders
          (1) In general

           *       *       *       *       *       *       *

          (5) Procedural requirements
                  (A) Timely notifications and determinations

           *       *       *       *       *       *       *

                  (C) National Medical Support Notice deemed to 
                be a qualified medical child support order
    (i) In general
          If the plan administrator of a group health plan 
        which is maintained by the employer of a [noncustodial] 
        parent of a child or to which such an employer 
        contributes receives an appropriately completed 
        National Medical Support Notice promulgated pursuant to 
        section 401(b) of the Child Support Performance and 
        Incentive Act of 1998 is the case of such child, and 
        the Notice meets the requirements of paragraphs (3) and 
        (4), the Notice shall be deemed to be a qualified 
        medical child support order in the case of such child.
    (ii) Enrollment of child in plan
          In any case in which an appropriately completed 
        National Medical Support Notice is issued in the case 
        of a child of a participant under a group health plan 
        who is a [noncustodial] parent of the child and the 
        Notice is deemed under clause (i) to be a qualified 
        medical child support order, the plan administrator, 
        within 40 business days after the date of the Notice, 
        shall--

           *       *       *       *       *       *       *


29 Sec. 1169. NOTE.

           *       *       *       *       *       *       *


National Medical Support Notices for State or Local Governmental Group 
                              Health Plans

    Pub. L. 105-200, title IV Sec. 401(e), July 16, 1998, 112 
Stat. 663, provided that:
    ``(1) In general.--Each State or local governmental group 
health plan shall provide benefits in accordance with the 
applicable requirements of any National Medical Support Notice.
    ``(2) Enrollment of child in plan.--In any case in which an 
appropriately completed National Medical Support Notice is 
issued in the case of a child of a participant under a State or 
local governmental group health plan [who is a noncustodial 
parent of the child] the plan administrator, within 40 business 
days after the date of the Notice, shall--

  Qualified Medical Child Support Orders and National Medical Support 
                        Notices for Church Plans

    Pub. L. 105-200, Title IV, Sec. 401(f), July 16, 1998, 112 
Stat. 664, provided that:
    ``(1) * * *
    ``(5) Procedural requirements.--
    ``(A) * * *
    ``(C) National Medical Support Notice deemed to be a 
qualified medical child support order.--
          ``(i) In general.--If the plan administrator of any 
        church group health plan which is maintained by the 
        employer of a [noncustodial] parent of a child or to 
        which such an employer contributes receives an 
        appropriately completed National Medical Support Notice 
        promulgated pursuant to subsection (b) of this section 
        [Pub.L. 105-200, Title IV, Sec. 401(b), July 16, 1998, 
        112 Stat. 660, which is classified as a note under 
        section 651 of Title 42] in the case of such child, and 
        the Notice meets the requirements of paragraphs (3) and 
        (4) of this subsection [this note], the Notice shall be 
        deemed to be a qualified medical child support order in 
        the case of such child.
          ``(ii) Enrollment of child in plan.--In any case in 
        which an appropriately completed National Medical 
        Support Notice is issued in the case of a child of a 
        participant under a church group health plan who is a 
        [noncustodial] parent of the child, and the Notice is 
        deemed under clause (i) to be a qualified medical child 
        support order, the plan administrator, within 40 
        business days after the date of the Notice, shall--

           *       *       *       *       *       *       *


                      TITLE 31--MONEY AND FINANCE

                   Subtitle III--Financial Management

                           CHAPTER 37--CLAIMS


Subchapter II--Claims of the United States Government

           *       *       *       *       *       *       *



SEC. 3701. DEFINITIONS AND APPLICATION.

(a) * * *
(d) Sections 3711(e) and 3716-3719 of this title do not apply 
to a claim or debt under, or to an amount payable under--
    (1) the Internal Revenue Code of 1986 (26 U.S.C. 1 et 
seq.),
    (2) the Social Security Act (42 U.S.C. 301 et seq.), except 
to the extent provided under sections 204(f) and 1631(b)(4) of 
such Act and [section 3716(c) of this title] subsections (c) 
and (h)(3) of section 3716 of this title, or

           *       *       *       *       *       *       *


SEC. 3716. ADMINISTRATIVE OFFSET.

           *       *       *       *       *       *       *


    (h)(1) The Secretary may, in the discretion of the 
Secretary, apply subsection (a) with respect to any past-due, 
legally-enforceable debt owed to a State if--

           *       *       *       *       *       *       *

    [(3) In applying this section with respect to any debt owed 
to a State, subsection (c)(3)(A) shall not apply.]
    (3)(A) Except as provided in subparagraph (B), in applying 
this section with respect to any debt owed to a State, 
subsection (c)(3)(A) shall not apply.
    (B) Subsection (c)(3)(A) shall apply with respect to 
payments owed to an individual under title II of the Social 
Security Act (notwithstanding any other provision of law, 
including section 207 of the Social Security Act (42 U.S.C. 
407)) for purposes of offset under this section of such 
payments to collect past-due support being enforced by a State.

           *       *       *       *       *       *       *


             LONGSHORE AND HARBOR WORKERS' COMPENSATION ACT

           ASSIGNMENT AND EXEMPTION FROM CLAIMS OF CREDITORS

    Sec. 16. [No] Except as provided by this Act, no 
assignment, release, or commutation of compensation or benefits 
due or payable under this Act[, except as provided by this 
Act,] shall be valid, and such compensation and benefits shall 
be exempt from all claims of creditors and from levy, 
execution, and attachment or other remedy for recovery or 
collection of a debt, which exemption may not be waived.

                       [LIEN AGAINST COMPENSATION

    [Sec. 17. Where a trust fund which complies with section 
186(c) of title 29 established pursuant to a collective-
bargaining agreement in effect between an employer and an 
employee covered under this chapter has paid disability 
benefits to an employee which the employee is legally obligated 
to repay by reason of his entitlement to compensation under 
this chapter or under a settlement, the Secretary shall 
authorize a lien on such compensation in favor or the trust 
fund for the amount of such payments.]

            LIENS ON COMPENSATION; CHILD SUPPORT ENFORCEMENT

    Sec. 17. (a) Liens.--Where a trust fund which complies with 
section 302(c) of the Labor Management Relations Act, 1947 (29 
U.S.C. 186(c) established pursuant to a collective-bargaining 
agreement in effect between an employer and an employee covered 
under this Act has paid disability benefits to an employee 
which the employee is legally obligated to repay by reason of 
the employee's entitlement to compensation under this Act or 
under a settlement, the Secretary shall authorize a lien on 
such compensation in favor of the trust fund for the amount of 
such payments.
    (b) Child Support.--Compensation or benefits due or payable 
to an individual under this Act (other than medical benefits) 
shall be subject, in like manner and to the same extent as 
similar compensation or benefits under a workers' compensation 
program if established under State law--
          (1) to withholding in accordance with State law 
        enacted pursuant to subsections (a)(1) and (b) of 
        section 466 of the Social Security Act and regulations 
        under such subsections; and
          (2) to any other legal process brought, by a State 
        agency administering a program under a State plan 
        approved under part D of title IV of the Social 
        Security Act or by an individual obligee, to enforce 
        the legal obligation of the individual to provide child 
        support or alimony.

           *       *       *       *       *       *       *


                                  
