[Federal Register Volume 63, Number 40 (Monday, March 2, 1998)]
[Proposed Rules]
[Pages 10264-10272]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5179]



[[Page 10263]]

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Part II





Department of Health and Human Services





_______________________________________________________________________



Administration for Children and Families



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45 CFR Part 283



Implementation of Section 403(a)(2) of Social Security Act Bonus To 
Reward Decrease in Illegitimacy; Proposed Rule

  Federal Register / Vol. 63, No. 40 / Monday, March 2, 1998 / Proposed 
Rules  

[[Page 10264]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Part 283

RIN 0970-AB79


Implementation of Section 403(a)(2) of Social Security Act Bonus 
To Reward Decrease in Illegitimacy

AGENCY: Administration for Children and Families, HHS.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Administration for Children and Families proposes to issue 
regulations describing how we will award a bonus to those States that 
experience the largest decreases in out-of-wedlock childbearing and 
also reduce their abortion rates. The total amount of the bonus will be 
$100 million in each of fiscal years 1999 through 2002, and the award 
for each eligible State in a given year will be $25 million or less.
    This incentive provision is a part of the new welfare reform block 
grant program enacted in 1996--the Temporary Assistance for Needy 
Families, or TANF, program.

DATES: You must submit comments by May 1, 1998. We will not consider 
comments received after this date in developing the final rule.

ADDRESSES: You may mail or hand-deliver comments to the Administration 
for Children and Families, Office of Planning, Research and Evaluation, 
370 L'Enfant Promenade, S.W., 7th Floor West, Washington, D.C. 20447. 
You may also transmit comments electronically via the Internet. To 
transmit comments electronically, or download an electronic version of 
the proposed rule, you should access the ACF Welfare Reform Home Page 
at http://www.acf.dhhs.gov/news/welfare and follow the instructions 
provided.
    We will make all comments available for public inspection at the 
Office of Planning, Research and Evaluation, 7th Floor West, 901 D 
Street, SW, Washington, DC 20447, from Monday through Friday between 
the hours of 9 a.m. and 4 p.m.
    We will only accept written comments. In addition, all your 
comments should:
     be specific;
     address only issues raised by the proposed rule, not the 
law itself;
     where appropriate, propose alternatives;
     explain reasons for any objections or recommended changes; 
and
     reference the specific section of the proposed rule that 
you are addressing.
    We will not acknowledge the comments. However, we will review and 
consider all comments that are germane and received during the comment 
period.

FOR FURTHER INFORMATION CONTACT: Kelleen Kaye, (202) 401-6634, or Ken 
Maniha, (202) 401-5372.
    Deaf and hearing-impaired individuals may call the Federal Dual 
Party Relay Service at 1-800-877-8339 between 8:00 a.m. and 7:00 p.m. 
Eastern time.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. The Personal Responsibility and Work Opportunity Reconciliation 
Act
II. Summary of the Bonus Provision
    A. Legislative History
    B. The Bonus Award
III. Regulatory Framework
    A. Consultations
    B. Related Regulations Under Development
    C. Statutory Context
    D. Regulatory Reform
    E. Departmental Activities Related to Out-of-Wedlock Births
IV. Section-by-Section Discussion of the NPRM
V. Regulatory Impact Analyses
    A. Executive Order 12866
    B. Regulatory Flexibility Analysis
    C. Paperwork Reduction Act
    D. Unfunded Mandates Reform Act of 1995

I. The Personal Responsibility and Work Opportunity Reconciliation 
Act

    On August 22, 1996, President Clinton signed ``The Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996''--or 
PRWORA--into law. The first title of this new law (Pub. L. 104-193) 
establishes a comprehensive welfare reform program designed to change 
the nation's welfare system dramatically. The new program is called 
Temporary Assistance for Needy Families, or TANF, in recognition of its 
focus on moving recipients into work and time-limited assistance.
    PRWORA repeals the existing welfare program known as Aid to 
Families with Dependent Children (AFDC), which provided cash assistance 
to needy families on an entitlement basis. It also repeals the related 
programs known as the Job Opportunities and Basic Skills Training 
program (JOBS) and Emergency Assistance (EA).
    The new TANF program went into effect on July 1, 1997, except in 
States that elected to submit a complete plan and implement the program 
at an earlier date.
    This landmark welfare reform legislation dramatically affects not 
only needy families, but also intergovernmental relationships. It 
challenges Federal, State, Tribal and local governments to foster 
positive changes in the culture of the welfare system and to take more 
responsibility for program results and outcomes.
    This new legislation also gives States the authority to use Federal 
welfare funds ``in any manner that is reasonably calculated to 
accomplish the purpose'' of the new program. It provides them broad 
flexibility to set eligibility rules and decide what benefits are most 
appropriate, and it offers States an opportunity to try new, far-
reaching ideas so they can respond more effectively to the needs of 
families within their own unique environments.

II. Summary of the Bonus Provision

A. Legislative History

    One of the greatest concerns of Congress in passing the PRWORA was 
the negative effect of out-of-wedlock births. This concern is reflected 
in the Congressional findings at section 101 of PRWORA. Here, Congress 
describes the need to address issues relating to marriage, the 
stability of families, and the promotion of responsible fatherhood and 
motherhood. It cites: the increasing number of children receiving 
public assistance; the increasing number of out-of-wedlock births; the 
negative consequences of an out-of-wedlock birth to the mother, the 
child, the family, and society; and the negative consequences of 
raising children in single-parent homes.
    Section 101 concludes:

    Therefore, in light of this demonstration of the crisis in our 
Nation, it is the sense of the Congress that prevention of out-of-
wedlock pregnancy and reduction in out-of-wedlock birth are very 
important Government interests and the policy contained in Part A of 
title IV of the Social Security Act (as amended by section 103(a) of 
this Act) is intended to address the crisis.

    Congressional concern is also reflected in the goals of the TANF 
program and the provision entitled Bonus to Reward Decrease in 
Illegitimacy. One purpose of the TANF program, as stated in section 
401(a)(3) of the Social Security Act, is to ``prevent and reduce the 
incidence of out-of-wedlock pregnancies and establish annual numerical 
goals for preventing and reducing the incidence of these pregnancies.''
    In enacting this separate bonus provision to reward decreases in 
out-of-wedlock childbearing, Congress intended to provide greater 
impetus to State efforts in this area and encourage State creativity in 
developing effective solutions.

[[Page 10265]]

B. The Bonus Award

    This rulemaking addresses the provision in the new law to reward 
States for high performance through the ``Bonus to Reward Decrease in 
Illegitimacy.'' (See section 403(a)(2) of the Social Security Act (the 
Act)).
    In this Notice of Proposed Rulemaking, the ``Bonus'' refers to the 
Bonus to Reward Decrease in Illegitimacy and the ``ratio'' refers to 
the ratio of out-of-wedlock births to total births.
    As specified in section 403(a)(2) of the Act, we will award a total 
of $100 million annually, in each of fiscal years 1999 through 2002. 
The amount of the bonus for each eligible State in a given year will be 
$25 million or less. For the purposes of this award, States include the 
50 States of the United States, the District of Columbia, the 
Commonwealth of Puerto Rico, the United States Virgin Islands, Guam and 
American Samoa, (as provided in section 419(a)(5)). However, the 
criteria for determining eligibility and size of the bonus for Guam, 
American Samoa and the Virgin Islands are different than the criteria 
for the remaining States, as specified in section 403(a)(2).
    We would base the bonus award on birth and abortion data for the 
State population as a whole, not on data for TANF or other more limited 
populations.
    Briefly, we propose to award the bonus as follows:
     We would calculate the ratio of out-of-wedlock births to 
total births for each State for the most recent two-year period for 
which data are available and for the prior two-year period. To compute 
these ratios, we would use the vital statistics data reported annually 
by States to the National Center for Health Statistics.
     For States other than Guam, American Samoa or the Virgin 
Islands, we would identify the five States that had the largest 
proportionate decrease in their ratios between the most recent two-year 
period for which data are available and the prior two-year period. 
These States would be potentially eligible.
     For Guam, American Samoa and the Virgin Islands, we would 
identify which had a comparable decrease in their ratios (i.e., a 
decrease at least as large as the smallest decrease among the other 
qualifying States). These additional States would also be potentially 
eligible. We call to your attention that bonus funds for Puerto Rico, 
Guam, American Samoa, and the Virgin Islands are not subject to the 
mandatory ceilings in section 1108(c)(4) of the Act.
     We would notify the potentially eligible States that, to 
be considered for the bonus, they need to submit data on the number of 
abortions.
     We would determine which of the potentially eligible 
States also experienced a decrease in their rate of abortions for the 
most recent calendar year compared to 1995, the base year specified in 
the Act. These States would receive a bonus award.

III. Regulatory Framework

A. Consultations

    In the spirit of both regulatory reform and PRWORA, we implemented 
a broad and far-reaching consultation strategy prior to the drafting of 
all proposed regulations for the TANF program. We discussed major 
issues related to this rulemaking with outside parties at numerous 
meetings.
    We held two types of consultations. First, we raised issues related 
to this bonus award in the general TANF consultation meetings with 
representatives of State and local government; non-profit, advocacy, 
and community organizations; foundations; and others. Second, we held 
consultations with technical, statistical and substantive experts 
focused specifically on these bonus provisions. We spoke with a number 
of different audiences including representatives of the National 
Association for Public Health Statistics and Information Systems 
(NAPHSIS); the Maternal and Child Health Technical Advisory Group 
(coordinated by the American Public Welfare Association primarily to 
advise the Health Care Financing Administration of the Department of 
Health and Human Services on policy matters); and other interested 
agencies and organizations (e.g., the Alan Guttmacher Institute, the 
NOW Legal Defense Fund, and Catholic Charities USA).
    The purpose of these discussions was to gain a variety of 
informational perspectives about the potential benefits and pitfalls of 
alternative regulatory approaches. We solicited both written and oral 
comments, and we worked to ensure that concerns raised during this 
process were shared with both the staff working on individual 
regulatory issues and key policy makers.
    These consultations were very useful in helping us identify key 
issues and evaluate policy options. However, we would like to emphasize 
that we are issuing these regulations as a proposed rule. Thus, all 
interested parties have the opportunity to voice their concerns and to 
react to specific policy proposals. We will review comments we receive 
during the comment period and will take them into consideration before 
issuing a final rule.

B. Related Regulations Under Development

    The NPRM to address the work, accountability, and data collection 
and reporting provisions of the new TANF program was published on 
November 20, 1997.
    Over the next several months, we expect to issue other related 
proposed rules. The upcoming NPRMs will cover high performance bonuses, 
Tribal work and TANF programs, and child poverty rates.

C. Statutory Context

    These proposed rules reflect PRWORA, as enacted, and amended by the 
Balanced Budget Act of 1997 (Pub.L. 105-33). This latter legislation 
included some technical changes and an adjustment to the formula if 
Guam, the Virgin Islands, or American Samoa is eligible for a bonus.

D. Regulatory Reform

    In its latest Document Drafting Handbook, the Office of the Federal 
Register supports the efforts of the National Performance Review and 
encourages Federal agencies to produce more reader-friendly 
regulations. In drafting this proposed rule, we have paid close 
attention to this guidance. Individuals who are familiar with prior 
welfare regulations should notice that this package incorporates a 
distinctly different, more readable style.

E. Departmental Activities Related to Out-of-Wedlock Births

    The Department has undertaken several initiatives in recognizing 
the importance of reducing out-of-wedlock childbearing. These include 
activities focused on the total population, as well as the teen 
population. In 1995, the Department published the Report to Congress on 
Out-of-Wedlock Childbearing. This volume provides an extensive 
compilation of many statistics on issues related to out-of-wedlock 
childbearing, as well as a literature review on the causes, 
consequences, and strategies to reduce childbearing outside of 
marriage. In that same year, the Department published ``Beginning too 
Soon: Adolescent Sexual Behavior, Pregnancy and Parenthood,'' a report 
prepared by Child Trends, Inc.
    Recently, the Department has developed the National Strategy to 
Prevent Teen Pregnancy, as required in section 905 of PRWORA. This 
strategy targets both girls and boys, and it contains both program and 
research

[[Page 10266]]

initiatives. Section 905 of PRWORA also required that the Department 
assure that at least 25 percent of communities in this country have 
teen pregnancy prevention programs in place. The National strategy 
sends the strongest possible message to all teens that postponing 
sexual activity, staying in school, and preparing for work are the 
right things to do. It strengthens ongoing efforts across the nation by 
increasing opportunities through welfare reform; supporting promising 
approaches; building partnerships; improving data collection, research, 
and evaluation; and disseminating information on innovative and 
effective practices.
    The Department is also administering the State Abstinence Education 
Program as authorized by section 912 of the PRWORA. This program 
authorizes $50 million per year beginning in FY 1998. By July 1997, 
every State had applied for this money to build on their State efforts 
to prevent teen pregnancy.

IV. Section-By-Section Discussion of the NPRM

What Does This Part Cover? (Sec. 283.1)

    This section of the proposed rule provides a summary of the content 
of part 283. Part 283 covers how we would determine which States 
qualify for the bonus award, what data we would use to make this 
determination, and how we would determine the amount of the award.

What Definitions Apply to This Part? (Sec. 283.2)

    Section 283.2 proposes definitions of the terms used in part 283. 
Some of these definitions assign a one-word term to represent a 
frequently used phrase. For example, ``Bonus'' is defined to mean the 
Bonus to Reward Decrease in Illegitimacy authorized under section 
403(a)(2) of the Act.
    We also define key technical terms used in calculating the bonus 
award for clarity and precision. For example, we define the ``most 
recent calendar year for which abortion data are available'' as the 
year that is two calendar years prior to the current calendar year. We 
also propose to define abortions to include both medically and 
surgically induced pregnancy terminations. This is consistent with the 
way data are collected in most States.
    You will note that we use the term ``we'' throughout the regulation 
and preamble. The term ``we'' means the Secretary of the Department of 
Health and Human Services or any of the following individuals or 
agencies acting on her behalf: the Assistant Secretary for Children and 
Families, the Regional Administrators for Children and Families, the 
Department of Health and Human Services, and the Administration for 
Children and Families.

What Steps Will We Follow To Award the Bonus? (Sec. 283.3)

    This section of the proposed rule describes the process we propose 
to follow for identifying which States would be eligible for the bonus 
and what the amount of the bonus would be. This process is based on the 
definition of ``eligible State'' in section 403(a)(2)(C)(i)(I)(aa). 
This definition indicates that a State must have a qualifying decrease 
in its ratio and also experience a decrease in its abortion rate. We 
propose to award the bonus based on decreases in ratios and abortion 
rates throughout the State. We would not award the bonus based on 
limited populations, e.g., teens or public assistance recipients.
    Competition for the bonus is voluntary, and this rule places no 
mandates on States with respect to data collection. Also, where 
possible, this NPRM proposes to use existing data sources or data that 
are the least burdensome to collect and report.
    In determining eligibility for the bonus, we first would consider 
States other than Guam, American Samoa, and the Virgin Islands. Among 
these States, we propose to identify which five States have the largest 
decrease in their ratios. We would then determine whether Guam, 
American Samoa and the Virgin Islands have decreases in their ratios at 
least as large as the smallest decrease among the other qualifying 
States. If so, they too would be potentially eligible for the bonus. We 
would not consider any other States for bonus eligibility, regardless 
of whether these potentially eligible States ultimately qualify for the 
bonus or not.
    When calculating decreases in the ratios, we would use the vital 
statistics data for total births and out-of-wedlock births that States 
submit to the National Center for Health Statistics (NCHS). Vital 
statistics data include information on virtually all births occurring 
in the United States and are already reported by State health 
departments to NCHS through the Vital Statistics Cooperative Program 
(VSCP). Hospitals and other facilities report this information to the 
State health departments on a standard birth certificate, following 
closely the format and content of the U.S. Standard Certificate of Live 
Birth. The States process all of their birth records and send their 
files to NCHS in electronic form in a standard format. The mother of 
the child or other informant provides the demographic information on 
the birth certificate, such as race, ethnicity, age, and her marital 
status at the time of birth.
    We chose vital statistics data to measure births because we viewed 
them as the most reliable and standard data available across States. 
Also, using vital statistics data from NCHS would allow us to measure 
the same years for all States and would give States a reasonable and 
standard time frame in which to submit the data. This is particularly 
important for birth data because we would rank States on their decrease 
in the ratio.
    We also determined that obtaining these data directly from NCHS 
rather than from the individual States would avoid a duplicate 
information collection activity and would be less burdensome for the 
States and for us. In most cases, States would not need to provide any 
new data or information related to births beyond what they already 
submit to NCHS.
    As specified in section 403(a)(2) of the Act, once we have 
identified the potentially eligible States with the largest decreases 
in their ratios, we would notify those States that, to be considered 
for eligibility for the bonus award, they must submit the necessary 
data on the number of abortions for both 1995 and the most recent year.
    We concluded that there is no need for all States to submit data on 
abortions, based on the definition of ``eligible State'' in section 
403(a)(2)(C)(i)(I)(aa). A State cannot qualify for the bonus unless it 
is potentially eligible based on its decrease in the ratio. Even if 
some potentially eligible States later become ineligible based on their 
abortion data, all States who were previously ineligible based on their 
birth data would remain ineligible. We see no purpose in requesting 
abortion data from States that are not potentially eligible. Requesting 
data from only the potentially eligible States would be less burdensome 
for States and for us.
    Each of the potentially eligible States that submits abortion data 
and also experiences a decrease in its abortion rate relative to 1995 
would be eligible to receive the bonus. If a State does not submit the 
necessary abortion data or has not experienced a decrease in its 
abortion rate, it would be ineligible.
    We want to call attention to the fact that, as specified in section 
403(a)(2)(C)(i)(I)(bb) of the Act, the comparison year for the abortion 
rate will be 1995 for every bonus year. Any State that is potentially 
eligible for the bonus and does not submit the 1995 abortion data along 
with the other

[[Page 10267]]

required information within two months of notification by ACF would be 
ineligible for the bonus that year.
    It is important to note that, based on the definition of ``eligible 
State'' in section 403(a)(2)(C)(i)(I)(aa), we propose to rank States 
only on the basis of their ratios. States do not compete with respect 
to their abortion rates. Once a State is ranked on decreases in the 
ratio and determined to be potentially eligible, changes in its 
abortion rate would affect only its own eligibility. A State's abortion 
rate has no affect on the eligibility of any other State. Thus, while 
abortion data affects whether an individual State receives the bonus, 
competition among States for the bonus depends primarily on the birth 
data.
    Section 403(a)(2)(B) of the Act specifies that the total amount of 
the bonus in each year shall be $100 million. The amount of the bonus 
awarded to each State will depend on the number of eligible States, and 
whether Guam, American Samoa or the Virgin Islands are among the 
eligible States. In no case will the amount of a State's bonus be more 
than $25 million.

If a State Wants To Be Considered for Bonus Eligibility, What Birth 
Data Must It Submit? (Sec. 283.4)

    This section of the proposed rule describes in more detail what 
data a State must have submitted to NCHS for each year in the 
calculation period as a first step in qualifying for the bonus. As 
specified in section 403(a)(2)(C)(I)(i)(aa) of the Act, the calculation 
period for each bonus year covers four years, i.e., the most recent two 
calendar years for which NCHS has final data and the prior two calendar 
years. Consider the hypothetical example where bonus eligibility is 
being determined in July of 1999 and the most recent year for which 
NCHS has final data for all States is 1997. In this example, the 
calculation period would be calendar years 1997, 1996, 1995, and 1994.
    If a State did not change its method for determining marital status 
at any time during the calculation period, it would not need to submit 
any additional information beyond the information submitted to the NCHS 
as part of the vital statistics program. States must have submitted 
these vital statistics files for each year in the calculation period. 
Among other elements, these files must contain the number of total 
births and out-of-wedlock births that occurred in the State. NCHS would 
use these data to tabulate the number of total and out-of-wedlock 
births occurring to residents of each State.
    While the determination of marital status at the time of birth is 
fairly standard across States, there is some variation. Most States use 
a direct question on marital status, while a few infer marital status 
based on various pieces of information.
    Section 403(a)(2)(C)(i)(II)(aa) of the Act requires us to disregard 
changes in data due to changed reporting methods. Accordingly, we 
propose in paragraph (b) of this section that, if a State changed its 
method of determining marital status during the calculation period, the 
State must provide additional information to NCHS in order to 
demonstrate the effect of that change. The information that States must 
provide includes the years(s) of the change and data resulting from a 
replication of the prior methodology, i.e., data showing what the 
numbers of out-of-wedlock births would have been if such a change had 
not occurred. Examples of such changes include replacing an inferential 
procedure with a direct question on marital status, or changing the 
data from which marital status is inferred.
    In providing the information on the prior methodology, the State 
must replicate as closely as possible the method for determining 
marital status in the previous year. The State must submit this 
alternative calculation of the number of out-of-wedlock births for 
years in which the determination of marital status is different from 
that in the prior year. The State would also have to submit 
documentation to NCHS describing the change in determination of marital 
status and how it made the alternative calculation.
    Consider the following hypothetical example of determining bonus 
eligibility in 1999:
    A State changes from an inferential procedure to a direct question 
on marital status in 1996 and then leaves its procedure unchanged. This 
State would need to submit vital statistics data on total and out-of 
wedlock births for each year in the calculation period. This State 
would also need to submit an alternative measure showing what the 
number of out-of-wedlock births would have been in 1996, using the 
earlier inferential procedure. The State would not need to submit 
alternative measures for any other years in the calculation period. 
NCHS would use the information for 1996 to calculate an adjustment 
factor for other relevant years in the calculation period. For FY 2000 
and subsequent bonus years, the State would not need to submit any data 
beyond the basic vital statistics files, as long as it made no further 
change in its procedures.
    This alternative calculation of the number of births and 
documentation is necessary only if a State chooses to be considered for 
the bonus. It is not required as part of the Vital Statistics 
Cooperative Program.
    We propose in paragraph (c) of this section that, for changes that 
occurred prior to 1998 or prior to final rule publication, the State 
has one year after final rule publication to submit the required 
information. For changes that occur during or after 1998 and after 
final rule publication, a State must submit the information with its 
vital statistics data for that year. This policy would help ensure that 
timely information is available when we determine bonus eligibility.

How Will We Use These Birth Data To Determine Bonus Eligibility? 
(Sec. 283.5)

    This section of the proposed rule explains how we would identify 
which States have the largest decrease in their ratios. We would do 
this by using data provided by NCHS on total births and out-of-wedlock 
births for each State. In States that changed their methods of 
determining marital status, NCHS would have adjusted the number of out-
of-wedlock births to disregard the effect of those methodology changes. 
This adjustment would be based on information provided by the States.
    In paragraph (b) we propose to use the NCHS data to calculate the 
ratio for each State that has submitted the required data. As specified 
in the Act, this ratio would equal the number of out-of-wedlock births 
during the most recent two years divided by the number of total births 
for the same period. We would also calculate this ratio for the prior 
two-year period. Both ratios would be calculated to three decimal 
points.
    We would then calculate the proportionate change in the ratios. 
This proportionate change would equal the ratio from the most recent 
two-year period, minus the ratio for the previous two-year period, all 
divided by the ratio from the previous two-year period. A negative 
result would indicate a decrease in the ratio. A positive result would 
indicate an increase in the ratio, and mean the State was not eligible 
for a bonus. We would calculate these ratios to three decimal places.
    We also considered measuring the absolute change in the ratio. The 
absolute change would equal the ratio from the most recent period minus 
the ratio from the prior period.
    We believe the proportionate change is a better measure than the 
absolute change because it would allow States starting with high and 
low ratios to compete more fairly. This is because a

[[Page 10268]]

State starting with a low ratio could have more difficulty achieving a 
given absolute decrease in ratios compared to a State starting with a 
high ratio. For example, a State starting with a ratio of .100 would 
need to cut its ratio in half to achieve an absolute decrease of .050 
points. On the other hand, a State starting with a ratio of .500 would 
need to cut its ratio by only a tenth to achieve the same absolute 
decrease. Using the proportionate change in ratios rather than the 
absolute change in ratios helps to mitigate this potential difficulty 
by measuring the change relative to the State's ratio in the base 
period.
    In paragraph (c) we propose to rank States with respect to the 
proportionate change between their two ratios. For States other than 
Guam, American Samoa and the Virgin Islands, we would identify the five 
States with the largest decrease in their ratios. These States would be 
potentially eligible. The number of such States potentially eligible 
for the bonus would be fewer than five if fewer than five States show 
decreases in their ratios.
    If a tie exists that would result in more than five such States 
being potentially eligible, we would calculate the percentage change to 
enough decimal places to eliminate the tie.
    We would then determine whether Guam, American Samoa and the Virgin 
Islands have a comparable decrease in their ratios (i.e., a decrease at 
least as large as the smallest decrease among qualifying States other 
than Guam, American Samoa and the Virgin Islands). These identified 
States would be potentially eligible for the bonus.

If a State Wants To Be Considered for Bonus Eligibility, What Data on 
Abortions Must It Submit? (Sec. 283.6)

    This section of the proposed rule describes the data a State also 
must submit on abortions in order to qualify for the bonus. As noted 
above, only those States that are potentially eligible based on their 
ratios would need to submit abortion data in each year. Other States 
cannot be eligible and, therefore, do not need to submit abortion 
numbers.
    Under the proposed definitions at Sec. 283.2, the term ``abortion'' 
includes both medically and surgically induced pregnancy terminations. 
In most cases, States already collect these data.
    To be considered for the bonus, we propose, in paragraph (a), that 
States must submit to ACF data and information on the number of 
abortions for calendar year 1995 within two months of notification by 
ACF that they are potentially eligible. Under section 403(a)(2) of the 
Act, their data must count all abortions; it cannot be based on sub-
populations, such as recipients of public assistance or Medicaid.
    In paragraph (b), we propose that the potentially eligible States 
must also submit documentation demonstrating when they obtained their 
1995 data on abortions. An eligible State must have obtained its 1995 
abortion data by the end of 1997, or within 60 days of final rule 
publication, whichever is later. Prompt collection of these data should 
help to improve the reliability of the abortion data submitted for 
1995.
    For comparison and calculation purposes, in paragraph (c) we 
propose that potentially eligible States also must submit data on the 
number of abortions for the most recent year for which abortion data 
are available. We define the term ``most recent year for which abortion 
data are available'' in Sec. 283.2(e) to mean the year that is two 
calendar years prior to the current calendar year. For example, if we 
are determining bonus eligibility in calendar year 1999, the State 
would need to submit abortion data for calendar year 1995 and calendar 
year 1997. We define the period this way in order to measure the same 
year for all States. Based on information received during the 
consultation phase, we concluded that two years was a reasonable time 
frame in which to obtain the data. A time frame of longer than two 
years would not result in timely data, and a time frame shorter than 
two years could be difficult for some States to meet.
    The information the State must submit for 1995 and the most recent 
year is either the number of all abortions performed within the State, 
or the number of all abortions performed within the State on in-State 
residents. We would accept either measure. However, we prefer the 
second measure because the population of in-State residents is more 
relevant for the intent of this provision. We assume that State 
policies to reduce out-of-wedlock childbearing will affect in-State 
residents most directly. We received numerous comments during our 
external consultation that the measure should be based on in-State 
residents, if possible.
    We understand, however, that some States collect data only on total 
abortions that occurred within the State and do not separately identify 
abortions provided to in-State or out-of-State residents. While such 
States could begin to collect the data on a State-resident basis in the 
future, their 1995 data would not be collected on this basis. We 
investigated whether a State could adjust its 1995 data to make it 
comparable to future data based on in-State residents. After extensive 
consultation, we concluded this would not be technically feasible.
    Therefore, this proposed rule offers potentially eligible States 
the option to measure either total abortions that occurred within the 
State or abortions only among in-State residents that occurred within 
the State. However, the State must use the same definition to measure 
abortions in later years as it chooses for 1995. For example, if a 
State submitted data on total abortions performed in the State in 1995, 
it also must submit data on total abortions performed in the State in 
1999.
    While a State would be ineligible for the bonus if it changed its 
number of reported abortions in this respect, it could change its 
reporting in other respects and still be potentially eligible. For 
example, a State could change its procedures for contacting abortion 
providers. This flexibility would allow States to improve their 
abortion reporting systems without making them ineligible for the 
bonus.
    Under this proposed rule, States would also have flexibility to 
choose the source of the abortion data they submit. This flexibility 
would allow States that do not already have their own reporting system 
in place to compete for the bonus using data from other sources.
    While the States would have some flexibility to change their 
abortion reporting over time, the State would have to adjust for 
effects of these changes. In paragraph (d), as provided in section 
403(a)(2)(C)(i)(II)(bb) of the Act, we propose that States must adjust 
the measure (the number of abortions) so as to exclude increases or 
decreases that result from changes in data reporting relative to 1995, 
i.e., changes in the source of the data or the methodology. We propose 
also that the Governor, or his or her designee, must certify that the 
State has made the appropriate adjustments.
    These abortion reporting restrictions, including the need to adjust 
for changes in data reporting and the need to define the population 
consistently over time, apply only to the number of abortions reported 
to ACF for purposes of this bonus. Therefore, the number of abortions 
reported for purposes of the bonus might or might not equal the number 
of abortions reported in public health statistics.
    This proposed rule does not specify what methodology States must 
use to adjust for changes in data collection. After extensive 
consultation, we do not believe it is feasible to design a single 
methodology that would address all possible changes in data reporting. 
In addition, based on comments from our

[[Page 10269]]

external consultation, we understand that some State privacy laws 
restrict the types of abortion provider information that can be 
reported. We considered more specific reporting requirements as a way 
of ensuring a more uniform methodology, but they appeared to conflict 
with these State confidentiality laws.
    Our aim in this section of the NPRM is to obtain from States the 
best quality and most standard abortion data possible. We believe this 
is necessary for the fair and equitable distribution of these bonus 
awards. We also believe, however, that this proposed rule provides 
States with important flexibility that would make it technically 
feasible for States to submit the necessary data if they choose to 
compete for the bonus. We believe that this flexibility would better 
incorporate State program knowledge and expertise in measuring 
abortions.
    This flexibility could introduce variation in measurement of 
abortions across States for purposes of the bonus and could raise 
concern about fair competition for the bonus. However, these concerns 
are greatly mitigated by the fact that States are not competing with 
each other on their abortion rates. As noted above, a State's abortion 
rate affects its own qualification only, not the qualification of any 
other State. Furthermore, the disqualification of any State, based on 
its abortion data, does not result in additional States becoming 
eligible.
    A State cannot be eligible for the bonus unless it submits the 
necessary abortion data. However, as competition for the bonus is 
voluntary, this provision places no requirement on States to submit 
these data.

How Will We Use These Data on Abortions To Determine Bonus Eligibility? 
(Sec. 283.7)

    This section of the proposed rule describes how we would use the 
abortion data to identify which States are eligible for the bonus. To 
be eligible, a State must meet all the requirements noted above and 
must demonstrate a decrease in its abortion rate as described below.
    In paragraph (a), we propose to use the abortion data that States 
provide to calculate a rate of abortions. This rate would equal the 
number of abortions in a State for the most recent year, divided by the 
number of total resident births for the same year as reported by NCHS. 
This statistic is also known as the ``abortion to live birth ratio.'' 
It is a standard statistic used to measure abortions and incorporates 
the same denominator as the ratio. We would calculate the rate to three 
decimal places.
    In paragraph (b), we propose to compare this rate for the most 
recent year to the rate for 1995, calculated in the same way, and to 
identify which of the potentially eligible States experienced decreases 
in their abortion rates relative to 1995. Only those States 
experiencing decreases relative to 1995 would be eligible for the 
bonus. We would always compare a State's abortion rate to its 1995 
rate, as specified in section 403(a)(2)(C)(i)(I)(bb) of the Act.

What Will Be the Amount of the Bonus? (Sec. 283.8)

    This section of the proposed rule explains how we would determine 
the amount of the bonus for eligible States. These amounts are 
specified in section 403(a)(2)(B) of the Act. For Guam, American Samoa 
or the Virgin Islands, the award would be 25 percent of their mandatory 
ceiling amount as defined in section 1108 of the Act. Any bonuses paid 
to the these States would be subtracted from the total award of $100 
million, and the remainder would be divided among the other qualifying 
States up to a maximum award of $25 million. If Guam, American Samoa 
and the Virgin Islands were not among the qualifying States, the bonus 
for each State would be $20 million if five States qualified and $25 
million if fewer States qualified. If Guam, American Samoa or the 
Virgin Islands were among the qualifying States, the award for each 
State would be some lesser amount. The bonus amount for any State will 
never exceed $25 million per year.

What Do Eligible States Need To Know To Access the Bonus Funds? 
(Sec. 283.9)

    This section of the proposed rule provides additional details on 
how we would pay the bonus and how States may use the bonus award. We 
propose in paragraph (a) to pay the award to the Executive Office of 
the Governor. We believe that the Governor, as Chief Executive Officer 
of the State, is responsible not only for the TANF block grant program 
but for the well-being of all citizens of the State, including efforts 
related to reducing out-of-wedlock childbearing for the population as a 
whole.
    Since a bonus is part of a State's Family Assistance Grant, a State 
may use these funds only for purposes listed in sections 404 (use of 
funds) and 408 (prohibitions; requirements) of the Act. These sections 
of the law, including their constraints and limitations, apply to all 
funds received under section 403 of the Act.

V. Regulatory Impact Analyses

A. Executive Order 12866

    Executive Order 12866 requires that regulations be drafted to 
ensure that they are consistent with the priorities and principles set 
forth in the Executive Order. The Department has determined that this 
proposed rule is consistent with these priorities and principles. This 
proposed rulemaking implements statutory authority based on broad 
consultation and coordination.
    The Executive Order encourages agencies, as appropriate, to provide 
the public with meaningful participation in the regulatory process. As 
described elsewhere in the preamble, ACF consulted with State and local 
officials, their representative organizations, and a broad range of 
technical and interest group representatives.
    We discuss the input received during the consultation process in 
the ``Supplementary Information'' section of the preamble and in the 
section-by-section discussion of the proposed rule. To a considerable 
degree, this NPRM reflects the information provided by, and the 
recommendations of, the groups with whom we consulted.

B. Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (5 U.S.C. Ch. 6) requires the 
Federal government to anticipate and reduce the impact of rules and 
paperwork requirements on small businesses and other small entities. 
Small entities are defined in the Act to include small businesses, 
small non-profit organizations, and small governmental agencies. This 
rule will affect only States. Therefore, the Secretary certifies that 
this rule will not have a significant impact on small entities.

C. Paperwork Reduction Act

    This rule does not contain information collection activities that 
are subject to review and approval by the Office of Management and 
Budget. The birth data on which we will base the computation of the 
bonus are currently available from the NCHS. Therefore, no new data 
collection is required to measure out-of-wedlock birth ratios. The 
abortion data would be solicited for up to eight States only, and, 
therefore, does not meet the criteria for OMB review and approval.

D. Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995 requires 
that a covered agency prepare a budgetary impact statement before 
promulgating a rule that includes any

[[Page 10270]]

Federal mandate that may result in the expenditure by State, local, and 
Tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year.
    We have determined that this proposed rule would not impose a 
mandate that will result in the expenditure by State, local, and Tribal 
governments, in the aggregate, or by the private sector, of more than 
$100 million in any one year. Accordingly, we have not prepared a 
budgetary impact statement, specifically addressed the regulatory 
alternatives considered, or prepared a plan for informing and advising 
any significantly or uniquely impacted small government.

List of Subjects in 45 CFR Part 283

    Health statistics, Family planning, Maternal and child health, 
Public assistance programs.

    Dated: September 19, 1997.
Olivia A. Golden,
Principal Deputy Assistant Secretary for Children and Families.
    Approved: November 24, 1997.
Donna E. Shalala,
Secretary, Department of Health and Human Services.

    For the reasons set forth in the preamble, we propose to add part 
283 to chapter II of title 45 of the CFR to read as follows:

PART 283--IMPLEMENTATION OF SECTION 403(a)(2) OF THE SOCIAL 
SECURITY ACT, BONUS TO REWARD DECREASE IN ILLEGITIMACY

Sec.
283.1  What does this part cover?
283.2  What definitions apply to this part?
283.3  What steps will we follow to award the bonus?
283.4  If a State wants to be considered for bonus eligibility, what 
birth data must it submit?
283.5  How will we use these birth data to determine bonus 
eligibility?
283.6  If a State wants to be considered for bonus eligibility, what 
data on abortions must it submit?
283.7  How will we use these data on abortions to determine bonus 
eligibility?
283.8  What will be the amount of the bonus?
283.9  What do eligible States need to know to access the bonus 
funds?

    Authority: 42 U.S.C. 603.


Sec. 283.1  What does this part cover?

    This part explains how States may be considered for the Bonus to 
Reward Decrease in Illegitimacy as authorized by section 403(a)(2) of 
the Social Security Act. It describes the data on which we will base 
the bonus, how we will make the award, and how we will determine the 
amount of the award.


Sec. 283.2  What definitions apply to this part?

    The following definitions apply to this part:
    Abortions means induced pregnancy terminations, including both 
medically and surgically induced pregnancy terminations.
    Act means the Social Security Act.
    Bonus refers to the Bonus to Reward Decrease in Illegitimacy, as 
set forth in section 403(a)(2) of the Social Security Act.
    Calculation period refers to the four calendar years used for 
determining the decrease in the out-of-wedlock birth ratios for a bonus 
year. (The years included in the calculation period change from year to 
year.)
    Most recent two-year period for which birth data are available 
means the most recent two calendar years for which the National Center 
for Health Statistics has obtained final birth data by State.
    Most recent year for which abortion data are available means the 
year that is two calendar years prior to the current calendar year. 
(For example, for eligibility determinations made during calendar year 
1999, the most recent year for which abortion data are available would 
be calendar year 1997.)
    NCHS means the National Center for Health Statistics, in the 
Centers for Disease Control and Prevention, U.S. Department of Health 
and Human Services.
    Number of out-of-wedlock births for the State means the final 
number of births occurring outside of marriage to residents of the 
State, as reported in NCHS vital statistics data.
    Number of total births for the State means the final total number 
of births to residents of the State, as reported in NCHS vital 
statistics data.
    Rate of abortions means the number of abortions reported by the 
State in the most recent year for which abortion data are available 
divided by the State's total number of resident births reported in 
vital statistics for that same year. (This measure is also more 
traditionally known as the ``abortion to live birth ratio.'')
    Ratio refers to the ratio of out-of-wedlock births to total births, 
as defined in Sec. 283.5(b).
    State means the 50 States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, Guam, and American Samoa, as provided in section 419(a)(5) of 
the Act.
    Vital statistics data means the data reported by State health 
departments to NCHS, through the Vital Statistics Cooperative Program 
(VSCP).


Sec. 283.3  What steps will we follow to award the bonus?

    (a) For each of the fiscal years 1999 through 2002 we will:
    (1) Calculate the ratios for the most recent two years for which 
data are available, and for the prior two years, as described in 
Sec. 283.5. We will do this for every State that submits the necessary 
vital statistics data to NCHS, as described in Sec. 283.4.
    (2) Calculate the proportionate change between these two ratios, as 
described in Sec. 283.5.
    (3) Identify as potentially eligible those States that have 
qualifying decreases in their ratios, using the methodology described 
in Sec. 283.5. We will identify fewer than five States if fewer than 
five States experience decreases in their ratios. We will identify more 
than five States if Guam, American Samoa or the Virgin Islands, in 
addition to five other States, have qualifying decreases in their out-
of-wedlock birth ratios.
    (4) Notify these potentially eligible States that we will consider 
them for the bonus if they submit data on abortions as stated in 
Sec. 283.6.
    (5) Identify which of the potentially eligible States that 
submitted the required data on abortions have experienced decreases in 
their rates of abortion relative to 1995, as described in Sec. 283.7. 
These States will receive the bonus.
    (b) We will determine the amount of the grant for each eligible 
State, based on the number of eligible States, and whether Guam, 
American Samoa or the Virgin Islands are eligible. No State will 
receive a bonus award greater than $25 million in any year.


Sec. 283.4  If a State wants to be considered for bonus eligibility, 
what birth data must it submit?

    (a) To be considered for a bonus, the State must have submitted 
data on out-of-wedlock births as follows:
    (1) The State must have submitted to NCHS final vital statistics 
data files for all births occurring in the State. These files must 
show, among other elements, the number of total births and the number 
of out-of-wedlock births occurring in the State. These data must 
conform to the Vital Statistics Cooperative Program contract for all 
years in the calculation period. This contract specifies, among other 
things, the guidelines and time-lines for submitting vital statistics 
data files.
    (2) The State must have submitted these data for the most recent 
two years for which NCHS reports final data, as well as for the 
previous two years.
    (b) If a State has changed its method of determining marital status 
for the

[[Page 10271]]

purposes of these data, the State also must have met the following 
requirements:
    (1) The State has identified all years for which the method of 
determining marital status is different from that used for the previous 
year.
    (2) For those years identified under paragraph (b)(1) of this 
section, the State has replicated as closely as possible the previous 
year's method for determining marital status at time of birth, and the 
State has reported to NCHS the resulting alternative number of out-of-
wedlock births.
    (3) The State has also submitted to NCHS documentation on what the 
changes in determination of marital status were for those years and how 
it determined the alternative number of out-of-wedlock births for the 
State.
    (4) For methodology changes that occurred prior to 1998 or final 
rule publication, the State must have submitted the information 
described in paragraphs (b)(1), (2) and (3) of this section within 1 
year of final rule publication. For such changes occurring during or 
after 1998 and after final rule publication, the State must have 
submitted such information according to the same deadline that applies 
to its vital statistics data for that year.

                                                  Deadline for Information on Changes in Data Reporting                                                 
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
If Change in Data Collection       Prior to 1998                 Prior to final rule           During 1998, after final      After 1998, after final    
 Occurred:                                                                                      rule                          rule                      
Then Deadline for Information on   Within 1 year of final rule   Within 1 year of final rule   NCHS deadlines                NCHS deadlines             
 Alternative Data is:                                                                                                                                   
--------------------------------------------------------------------------------------------------------------------------------------------------------

Sec. 283.5  How will we use these birth data to determine bonus 
eligibility?

    (a) We will use the number of out-of-wedlock births and total 
births among women living in each State provided by NCHS as follows.
    (1) If a State has not changed its method of determining marital 
status, these numbers will be based directly on their vital statistics 
data files.
    (2) For years when the determination of marital status has been 
changed during the calculation period, NCHS will provide the number of 
out-of-wedlock births from vital statistics as well as an adjustment 
factor to disregard the effects of this change.
    (b) We will use these data provided by NCHS to calculate the 
decrease in the ratios for each State, as follows:
    (1) We will calculate the ratio as the number of out-of-wedlock 
births for the State during the most recent two-year period for which 
NCHS has final birth data divided by the number of total births for the 
State during the same period. We will calculate, to three decimal 
places, the ratio for each State that submits the necessary data on 
total and out-of-wedlock births described in Sec. 283.4.
    (2) We will calculate the ratio for the previous two-year period 
using the same methodology.
    (3) We will calculate the proportionate change in the ratio as the 
ratio of out-of-wedlock births total births for the most recent two-
year period minus the ratio of out-of-wedlock births to total births 
from the prior two-year period, all divided by the ratio of out-of 
wedlock births to total births for the prior two-year period. A 
negative number will indicate a decrease in the ratio and a positive 
number will indicate an increase in the ratio.
    (c) We will identify which States have a decrease in their ratios 
large enough to make them potentially eligible for the bonus, as 
follows:
    (1) For States other than Guam, American Samoa and the Virgin 
Islands, we will use this calculated change to rank the States and 
identify which five States have the largest decrease in their ratios. 
Only States among the top five will be potentially eligible for the 
bonus. We will identify fewer than five such States as potentially 
eligible if fewer than five experience decreases in their ratios. We 
will not include Guam, American Samoa and the Virgin Islands in this 
ranking.
    (2) If we identify more than five States due to a tie in the 
decrease, we will recalculate the ratio and the decrease in the ratio 
to as many decimal places as necessary to eliminate the tie. We will 
identify no more than five States.
    (3) For Guam, American Samoa and the Virgin Islands, we will use 
the calculated change in the ratio to identify which of these States 
experienced a decrease at least as large as the smallest qualifying 
decrease identified in paragraph (c)(1) of this section. These 
identified States will be potentially eligible for the bonus also.
    (4) We will notify the potentially eligible States, as identified 
under paragraphs (a) through (c) of this section that they must submit 
the information on abortion rates specified under Sec. 283.6 if they 
want to be considered for the bonus.


Sec. 283.6  If a State wants to be considered for bonus eligibility, 
what data on abortions must it submit?

    (a) To be considered further for bonus eligibility, each 
potentially eligible State, as identified under Sec. 283.5, must then 
submit to ACF data and information on the number of abortions for 
calendar year 1995 within two months of this notification. This number 
must measure either of the following:
    (1) For calendar year 1995, the total number of abortions performed 
by all providers within the State; or
    (2) For calendar year 1995, the total number of abortions that were 
performed by all providers within the State on the total population of 
State residents only. This is the preferred measure.
    (b) States must have obtained these data on abortions for calendar 
year 1995 by the end of calendar year 1997, or within 60 days of 
publication of the final rule on the bonus, whichever is later. Within 
two months of notification by ACF of potential eligibility, the State 
must submit records documenting when it obtained the abortion data for 
calendar year 1995.
    (c) The State also must submit data on the number of abortions for 
the most recent year for which abortion data are available, as defined 
in Sec. 283.2. In measuring the number of abortions, the State must use 
the same definition, either under paragraph (a)(1) or (a)(2) of this 
section, for both 1995 and the most recent year.
    (d) The State must adjust the number of abortions reported to ACF 
in any year to exclude increases or decreases due to changes in data 
collection or methodology relative to the number of abortions reported 
to ACF for 1995. The Governor, or his or her designee, must certify to 
ACF that such adjustments have been made.


Sec. 283.7  How will we use these data on abortions to determine bonus 
eligibility?

    (a) For those States that have met all the requirements under 
Secs. 283.1 through 283.6, we will calculate the rate of abortions for 
calendar year 1995 and for the most recent year for which abortion data 
are available. These rates will equal the number of abortions reported 
by the State to ACF for the applicable year, divided by total births

[[Page 10272]]

among women living in the State reported by NCHS for the same year. We 
will calculate the rates to three decimal places.
    (b) If ACF determines that the State's rate of abortions for the 
most recent year for which abortion data are available is less than the 
rate for 1995, and, if the State has met all the requirements listed 
elsewhere under this part, the State will receive the bonus.


Sec. 283.8  What will be the amount of the bonus?

    (a) If, for a bonus year, none of the eligible States is Guam, 
American Samoa or the Virgin Islands, then the amount of the grant 
shall be:
    (1) $20 million if there are five eligible States; or
    (2) $25 million if there are fewer than five eligible States.
    (b) If for a bonus year, Guam, the Virgin Islands, or American 
Samoa is an eligible State, then the amount of the grant shall be:
    (1) In the case of such a State, 25 percent of the mandatory 
ceiling amount as defined in section 1108 of the Act; and
    (2) In the case of any other State the amount of the grant shall be 
$100 million, minus the total amount of any bonuses paid to Guam, the 
Virgin Islands, and American Samoa, and divided by the number of 
eligible States other than such territories, not to exceed $25 million.


Sec. 283.9  What do eligible States need to know to access the bonus 
funds?

    (a) We will pay the bonus to the Executive Office of the Governor 
of the eligible State.
    (b)(1) States must use the bonus to carry out the purposes of the 
Temporary Assistance for Needy Families Block Grant in section 404 of 
the Social Security Act.
    (2) These funds are also subject to the limitations in, and 
requirements of, sections 404 and 408 of the Act.

[FR Doc. 98-5179 Filed 2-27-98; 8:45 am]
BILLING CODE 4184-01-P