[Federal Register Volume 64, Number 71 (Wednesday, April 14, 1999)]
[Rules and Regulations]
[Pages 18484-18495]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8866]



[[Page 18483]]

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Part II





Department of Health and Human Services





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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 Ratio; Final Rule

  Federal Register / Vol. 64, No. 71 / Wednesday, April 14, 1999 / 
Rules and Regulations  

[[Page 18484]]


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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 Ratio

AGENCY: Administration for Children and Families, HHS.

ACTION: Final rule

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SUMMARY: The Administration for Children and Families is issuing a 
final rule 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 
up to $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 welfare reform block 
grant program enacted in 1996--the Temporary Assistance for Needy 
Families, or TANF, program.

DATES: This regulation is effective June 14, 1999.

FOR FURTHER INFORMATION CONTACT: Kelleen Kaye, Senior Program Analyst, 
Office of the Assistant Secretary for Planning and Evaluation, at (202) 
401-6634; or Ken Maniha, Senior Program Analyst, Administration for 
Children and Families, at (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. The Bonus Award
    A. Legislative History
    B. Summary of the Bonus Award Process
III. Development of the Final Rule
    A. Consultations
    B. Regulatory Reform
    C. Notice of Proposed Rulemaking
    D. Section-by-Section Discussion of the Final Rule
    E. Response to Comments that Were Outside the Scope of this Final 
Rule
IV. Departmental Activities Related to Out-of-Wedlock Births
V. Regulatory Impact Analyses
    A. Executive Order 12866
    B. Regulatory Flexibility Analysis
    C. Paperwork Reduction Act
    D. Unfunded Mandates Reform Act of 1995
    E. Congressional Review

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 law (Pub.L. 104-193) 
established a comprehensive welfare reform program designed to change 
the nation's welfare system dramatically. The 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 repealed the prior welfare program known as Aid to Families 
with Dependent Children (AFDC), which provided cash assistance to needy 
families on an entitlement basis. It also repealed the related programs 
known as the Job Opportunities and Basic Skills Training program (JOBS) 
and Emergency Assistance (EA).
    The 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. 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.
    It 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 (see Legislative History below). 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. The Bonus Award

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 
described the need to address issues relating to marriage, the 
stability of families, and the promotion of responsible fatherhood and 
motherhood. The issues cited were: 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.
    Congressional concern is also reflected in the goals of the TANF 
program and the inclusion of a performance bonus entitled ``Bonus to 
Reward Decrease in Illegitimacy Ratio.'' 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 the bonus provision, 
Congress intended to provide greater impetus to State efforts in this 
area and encourage State creativity in developing effective solutions.

B. Summary of the Bonus Award Process

    This final rule implements section 403(a)(2) of the Social Security 
Act (the Act), ``Bonus to Reward Decrease in Illegitimacy Ratio.'' In 
this final rule, we use the term ``bonus'' to refer to the bonus in 
section 403(a)(2) of the Act. We use the term ``ratio'' to refer to the 
ratio of out-of-wedlock births to total births.
    As specified in section 403(a)(2) of the Act, we will award up to 
$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, Guam, the United States Virgin Islands, and American 
Samoa. While the criteria for determining bonus eligibility for Guam, 
the Virgin Islands, and American Samoa are the same as for the 
remaining States, their eligibility is determined separately and the 
determination of their bonus amount is different, as specified in the 
statute in sections 403(a)(2)(B)(ii) (Amount of Grant) and 
403(a)(2)(C)(i)(I) (definition of eligible State).
    Briefly, we will award the bonus as follows:
     We will 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 will use the vital statistics data compiled annually 
by the National Center for Health Statistics and based on records 
submitted by the States.
     For States other than Guam, the Virgin Islands, and 
American Samoa, we will identify the five States that had the largest 
proportionate decrease in

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their ratios between the most recent two-year period for which data are 
available and the prior two-year period. These States are potentially 
eligible.
     For Guam, the Virgin Islands, and American Samoa, we will 
identify which jurisdictions had a comparable decrease in their ratios 
(i.e., a decrease at least as large as the smallest decrease among the 
other qualifying States or a decrease that ranks among the top five 
decreases when all States and Territories are ranked together). These 
additional States will also be potentially eligible.
     We will notify the potentially eligible States that, to be 
considered for the bonus, they need to submit data and information on 
the number of abortions performed in their State for the most recent 
year and for 1995.
     We will determine which of the potentially eligible States 
also experienced a decrease in their rate of abortions (defined for the 
purposes of this bonus to be ratio of the abortions to live births) for 
the most recent calendar year compared to 1995, the base year specified 
in the Act. These States will receive a bonus award.

III. Development of the Final Rule

A. Consultations

    In the spirit of both regulatory reform and PRWORA, we implemented 
a broad consultation strategy prior to the drafting of all proposed 
regulations for the TANF program, including this bonus provision. We 
discussed major issues related to the proposed rulemaking with outside 
parties at several meetings. We spoke with a number of different 
audiences including representatives of State and local government, 
State TANF agencies, national advocacy organizations, and data 
collection experts. These consultations were helpful to us in 
identifying key issues and evaluating policy options.

B. Regulatory Reform

    In its latest Document Drafting Handbook, the Office of the Federal 
Register supports the efforts of the National Performance Review (now 
the National Partnership for Reinventing Government) to encourage 
Federal agencies to produce more reader-friendly regulations and 
regulations written in plain language. In drafting this final 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.
    In the spirit of facilitating understanding, we have included some 
of the preamble discussion from the NPRM as well as additional 
information related to the final rule to provide further explanation 
and context for the reader. This information is under the heading 
``Additional Information Related to This Section.'' We also have 
exercised some editorial discretion to make the discussion more 
succinct or clearer in places. However, where we made significant 
changes in the preamble material or the regulatory text, the preamble 
explains these changes.

C. Notice of Proposed Rulemaking

    On March 2, 1998, the Administration for Children and Families 
published a Notice of Proposed Rulemaking (NPRM) to implement section 
403(a)(2) of the Act. We provided a 60-day comment period which ended 
on May 1, 1998 (63 FR 10264).
    We offered those interested the opportunity to submit comments 
either by mail or electronically via our Web site. Several commenters 
took advantage of the electronic access, but we received most comments 
by mail.
    In addition, we held a briefing on the provisions of the NPRM for 
interested organizations and entities on March 12, 1998. The purpose of 
the briefing was to answer questions on the NPRM and provide clarifying 
information.
    We received 17 letters commenting on the NPRM from five States, one 
local government agency, one State legislator, one national 
organization representing State interests, seven national nonprofit 
research and advocacy organizations, and three individuals. (One letter 
was signed by two national organizations.)
    In general, the comments expressed qualified approval for our 
proposed approach to this highly technical statutory provision. Some 
commenters recognized that we were constrained by the statute in 
developing the NPRM, but, within those limitations, commended our 
approach for ``in some instances, minimizing the potential problems 
posed by the bonus.'' Other commenters supported specific aspects of 
the NPRM, such as:
     The proposed use of existing data (no new data collection 
requirements);
     Not ranking States based on their abortion data;
     Our stated preference for residence data on abortions 
while proposing to accept either occurrence or residence data;
     Recognizing the differences in the States' methods of 
collecting data on abortions and providing for State changes in State 
methodology; and
     Designing a process which would allow all States to 
compete for the bonus, if they so choose.
    Several commenters, however, expressed serious concern about 
possible unintended effects of the bonus and about the quality of the 
abortion data on which the bonus award would be based. They urged 
increased attention to and recommended that we place additional 
requirements on the collection of abortion data. They also urged 
greater Departmental involvement to prevent, for example, actions that 
might restrict access to abortion. Several commenters recommended 
specific steps the Department might take to help assure that the bonus 
award was not based on a State's legislation or policies to restrict 
abortion services. They also recommended ways in which the Department 
might use this bonus award process to evaluate out-of-wedlock and teen 
pregnancy prevention programs, improve the quality of the abortion 
data, and disseminate information on best practices.
    We appreciate the thoughtful and policy-focused comments we 
received and have seriously considered all concerns and 
recommendations. We have made several changes in the final rule based 
on the comments. We will discuss all comments below. Briefly, however, 
we have:
     Revised the definition of ``abortion'' to exclude 
spontaneous abortions;
     Specified that if a State changes its methodology for the 
collection of abortion data, it must describe the nature of the change 
and submit this explanatory information along with the number of 
abortions performed after adjusting for these changes;
     For changes in the collection of data on out-of-wedlock 
births implemented prior to 1998, reduced the period of time States 
have to submit this information from one year following publication of 
the final rule to 60 days following publication of the final rule;
     Clarified the time limit on the expenditure of the bonus 
award funds;
     Clarified the scope of the activities and services that 
may be funded using bonus award funds and the limitations on the use of 
these funds;
     Clarified that, for Puerto Rico, Guam, the Virgin Islands, 
and American Samoa, bonus award funds are not subject to the mandatory 
funding ceilings established in section 1108(c)(4) of the Act. (Section 
1108(c)(4) limits the total amount of TANF block grant funding for 
these jurisdictions.)
    We were not able to accept recommendations that were inconsistent 
with the statute or our regulatory authority. Examples of these 
recommendations included:
     That we design a process to ensure that five States (other 
than Guam, the

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Virgin Islands, and American Samoa) would receive bonus awards 
annually;
     That States that do not collect abortion data be allowed 
to submit abortion data based on a sub-state population such as 
Medicaid recipients;
     That we require States to submit information on the policy 
measures they followed to lower their out-of-wedlock births; and
     That, when determining eligibility, we discount changes in 
abortion that result from changes in availability of abortion services.
    These and other comments and recommendations will be discussed 
below.

D. Section-By-Section Discussion of the Final Rule

Section 283.1 What Does This Part Cover?
    This section of the NPRM provided a summary of the content of part 
283 covering 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.
    We received no specific comments on and have made no changes in 
this section.
Section 283.2 What Definitions Apply to This Part?
    This section of the NPRM proposed definitions of the terms used in 
part 283. Some of these definitions assigned a one-word term to 
represent a frequently used phrase. For example, ``bonus'' is defined 
to mean the Bonus to Reward Decrease in Illegitimacy Ratio authorized 
under section 403(a)(2) of the Act. Other definitions add clarity and 
precision to key technical terms. For example, we defined the ``most 
recent year for which abortion data are available'' as the year that is 
two calendar years prior to the current calendar year.
    We received several comments relating to definitions in this part. 
These comments referred to definitions for ``abortion,'' ``most recent 
period for which birth data are available,'' most recent year for which 
abortion data are available,'' and ``number of out-of-wedlock births.''
    Comment: One commenter recommended that we modify the definition of 
``abortion'' to make clear that spontaneous abortions, i.e., 
miscarriages, are not included in this definition.
    Response: We agree and have revised the definition accordingly.
    Comment: One commenter interpreted the definition of ``most recent 
two-year period for which birth data are available'' as variable across 
States. This commenter recommended that we measure potential State 
eligibility for the bonus based on identical time periods across 
States.
    Response: We agree that the determination of eligibility will be 
based on birth data for an identical time period across States. We have 
clarified the definition of ``most recent two-year period for which 
birth data are available'' to indicate that this will be the most 
recent period for which the National Center for Health Statistics 
(NCHS) has released final birth data by State. Final data released by 
NCHS covers the same year for all reporting States, as noted in the 
NPRM.
    Comment: One commenter objected to this same definition on 
different grounds. In the NPRM, we said in the preamble discussion to 
Sec. 283.4 that in bonus year 1999, we would likely compare births in 
calendar years 1996 and 1997 to births in years 1994 and 1995. The 
commenter believed that this would not provide a fair comparison among 
States, particularly those States that had implemented programs to 
reduce out-of-wedlock births since enactment of PRWORA. The commenter 
also believed that it did not make sense to compare years prior to 
enactment of the TANF program and suggested that we use more recent 
birth data that would reflect recent State efforts to reduce out-of-
wedlock births, delaying the bonus award if necessary.
    Response: We recognize the importance of basing the bonus on the 
most recent data available and incorporating data that reflect State 
efforts to reduce out-of-wedlock childbearing. The rule clearly states 
that eligibility will be based on the most recent data released by 
NCHS. In all but the first bonus year, eligibility will likely be based 
on data that reflect post-TANF outcomes. For example, in the first 
bonus year, FY 1999, we will base awards on a data period including 
1997; awards in FY 2000 will reflect data for 1998.
    However, after carefully considering this matter, we have 
determined that the Department must obligate the first-year bonus funds 
in fiscal year 1999, and therefore determination of eligibility in the 
first year cannot be delayed beyond fiscal year 1999.
    Comment: One commenter objected to the definition of ``most recent 
year for which abortion data are available.'' The NPRM defined this 
term as ``the year that is two calendar years prior to the current 
calendar year.'' We provided the example that in calendar year 1999, 
the most recent year for which abortion data are available would be 
calendar year 1997. The commenter recommended that we change the 
definition to read: ``the year that is no later than two calendar years 
prior to the current calendar year.'' The commenter believed that if 
more timely data were available, States should be allowed to use these 
data, particularly if the data would have a positive effect on the 
State's eligibility for the bonus, since the data would not affect 
another State's eligibility.
    Response: The definition stated in the NPRM bases eligibility on 
reasonably current abortion data gathered for a consistent time period. 
While States do not compete directly with respect to their abortion 
measures, it is important to define this period consistently. If each 
State were to use their most recent year of abortion data, eligibility 
could be affected not only by changes in the abortion rate but also by 
changes in the State's decision regarding when to release the next year 
of data, which is not the intent of the bonus provision. The final rule 
was not changed with respect to this comment.
    Comment: One commenter objected to the definition of ``number of 
out-of-wedlock births'' and ``number of total births'' because she 
interpreted the definitions to mean the number of births occurring in 
the State. The commenter recommended that the number of births be 
measured according to the state of residence rather than the state of 
occurrence.
    Response: We agree that the number of out-of-wedlock and total 
births will be measured according to state of residence rather than 
state of occurrence, and the definitions proposed in the NPRM for out-
of-wedlock and total births already reflect this. Therefore, no changes 
were needed in the final rule. We retained the two pertinent 
definitions proposed in the NPRM as follows:
    ``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 live births to 
residents of the State, as reported in NCHS vital statistics data.
Section 283.3 What Steps Will We Follow to Award the Bonus?
    This section of the NPRM described the process we proposed to 
follow for identifying which States would be eligible for the bonus and 
what the amount of the bonus would be. This process was based on the 
definition of ``eligible State'' in section 403(a)(2)(C)(i)(I). This 
definition

[[Page 18487]]

indicates that a State must have a qualifying decrease in its ratio 
(i.e., its ratio of live out-of-wedlock births to total births) and 
also experience a decrease in its abortion rate (i.e. its ratio of 
abortions to live births). We proposed to base the bonus award on birth 
and abortion data for the State population as a whole, not on data for 
TANF recipients or other sub-state populations.
    We received several comments in support of the general process for 
awarding the bonus. Commenters supported the two-year comparison period 
for State birth data. They also supported the use of NCHS data on 
births because it avoids duplicate State data collection and allows the 
bonus to be awarded based on statistics similar for all States. 
Commenters also supported the use of the proportionate ratio method in 
ranking States based on birth data because it allows States to compete 
on a more level playing field, regardless of population size or 
previous decreases in out-of-wedlock birth ratios.
    We also received several comments expressing concerns related to 
this section. These included comments regarding the determination of 
eligibility for Guam, American Samoa and the Virgin Islands, comments 
regarding the number of potentially eligible States, and comments that 
the final rule should include an appeals process for those who do not 
receive the bonus.
    Comment: One commenter questioned our preamble discussion on how 
the bonus for Guam, the Virgin Islands, and American Samoa would be 
computed and recommended that the process for making awards to these 
jurisdictions be the same as for other States.
    Response: We agree that, for these jurisdictions, the criteria for 
how bonus eligibility will be determined is the same as for other 
States, and we have clarified this in paragraph (a)(3). It is only the 
amount of the award that will be different.
    Comment: One commenter recommended that the Department design a 
process that would ensure that the maximum number of States (five other 
than Guam, American Samoa and the Virgin Islands) receive a bonus each 
year. They suggested informing more than just five States (e.g., 
between 7-10 States) that they were potentially eligible for the bonus 
based on their birth data. Among this larger group of potentially 
eligible States, even if some States were not eligible based on their 
abortion data, DHHS would still be able to identify five eligible 
States.
    Response: Section 403(a)(2)(C)(i)(I) of the Act clearly indicates 
that an eligible State must meet two criteria; it must be among the top 
five States with the largest decrease in the ratio of out-of-wedlock to 
total births and it must have a reduction in its abortion rate. A State 
that is not among the top five States would not meet the definition of 
eligibility stated in the Act, and the Act clearly provides for the 
possibility that fewer than five States will receive the bonus. We did 
not change the final rule with respect to this comment.
    Comment: Another comment that did not directly reference Sec. 283.3 
but is related most closely to this section, recommended that the final 
rule include an appeals process for those States that did not qualify 
for the bonus.
    Response: We recognize the importance of awarding the bonus fairly. 
To accomplish this, the final rule bases eligibility on widely accepted 
and standard measures of births and clearly describes the objective 
criteria we will follow in ranking and identifying those States with 
the largest decrease in the ratio of out-of-wedlock to total births. 
The final rule also clearly defines what abortion data the State must 
submit to be eligible for the bonus and assigns to the States the 
responsibility of collecting those data and calculating any necessary 
adjustment. Because eligibility is based on nondiscretionary, objective 
criteria and data that are largely submitted by the States, we do not 
believe an appeals process is appropriate.
    Therefore, the final rule does not provide for an appeals process 
and no changes to the final rule were made with respect to this 
comment. While section 410 of the Act does provide for an appeals 
process, this section applies only to adverse actions such as the 
imposition of penalties and does not apply to bonus awards.
    Finally, we have made editorial changes for clarity.
Additional Information Related to This Section
    This final rule places no mandates on States with respect to data 
collection. Competition for the bonus is entirely voluntary. Also, 
where possible, this final rule uses existing data sources or data that 
are the least burdensome to collect and report.
    When calculating decreases in the ratios of out-of-wedlock to total 
births, we will use the NCHS vital statistics data for total births and 
out-of-wedlock births, which are based on data submitted by the States. 
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.
    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 will allow us to measure 
the same years for all States and will give States a reasonable and 
standard time frame in which to submit the data. This is particularly 
important for birth data because we will rank States on their decreases 
in the ratio based on these data.
    We also determined that obtaining these data directly from NCHS 
rather than from the individual States will avoid a duplicate 
information collection activity and will be less burdensome for the 
States and for us. In most cases, States will 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 will 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 as well 
as information on any adjustment to these data.
    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). 
A State cannot qualify for the bonus unless it is among the top five 
with the largest decrease in the ratio of live out-of-wedlock to total 
births (or it is one of the previously mentioned territories and has a 
comparable decrease).
    Even if some potentially eligible States later become ineligible 
based on their abortion data, all States that were previously 
ineligible based on their birth data remain ineligible. Therefore, one 
State's abortion rate does not affect whether another State qualifies. 
Thus, while abortion data affects whether an individual State receives 
the bonus, competition among States for the bonus depends on the birth 
data.

[[Page 18488]]

Section 283.4 If a State Wants To Be Considered for Bonus Eligibility, 
What Birth Data Must It Submit?
    This section of the NPRM described in more detail what birth data a 
State must have submitted to NCHS for each year in the calculation 
period as a first step in qualifying for the bonus. This section also 
described what the State must do if it changed its methodology for 
collecting or reporting birth data, i.e., the method for determining 
marital status at the time of birth.
    Several commenters agreed with the proposed approach in this 
section. They were pleased that we proposed to rely on statistics 
already submitted by States. They also were pleased that we recognized 
that some States may have changed (or may plan to change) their 
methodology or classification procedures for collecting out-of-wedlock 
birth data and agreed with our proposed approach that would allow those 
States to be eligible to compete for the bonus. However, commenters 
also expressed several concerns.
    Comment: One commenter was concerned that the NPRM included no 
standards by which NCHS ``must fairly evaluate the adjustment methods 
used by a State which had changed its reporting methodology'' for birth 
data. They suggested that the final rule clarify these standards in 
order to assure fair and consistent review of the additional 
information submitted by a State.
    Response: We recognize the importance of fairly adjusting for 
changes in data collection. The NPRM proposed in Sec. 283.4(b) that if 
a State changed its data collection methodology regarding nonmarital 
births, it would have to submit additional detailed information 
regarding this change, in addition to submitting the number of out-of-
wedlock and total births. This information included an alternative 
calculation showing, to the greatest extent possible, what the number 
of out-of-wedlock births would have been under the prior methodology, 
documentation of the changes in data collection methodology, and how it 
determined the alternative number.
    In the preamble we stated that NCHS would then calculate an 
adjustment factor based on this information. NCHS has extensive 
expertise in working with the State vital statistics data and working 
with States regarding the collection of these data.
    Specifying in greater detail how NCHS will calculate the adjustment 
is not feasible until more specific information is available regarding 
the actual changes a State might make in data collection. However, NCHS 
will examine all information submitted with respect to this requirement 
to ensure that it is statistically valid.
    Comment: Two commenters believed that the final rule should require 
States seeking the bonus to submit information regarding the policies 
they undertook to reduce their out-of-wedlock births, and that we 
should evaluate these efforts and disseminate the findings. The 
commenters cited sections 413(a) (research) and 413(c) (dissemination) 
of the Act in support of this suggestion. They believed that without 
such information, the Federal government might award significant sums 
of money without learning sufficiently about effective practices to 
lower out-of-wedlock births. Another commenter expressed the importance 
of learning from best practices regarding reduction in unintended 
pregnancies and out-of-wedlock births, but did not recommend that such 
information be required as part of this final rule.
    Response: We recognize the importance of disseminating information 
on effective practices regarding efforts to reduce out-of-wedlock 
births and unintended pregnancies, and the Department has made it a 
priority to continue facilitating the collection, review, and 
dissemination of this information in the future. We will build on our 
existing efforts described in section IV of the preamble, 
``Departmental Activities Related to Out-of-Wedlock Births'' and 
explore further ways to disseminate information on State best practices 
and winning strategies. The final rule was not changed to reflect our 
research and dissemination efforts because they are beyond the scope of 
section 403(a)(2) of the Act, to which this final rule pertains.
    Also, the final rule does not require States to submit information 
on the policies they undertook to reduce out-of-wedlock births because 
such a requirement would be inconsistent with the eligibility 
requirements specified in section 403(a)(2) of the Act. The Act 
specifies that if a State is among the top five States with the largest 
decrease in its ratio of out-of-wedlock to total births and its 
abortion rate is lower than the rate in 1995, they are eligible for the 
bonus. This definition does not provide for making eligibility 
contingent on supplying information regarding policies aimed at 
reducing out-of-wedlock births.
    Sections 413(a) and 413(c) of the Act direct the Secretary to 
conduct research on ``the benefits, effects and costs of State programs 
funded under [TANF]'' and disseminate information. However, these 
sections do not give us the authority to require such information from 
States, or to make bonus eligibility contingent on this information. In 
addition, efforts initiated by States to reduce out-of-wedlock births 
may be, but are not necessarily, ``programs funded under TANF.''
    In addition, after reviewing the language of the NPRM, we have made 
two changes in paragraph Sec. 283.4(b) of the final rule. The first 
change gives States greater flexibility regarding the information they 
submit with respect to changes in methodology for collecting birth 
data. In paragraph (b)(2) of the NPRM, we proposed that, in a year when 
a State changed its methodology for collecting birth data, the State 
must generate an alternative number of out-of-wedlock births based on a 
consistent methodology for the year of the change and the previous 
year. In the final rule, States for which NCHS agrees it would be 
technically infeasible to produce the alternative number would have the 
option of accepting an NCHS estimate of the alternative number. We made 
this change based on our identification of several complexities 
regarding the changes in birth data collection that have occurred. This 
change reflects our efforts to be accommodating of technical 
difficulties that States might face, while maintaining an award process 
that is fair and methodologically sound. Because NCHS will evaluate all 
information submitted by States to ensure it is methodologically valid, 
we strongly encourage States to work with NCHS as they respond to this 
eligibility criterion. Paragraphs (b)(2) and (3) reflect this change.
    The second change affects when information must be submitted to 
NCHS on changes in a State's methodology for collecting birth data. 
Paragraph (b)(4) of the NPRM proposed that States must submit 
documentation on such changes made prior to 1998 and prior to the 
publication of the final rule within one year of publication of the 
final rule.
    In the final rule, we have reduced this time period to two months 
for changes pertaining to 1997 or earlier years. Information pertaining 
to changes in data for 1998 or later years will not be due until the 
end of calendar year 1999 or the deadline that normally applies to the 
State's submission of vital statistics data for that year, whichever is 
later. This changes reflects a balance between our need to base the 
1999 award on timely information and our efforts to allow States as 
much time as possible to submit the required information. This change 
is reflected in paragraph (b)(4).

[[Page 18489]]

Additional Information Related to This Section
    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 reporting 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 will 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. 
NCHS will 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 a State's birth data due to changed reporting methods. 
Examples of such changes in data collection include replacing an 
inferential procedure with a direct question on marital status, or 
changing the data items from which marital status is inferred.
    Accordingly, if a State implemented changes that affected its data 
on out-of-wedlock births for the calculation period, the State must 
provide additional information to NCHS as specified in Sec. 283.4. This 
additional information 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.
Section 283.5 How Will We Use These Birth Data to Determine Bonus 
Eligibility?
    This section of the NPRM explained how we would identify which 
States have the largest decrease in their ratios.
    The comments we received on this section expressed support for the 
use of the proportionate ratio calculation and recommended that we 
design a process to award bonus funds to the maximum number of States 
each year. These latter comments were addressed in a prior section of 
the preamble.
    We have made only editorial changes in the final rule for clarity.
Section 283.6 If a State Wants To Be Considered for Bonus Eligibility, 
What Data on Abortions Must It Submit?
    This section of the NPRM described the data that a potentially 
eligible 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 of out-of-wedlock to total births would 
need to submit abortion data in each year. Other States cannot be 
eligible and, therefore, do not need to submit abortion numbers.
    We received a number of comments in support of various provisions 
of this section. Various commenters supported:
     The proposal to review State abortion data only for those 
States with a decrease in out-of-wedlock births large enough to make 
them potentially eligible;
     The proposal that States will not be ranked according to 
their abortion data;
     The 60-day time period to report abortion data after a 
State is notified that it is potentially eligible;
     The approach in the NPRM which gave States flexibility to 
change their abortion data collection methodology over time and provide 
appropriately adjusted data to account for the change;
     The proposal that abortion data based on state of 
residence is preferred, but that States have flexibility to submit data 
based on either state of residence or state of occurrence; and
     The proposal that the responsibility for certifying the 
validity of abortion data lies with the Offices of the Governors and 
that ACF would not conduct further review or analysis of the data.
    We also received several comments recommending changes in this 
section of the final rule. These include recommendations that state of 
residence data be required, that abortion data should not be required 
to cover the entire State population, that States should be allowed to 
adjust 1995 abortion data, and that there should be more Federal 
oversight regarding abortion data.
    Comment: Several commenters questioned the provision that would 
allow States to submit data on either the total number of abortions 
performed within the State, or the total number of abortions performed 
within the State on in-state residents. Some commenters strongly 
recommended that the final rule require States to count only abortions 
to in-state residents. Other commenters recommended that the final rule 
should require States to count out-of-state abortions obtained by their 
residents as well. Some commenters believed that these changes were the 
only method to assure fairness, while other commenters believed these 
changes would reduce the unintended consequences that the bonus may 
have regarding the availability of abortion services.
    Response: We recognize the value of using abortion data based on 
state of residence and the final rule continues to emphasize this as 
the preferred measure. However, the final rule does not require data 
based on state of residence because numerous States did not have data 
based on state of residence for the base year of 1995 and, therefore, 
would have no opportunity to compete for the bonus. In addition, we 
also did not accept the recommendation that a potentially eligible 
State obtain data from other States on abortions obtained by its 
residents in other States. This is because the degree to which 
neighboring States will have information on state of residence for 
abortions will vary across States, and because we have no authority to 
require all States to report this information. The final rule was not 
changed with respect to these comments.
    Comment: One commenter urged that, for a State that does not have 
mandatory statewide reporting of abortion data and does not collect 
abortion statistics, the final rule permit such a State to report less 
than total population data, e.g., abortion data on the title XIX 
(Medicaid) population.
    Response: Section 403(a)(2) of the Act clearly indicates that 
eligibility shall be based on the number of abortions performed in the 
State and does not provide for a measure based on other more narrowly 
defined populations. We did not change the final rule with respect to 
this comment.
    Comment: One commenter observed that NCHS, through its Vital 
Statistics Cooperative Program, previously supported abortion data 
collection by grants to 14 States, and that the funding support was 
discontinued in the commenter's State during 1994. The commenter 
observed that this cessation in funding caused a reduction in effort to 
collect 1995 abortion data, and the 1995 abortion rate is a low point 
for that State. This has implications for that State in terms of the 
bonus, as 1995 is the base year for comparison purposes.
    Response: We recognize that this Federal funding for collection of 
abortion data in 14 States was eliminated in 1995. To the extent that 
this elimination of funding led to

[[Page 18490]]

differences in data collection or reporting between 1995 and subsequent 
years in the bonus period, the final rule allows States to adjust their 
number of abortions to account for these differences. No change in the 
final rule was necessary in response to this comment.
    Comment: Several commenters recommended more specific Federal 
requirements with respect to the submission of abortion data for the 
bonus and any adjustments to that data. (The Act states that States 
must adjust their abortion data if the data reporting methodology 
changed between 1995 and the evaluation year.) These commenters made 
the following recommendations:
     That the final rule provide guidelines for how a State 
should calculate the adjustment;
     That we make clear that States should adjust for changes 
in reporting among providers (e.g. changes in the proportion or makeup 
of providers reporting);
     That the final rule require States to report any 
legislative or policy changes in the State that could impact the 
collection or reporting of abortion data; and
     That we review the abortion data and information provided 
by States regarding changes in data collection.
    Response: We agree that we should be more specific regarding 
adjustments for changes in abortion data collection and should require 
additional information from those States that adjust their abortion 
data. We have revised paragraph (d) of the final rule to reflect this.
    We have stated more specifically in paragraph (d) what changes in 
data collection or reporting entails, including such things as changes 
in the response rate of providers in reporting abortion data. We have 
also stated that to qualify for the bonus, States must indicate whether 
or not they have adjusted their abortion data and, if so, give the 
rationale for the adjustment (e.g. describe how legislative, policy or 
procedural changes impacted data collection and necessitated the 
adjustment).
    The final rule does not give more specific requirements regarding 
how States should adjust for changes in data collection because it is 
not feasible at this time to anticipate what these changes might be and 
how to best adjust for them. In the final rule, the States remain 
responsible for calculating any adjustment and certifying as to the 
correctness of the abortion data submitted.
    Comment: Another commenter suggested that when submitting data on 
the number of abortions for the most recent year, the State should 
demonstrate that any decreases were not the result of restrictions in 
access to abortion services. The commenter expressed strong concern 
that without such an adjustment, the bonus provision could encourage 
States to restrict access to abortion services, given that States must 
have an abortion rate lower than their 1995 rate in order to qualify 
for the bonus.
    Response: Section 403(a)(2)(C)(i)(I) of the Act specifies that if a 
State is among the top five States with the largest decrease in its 
ratio of out-of-wedlock to total births and its abortion rate (i.e., 
ratio of abortions to live births) is lower than the rate in 1995, it 
is eligible for the bonus. This definition does not provide for making 
eligibility contingent on access to abortion services. Therefore, we 
have not changed the final rule with respect to this comment.
    Finally, we have deleted the phrase ``by the end of calendar year 
1997'' in paragraph (c) as no longer applicable, and made other 
editorial changes for clarity in paragraph (d).
Additional Information Related to This Section
    The information the State must submit for 1995 and the most recent 
year is either the number of all abortions (i.e., both medically and 
surgically induced abortions) performed within the State, or the number 
of all abortions performed within the State on in-state residents. We 
will 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, 
prior to publication of the NPRM, 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 
have been 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. We have retained this policy 
position in the final rule.
    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 abortions performed in the State in 1995, it also must submit 
data on abortions performed in the State in 1999.
    Most States have reporting systems in place for abortion data and 
these are the preferred data to use for purposes of this bonus. 
However, States have the flexibility to choose the source of the 
abortion data they submit, allowing States that do not already have 
their own reporting system in place to compete for the bonus using data 
from other sources. Regardless of the data source, the data must cover 
the entire State population, and not be limited to other more narrowly 
defined populations such as Medicaid recipients.
    The State also has some flexibility to change its abortion 
reporting over time. However, the State must adjust for effects of 
these changes. This flexibility allows States to improve their abortion 
reporting systems without making them ineligible for the bonus. 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.
    The NPRM did 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, we 
understand that some State privacy laws restrict the types of abortion 
provider information that can be reported. Some of the more specific 
reporting requirements we considered as a way of ensuring a more 
uniform methodology appeared to conflict with these State 
confidentiality laws.
    Our aim in this section of the final rule 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 rule provides States 
with important flexibility that would

[[Page 18491]]

make it technically feasible for States to submit the necessary data if 
they choose to compete for the bonus. We believe that this flexibility 
better incorporates 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 
concerns 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.
    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.
Section 283.7 How Will We Use These Data on Abortions To Determine 
Bonus Eligibility?
    This section of the NPRM described how we would use the abortion 
data to identify which States are eligible for the bonus.
    Comment: We received one comment specifically on this section. Two 
organizations recommended an alternative ratio for computing the 
abortion ratio. The NPRM proposed to calculate the rate of abortions 
for 1995 and for the most recent year for which abortion data are 
available. The rate would be equal to the number of abortions divided 
by the total number of live births in the State. The commenters 
believed that this ratio might encourage States to manipulate birth 
rates. They recommended that the ratio be based on abortions per 1,000 
women ages 15 to 44. They stated that this is a standard measure, 
consistent with the statute, and would more directly reflect the number 
of abortions and would not unnecessarily incorporate birthrate data 
into the calculation.
    Response: We recognize the importance of using standard measures to 
calculate changes in abortion rates, and in developing the NPRM, we 
considered using the number of abortions per 1,000 women ages 15 to 44. 
However, the number of women ages 15 to 44 in each State is difficult 
to measure precisely between census years. Typically, these measures 
come from intercensal population estimates. The degree of error in 
these data varies from year to year and from State to State, and the 
estimates decline in reliability as the interval since the last census 
increases. This makes it difficult to separate actual changes in the 
abortion rate from year to year changes in estimation error. The number 
of births occurring to residents of the State is highly reliable 
because it is based on a complete count of all births in the State. In 
contrast, data on the number of women in the State are based on 
intercensal population estimates. We made no changes to the final rule 
with respect to this comment.
Additional Information Related to This Section
    We will 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 
live 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 of live out-of-wedlock births to total births.
Section 283.8 What Will be the Amount of the Bonus?
    This section of the NPRM explained 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, the Virgin Islands, and American Samoa, 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 $100 million (the total annual amount available for the 
bonus awards), and the remainder would be divided among the other 
qualifying States up to a maximum award of $25 million per State. If 
Guam, the Virgin Islands, and American Samoa are 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.
    Consider the hypothetical example where American Samoa and four 
States other than American Samoa, Guam and the Virgin Islands qualify 
for the bonus. In this case, American Samoa would receive $250,000 (25 
percent of their mandatory ceiling amount of $1,000,000) and the 
remaining eligible States would each receive $24,937,500 ($100,000,000 
minus $250,000 all divided by four). If American Samoa and two States 
other than Guam, American Samoa and the Virgin Islands qualified for 
the bonus, American Samoa would receive $250,000 and the remaining 
States would receive $25 million, which is the maximum amount that any 
State can receive.
    We received no comments on and have made no changes in this section 
of the final rule.
Section 283.9 What Do Eligible States Need To Know To Access and Use 
the Bonus Funds?
    This section of the NPRM specified additional information on how we 
would pay the bonus and how States may use bonus award funds. In the 
NPRM, we proposed to pay the award to the Executive Office of the 
Governor. We also specified that States must use bonus funds to carry 
out the purposes of the TANF program and that bonus award funds are 
subject to the limitations in, and the requirements of, sections 404 
and 408 of the Act.
    We made one change in this section after further internal ACF 
discussion and made other changes in response to comments. In the final 
rule, we deleted the proposed provision to pay the bonus to the 
Executive Office of the Governor. We continue to 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 to reduce out-of-wedlock 
childbearing for the State population as a whole. Therefore, we will 
award the bonus to the Governor of the winning State(s) and other 
jurisdiction(s), but, for uniform fiscal reporting and accounting 
purposes, we will issue the bonus award grant funds to the TANF agency.
    Comment: Several commenters asked for a clarification of and more 
information on how bonus funds may be used and what limitations apply 
to the use of these funds. One commenter suggested that the final rule 
direct States to use bonus funds only on specific programs, i.e., 
public family planning education and contraception services, child 
health and child day care, and job training for women. Other commenters 
questioned why the prohibitions and limitations in sections 404 and 408 
of the Act applied to bonus award funds given that the funds related to 
the State's entire population, not just the TANF population.
    Response: We agree that clarification is needed regarding the 
provisions of this section. First, in the context of the flexibility 
provided to States under the TANF block grant program, we decline to 
specify how States must use these bonus award funds. We want to make 
clear that the State has the same flexibility on the use of these funds 
that it has in the use of the TANF block grant funds. We have added an 
example in paragraph (a) of the final rule to clarify that States may 
use bonus award funds

[[Page 18492]]

for statewide programs to prevent and reduce the incidence of out-of-
wedlock pregnancies, a purpose of the TANF program in section 401 of 
the Act.
    Second, the prohibitions and limitations in sections 404 and 408 
are statutory requirements. Grants made to a State under section 403 of 
the Act--whether TANF block grant funds, bonus award funds, or Welfare-
to-Work grants--are subject to these conditions, as applicable. Section 
404(a)(1) of the Act provides that the State may use grants made under 
section 403 (including the bonus award) ``. . . in any manner that is 
reasonably calculated to accomplish the purpose of this part . . .'' 
The purposes of this part (i.e., title IV, Part A, of the Act) are 
found in section 401 of the Act. The funds may also be used ``. . . in 
any manner that the State was authorized to use the funds . . . under 
prior programs'' (i.e., title IV-A and title IV-F of the Act).
    However, sections 404 (b) through (j) and section 408 of the Act 
specify a number of limitations on the use of TANF funds. For example, 
if a State uses bonus funds to provide assistance, the prohibitions 
against providing assistance to certain individuals in section 408 of 
the Act will apply. If a State uses bonus funds for activities that are 
not defined as assistance, then these prohibitions are not applicable.
    Finally, some of the general requirements in sections 404 and 408 
of the Act will apply regardless of how the State chooses to use these 
funds. For example, the 15 percent limitation on the use of TANF grant 
funds for administrative purposes (section 404(b)) means that any bonus 
award funds will be added to the State's total TANF grant funds and the 
administrative cost percentage will be computed based on the total.
    Comment: We received several comments asking us to clarify the 
expenditure period for bonus award funds. One commenter suggested that 
the State be allowed three years to expend these funds.
    Response: Because there is no expenditure period for TANF funds, 
and because bonus award funds are a part of the total TANF funds 
awarded to States under section 403 of the Act, there is no expenditure 
period for bonus award funds. In using bonus award funds, States must 
report on the use of these funds as they do other TANF funds.
    Comment: One commenter recommended that we state explicitly in the 
rule that bonus award funds to Puerto Rico, Guam, the Virgin Islands, 
and American Samoa are not subject to the mandatory funding ceilings 
for these jurisdictions in section 1108(c)(4) of the Act.
    Response: We agree and have added a new paragraph (c) to this 
section to specify this information. It is important to clarify this 
provision because section 1108(c)(4) sets a statutory limit on the TANF 
funds these jurisdictions may receive. We provide explicitly that any 
bonus funds received by Puerto Rico, the Virgin Islands, Guam or 
American Samoa will not be counted toward this limitation.

E. Response to Comments That Were Beyond the Scope of the Final Rule

    Several comments we received were outside the scope of this 
rulemaking. These include comments expressing concern that a 
competitive bonus is not the appropriate way to try to reduce out-of-
wedlock childbearing, that efforts to reduce out-of-wedlock births 
should not place the burden solely on women, and that policies 
addressing single parent families should not place unreasonable burdens 
on men. Because these comments focused on general criticisms of the 
statutory language or criticisms of other policies (which cannot be 
addressed within this final rule), we made no changes to the final rule 
with respect to these comments.

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

    The Department has various activities underway related to reducing 
out-of-wedlock births. Given public comments on the Department's role 
in providing information on this important topic, we summarize some of 
these activities below, and have made materials regarding these efforts 
available to the public.
    In 1995, the Department produced the Report to Congress on Out-of-
Wedlock Childbearing, and Beginning too Soon: Adolescent Sexual 
Behavior, Pregnancy and Parenthood, both reports that contained 
valuable information regarding the occurrence of out-of-wedlock and 
teen pregnancy as well as strategies for addressing these concerns. 
Since then, the Department has undertaken many additional initiatives 
to support programs and research focused on reducing out-of-wedlock 
childbearing.
    In 1997, the Department developed the National Strategy to Prevent 
Teen Pregnancy, as required in section 905 of PRWORA. The Department 
has recently released its first annual report to Congress, citing, 
among other things, that HHS has funded teen pregnancy prevention 
programs in at least 31 percent of communities across the country. The 
report also lists more than twenty departmental programs aimed at 
educating teens and preventing pregnancy, including Girl Neighborhood 
Power! and demonstration grants to communities in 11 States funded 
through The Center for Disease Control and Prevention Community 
Coalition Partnership Programs.
    To help disseminate information on efforts to reduce teen 
pregnancy, the Department is currently working with the National 
Campaign to Prevent Teen Pregnancy to develop a ``Tool Kit'' that will 
provide States and communities with practical advice on how to 
implement a wide range of teen pregnancy prevention initiatives. The 
Department will be disseminating additional information to communities 
regarding programs that specifically target boys and young men.
    HHS 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 (although New Hampshire has now declined their funding for FY 
1998). As mandated in the Balanced Budget Act of 1997, the Department 
is conducting an evaluation of these programs, and will include five 
sites involving random assignment and one involving a rigorous 
evaluation of comprehensive community approaches.
    The Office of the Assistant Secretary for Planning and Evaluation 
also is providing additional funding to three existing rigorous teen 
pregnancy prevention evaluations. These three programs each have a 
unique approach, including differing levels of pregnancy prevention 
services, a statewide program targeted at siblings of adolescent 
mothers, and a statewide teen pregnancy prevention program that allows 
each local community to develop its own intervention.
    The Department also is actively supporting expanding pregnancy 
prevention efforts to include a focus on boys and young men. Through 
the HHS Regional Offices $2 million in small grants have been awarded 
to Title X Family Planning Clinics to develop pilot programs designed 
to prevent premature fatherhood. These projects employ male high school 
students as interns to provide them with on-the-job training in clinic 
operations and allied health occupations and provide education about 
male responsibility, family planning and reproductive health.
    In addition to these programmatic initiatives, the Department has 
supported numerous research and

[[Page 18493]]

evaluation projects. The National Study of Adolescent Health, the 
National Survey of Family Growth, and the National Survey of Adolescent 
Males have all provided important insight into adolescent risk 
behaviors including sexual activity and response to pregnancy.

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 
rule is consistent with these priorities and principles. This 
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.
    To a considerable degree, this final rule reflects the comments we 
received in response to the NPRM. We appreciate and have seriously 
considered all of the detailed and thoughtful comments we received.

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 only for up to eight States, i.e., 
five States and three Territories. This 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 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 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.

E. Congressional Review

    This final rule is not a major rule as defined in 5 U.S.C., Chapter 
8.

List of Subjects in 45 CFR Part 283

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

(Catalogue of Federal Domestic Assistance Programs: 17.253 
Employment and Training Assistance--Welfare-to-Work Grants to States 
and Local Entities for Hard-to-Employ Welfare Recipient Programs; 
93.558 TANF Programs-State Family Assistance Grants, Assistance 
Grants to Territories, Matching Grants to Territories, Supplemental 
Grants for Population Increases and Contingency Fund; 93.559-Loan 
Fund; and 93.595-Welfare Reform Research, Evaluations and National 
Studies)

    Dated: December 24, 1998.
Olivia A. Golden,
Assistant Secretary for Children and Families.
    Approved: January 11, 1999.
Donna E. Shalala,
Secretary, Department of Health and Human Services.

    For the reasons set forth in the preamble, we are amending 45 CFR 
chapter II by adding Part 283 to read as follows:

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

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 and use 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 Ratio,'' 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. This term does 
not include spontaneous abortions, i.e., miscarriages.
    Act means the Social Security Act.
    Bonus refers to the Bonus to Reward Decrease in Illegitimacy Ratio, 
as set forth in section 403(a)(2) of the 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 released 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, of 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 live 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

[[Page 18494]]

most recent year for which abortion data are available divided by the 
State's total number of resident live 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 live out-of-wedlock births to total 
live 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).
    We (and any other first person plural pronouns) means the Secretary 
of Health and Human Services or any of the following individuals or 
organizations acting in an official capacity on the Secretary's 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.


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) Based on the vital statistics data provided by NCHS as 
described in Sec. 283.4, calculate the ratios for the most recent two 
years for which final birth data are available, and for the prior two 
years, as described in Sec. 283.5;
    (2) Calculate the proportionate change between these two ratios, as 
described in Sec. 283.5.
    (3) Identify as potentially eligible a maximum of eight States, 
i.e., Guam, the Virgin Islands, and American Samoa, and five other 
States, that have qualifying decreases in their ratios, using the 
methodology described in Sec. 283.5;
    (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; and
    (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 the final vital 
statistics data files for all births occurring in the State. These 
files must show, among other elements, the total number of live births 
and the total number of out-of-wedlock live 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; and
    (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 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 either:
    (i) Replicated as closely as possible a consistent method for 
determining marital status at the time of birth, and the State has 
reported to NCHS the resulting alternative number of out-of-wedlock 
births; or
    (ii) If NCHS agrees that such replication is not methodologically 
feasible, the State may chose to accept an NCHS estimate of what the 
alternative number would be;
    (3) The State has submitted documentation to NCHS on what changes 
occurred in the determination of marital status for those years and, if 
appropriate, how it determined the alternative number of out-of-wedlock 
births for the State; and
    (4) For methodological changes that were implemented prior to 1998 
and applicable to data collected for the bonus period, the State has 
submitted the information described in paragraphs (b)(1), (2) and (3) 
of this section within two months after April 14, 1999. For such 
changes implemented during or after 1998, the State must submit such 
information either by the end of calendar year 1999 or according to the 
same deadline that applies to its vital statistics data for that year, 
whichever is later.


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

    (a) We will base eligibility determinations on final vital 
statistics data provided by NCHS showing the number of out-of-wedlock 
live births and the number of total live births among women living in 
each State and a factor provided by NCHS to adjust for changes in data 
reporting for those States that have changed their methodology for 
collecting data on out-of-wedlock births during the bonus period.
    (b) We will use the number of total live births and the number of 
out-of-wedlock births, adjusted for any changes in data collection or 
reporting, to calculate the decrease in the ratio of out-of-wedlock to 
total births 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 to 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

[[Page 18495]]

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 that is either at least as large as the smallest 
qualifying decrease identified in paragraph (c)(1) of this section, or 
a decrease that ranks within the top five decreases when all States and 
Territories are ranked together. 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 abortions 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 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 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 within 60 days of publication of the final rule and must 
include with their submission of 1995 data an official record 
documenting when they obtained the abortion data.
    (c) Within two months of notification by ACF of potential 
eligibility, the State must submit:
    (1) The number of abortions performed for the most recent year for 
which abortion data are available (as defined in Sec. 283.2 to mean the 
year that is two calendar years prior to the current calendar year). In 
measuring the number of abortions, the State must use the same 
definition, either under paragraph (a)(1) or paragraph (a)(2) of this 
section, for both 1995 and the most recent year; or
    (2) If applicable, the adjusted number and information specified in 
paragraph (d) of this section.
    (d) If the State's data collection or reporting methodology changed 
between 1995 and the bonus year in such a way as to reflect an increase 
or decrease in the number of abortions that is different than what 
actually occurred during the period, the State must:
    (1) When submitting the number of abortions for the most recent 
year under paragraph (c)(2), adjust the number to exclude increases or 
decreases in the number due to changes in methodology for collecting or 
reporting the data. For example, this calculation should include 
adjustments for increases or decreases in response rates for providers 
in reporting abortion data;
    (2) Provide a rationale for the adjustment, i.e., a description of 
how the data collection or reporting methodology was changed. This 
could include a description of how legislative, policy or procedural 
changes affected the collection or reporting of abortion data, or an 
indication of changes in the response rate of providers in reporting 
abortion data; and
    (3) Provide a certification by the Governor, or his or her 
designee, that the number of abortions reported to ACF accurately 
reflects these adjustments for changes in data collection or reporting 
methodology.


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 as defined in Sec. 283.2. These rates will equal the 
number of abortions reported by the State to ACF for the applicable 
year, divided by total live births 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 per State if there are five eligible States; or
    (2) $25 million per State 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, $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 Guam, 
American Samoa and the Virgin Islands, not to exceed $25 million per 
State.


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

    (a) States must use the bonus funds to carry out the purposes of 
the Temporary Assistance for Needy Families Block Grant in section 401 
and 404 of the Act. This may include statewide programs to prevent and 
reduce the incidence of out-of-wedlock pregnancies.
    (b) As applicable, these funds are subject to the requirements in, 
and the limitations of, sections 404 and 408 of the Act.
    (c) For Puerto Rico, Guam, the Virgin Islands, and American Samoa, 
the bonus award funds are not subject to the mandatory ceilings on 
funding established in section 1108(c)(4) of the Act.

[FR Doc. 99-8866 Filed 4-13-99; 8:45 am]
BILLING CODE 4184-01-P