Welfare Reform Bill: HR 3734, Final Passage

 
H.R. 3734  by KASICH (R-OH) -- Personal Responsibility, Work
          Opportunity and Medicaid Restructuring Act of 1996


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LEGI-SLATE Report for the 104th Congress     Fri, August 9, 1996  12:44pm (EDT)
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BILL TEXT Report for H.R.3734
    As finally approved by the House and Senate (Enrolled)


 

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        H.R.3734 As finally approved by the House and Senate (Enrolled)        
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                          SENATE VOTE ON H.R. 3734

Abraham, Ashcroft, Baucus, Bennett, Biden, Bond, Breaux, Brown, Bryan, Burns,
Byrd, Campbell, Chafee, Coats, Cochran, Cohen, Conrad, Coverdell, Craig,
D'Amato, DeWine, Domenici, Dorgan, Exon, Faircloth, Feingold, Ford, Frahm,
Frist, Gorton, Graham, Gramm, Grams, Grassley, Gregg, Harkin, Hatch,
Hatfield, Heflin, Helms, Hollings, Hutchison, Inhofe, Jeffords, Johnston,
Kassebaum, Kempthorne, Kerry, Kohl, Kyl, Levin, Lieberman, Lott, Lugar, Mack,

McCain, McConnell, Mikulski, Murkowski, Nickles, Nunn, Pressler, Reid, Robb,
Rockefeller, Roth, Santorum, Shelby, Simpson, Smith, Snowe, Specter, Stevens,

Thomas, Thompson, Thurmond, Warner, Wyden

                                NAYS--21

Akaka, Bingaman, Boxer, Bradley, Bumpers, Daschle, Dodd, Feinstein, Glenn,
Inouye, Kennedy, Kerrey, Lautenberg, Leahy, Moseley-Braun, Moynihan, Murray,
Pell, Sarbanes, Simon, Wellstone, 

                              NOT VOTING--1
Pryor



                                   H. R. 3734
                           One Hundred Fourth Congress
 
                                     of the
 
                            United States of America
                         A T T H E SECOND S E S S I O N
     Begun and held at the City of Washington on Wednesday, the third day of
                January, one thousand nine hundred and ninety-six

                                      An Act
      To provide for reconciliation pursuant to section 201(a)(1) of the
  concurrent resolution on the budget for fiscal year 1997.

                          ==============================
 
 
      Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,


  SECTION 1. SHORT TITLE.
 
      This Act may be cited as the "Personal Responsibility and Work
  Opportunity Reconciliation Act of 1996".


  SEC. 2. TABLE OF CONTENTS.
 
      The table of contents for this Act is as follows:
 
 
        TITLE I--BLOCK GRANTS FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES
 
  Sec. 101. Findings.
 
  Sec. 102. Reference to Social Security Act.
 
  Sec. 103. Block grants to States.
 
  Sec. 104. Services provided by charitable, religious, or private
                  organizations.
 
  Sec. 105. Census data on grandparents as primary caregivers for their
                  grandchildren.
 
  Sec. 106. Report on data processing.
 
  Sec. 107. Study on alternative outcomes measures.
 
  Sec. 108. Conforming amendments to the Social Security Act.
 
  Sec. 109. Conforming amendments to the Food Stamp Act of 1977 and related
                  provisions.
 
  Sec. 110. Conforming amendments to other laws.
 
  Sec. 111. Development of prototype of counterfeit-resistant Social Security
                  card required.
 
  Sec. 112. Modifications to the job opportunities for certain low-income
                  individuals program.
 
  Sec. 113. Secretarial submission of legislative proposal for technical and
                  conforming amendments.
 
  Sec. 114. Assuring medicaid coverage for low-income families.
 
  Sec. 115. Denial of assistance and benefits for certain drug-related
                  convictions.
 
  Sec. 116. Effective date; transition rule.
 
 
                     TITLE II--SUPPLEMENTAL SECURITY INCOME
 
  Sec. 200. Reference to Social Security Act.
 
 
                      Subtitle A--Eligibility Restrictions
 
  Sec. 201. Denial of SSI benefits for 10 years to individuals found to have
                  fraudulently misrepresented residence in order to obtain
                  benefits simultaneously in 2 or more States.
 
  Sec. 202. Denial of SSI benefits for fugitive felons and probation and parole
                  violators.
 
  Sec. 203. Treatment of prisoners.
 
  Sec. 204. Effective date of application for benefits.
 
 
                   Subtitle B--Benefits for Disabled Children
 
  Sec. 211. Definition and eligibility rules.
 
  Sec. 212. Eligibility redeterminations and continuing disability reviews.
 
  Sec. 213. Additional accountability requirements.
 
  Sec. 214. Reduction in cash benefits payable to institutionalized individuals
                  whose medical costs are covered by private insurance.
 
  Sec. 215. Regulations.
 
 
                  Subtitle C--Additional Enforcement Provision
 
  Sec. 221. Installment payment of large past-due supplemental security income
                  benefits.
 
  Sec. 222. Regulations.
 
 
       Subtitle D--Studies Regarding Supplemental Security Income Program
 
  Sec. 231. Annual report on the supplemental security income program.
 
  Sec. 232. Study by General Accounting Office.
 
 
                            TITLE III--CHILD SUPPORT
 
  Sec. 300. Reference to Social Security Act.
 
 
         Subtitle A--Eligibility for Services; Distribution of Payments
 
  Sec. 301. State obligation to provide child support enforcement services.
 
  Sec. 302. Distribution of child support collections.
 
  Sec. 303. Privacy safeguards.
 
  Sec. 304. Rights to notification of hearings.
 
 
                      Subtitle B--Locate and Case Tracking
 
  Sec. 311. State case registry.
 
  Sec. 312. Collection and disbursement of support payments.
 
  Sec. 313. State directory of new hires.
 
  Sec. 314. Amendments concerning income withholding.
 
  Sec. 315. Locator information from interstate networks.
 
  Sec. 316. Expansion of the Federal Parent Locator Service.
 
  Sec. 317. Collection and use of Social Security numbers for use in child
                  support enforcement.
 
 
              Subtitle C--Streamlining and Uniformity of Procedures
 
  Sec. 321. Adoption of uniform State laws.
 
  Sec. 322. Improvements to full faith and credit for child support orders.
 
  Sec. 323. Administrative enforcement in interstate cases.
 
  Sec. 324. Use of forms in interstate enforcement.
 
  Sec. 325. State laws providing expedited procedures.
 
 
                       Subtitle D--Paternity Establishment
 
  Sec. 331. State laws concerning paternity establishment.
 
  Sec. 332. Outreach for voluntary paternity establishment.
 
  Sec. 333. Cooperation by applicants for and recipients of part A assistance.
 
 
                 Subtitle E--Program Administration and Funding
 
  Sec. 341. Performance-based incentives and penalties.
 
  Sec. 342. Federal and State reviews and audits.
 
  Sec. 343. Required reporting procedures.
 
  Sec. 344. Automated data processing requirements.
 
  Sec. 345. Technical assistance.
 
  Sec. 346. Reports and data collection by the Secretary.
 
 
          Subtitle F--Establishment and Modification of Support Orders
 
  Sec. 351. Simplified process for review and adjustment of child support
                  orders.
 
  Sec. 352. Furnishing consumer reports for certain purposes relating to child
                  support.
 
  Sec. 353. Nonliability for financial institutions providing financial records
                  to State child support enforcement agencies in child support
                  cases.
 
 
                    Subtitle G--Enforcement of Support Orders
 
  Sec. 361. Internal Revenue Service collection of arrearages.
 
  Sec. 362. Authority to collect support from Federal employees.
 
  Sec. 363. Enforcement of child support obligations of members of the Armed
                  Forces.
 
  Sec. 364. Voiding of fraudulent transfers.
 
  Sec. 365. Work requirement for persons owing past-due child support.
 
  Sec. 366. Definition of support order.
 
  Sec. 367. Reporting arrearages to credit bureaus.
 
  Sec. 368. Liens.
 
  Sec. 369. State law authorizing suspension of licenses.
 
  Sec. 370. Denial of passports for nonpayment of child support.
 
  Sec. 371. International support enforcement.
 
  Sec. 372. Financial institution data matches.
 
  Sec. 373. Enforcement of orders against paternal or maternal grandparents in
                  cases of minor parents.
 
  Sec. 374. Nondischargeability in bankruptcy of certain debts for the support
                  of a child.
 
  Sec. 375. Child support enforcement for Indian tribes.
 
 
                           Subtitle H--Medical Support
 
  Sec. 381. Correction to ERISA definition of medical child support order.
 
  Sec. 382. Enforcement of orders for health care coverage.
 
 
    Subtitle I--Enhancing Responsibility and Opportunity for Non-Residential
                                     Parents
 
  Sec. 391. Grants to States for access and visitation programs.
 
 
              Subtitle J--Effective Dates and Conforming Amendments
 
  Sec. 395. Effective dates and conforming amendments.
 
 
          TITLE IV--RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS
 
  Sec. 400. Statements of national policy concerning welfare and immigration.
 
 
                  Subtitle A--Eligibility for Federal Benefits
 
  Sec. 401. Aliens who are not qualified aliens ineligible for Federal public
                  benefits.
 
  Sec. 402. Limited eligibility of qualified aliens for certain Federal
                  programs.
 
  Sec. 403. Five-year limited eligibility of qualified aliens for Federal
                  means-tested public benefit.
 
  Sec. 404. Notification and information reporting.
 
 
      Subtitle B--Eligibility for State and Local Public Benefits Programs
 
  Sec. 411. Aliens who are not qualified aliens or nonimmigrants ineligible for
                  State and local public benefits.
 
  Sec. 412. State authority to limit eligibility of qualified aliens for State
                  public benefits.
 
 
           Subtitle C--Attribution of Income and Affidavits of Support
 
  Sec. 421. Federal attribution of sponsor's income and resources to alien.
 
  Sec. 422. Authority for States to provide for attribution of sponsors income
                  and resources to the alien with respect to State programs.
 
  Sec. 423. Requirements for sponsor's affidavit of support.
 
 
                         Subtitle D--General Provisions
 
  Sec. 431. Definitions.
 
  Sec. 432. Verification of eligibility for Federal public benefits.
 
  Sec. 433. Statutory construction.
 
  Sec. 434. Communication between State and local government agencies and the
                  Immigration and Naturalization Service.
 
  Sec. 435. Qualifying quarters.
 
 
         Subtitle E--Conforming Amendments Relating to Assisted Housing
 
  Sec. 441. Conforming amendments relating to assisted housing.
 
 
       Subtitle F--Earning Income Credit Denied to Unauthorized Employees
 
  Sec. 451. Earned income credit denied to individuals not authorized to be
                  employed in the United States.
 
 
                            TITLE V--CHILD PROTECTION
 
  Sec. 501. Authority of States to make foster care maintenance payments on
                  behalf of children in any private child care institution.
 
  Sec. 502. Extension of enhanced match for implementation of statewide
                  automated child welfare information systems.
 
  Sec. 503. National random sample study of child welfare.
 
  Sec. 504. Redesignation of section 1123.
 
  Sec. 505. Kinship care.
 
 
                              TITLE VI--CHILD CARE
 
  Sec. 601. Short title and references.
 
  Sec. 602. Goals.
 
  Sec. 603. Authorization of appropriations and entitlement authority.
 
  Sec. 604. Lead agency.
 
  Sec. 605. Application and plan.
 
  Sec. 606. Limitation on State allotments.
 
  Sec. 607. Activities to improve the quality of child care.
 
  Sec. 608. Repeal of early childhood development and before- and after-school
                  care requirement.
 
  Sec. 609. Administration and enforcement.
 
  Sec. 610. Payments.
 
  Sec. 611. Annual report and audits.
 
  Sec. 612. Report by the Secretary.
 
  Sec. 613. Allotments.
 
  Sec. 614. Definitions.
 
  Sec. 615. Effective date.
 
 
                       TITLE VII--CHILD NUTRITION PROGRAMS
 
 
                      Subtitle A--National School Lunch Act
 
  Sec. 701. State disbursement to schools.
 
  Sec. 702. Nutritional and other program requirements.
 
  Sec. 703. Free and reduced price policy statement.
 
  Sec. 704. Special assistance.
 
  Sec. 705. Miscellaneous provisions and definitions.
 
  Sec. 706. Summer food service program for children.
 
  Sec. 707. Commodity distribution.
 
  Sec. 708. Child and adult care food program.
 
  Sec. 709. Pilot projects.
 
  Sec. 710. Reduction of paperwork.
 
  Sec. 711. Information on income eligibility.
 
  Sec. 712. Nutrition guidance for child nutrition programs.
 
 
                     Subtitle B--Child Nutrition Act of 1966
 
  Sec. 721. Special milk program.
 
  Sec. 722. Free and reduced price policy statement.
 
  Sec. 723. School breakfast program authorization.
 
  Sec. 724. State administrative expenses.
 
  Sec. 725. Regulations.
 
  Sec. 726. Prohibitions.
 
  Sec. 727. Miscellaneous provisions and definitions.
 
  Sec. 728. Accounts and records.
 
  Sec. 729. Special supplemental nutrition program for women, infants, and
                  children.
 
  Sec. 730. Cash grants for nutrition education.
 
  Sec. 731. Nutrition education and training.
 
 
                      Subtitle C--Miscellaneous Provisions
 
  Sec. 741. Coordination of school lunch, school breakfast, and summer food
                  service programs.
 
  Sec. 742. Requirements relating to provision of benefits based on
                  citizenship, alienage, or immigration status under the
                  National School Lunch Act, the Child Nutrition Act of 1966,
                  and certain other acts.
 
 
               TITLE VIII--FOOD STAMPS AND COMMODITY DISTRIBUTION
 
 
                         Subtitle A--Food Stamp Program
 
  Sec. 801. Definition of certification period.
 
  Sec. 802. Definition of coupon.
 
  Sec. 803. Treatment of children living at home.
 
  Sec. 804. Adjustment of thrifty food plan.
 
  Sec. 805. Definition of homeless individual.
 
  Sec. 806. State option for eligibility standards.
 
  Sec. 807. Earnings of students.
 
  Sec. 808. Energy assistance.
 
  Sec. 809. Deductions from income.
 
  Sec. 810. Vehicle allowance.
 
  Sec. 811. Vendor payments for transitional housing counted as income.
 
  Sec. 812. Simplified calculation of income for the self-employed.
 
  Sec. 813. Doubled penalties for violating food stamp program requirements.
 
  Sec. 814. Disqualification of convicted individuals.
 
  Sec. 815. Disqualification.
 
  Sec. 816. Caretaker exemption.
 
  Sec. 817. Employment and training.
 
  Sec. 818. Food stamp eligibility.
 
  Sec. 819. Comparable treatment for disqualification.
 
  Sec. 820. Disqualification for receipt of multiple food stamp benefits.
 
  Sec. 821. Disqualification of fleeing felons.
 
  Sec. 822. Cooperation with child support agencies.
 
  Sec. 823. Disqualification relating to child support arrears.
 
  Sec. 824. Work requirement.
 
  Sec. 825. Encouragement of electronic benefit transfer systems.
 
  Sec. 826. Value of minimum allotment.
 
  Sec. 827. Benefits on recertification.
 
  Sec. 828. Optional combined allotment for expedited households.
 
  Sec. 829. Failure to comply with other means-tested public assistance
                  programs.
 
  Sec. 830. Allotments for households residing in centers.
 
  Sec. 831. Condition precedent for approval of retail food stores and
                  wholesale food concerns.
 
  Sec. 832. Authority to establish authorization periods.
 
  Sec. 833. Information for verifying eligibility for authorization.
 
  Sec. 834. Waiting period for stores that fail to meet authorization criteria.
 
  Sec. 835. Operation of food stamp offices.
 
  Sec. 836. State employee and training standards.
 
  Sec. 837. Exchange of law enforcement information.
 
  Sec. 838. Expedited coupon service.
 
  Sec. 839. Withdrawing fair hearing requests.
 
  Sec. 840. Income, eligibility, and immigration status verification systems.
 
  Sec. 841. Investigations.
 
  Sec. 842. Disqualification of retailers who intentionally submit falsified
                  applications.
 
  Sec. 843. Disqualification of retailers who are disqualified under the WIC
                  program.
 
  Sec. 844. Collection of overissuances.
 
  Sec. 845. Authority to suspend stores violating program requirements pending
                  administrative and judicial review.
 
  Sec. 846. Expanded criminal forfeiture for violations.
 
  Sec. 847. Limitation on Federal match.
 
  Sec. 848. Standards for administration.
 
  Sec. 849. Work supplementation or support program.
 
  Sec. 850. Waiver authority.
 
  Sec. 851. Response to waivers.
 
  Sec. 852. Employment initiatives program.
 
  Sec. 853. Reauthorization.
 
  Sec. 854. Simplified food stamp program.
 
  Sec. 855. Study of the use of food stamps to purchase vitamins and minerals.
 
  Sec. 856. Deficit reduction.
 
 
                   Subtitle B--Commodity Distribution Programs
 
  Sec. 871. Emergency food assistance program.
 
  Sec. 872. Food bank demonstration project.
 
  Sec. 873. Hunger prevention programs.
 
  Sec. 874. Report on entitlement commodity processing.
 
 
                 Subtitle C--Electronic Benefit Transfer Systems
 
  Sec. 891. Provisions to encourage electronic benefit transfer systems.
 
 
                             TITLE IX--MISCELLANEOUS
 
  Sec. 901. Appropriation by State legislatures.
 
  Sec. 902. Sanctioning for testing positive for controlled substances.
 
  Sec. 903. Elimination of housing assistance with respect to fugitive felons
                  and probation and parole violators.
 
  Sec. 904. Sense of the Senate regarding the inability of the noncustodial
                  parent to pay child support.
 
  Sec. 905. Establishing national goals to prevent teenage pregnancies.
 
  Sec. 906. Sense of the Senate regarding enforcement of statutory rape laws.
 
  Sec. 907. Provisions to encourage electronic benefit transfer systems.
 
  Sec. 908. Reduction of block grants to States for social services; use of
                  vouchers.
 
  Sec. 909. Rules relating to denial of earned income credit on basis of
                  disqualified income.
 
  Sec. 910. Modification of adjusted gross income definition for earned income
                  credit.
 
  Sec. 911. Fraud under means-tested welfare and public assistance programs.
 
  Sec. 912. Abstinence education.
 
  Sec. 913. Change in reference.
 

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

  SEC. 101. FINDINGS.
 
      The Congress makes the following findings:
 
          (1) Marriage is the foundation of a successful society.
 
          (2) Marriage is an essential institution of a successful society
      which promotes the interests of children.
 
          (3) Promotion of responsible fatherhood and motherhood is integral to
      successful child rearing and the well-being of children.
 
          (4) In 1992, only 54 percent of single-parent families with children
      had a child support order established and, of that 54 percent, only about
      one-half received the full amount due. Of the cases enforced through the
      public child support enforcement system, only 18 percent of the caseload
      has a collection.
 
          (5) The number of individuals receiving aid to families with
      dependent children (in this section referred to as "AFDC") has more than
      tripled since 1965. More than two-thirds of these recipients are
      children. Eighty-nine percent of children receiving AFDC benefits now
      live in homes in which no father is present.
 
              (A)(i) The average monthly number of children receiving AFDC
          benefits--
 
                  (I) was 3,300,000 in 1965;
 
                  (II) was 6,200,000 in 1970;
 
                  (III) was 7,400,000 in 1980; and
 
                  (IV) was 9,300,000 in 1992.
 
              (ii) While the number of children receiving AFDC benefits
          increased nearly threefold between 1965 and 1992, the total number of
          children in the United States aged 0 to 18 has declined by 5.5
          percent.
 
              (B) The Department of Health and Human Services has estimated
          that 12,000,000 children will receive AFDC benefits within 10 years.
 
              (C) The increase in the number of children receiving public
          assistance is closely related to the increase in births to unmarried
          women. Between 1970 and 1991, the percentage of live births to
          unmarried women increased nearly threefold, from 10.7 percent to 29.5
          percent.
 
          (6) The increase of out-of-wedlock pregnancies and births is well
      documented as follows:
 
              (A) It is estimated that the rate of nonmarital teen pregnancy
          rose 23 percent from 54 pregnancies per 1,000 unmarried teenagers in
          1976 to 66.7 pregnancies in 1991. The overall rate of nonmarital
          pregnancy rose 14 percent from 90.8 pregnancies per 1,000 unmarried
          women in 1980 to 103 in both 1991 and 1992. In contrast, the overall
          pregnancy rate for married couples decreased 7.3 percent between 1980
          and 1991, from 126.9 pregnancies per 1,000 married women in 1980 to
          117.6 pregnancies in 1991.
 
              (B) The total of all out-of-wedlock births between 1970 and 1991
          has risen from 10.7 percent to 29.5 percent and if the current trend
          continues, 50 percent of all births by the year 2015 will be out-of-
          wedlock.
 
          (7) An effective strategy to combat teenage pregnancy must address
      the issue of male responsibility, including statutory rape culpability
      and prevention. The increase of teenage pregnancies among the youngest
      girls is particularly severe and is linked to predatory sexual practices
      by men who are significantly older.
 
              (A) It is estimated that in the late 1980's, the rate for girls
          age 14 and under giving birth increased 26 percent.
 
              (B) Data indicates that at least half of the children born to
          teenage mothers are fathered by adult men. Available data suggests
          that almost 70 percent of births to teenage girls are fathered by men
          over age 20.
 
              (C) Surveys of teen mothers have revealed that a majority of such
          mothers have histories of sexual and physical abuse, primarily with
          older adult men.
 
          (8) The negative consequences of an out-of-wedlock birth on the
      mother, the child, the family, and society are well documented as
      follows:
 
              (A) Young women 17 and under who give birth outside of marriage
          are more likely to go on public assistance and to spend more years on
          welfare once enrolled. These combined effects of "younger and longer"
          increase total AFDC costs per household by 25 percent to 30 percent
          for 17-year-olds.
 
              (B) Children born out-of-wedlock have a substantially higher risk
          of being born at a very low or moderately low birth weight.
 
              (C) Children born out-of-wedlock are more likely to experience
          low verbal cognitive attainment, as well as more child abuse, and
          neglect.
 
              (D) Children born out-of-wedlock were more likely to have lower
          cognitive scores, lower educational aspirations, and a greater
          likelihood of becoming teenage parents themselves.
 
              (E) Being born out-of-wedlock significantly reduces the chances
          of the child growing up to have an intact marriage.
 
              (F) Children born out-of-wedlock are 3 times more likely to be on
          welfare when they grow up.
 
          (9) Currently 35 percent of children in single-parent homes were born
      out-of-wedlock, nearly the same percentage as that of children in single-
      parent homes whose parents are divorced (37 percent). While many parents
      find themselves, through divorce or tragic circumstances beyond their
      control, facing the difficult task of raising children alone,
      nevertheless, the negative consequences of raising children in single-
      parent homes are well documented as follows:
 
              (A) Only 9 percent of married-couple families with children under
          18 years of age have income below the national poverty level. In
          contrast, 46 percent of female-headed households with children under
          18 years of age are below the national poverty level.
 
              (B) Among single-parent families, nearly 1/2  of the mothers who
          never married received AFDC while only 1/5  of divorced mothers
          received AFDC.
 
              (C) Children born into families receiving welfare assistance are
          3 times more likely to be on welfare when they reach adulthood than
          children not born into families receiving welfare.
 
              (D) Mothers under 20 years of age are at the greatest risk of
          bearing low birth weight babies.
 
              (E) The younger the single-parent mother, the less likely she is
          to finish high school.
 
              (F) Young women who have children before finishing high school
          are more likely to receive welfare assistance for a longer period of
          time.
 
              (G) Between 1985 and 1990, the public cost of births to teenage
          mothers under the aid to families with dependent children program,
          the food stamp program, and the medicaid program has been estimated
          at $120,000,000,000.
 
              (H) The absence of a father in the life of a child has a negative
          effect on school performance and peer adjustment.
 
              (I) Children of teenage single parents have lower cognitive
          scores, lower educational aspirations, and a greater likelihood of
          becoming teenage parents themselves.
 
              (J) Children of single-parent homes are 3 times more likely to
          fail and repeat a year in grade school than are children from intact
          2-parent families.
 
              (K) Children from single-parent homes are almost 4 times more
          likely to be expelled or suspended from school.
 
              (L) Neighborhoods with larger percentages of youth aged 12
          through 20 and areas with higher percentages of single-parent
          households have higher rates of violent crime.
 
              (M) Of those youth held for criminal offenses within the State
          juvenile justice system, only 29.8 percent lived primarily in a home
          with both parents. In contrast to these incarcerated youth, 73.9
          percent of the 62,800,000 children in the Nation's resident
          population were living with both parents.
 
          (10) 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.


  SEC. 102. REFERENCE TO SOCIAL SECURITY ACT.
 
      Except as otherwise specifically provided, wherever in this title an
  amendment is expressed in terms of an amendment to or repeal of a section or
  other provision, the reference shall be considered to be made to that section
  or other provision of the Social Security Act.
 

  SEC. 103. BLOCK GRANTS TO STATES.
 
      (a) In General.--Part A of title IV (42 U.S.C. 601 et seq.) is amended--
 
          (1) by striking all that precedes section 418 (as added by section
      603(b)(2) of this Act) and inserting the following:
 
 
                  "PART A--BLOCK GRANTS TO STATES FOR TEMPORARY
                          ASSISTANCE FOR NEEDY FAMILIES
 
 
  "SEC. 401. PURPOSE.
 
      "(a) In General.--The purpose of this part is to increase the flexibility
  of States in operating a program designed to--
 
          "(1) provide assistance to needy families so that children may be
      cared for in their own homes or in the homes of relatives;
 
          "(2) end the dependence of needy parents on government benefits by
      promoting job preparation, work, and marriage;
 
          "(3) prevent and reduce the incidence of out-of-wedlock pregnancies
      and establish annual numerical goals for preventing and reducing the
      incidence of these pregnancies; and
 
          "(4) encourage the formation and maintenance of two-parent families.
 
      "(b) No Individual Entitlement.--This part shall not be interpreted to
  entitle any individual or family to assistance under any State program funded
  under this part.
 
 
  "SEC. 402. ELIGIBLE STATES; STATE PLAN.
 
      "(a) In General.--As used in this part, the term 'eligible State' means,
  with respect to a fiscal year, a State that, during the 2-year period
  immediately preceding the fiscal year, has submitted to the Secretary a plan
  that the Secretary has found includes the following:
 
          "(1) Outline of family assistance program.--
 
              "(A) General provisions.--A written document that outlines how
          the State intends to do the following:
 
                  "(i) Conduct a program, designed to serve all political
              subdivisions in the State (not necessarily in a uniform manner),
              that provides assistance to needy families with (or expecting)
              children and provides parents with job preparation, work, and
              support services to enable them to leave the program and become
              self-sufficient.
 
                  "(ii) Require a parent or caretaker receiving assistance
              under the program to engage in work (as defined by the State)
              once the State determines the parent or caretaker is ready to
              engage in work, or once the parent or caretaker has received
              assistance under the program for 24 months (whether or not
              consecutive), whichever is earlier.
 
                  "(iii) Ensure that parents and caretakers receiving
              assistance under the program engage in work activities in
              accordance with section 407.
 
                  "(iv) Take such reasonable steps as the State deems necessary
              to restrict the use and disclosure of information about
              individuals and families receiving assistance under the program
              attributable to funds provided by the Federal Government.
 
                  "(v) Establish goals and take action to prevent and reduce
              the incidence of out-of-wedlock pregnancies, with special
              emphasis on teenage pregnancies, and establish numerical goals
              for reducing the illegitimacy ratio of the State (as defined in
              section 403(a)(2)(B)) for calendar years 1996 through 2005.
 
                  "(vi) Conduct a program, designed to reach State and local
              law enforcement officials, the education system, and relevant
              counseling services, that provides education and training on the
              problem of statutory rape so that teenage pregnancy prevention
              programs may be expanded in scope to include men.
 
              "(B) Special provisions.--
 
                  "(i) The document shall indicate whether the State intends to
              treat families moving into the State from another State
              differently than other families under the program, and if so, how
              the State intends to treat such families under the program.
 
                  "(ii) The document shall indicate whether the State intends
              to provide assistance under the program to individuals who are
              not citizens of the United States, and if so, shall include an
              overview of such assistance.
 
                  "(iii) The document shall set forth objective criteria for
              the delivery of benefits and the determination of eligibility and
              for fair and equitable treatment, including an explanation of how
              the State will provide opportunities for recipients who have been
              adversely affected to be heard in a State administrative or
              appeal process.
 
                  "(iv) Not later than 1 year after the date of enactment of
              this Act, unless the chief executive officer of the State opts
              out of this provision by notifying the Secretary, a State shall,
              consistent with the exception provided in section 407(e)(2),
              require a parent or caretaker receiving assistance under the
              program who, after receiving such assistance for 2 months is not
              exempt from work requirements and is not engaged in work, as
              determined under section 407(c), to participate in community
              service employment, with minimum hours per week and tasks to be
              determined by the State.
 
          "(2) Certification that the state will operate a child support
      enforcement program.--A certification by the chief executive officer of
      the State that, during the fiscal year, the State will operate a child
      support enforcement program under the State plan approved under part D.
 
          "(3) Certification that the state will operate a foster care and
      adoption assistance program.--A certification by the chief executive
      officer of the State that, during the fiscal year, the State will operate
      a foster care and adoption assistance program under the State plan
      approved under part E, and that the State will take such actions as are
      necessary to ensure that children receiving assistance under such part
      are eligible for medical assistance under the State plan under title XIX.
 
          "(4) Certification of the administration of the program.--A
      certification by the chief executive officer of the State specifying
      which State agency or agencies will administer and supervise the program
      referred to in paragraph (1) for the fiscal year, which shall include
      assurances that local governments and private sector organizations--
 
              "(A) have been consulted regarding the plan and design of welfare
          services in the State so that services are provided in a manner
          appropriate to local populations; and
 
              "(B) have had at least 45 days to submit comments on the plan and
          the design of such services.
 
          "(5) Certification that the state will provide indians with equitable
      access to assistance.--A certification by the chief executive officer of
      the State that, during the fiscal year, the State will provide each
      member of an Indian tribe, who is domiciled in the State and is not
      eligible for assistance under a tribal family assistance plan approved
      under section 412, with equitable access to assistance under the State
      program funded under this part attributable to funds provided by the
      Federal Government.
 
          "(6) Certification of standards and procedures to ensure against
      program fraud and abuse.--A certification by the chief executive officer
      of the State that the State has established and is enforcing standards
      and procedures to ensure against program fraud and abuse, including
      standards and procedures concerning nepotism, conflicts of interest among
      individuals responsible for the administration and supervision of the
      State program, kickbacks, and the use of political patronage.
 
          "(7) Optional certification of standards and procedures to ensure
      that the state will screen for and identify domestic violence.--
 
              "(A) In general.--At the option of the State, a certification by
          the chief executive officer of the State that the State has
          established and is enforcing standards and procedures to--
 
                  "(i) screen and identify individuals receiving assistance
              under this part with a history of domestic violence while
              maintaining the confidentiality of such individuals;
 
                  "(ii) refer such individuals to counseling and supportive
              services; and
 
                  "(iii) waive, pursuant to a determination of good cause,
              other program requirements such as time limits (for so long as
              necessary) for individuals receiving assistance, residency
              requirements, child support cooperation requirements, and family
              cap provisions, in cases where compliance with such requirements
              would make it more difficult for individuals receiving assistance
              under this part to escape domestic violence or unfairly penalize
              such individuals who are or have been victimized by such
              violence, or individuals who are at risk of further domestic
              violence.
 
              "(B) Domestic violence defined.--For purposes of this paragraph,
          the term 'domestic violence' has the same meaning as the term
          'battered or subjected to extreme cruelty', as defined in section
          408(a)(7)(C)(iii).
 
      "(b) Public Availability of State Plan Summary.--The State shall make
  available to the public a summary of any plan submitted by the State under
  this section.
 
 
  "SEC. 403. GRANTS TO STATES.
 
      "(a) Grants.--
 
          "(1) Family assistance grant.--
 
              "(A) In general.--Each eligible State shall be entitled to
          receive from the Secretary, for each of fiscal years 1996, 1997,
          1998, 1999, 2000, 2001, and 2002, a grant in an amount equal to the
          State family assistance grant.
 
              "(B) State family assistance grant defined.--As used in this
          part, the term 'State family assistance grant' means the greatest
          of--
 
                  "(i) 1/3  of the total amount required to be paid to the
              State under former section 403 (as in effect on September 30,
              1995) for fiscal years 1992, 1993, and 1994 (other than with
              respect to amounts expended by the State for child care under
              subsection (g) or (i) of former section 402 (as so in effect));
 
                  "(ii)(I) the total amount required to be paid to the State
              under former section 403 for fiscal year 1994 (other than with
              respect to amounts expended by the State for child care under
              subsection (g) or (i) of former section 402 (as so in effect));
              plus
 
                  "(II) an amount equal to 85 percent of the amount (if any) by
              which the total amount required to be paid to the State under
              former section 403(a)(5) for emergency assistance for fiscal year
              1995 exceeds the total amount required to be paid to the State
              under former section 403(a)(5) for fiscal year 1994, if, during
              fiscal year 1994 or 1995, the Secretary approved under former
              section 402 an amendment to the former State plan with respect to
              the provision of emergency assistance; or
 
                  "(iii) 4/3  of the total amount required to be paid to the
              State under former section 403 (as in effect on September 30,
              1995) for the 1st 3 quarters of fiscal year 1995 (other than with
              respect to amounts expended by the State under the State plan
              approved under part F (as so in effect) or for child care under
              subsection (g) or (i) of former section 402 (as so in effect)),
              plus the total amount required to be paid to the State for fiscal
              year 1995 under former section 403(l) (as so in effect).
 
              "(C) Total amount required to be paid to the state under former
          section 403 defined.--As used in this part, the term 'total amount
          required to be paid to the State under former section 403' means,
          with respect to a fiscal year--
 
                  "(i) in the case of a State to which section 1108 does not
              apply, the sum of--
 
                      "(I) the Federal share of maintenance assistance
                  expenditures for the fiscal year, before reduction pursuant
                  to subparagraph (B) or (C) of section 403(b)(2) (as in effect
                  on September 30, 1995), as reported by the State on ACF Form
                  231;
 
                      "(II) the Federal share of administrative expenditures
                  (including administrative expenditures for the development of
                  management information systems) for the fiscal year, as
                  reported by the State on ACF Form 231;
 
                      "(III) the Federal share of emergency assistance
                  expenditures for the fiscal year, as reported by the State on
                  ACF Form 231;
 
                      "(IV) the Federal share of expenditures for the fiscal
                  year with respect to child care pursuant to subsections (g)
                  and (i) of former section 402 (as in effect on September 30,
                  1995), as reported by the State on ACF Form 231; and
 
                      "(V) the Federal obligations made to the State under
                  section 403 for the fiscal year with respect to the State
                  program operated under part F (as in effect on September 30,
                  1995), as determined by the Secretary, including additional
                  obligations or reductions in obligations made after the close
                  of the fiscal year; and
 
                  "(ii) in the case of a State to which section 1108 applies,
              the lesser of--
 
                      "(I) the sum described in clause (i); or
 
                      "(II) the total amount certified by the Secretary under
                  former section 403 (as in effect during the fiscal year) with
                  respect to the territory.
 
              "(D) Information to be used in determining amounts.--
 
                  "(i) For fiscal years 1992 and 1993.--
 
                      "(I) In determining the amounts described in subclauses
                  (I) through (IV) of subparagraph (C)(i) for any State for
                  each of fiscal years 1992 and 1993, the Secretary shall use
                  information available as of April 28, 1995.
 
                      "(II) In determining the amount described in subparagraph
                  (C)(i)(V) for any State for each of fiscal years 1992 and
                  1993, the Secretary shall use information available as of
                  January 6, 1995.
 
                  "(ii) For fiscal year 1994.--In determining the amounts
              described in subparagraph (C)(i) for any State for fiscal year
              1994, the Secretary shall use information available as of April
              28, 1995.
 
                  "(iii) For fiscal year 1995.--
 
                      "(I) In determining the amount described in subparagraph
                  (B)(ii)(II) for any State for fiscal year 1995, the Secretary
                  shall use the information which was reported by the States
                  and estimates made by the States with respect to emergency
                  assistance expenditures and was available as of August 11,
                  1995.
 
                      "(II) In determining the amounts described in subclauses
                  (I) through (III) of subparagraph (C)(i) for any State for
                  fiscal year 1995, the Secretary shall use information
                  available as of October 2, 1995.
 
                      "(III) In determining the amount described in
                  subparagraph (C)(i)(IV) for any State for fiscal year 1995,
                  the Secretary shall use information available as of February
                  28, 1996.
 
                      "(IV) In determining the amount described in subparagraph
                  (C)(i)(V) for any State for fiscal year 1995, the Secretary
                  shall use information available as of October 5, 1995.
 
              "(E) Appropriation.--Out of any money in the Treasury of the
          United States not otherwise appropriated, there are appropriated for
          fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002 such sums
          as are necessary for grants under this paragraph.
 
          "(2) Bonus to reward decrease in illegitimacy.--
 
              "(A) In general.--Each eligible State shall be entitled to
          receive from the Secretary a grant for each bonus year for which the
          State demonstrates a net decrease in out-of-wedlock births.
 
              "(B) Amount of grant.--
 
                  "(i) If 5 eligible states.--If there are 5 eligible States
              for a bonus year, the amount of the grant shall be $20,000,000.
 
                  "(ii) If fewer than 5 eligible states.--If there are fewer
              than 5 eligible States for a bonus year, the amount of the grant
              shall be $25,000,000.
 
              "(C) Definitions.--As used in this paragraph:
 
                  "(i) Eligible state.--
 
                      "(I) In general.--The term 'eligible State' means a State
                  that the Secretary determines meets the following
                  requirements:
 
                          "(aa) The State demonstrates that the number of out-
                      of-wedlock births that occurred in the State during the
                      most recent 2-year period for which such information is
                      available decreased as compared to the number of such
                      births that occurred during the previous 2-year period,
                      and the magnitude of the decrease for the State for the
                      period is not exceeded by the magnitude of the
                      corresponding decrease for 5 or more other States for the
                      period.
 
                          "(bb) The rate of induced pregnancy terminations in
                      the State for the fiscal year is less than the rate of
                      induced pregnancy terminations in the State for fiscal
                      year 1995.
 
                      "(II) Disregard of changes in data due to changed
                  reporting methods.--In making the determination required by
                  subclause (I), the Secretary shall disregard--
 
                          "(aa) any difference between the number of out-of-
                      wedlock births that occurred in a State for a fiscal year
                      and the number of out-of-wedlock births that occurred in
                      a State for fiscal year 1995 which is attributable to a
                      change in State methods of reporting data used to
                      calculate the number of out-of-wedlock births; and
 
                          "(bb) any difference between the rate of induced
                      pregnancy terminations in a State for a fiscal year and
                      such rate for fiscal year 1995 which is attributable to a
                      change in State methods of reporting data used to
                      calculate such rate.
 
                  "(ii) Bonus year.--The term 'bonus year' means fiscal years
              1999, 2000, 2001, and 2002.
 
              "(D) Appropriation.--Out of any money in the Treasury of the
          United States not otherwise appropriated, there are appropriated for
          fiscal years 1999 through 2002, such sums as are necessary for grants
          under this paragraph.
 
          "(3) Supplemental grant for population increases in certain states.--
 
              "(A) In general.--Each qualifying State shall, subject to
          subparagraph (F), be entitled to receive from the Secretary--
 
                  "(i) for fiscal year 1998 a grant in an amount equal to 2.5
              percent of the total amount required to be paid to the State
              under former section 403 (as in effect during fiscal year 1994)
              for fiscal year 1994; and
 
                  "(ii) for each of fiscal years 1999, 2000, and 2001, a grant
              in an amount equal to the sum of--
 
                      "(I) the amount (if any) required to be paid to the State
                  under this paragraph for the immediately preceding fiscal
                  year; and
 
                      "(II) 2.5 percent of the sum of--
 
                          "(aa) the total amount required to be paid to the
                      State under former section 403 (as in effect during
                      fiscal year 1994) for fiscal year 1994; and
 
                          "(bb) the amount (if any) required to be paid to the
                      State under this paragraph for the fiscal year preceding
                      the fiscal year for which the grant is to be made.
 
              "(B) Preservation of grant without increases for states failing
          to remain qualifying states.--Each State that is not a qualifying
          State for a fiscal year specified in subparagraph (A)(ii) but was a
          qualifying State for a prior fiscal year shall, subject to
          subparagraph (F), be entitled to receive from the Secretary for the
          specified fiscal year, a grant in an amount equal to the amount
          required to be paid to the State under this paragraph for the most
          recent fiscal year for which the State was a qualifying State.
 
              "(C) Qualifying state.--
 
                  "(i) In general.--For purposes of this paragraph, a State is
              a qualifying State for a fiscal year if--
 
                      "(I) the level of welfare spending per poor person by the
                  State for the immediately preceding fiscal year is less than
                  the national average level of State welfare spending per poor
                  person for such preceding fiscal year; and
 
                      "(II) the population growth rate of the State (as
                  determined by the Bureau of the Census) for the most recent
                  fiscal year for which information is available exceeds the
                  average population growth rate for all States (as so
                  determined) for such most recent fiscal year.
 
                  "(ii) State must qualify in fiscal year 1997.--
              Notwithstanding clause (i), a State shall not be a qualifying
              State for any fiscal year after 1998 by reason of clause (i) if
              the State is not a qualifying State for fiscal year 1998 by
              reason of clause (i).
 
                  "(iii) Certain states deemed qualifying states.--For purposes
              of this paragraph, a State is deemed to be a qualifying State for
              fiscal years 1998, 1999, 2000, and 2001 if--
 
                      "(I) the level of welfare spending per poor person by the
                  State for fiscal year 1994 is less than 35 percent of the
                  national average level of State welfare spending per poor
                  person for fiscal year 1994; or
 
                      "(II) the population of the State increased by more than
                  10 percent from April 1, 1990 to July 1, 1994, according to
                  the population estimates in publication CB94-204 of the
                  Bureau of the Census.
 
              "(D) Definitions.--As used in this paragraph:
 
                  "(i) Level of welfare spending per poor person.--The term
              'level of State welfare spending per poor person' means, with
              respect to a State and a fiscal year--
 
                      "(I) the sum of--
 
                          "(aa) the total amount required to be paid to the
                      State under former section 403 (as in effect during
                      fiscal year 1994) for fiscal year 1994; and
 
                          "(bb) the amount (if any) paid to the State under
                      this paragraph for the immediately preceding fiscal year;
                      divided by
 
                      "(II) the number of individuals, according to the 1990
                  decennial census, who were residents of the State and whose
                  income was below the poverty line.
 
                  "(ii) National average level of state welfare spending per
              poor person.--The term 'national average level of State welfare
              spending per poor person' means, with respect to a fiscal year,
              an amount equal to--
 
                      "(I) the total amount required to be paid to the States
                  under former section 403 (as in effect during fiscal year
                  1994) for fiscal year 1994; divided by
 
                      "(II) the number of individuals, according to the 1990
                  decennial census, who were residents of any State and whose
                  income was below the poverty line.
 
                  "(iii) State.--The term 'State' means each of the 50 States
              of the United States and the District of Columbia.
 
              "(E) Appropriation.--Out of any money in the Treasury of the
          United States not otherwise appropriated, there are appropriated for
          fiscal years 1998, 1999, 2000, and 2001 such sums as are necessary
          for grants under this paragraph, in a total amount not to exceed
          $800,000,000.
 
              "(F) Grants reduced pro rata if insufficient appropriations.--If
          the amount appropriated pursuant to this paragraph for a fiscal year
          is less than the total amount of payments otherwise required to be
          made under this paragraph for the fiscal year, then the amount
          otherwise payable to any State for the fiscal year under this
          paragraph shall be reduced by a percentage equal to the amount so
          appropriated divided by such total amount.
 
              "(G) Budget scoring.--Notwithstanding section 257(b)(2) of the
          Balanced Budget and Emergency Deficit Control Act of 1985, the
          baseline shall assume that no grant shall be made under this
          paragraph after fiscal year 2001.
 
          "(4) Bonus to reward high performance states.--
 
              "(A) In general.--The Secretary shall make a grant pursuant to
          this paragraph to each State for each bonus year for which the State
          is a high performing State.
 
              "(B) Amount of grant.--
 
                  "(i) In general.--Subject to clause (ii) of this
              subparagraph, the Secretary shall determine the amount of the
              grant payable under this paragraph to a high performing State for
              a bonus year, which shall be based on the score assigned to the
              State under subparagraph (D)(i) for the fiscal year that
              immediately precedes the bonus year.
 
                  "(ii) Limitation.--The amount payable to a State under this
              paragraph for a bonus year shall not exceed 5 percent of the
              State family assistance grant.
 
              "(C) Formula for measuring state performance.--Not later than 1
          year after the date of the enactment of the Personal Responsibility
          and Work Opportunity Reconciliation Act of 1996, the Secretary, in
          consultation with the National Governors' Association and the
          American Public Welfare Association, shall develop a formula for
          measuring State performance in operating the State program funded
          under this part so as to achieve the goals set forth in section
          401(a).
 
              "(D) Scoring of state performance; setting of performance
          thresholds.--For each bonus year, the Secretary shall--
 
                  "(i) use the formula developed under subparagraph (C) to
              assign a score to each eligible State for the fiscal year that
              immediately precedes the bonus year; and
 
                  "(ii) prescribe a performance threshold in such a manner so
              as to ensure that--
 
                      "(I) the average annual total amount of grants to be made
                  under this paragraph for each bonus year equals $200,000,000;
                  and
 
                      "(II) the total amount of grants to be made under this
                  paragraph for all bonus years equals $1,000,000,000.
 
              "(E) Definitions.--As used in this paragraph:
 
                  "(i) Bonus year.--The term 'bonus year' means fiscal years
              1999, 2000, 2001, 2002, and 2003.
 
                  "(ii) High performing state.--The term 'high performing
              State' means, with respect to a bonus year, an eligible State
              whose score assigned pursuant to subparagraph (D)(i) for the
              fiscal year immediately preceding the bonus year equals or
              exceeds the performance threshold prescribed under subparagraph
              (D)(ii) for such preceding fiscal year.
 
              "(F) Appropriation.--Out of any money in the Treasury of the
          United States not otherwise appropriated, there are appropriated for
          fiscal years 1999 through 2003 $1,000,000,000 for grants under this
          paragraph.
 
      "(b) Contingency Fund.--
 
          "(1) Establishment.--There is hereby established in the Treasury of
      the United States a fund which shall be known as the 'Contingency Fund
      for State Welfare Programs' (in this section referred to as the 'Fund').
 
          "(2) Deposits into fund.--Out of any money in the Treasury of the
      United States not otherwise appropriated, there are appropriated for
      fiscal years 1997, 1998, 1999, 2000, and 2001 such sums as are necessary
      for payment to the Fund in a total amount not to exceed $2,000,000,000.
 
          "(3) Grants.--
 
              "(A) Provisional payments.--If an eligible State submits to the
          Secretary a request for funds under this paragraph during an eligible
          month, the Secretary shall, subject to this paragraph, pay to the
          State, from amounts appropriated pursuant to paragraph (2), an amount
          equal to the amount of funds so requested.
 
              "(B) Payment priority.--The Secretary shall make payments under
          subparagraph (A) in the order in which the Secretary receives
          requests for such payments.
 
              "(C) Limitations.--
 
                  "(i) Monthly payment to a state.--The total amount paid to a
              single State under subparagraph (A) during a month shall not
              exceed 1/12  of 20 percent of the State family assistance grant.
 
                  "(ii) Payments to all states.--The total amount paid to all
              States under subparagraph (A) during fiscal years 1997 through
              2001 shall not exceed the total amount appropriated pursuant to
              paragraph (2).
 
          "(4) Annual reconciliation.--Notwithstanding paragraph (3), at the
      end of each fiscal year, each State shall remit to the Secretary an
      amount equal to the amount (if any) by which the total amount paid to the
      State under paragraph (3) during the fiscal year exceeds--
 
              "(A) the Federal medical assistance percentage for the State for
          the fiscal year (as defined in section 1905(b), as in effect on
          September 30, 1995) of the amount (if any) by which--
 
                  "(i) if the Secretary makes a payment to the State under
              section 418(a)(2) in the fiscal year--
 
                      "(I) the expenditures under the State program funded
                  under this part for the fiscal year, excluding any amounts
                  made available by the Federal Government (except amounts paid
                  to the State under paragraph (3) during the fiscal year that
                  have been expended by the State) and any amounts expended by
                  the State during the fiscal year for child care; exceeds
 
                      "(II) historic State expenditures (as defined in section
                  409(a)(7)(B)(iii)), excluding the expenditures by the State
                  for child care under subsection (g) or (i) of section 402 (as
                  in effect during fiscal year 1994) for fiscal year 1994 minus
                  any Federal payment with respect to such child care
                  expenditures; or
 
                  "(ii) if the Secretary does not make a payment to the State
              under section 418(a)(2) in the fiscal year--
 
                      "(I) the expenditures under the State program funded
                  under this part for the fiscal year (excluding any amounts
                  made available by the Federal Government, except amounts paid
                  to the State under paragraph (3) during the fiscal year that
                  have been expended by the State); exceeds
 
                      "(II) historic State expenditures (as defined in section
                  409(a)(7)(B)(iii)); multiplied by
 
              "(B) 1/12  times the number of months during the fiscal year for
          which the Secretary makes a payment to the State under this
          subsection.
 
          "(5) Eligible month.--As used in paragraph (3)(A), the term 'eligible
      month' means, with respect to a State, a month in the 2-month period that
      begins with any month for which the State is a needy State.
 
          "(6) Needy state.--For purposes of paragraph (5), a State is a needy
      State for a month if--
 
              "(A) the average rate of--
 
                  "(i) total unemployment in such State (seasonally adjusted)
              for the period consisting of the most recent 3 months for which
              data for all States are published equals or exceeds 6.5 percent;
              and
 
                  "(ii) total unemployment in such State (seasonally adjusted)
              for the 3-month period equals or exceeds 110 percent of such
              average rate for either (or both) of the corresponding 3-month
              periods ending in the 2 preceding calendar years; or
 
              "(B) as determined by the Secretary of Agriculture (in the
          discretion of the Secretary of Agriculture), the monthly average
          number of individuals (as of the last day of each month)
          participating in the food stamp program in the State in the then most
          recently concluded 3-month period for which data are available
          exceeds by not less than 10 percent the lesser of--
 
                  "(i) the monthly average number of individuals (as of the
              last day of each month) in the State that would have participated
              in the food stamp program in the corresponding 3-month period in
              fiscal year 1994 if the amendments made by titles IV and VIII of
              the Personal Responsibility and Work Opportunity Reconciliation
              Act of 1996 had been in effect throughout fiscal year 1994; or
 
                  "(ii) the monthly average number of individuals (as of the
              last day of each month) in the State that would have participated
              in the food stamp program in the corresponding 3-month period in
              fiscal year 1995 if the amendments made by titles IV and VIII of
              the Personal Responsibility and Work Opportunity Reconciliation
              Act of 1996 had been in effect throughout fiscal year 1995.
 
          "(7) Other terms defined.--As used in this subsection:
 
              "(A) State.--The term 'State' means each of the 50 States of the
          United States and the District of Columbia.
 
              "(B) Secretary.--The term 'Secretary' means the Secretary of the
          Treasury.
 
          "(8) Annual reports.--The Secretary shall annually report to the
      Congress on the status of the Fund.
 
 
  "SEC. 404. USE OF GRANTS.
 
      "(a) General Rules.--Subject to this part, a State to which a grant is
  made under section 403 may use the grant--
 
          "(1) in any manner that is reasonably calculated to accomplish the
      purpose of this part, including to provide low income households with
      assistance in meeting home heating and cooling costs; or
 
          "(2) in any manner that the State was authorized to use amounts
      received under part A or F, as such parts were in effect on September 30,
      1995.
 
      "(b) Limitation on Use of Grant for Administrative Purposes.--
 
          "(1) Limitation.--A State to which a grant is made under section 403
      shall not expend more than 15 percent of the grant for administrative
      purposes.
 
          "(2) Exception.--Paragraph (1) shall not apply to the use of a grant
      for information technology and computerization needed for tracking or
      monitoring required by or under this part.
 
      "(c) Authority To Treat Interstate Immigrants Under Rules of Former
  State.--A State operating a program funded under this part may apply to a
  family the rules (including benefit amounts) of the program funded under this
  part of another State if the family has moved to the State from the other
  State and has resided in the State for less than 12 months.
 
      "(d) Authority To Use Portion of Grant for Other Purposes.--
 
          "(1) In general.--A State may use not more than 30 percent of the
      amount of any grant made to the State under section 403(a) for a fiscal
      year to carry out a State program pursuant to any or all of the following
      provisions of law:
 
              "(A) Title XX of this Act.
 
              "(B) The Child Care and Development Block Grant Act of 1990.
 
          "(2) Limitation on amount transferable to title xx programs.--
      Notwithstanding paragraph (1), not more than 1/3  of the total amount
      paid to a State under this part for a fiscal year that is used to carry
      out State programs pursuant to provisions of law specified in paragraph
      (1) may be used to carry out State programs pursuant to title XX.
 
          "(3) Applicable rules.--
 
              "(A) In general.--Except as provided in subparagraph (B) of this
          paragraph, any amount paid to a State under this part that is used to
          carry out a State program pursuant to a provision of law specified in
          paragraph (1) shall not be subject to the requirements of this part,
          but shall be subject to the requirements that apply to Federal funds
          provided directly under the provision of law to carry out the
          program, and the expenditure of any amount so used shall not be
          considered to be an expenditure under this part.
 
              "(B) Exception relating to title xx programs.--All amounts paid
          to a State under this part that are used to carry out State programs
          pursuant to title XX shall be used only for programs and services to
          children or their families whose income is less than 200 percent of
          the income official poverty line (as defined by the Office of
          Management and Budget, and revised annually in accordance with
          section 673(2) of the Omnibus Budget Reconciliation Act of 1981)
          applicable to a family of the size involved.
 
      "(e) Authority to Reserve Certain Amounts for Assistance.--A State may
  reserve amounts paid to the State under this part for any fiscal year for the
  purpose of providing, without fiscal year limitation, assistance under the
  State program funded under this part.
 
      "(f) Authority to Operate Employment Placement Program.--A State to which
  a grant is made under section 403 may use the grant to make payments (or
  provide job placement vouchers) to State-approved public and private job
  placement agencies that provide employment placement services to individuals
  who receive assistance under the State program funded under this part.
 
      "(g) Implementation of Electronic Benefit Transfer System.--A State to
  which a grant is made under section 403 is encouraged to implement an
  electronic benefit transfer system for providing assistance under the State
  program funded under this part, and may use the grant for such purpose.
 
      "(h) Use of Funds for Individual Development Accounts.--
 
          "(1) In general.--A State to which a grant is made under section 403
      may use the grant to carry out a program to fund individual development
      accounts (as defined in paragraph (2)) established by individuals
      eligible for assistance under the State program funded under this part.
 
          "(2) Individual development accounts.--
 
              "(A) Establishment.--Under a State program carried out under
          paragraph (1), an individual development account may be established
          by or on behalf of an individual eligible for assistance under the
          State program operated under this part for the purpose of enabling
          the individual to accumulate funds for a qualified purpose described
          in subparagraph (B).
 
              "(B) Qualified purpose.--A qualified purpose described in this
          subparagraph is 1 or more of the following, as provided by the
          qualified entity providing assistance to the individual under this
          subsection:
 
                  "(i) Postsecondary educational expenses.--Postsecondary
              educational expenses paid from an individual development account
              directly to an eligible educational institution.
 
                  "(ii) First home purchase.--Qualified acquisition costs with
              respect to a qualified principal residence for a qualified first-
              time homebuyer, if paid from an individual development account
              directly to the persons to whom the amounts are due.
 
                  "(iii) Business capitalization.--Amounts paid from an
              individual development account directly to a business
              capitalization account which is established in a federally
              insured financial institution and is restricted to use solely for
              qualified business capitalization expenses.
 
              "(C) Contributions to be from earned income.--An individual may
          only contribute to an individual development account such amounts as
          are derived from earned income, as defined in section 911(d)(2) of
          the Internal Revenue Code of 1986.
 
              "(D) Withdrawal of funds.--The Secretary shall establish such
          regulations as may be necessary to ensure that funds held in an
          individual development account are not withdrawn except for 1 or more
          of the qualified purposes described in subparagraph (B).
 
          "(3) Requirements.--
 
              "(A) In general.--An individual development account established
          under this subsection shall be a trust created or organized in the
          United States and funded through periodic contributions by the
          establishing individual and matched by or through a qualified entity
          for a qualified purpose (as described in paragraph (2)(B)).
 
              "(B) Qualified entity.--As used in this subsection, the term
          'qualified entity' means--
 
                  "(i) a not-for-profit organization described in section
              501(c)(3) of the Internal Revenue Code of 1986 and exempt from
              taxation under section 501(a) of such Code; or
 
                  "(ii) a State or local government agency acting in
              cooperation with an organization described in clause (i).
 
          "(4) No reduction in benefits.--Notwithstanding any other provision
      of Federal law (other than the Internal Revenue Code of 1986) that
      requires consideration of 1 or more financial circumstances of an
      individual, for the purpose of determining eligibility to receive, or the
      amount of, any assistance or benefit authorized by such law to be
      provided to or for the benefit of such individual, funds (including
      interest accruing) in an individual development account under this
      subsection shall be disregarded for such purpose with respect to any
      period during which such individual maintains or makes contributions into
      such an account.
 
          "(5) Definitions.--As used in this subsection--
 
              "(A) Eligible educational institution.--The term 'eligible
          educational institution' means the following:
 
                  "(i) An institution described in section 481(a)(1) or 1201(a)
              of the Higher Education Act of 1965 (20 U.S.C. 1088(a)(1) or
              1141(a)), as such sections are in effect on the date of the
              enactment of this subsection.
 
                  "(ii) An area vocational education school (as defined in
              subparagraph (C) or (D) of section 521(4) of the Carl D. Perkins
              Vocational and Applied Technology Education Act (20 U.S.C.
              2471(4))) which is in any State (as defined in section 521(33) of
              such Act), as such sections are in effect on the date of the
              enactment of this subsection.
 
              "(B) Post-secondary educational expenses.--The term 'post-
          secondary educational expenses' means--
 
                  "(i) tuition and fees required for the enrollment or
              attendance of a student at an eligible educational institution,
              and
 
                  "(ii) fees, books, supplies, and equipment required for
              courses of instruction at an eligible educational institution.
 
              "(C) Qualified acquisition costs.--The term 'qualified
          acquisition costs' means the costs of acquiring, constructing, or
          reconstructing a residence. The term includes any usual or reasonable
          settlement, financing, or other closing costs.
 
              "(D) Qualified business.--The term 'qualified business' means any
          business that does not contravene any law or public policy (as
          determined by the Secretary).
 
              "(E) Qualified business capitalization expenses.--The term
          'qualified business capitalization expenses' means qualified
          expenditures for the capitalization of a qualified business pursuant
          to a qualified plan.
 
              "(F) Qualified expenditures.--The term 'qualified expenditures'
          means expenditures included in a qualified plan, including capital,
          plant, equipment, working capital, and inventory expenses.
 
              "(G) Qualified first-time homebuyer.--
 
                  "(i) In general.--The term 'qualified first-time homebuyer'
              means a taxpayer (and, if married, the taxpayer's spouse) who has
              no present ownership interest in a principal residence during the
              3-year period ending on the date of acquisition of the principal
              residence to which this subsection applies.
 
                  "(ii) Date of acquisition.--The term 'date of acquisition'
              means the date on which a binding contract to acquire, construct,
              or reconstruct the principal residence to which this subparagraph
              applies is entered into.
 
              "(H) Qualified plan.--The term 'qualified plan' means a business
          plan which--
 
                  "(i) is approved by a financial institution, or by a
              nonprofit loan fund having demonstrated fiduciary integrity,
 
                  "(ii) includes a description of services or goods to be sold,
              a marketing plan, and projected financial statements, and
 
                  "(iii) may require the eligible individual to obtain the
              assistance of an experienced entrepreneurial advisor.
 
              "(I) Qualified principal residence.--The term 'qualified
          principal residence' means a principal residence (within the meaning
          of section 1034 of the Internal Revenue Code of 1986), the qualified
          acquisition costs of which do not exceed 100 percent of the average
          area purchase price applicable to such residence (determined in
          accordance with paragraphs (2) and (3) of section 143(e) of such
          Code).
 
      "(i) Sanction Welfare Recipients for Failing To Ensure That Minor
  Dependent Children Attend School.--A State to which a grant is made under
  section 403 shall not be prohibited from sanctioning a family that includes
  an adult who has received assistance under any State program funded under
  this part attributable to funds provided by the Federal Government or under
  the food stamp program, as defined in section 3(h) of the Food Stamp Act of
  1977, if such adult fails to ensure that the minor dependent children of such
  adult attend school as required by the law of the State in which the minor
  children reside.
 
      "(j) Requirement for High School Diploma or Equivalent.--A State to which
  a grant is made under section 403 shall not be prohibited from sanctioning a
  family that includes an adult who is older than age 20 and younger than age
  51 and who has received assistance under any State program funded under this
  part attributable to funds provided by the Federal Government or under the
  food stamp program, as defined in section 3(h) of the Food Stamp Act of 1977,
  if such adult does not have, or is not working toward attaining, a secondary
  school diploma or its recognized equivalent unless such adult has been
  determined in the judgment of medical, psychiatric, or other appropriate
  professionals to lack the requisite capacity to complete successfully a
  course of study that would lead to a secondary school diploma or its
  recognized equivalent.
 
 
  "SEC. 405. ADMINISTRATIVE PROVISIONS.
 
      "(a) Quarterly.--The Secretary shall pay each grant payable to a State
  under section 403 in quarterly installments, subject to this section.
 
      "(b) Notification.--Not later than 3 months before the payment of any
  such quarterly installment to a State, the Secretary shall notify the State
  of the amount of any reduction determined under section 412(a)(1)(B) with
  respect to the State.
 
      "(c) Computation and Certification of Payments to States.--
 
          "(1) Computation.--The Secretary shall estimate the amount to be paid
      to each eligible State for each quarter under this part, such estimate to
      be based on a report filed by the State containing an estimate by the
      State of the total sum to be expended by the State in the quarter under
      the State program funded under this part and such other information as
      the Secretary may find necessary.
 
          "(2) Certification.--The Secretary of Health and Human Services shall
      certify to the Secretary of the Treasury the amount estimated under
      paragraph (1) with respect to a State, reduced or increased to the extent
      of any overpayment or underpayment which the Secretary of Health and
      Human Services determines was made under this part to the State for any
      prior quarter and with respect to which adjustment has not been made
      under this paragraph.
 
      "(d) Payment Method.--Upon receipt of a certification under subsection
  (c)(2) with respect to a State, the Secretary of the Treasury shall, through
  the Fiscal Service of the Department of the Treasury and before audit or
  settlement by the General Accounting Office, pay to the State, at the time or
  times fixed by the Secretary of Health and Human Services, the amount so
  certified.
 
 
  "SEC. 406. FEDERAL LOANS FOR STATE WELFARE PROGRAMS.
 
      "(a) Loan Authority.--
 
          "(1) In general.--The Secretary shall make loans to any loan-eligible
      State, for a period to maturity of not more than 3 years.
 
          "(2) Loan-eligible state.--As used in paragraph (1), the term 'loan-
      eligible State' means a State against which a penalty has not been
      imposed under section 409(a)(1).
 
      "(b) Rate of Interest.--The Secretary shall charge and collect interest
  on any loan made under this section at a rate equal to the current average
  market yield on outstanding marketable obligations of the United States with
  remaining periods to maturity comparable to the period to maturity of the
  loan.
 
      "(c) Use of Loan.--A State shall use a loan made to the State under this
  section only for any purpose for which grant amounts received by the State
  under section 403(a) may be used, including--
 
          "(1) welfare anti-fraud activities; and
 
          "(2) the provision of assistance under the State program to Indian
      families that have moved from the service area of an Indian tribe with a
      tribal family assistance plan approved under section 412.
 
      "(d) Limitation on Total Amount of Loans to a State.--The cumulative
  dollar amount of all loans made to a State under this section during fiscal
  years 1997 through 2002 shall not exceed 10 percent of the State family
  assistance grant.
 
      "(e) Limitation on Total Amount of Outstanding Loans.--The total dollar
  amount of loans outstanding under this section may not exceed $1,700,000,000.
 
      "(f) Appropriation.--Out of any money in the Treasury of the United
  States not otherwise appropriated, there are appropriated such sums as may be
  necessary for the cost of loans under this section.
 
 
  "SEC. 407. MANDATORY WORK REQUIREMENTS.
 
      "(a) Participation Rate Requirements.--
 
          "(1) All families.--A State to which a grant is made under section
      403 for a fiscal year shall achieve the minimum participation rate
      specified in the following table for the fiscal year with respect to all
      families receiving assistance under the State program funded under this
      part:
 
                                                                    The minimum
                                                                  participation
          "If the fiscal year is:                                      rate is:
              1997........................................                   25
              1998........................................                   30
              1999........................................                   35
              2000........................................                   40
              2001........................................                   45
              2002 or thereafter..........................                  50.
 
 
          "(2) 2-parent families.--A State to which a grant is made under
      section 403 for a fiscal year shall achieve the minimum participation
      rate specified in the following table for the fiscal year with respect to
      2-parent families receiving assistance under the State program funded
      under this part:
 
                                                                    The minimum
                                                                  participation
          "If the fiscal year is:                                      rate is:
              1997........................................                   75
              1998........................................                   75
              1999 or thereafter..........................                  90.
 
 
      "(b) Calculation of Participation Rates.--
 
          "(1) All families.--
 
              "(A) Average monthly rate.--For purposes of subsection (a)(1),
          the participation rate for all families of a State for a fiscal year
          is the average of the participation rates for all families of the
          State for each month in the fiscal year.
 
              "(B) Monthly participation rates.--The participation rate of a
          State for all families of the State for a month, expressed as a
          percentage, is--
 
                  "(i) the number of families receiving assistance under the
              State program funded under this part that include an adult or a
              minor child head of household who is engaged in work for the
              month; divided by
 
                  "(ii) the amount by which--
 
                      "(I) the number of families receiving such assistance
                  during the month that include an adult or a minor child head
                  of household receiving such assistance; exceeds
 
                      "(II) the number of families receiving such assistance
                  that are subject in such month to a penalty described in
                  subsection (e)(1) but have not been subject to such penalty
                  for more than 3 months within the preceding 12-month period
                  (whether or not consecutive).
 
          "(2) 2-parent families.--
 
              "(A) Average monthly rate.--For purposes of subsection (a)(2),
          the participation rate for 2-parent families of a State for a fiscal
          year is the average of the participation rates for 2-parent families
          of the State for each month in the fiscal year.
 
              "(B) Monthly participation rates.--The participation rate of a
          State for 2-parent families of the State for a month shall be
          calculated by use of the formula set forth in paragraph (1)(B),
          except that in the formula the term 'number of 2-parent families'
          shall be substituted for the term 'number of families' each place
          such latter term appears.
 
          "(3) Pro rata reduction of participation rate due to caseload
      reductions not required by federal law.--
 
              "(A) In general.--The Secretary shall prescribe regulations for
          reducing the minimum participation rate otherwise required by this
          section for a fiscal year by the number of percentage points equal to
          the number of percentage points (if any) by which--
 
                  "(i) the average monthly number of families receiving
              assistance during the immediately preceding fiscal year under the
              State program funded under this part is less than
 
                  "(ii) the average monthly number of families that received
              aid under the State plan approved under part A (as in effect on
              September 30, 1995) during fiscal year 1995.
 
          The minimum participation rate shall not be reduced to the extent
          that the Secretary determines that the reduction in the number of
          families receiving such assistance is required by Federal law.
 
              "(B) Eligibility changes not counted.--The regulations required
          by subparagraph (A) shall not take into account families that are
          diverted from a State program funded under this part as a result of
          differences in eligibility criteria under a State program funded
          under this part and eligibility criteria under the State program
          operated under the State plan approved under part A (as such plan and
          such part were in effect on September 30, 1995). Such regulations
          shall place the burden on the Secretary to prove that such families
          were diverted as a direct result of differences in such eligibility
          criteria.
 
          "(4) State option to include individuals receiving assistance under a
      tribal family assistance plan.--For purposes of paragraphs (1)(B) and
      (2)(B), a State may, at its option, include families in the State that
      are receiving assistance under a tribal family assistance plan approved
      under section 412.
 
          "(5) State option for participation requirement exemptions.--For any
      fiscal year, a State may, at its option, not require an individual who is
      a single custodial parent caring for a child who has not attained 12
      months of age to engage in work, and may disregard such an individual in
      determining the participation rates under subsection (a) for not more
      than 12 months.
 
      "(c) Engaged in Work.--
 
          "(1) General rules.--
 
              "(A) All families.--For purposes of subsection (b)(1)(B)(i), a
          recipient is engaged in work for a month in a fiscal year if the
          recipient is participating in work activities for at least the
          minimum average number of hours per week specified in the following
          table during the month, not fewer than 20 hours per week of which are
          attributable to an activity described in paragraph (1), (2), (3),
          (4), (5), (6), (7), (8), or (12) of subsection (d), subject to this
          subsection:
 
                                                                    The minimum
            "If the month is                                  average number of
              in fiscal year:                                hours per week is:
                1997......................................                   20
                1998......................................                   20
                1999......................................                   25
                2000 or thereafter........................                  30.
 
 
              "(B) 2-parent families.--For purposes of subsection (b)(2)(B), an
          individual is engaged in work for a month in a fiscal year if--
 
                  "(i) the individual is making progress in work activities for
              at least 35 hours per week during the month, not fewer than 30
              hours per week of which are attributable to an activity described
              in paragraph (1), (2), (3), (4), (5), (6), (7), (8), or (12) of
              subsection (d), subject to this subsection; and
 
                  "(ii) if the family of the individual receives federally-
              funded child care assistance and an adult in the family is not
              disabled or caring for a severely disabled child, the
              individual's spouse is making progress in work activities during
              the month, not fewer than 20 hours per week of which are
              attributable to an activity described in paragraph (1), (2), (3),
              (4), (5), or (7) of subsection (d).
 
          "(2) Limitations and special rules.--
 
              "(A) Number of weeks for which job search counts as work.--
 
                  "(i) Limitation.--Notwithstanding paragraph (1) of this
              subsection, an individual shall not be considered to be engaged
              in work by virtue of participation in an activity described in
              subsection (d)(6) of a State program funded under this part,
              after the individual has participated in such an activity for 6
              weeks (or, if the unemployment rate of the State is at least 50
              percent greater than the unemployment rate of the United States,
              12 weeks), or if the participation is for a week that immediately
              follows 4 consecutive weeks of such participation.
 
                  "(ii) Limited authority to count less than full week of
              participation.--For purposes of clause (i) of this subparagraph,
              on not more than 1 occasion per individual, the State shall
              consider participation of the individual in an activity described
              in subsection (d)(6) for 3 or 4 days during a week as a week of
              participation in the activity by the individual.
 
              "(B) Single parent with child under age 6 deemed to be meeting
          work participation requirements if parent is engaged in work for 20
          hours per week.--For purposes of determining monthly participation
          rates under subsection (b)(1)(B)(i), a recipient in a 1-parent family
          who is the parent of a child who has not attained 6 years of age is
          deemed to be engaged in work for a month if the recipient is engaged
          in work for an average of at least 20 hours per week during the
          month.
 
              "(C) Teen head of household who maintains satisfactory school
          attendance deemed to be meeting work participation requirements.--For
          purposes of determining monthly participation rates under sub-section
          (b)(1)(B)(i), a recipient who is a single head of household and has
          not attained 20 years of age is deemed, subject to subparagraph (D)
          of this paragraph, to be engaged in work for a month in a fiscal year
          if the recipient--
 
                  "(i) maintains satisfactory attendance at secondary school or
              the equivalent during the month; or
 
                  "(ii) participates in education directly related to
              employment for at least the minimum average number of hours per
              week specified in the table set forth in paragraph (1)(A) of this
              subsection.
 
              "(D) Number of persons that may be treated as engaged in work by
          virtue of participation in vocational education activities or being a
          teen head of household who maintains satisfactory school
          attendance.--For purposes of determining monthly participation rates
          under paragraphs (1)(B)(i) and (2)(B) of subsection (b), not more
          than 20 percent of individuals in all families and in 2-parent
          families may be determined to be engaged in work in the State for a
          month by reason of participation in vocational educational training
          or deemed to be engaged in work by reason of subparagraph (C) of this
          paragraph.
 
      "(d) Work Activities Defined.--As used in this section, the term 'work
  activities' means--
 
          "(1) unsubsidized employment;
 
          "(2) subsidized private sector employment;
 
          "(3) subsidized public sector employment;
 
          "(4) work experience (including work associated with the refurbishing
      of publicly assisted housing) if sufficient private sector employment is
      not available;
 
          "(5) on-the-job training;
 
          "(6) job search and job readiness assistance;
 
          "(7) community service programs;
 
          "(8) vocational educational training (not to exceed 12 months with
      respect to any individual);
 
          "(9) job skills training directly related to employment;
 
          "(10) education directly related to employment, in the case of a
      recipient who has not received a high school diploma or a certificate of
      high school equivalency;
 
          "(11) satisfactory attendance at secondary school or in a course of
      study leading to a certificate of general equivalence, in the case of a
      recipient who has not completed secondary school or received such a
      certificate; and
 
          "(12) the provision of child care services to an individual who is
      participating in a community service program.
 
      "(e) Penalties Against Individuals.--
 
          "(1) In general.--Except as provided in paragraph (2), if an
      individual in a family receiving assistance under the State program
      funded under this part refuses to engage in work required in accordance
      with this section, the State shall--
 
              "(A) reduce the amount of assistance otherwise payable to the
          family pro rata (or more, at the option of the State) with respect to
          any period during a month in which the individual so refuses; or
 
              "(B) terminate such assistance,
 
      subject to such good cause and other exceptions as the State may
      establish.
 
          "(2) Exception.--Notwithstanding paragraph (1), a State may not
      reduce or terminate assistance under the State program funded under this
      part based on a refusal of an individual to work if the individual is a
      single custodial parent caring for a child who has not attained 6 years
      of age, and the individual proves that the individual has a demonstrated
      inability (as determined by the State) to obtain needed child care, for 1
      or more of the following reasons:
 
              "(A) Unavailability of appropriate child care within a reasonable
          distance from the individual's home or work site.
 
              "(B) Unavailability or unsuitability of informal child care by a
          relative or under other arrangements.
 
              "(C) Unavailability of appropriate and affordable formal child
          care arrangements.
 
      "(f) Nondisplacement in Work Activities.--
 
          "(1) In general.--Subject to paragraph (2), an adult in a family
      receiving assistance under a State program funded under this part
      attributable to funds provided by the Federal Government may fill a
      vacant employment position in order to engage in a work activity
      described in subsection (d).
 
          "(2) No filling of certain vacancies.--No adult in a work activity
      described in subsection (d) which is funded, in whole or in part, by
      funds provided by the Federal Government shall be employed or assigned--
 
              "(A) when any other individual is on layoff from the same or any
          substantially equivalent job; or
 
              "(B) if the employer has terminated the employment of any regular
          employee or otherwise caused an involuntary reduction of its
          workforce in order to fill the vacancy so created with an adult
          described in paragraph (1).
 
          "(3) Grievance procedure.--A State with a program funded under this
      part shall establish and maintain a grievance procedure for resolving
      complaints of alleged violations of paragraph (2).
 
          "(4) No preemption.--Nothing in this subsection shall preempt or
      supersede any provision of State or local law that provides greater
      protection for employees from displacement.
 
      "(g) Sense of the Congress.--It is the sense of the Congress that in
  complying with this section, each State that operates a program funded under
  this part is encouraged to assign the highest priority to requiring adults in
  2-parent families and adults in single-parent families that include older
  preschool or school-age children to be engaged in work activities.
 
      "(h) Sense of the Congress That States Should Impose Certain Requirements
  on Noncustodial, Nonsupporting Minor Parents.--It is the sense of the
  Congress that the States should require noncustodial, nonsupporting parents
  who have not attained 18 years of age to fulfill community work obligations
  and attend appropriate parenting or money management classes after school.
 
      "(i) Review of Implementation of State Work Programs.--During fiscal year
  1999, the Committee on Ways and Means of the House of Representatives and the
  Committee on Finance of the Senate shall hold hearings and engage in other
  appropriate activities to review the implementation of this section by the
  States, and shall invite the Governors of the States to testify before them
  regarding such implementation. Based on such hearings, such Committees may
  introduce such legislation as may be appropriate to remedy any problems with
  the State programs operated pursuant to this section.
 
 
  "SEC. 408. PROHIBITIONS; REQUIREMENTS.
 
      "(a) In General.--
 
          "(1) No assistance for families without a minor child.--A State to
      which a grant is made under section 403 shall not use any part of the
      grant to provide assistance to a family--
 
              "(A) unless the family includes--
 
                  "(i) a minor child who resides with a custodial parent or
              other adult caretaker relative of the child; or
 
                  "(ii) a pregnant individual; and
 
              "(B) if the family includes an adult who has received assistance
          under any State program funded under this part attributable to funds
          provided by the Federal Government, for 60 months (whether or not
          consecutive) after the date the State program funded under this part
          commences (unless an exception described in subparagraph (B), (C), or
          (D) of paragraph (7) applies).
 
          "(2) Reduction or elimination of assistance for noncooperation in
      establishing paternity or obtaining child support.--If the agency
      responsible for administering the State plan approved under part D
      determines that an individual is not cooperating with the State in
      establishing paternity or in establishing, modifying, or enforcing a
      support order with respect to a child of the individual, and the
      individual does not qualify for any good cause or other exception
      established by the State pursuant to section 454(29), then the State--
 
              "(A) shall deduct from the assistance that would otherwise be
          provided to the family of the individual under the State program
          funded under this part an amount equal to not less than 25 percent of
          the amount of such assistance; and
 
              "(B) may deny the family any assistance under the State program.
 
          "(3) No assistance for families not assigning certain support rights
      to the state.--
 
              "(A) In general.--A State to which a grant is made under section
          403 shall require, as a condition of providing assistance to a family
          under the State program funded under this part, that a member of the
          family assign to the State any rights the family member may have (on
          behalf of the family member or of any other person for whom the
          family member has applied for or is receiving such assistance) to
          support from any other person, not exceeding the total amount of
          assistance so provided to the family, which accrue (or have accrued)
          before the date the family leaves the program, which assignment, on
          and after the date the family leaves the program, shall not apply
          with respect to any support (other than support collected pursuant to
          section 464) which accrued before the family received such assistance
          and which the State has not collected by--
 
                  "(i) September 30, 2000, if the assignment is executed on or
              after October 1, 1997, and before October 1, 2000; or
 
                  "(ii) the date the family leaves the program, if the
              assignment is executed on or after October 1, 2000.
 
              "(B) Limitation.--A State to which a grant is made under section
          403 shall not require, as a condition of providing assistance to any
          family under the State program funded under this part, that a member
          of the family assign to the State any rights to support described in
          subparagraph (A) which accrue after the date the family leaves the
          program.
 
          "(4) No assistance for teenage parents who do not attend high school
      or other equivalent training program.--A State to which a grant is made
      under section 403 shall not use any part of the grant to provide
      assistance to an individual who has not attained 18 years of age, is not
      married, has a minor child at least 12 weeks of age in his or her care,
      and has not successfully completed a high-school education (or its
      equivalent), if the individual does not participate in--
 
              "(A) educational activities directed toward the attainment of a
          high school diploma or its equivalent; or
 
              "(B) an alternative educational or training program that has been
          approved by the State.
 
          "(5) No assistance for teenage parents not living in adult-supervised
      settings.--
 
              "(A) In general.--
 
                  "(i) Requirement.--Except as provided in subparagraph (B), a
              State to which a grant is made under section 403 shall not use
              any part of the grant to provide assistance to an individual
              described in clause (ii) of this subparagraph if the individual
              and the minor child referred to in clause (ii)(II) do not reside
              in a place of residence maintained by a parent, legal guardian,
              or other adult relative of the individual as such parent's,
              guardian's, or adult relative's own home.
 
                  "(ii) Individual described.-- For purposes of clause (i), an
              individual described in this clause is an individual who--
 
                      "(I) has not attained 18 years of age; and
 
                      "(II) is not married, and has a minor child in his or her
                  care.
 
              "(B) Exception.--
 
                  "(i) Provision of, or assistance in locating, adult-
              supervised living arrangement.--In the case of an individual who
              is described in clause (ii), the State agency referred to in
              section 402(a)(4) shall provide, or assist the individual in
              locating, a second chance home, maternity home, or other
              appropriate adult-supervised supportive living arrangement,
              taking into consideration the needs and concerns of the
              individual, unless the State agency determines that the
              individual's current living arrangement is appropriate, and
              thereafter shall require that the individual and the minor child
              referred to in subparagraph (A)(ii)(II) reside in such living
              arrangement as a condition of the continued receipt of assistance
              under the State program funded under this part attributable to
              funds provided by the Federal Government (or in an alternative
              appropriate arrangement, should circumstances change and the
              current arrangement cease to be appropriate).
 
                  "(ii) Individual described.--For purposes of clause (i), an
              individual is described in this clause if the individual is
              described in subparagraph (A)(ii), and--
 
                      "(I) the individual has no parent, legal guardian, or
                  other appropriate adult relative described in subclause (II)
                  of his or her own who is living or whose whereabouts are
                  known;
 
                      "(II) no living parent, legal guardian, or other
                  appropriate adult relative, who would otherwise meet
                  applicable State criteria to act as the individual's legal
                  guardian, of such individual allows the individual to live in
                  the home of such parent, guardian, or relative;
 
                      "(III) the State agency determines that--
 
                          "(aa) the individual or the minor child referred to
                      in subparagraph (A)(ii)(II) is being or has been
                      subjected to serious physical or emotional harm, sexual
                      abuse, or exploitation in the residence of the
                      individual's own parent or legal guardian; or
 
                          "(bb) substantial evidence exists of an act or
                      failure to act that presents an imminent or serious harm
                      if the individual and the minor child lived in the same
                      residence with the individual's own parent or legal
                      guardian; or
 
                      "(IV) the State agency otherwise determines that it is in
                  the best interest of the minor child to waive the requirement
                  of subparagraph (A) with respect to the individual or the
                  minor child.
 
                  "(iii) Second-chance home.--For purposes of this
              subparagraph, the term 'second-chance home' means an entity that
              provides individuals described in clause (ii) with a supportive
              and supervised living arrangement in which such individuals are
              required to learn parenting skills, including child development,
              family budgeting, health and nutrition, and other skills to
              promote their long-term economic independence and the well-being
              of their children.
 
          "(6) No medical services.--
 
              "(A) In general.--A State to which a grant is made under section
          403 shall not use any part of the grant to provide medical services.
 
              "(B) Exception for prepregnancy family planning services.--As
          used in subparagraph (A), the term 'medical services' does not
          include prepregnancy family planning services.
 
          "(7) No assistance for more than 5 years.--
 
              "(A) In general.--A State to which a grant is made under section
          403 shall not use any part of the grant to provide assistance to a
          family that includes an adult who has received assistance under any
          State program funded under this part attributable to funds provided
          by the Federal Government, for 60 months (whether or not consecutive)
          after the date the State program funded under this part commences,
          subject to this paragraph.
 
              "(B) Minor child exception.--In determining the number of months
          for which an individual who is a parent or pregnant has received
          assistance under the State program funded under this part, the State
          shall disregard any month for which such assistance was provided with
          respect to the individual and during which the individual was--
 
                  "(i) a minor child; and
 
                  "(ii) not the head of a household or married to the head of a
              household.
 
              "(C) Hardship exception.--
 
                  "(i) In general.--The State may exempt a family from the
              application of subparagraph (A) by reason of hardship or if the
              family includes an individual who has been battered or subjected
              to extreme cruelty.
 
                  "(ii) Limitation.--The number of families with respect to
              which an exemption made by a State under clause (i) is in effect
              for a fiscal year shall not exceed 20 percent of the average
              monthly number of families to which assistance is provided under
              the State program funded under this part.
 
                  "(iii) Battered or subject to extreme cruelty defined.--For
              purposes of clause (i), an individual has been battered or
              subjected to extreme cruelty if the individual has been subjected
              to--
 
                      "(I) physical acts that resulted in, or threatened to
                  result in, physical injury to the individual;
 
                      "(II) sexual abuse;
 
                      "(III) sexual activity involving a dependent child;
 
                      "(IV) being forced as the caretaker relative of a
                  dependent child to engage in nonconsensual sexual acts or
                  activities;
 
                      "(V) threats of, or attempts at, physical or sexual
                  abuse;
 
                      "(VI) mental abuse; or
 
                      "(VII) neglect or deprivation of medical care.
 
              "(D) Disregard of months of assistance received by adult while
          living on an indian reservation or in an alaskan native village with
          50 percent unemployment.--In determining the number of months for
          which an adult has received assistance under the State program funded
          under this part, the State shall disregard any month during which the
          adult lived on an Indian reservation or in an Alaskan Native village
          if, during the month--
 
                  "(i) at least 1,000 individuals were living on the
              reservation or in the village ; and
 
                  "(ii) at least 50 percent of the adults living on the
              reservation or in the village were unemployed.
 
              "(E) Rule of interpretation.--Subparagraph (A) shall not be
          interpreted to require any State to provide assistance to any
          individual for any period of time under the State program funded
          under this part.
 
              "(F) Rule of interpretation.--This part shall not be interpreted
          to prohibit any State from expending State funds not originating with
          the Federal Government on benefits for children or families that have
          become ineligible for assistance under the State program funded under
          this part by reason of subparagraph (A).
 
          "(8) Denial of assistance for 10 years to a person found to have
      fraudulently misrepresented residence in order to obtain assistance in 2
      or more states.--A State to which a grant is made under section 403 shall
      not use any part of the grant to provide cash assistance to an individual
      during the 10-year period that begins on the date the individual is
      convicted in Federal or State court of having made a fraudulent statement
      or representation with respect to the place of residence of the
      individual in order to receive assistance simultaneously from 2 or more
      States under programs that are funded under this title, title XIX, or the
      Food Stamp Act of 1977, or benefits in 2 or more States under the
      supplemental security income program under title XVI. The preceding
      sentence shall not apply with respect to a conviction of an individual,
      for any month beginning after the President of the United States grants a
      pardon with respect to the conduct which was the subject of the
      conviction.
 
          "(9) Denial of assistance for fugitive felons and probation and
      parole violators.--
 
              "(A) In general.--A State to which a grant is made under section
          403 shall not use any part of the grant to provide assistance to any
          individual who is--
 
                  "(i) fleeing to avoid prosecution, or custody or confinement
              after conviction, under the laws of the place from which the
              individual flees, for a crime, or an attempt to commit a crime,
              which is a felony under the laws of the place from which the
              individual flees, or which, in the case of the State of New
              Jersey, is a high misdemeanor under the laws of such State; or
 
                  "(ii) violating a condition of probation or parole imposed
              under Federal or State law.
 
          The preceding sentence shall not apply with respect to conduct of an
          individual, for any month beginning after the President of the United
          States grants a pardon with respect to the conduct.
 
              "(B) Exchange of information with law enforcement agencies.--If a
          State to which a grant is made under section 403 establishes
          safeguards against the use or disclosure of information about
          applicants or recipients of assistance under the State program funded
          under this part, the safeguards shall not prevent the State agency
          administering the program from furnishing a Federal, State, or local
          law enforcement officer, upon the request of the officer, with the
          current address of any recipient if the officer furnishes the agency
          with the name of the recipient and notifies the agency that--
 
                  "(i) the recipient--
 
                      "(I) is described in subparagraph (A); or
 
                      "(II) has information that is necessary for the officer
                  to conduct the official duties of the officer; and
 
                  "(ii) the location or apprehension of the recipient is within
              such official duties.
 
          "(10) Denial of assistance for minor children who are absent from the
      home for a significant period.--
 
              "(A) In general.--A State to which a grant is made under section
          403 shall not use any part of the grant to provide assistance for a
          minor child who has been, or is expected by a parent (or other
          caretaker relative) of the child to be, absent from the home for a
          period of 45 consecutive days or, at the option of the State, such
          period of not less than 30 and not more than 180 consecutive days as
          the State may provide for in the State plan submitted pursuant to
          section 402.
 
              "(B) State authority to establish good cause exceptions.--The
          State may establish such good cause exceptions to subparagraph (A) as
          the State considers appropriate if such exceptions are provided for
          in the State plan submitted pursuant to section 402.
 
              "(C) Denial of assistance for relative who fails to notify state
          agency of absence of child.--A State to which a grant is made under
          section 403 shall not use any part of the grant to provide assistance
          for an individual who is a parent (or other caretaker relative) of a
          minor child and who fails to notify the agency administering the
          State program funded under this part of the absence of the minor
          child from the home for the period specified in or provided for
          pursuant to subparagraph (A), by the end of the 5-day period that
          begins with the date that it becomes clear to the parent (or
          relative) that the minor child will be absent for such period so
          specified or provided for.
 
          "(11) Medical assistance required to be provided for certain families
      having earnings from employment or child support.--
 
              "(A) Earnings from employment.--A State to which a grant is made
          under section 403 and which has a State plan approved under title XIX
          shall provide that in the case of a family that is treated (under
          section 1931(b)(1)(A) for purposes of title XIX) as receiving aid
          under a State plan approved under this part (as in effect on July 16,
          1996), that would become ineligible for such aid because of hours of
          or income from employment of the caretaker relative (as defined under
          this part as in effect on such date) or because of section
          402(a)(8)(B)(ii)(II) (as so in effect), and that was so treated as
          receiving such aid in at least 3 of the 6 months immediately
          preceding the month in which such ineligibility begins, the family
          shall remain eligible for medical assistance under the State's plan
          approved under title XIX for an extended period or periods as
          provided in section 1925 or 1902(e)(1) (as applicable), and that the
          family will be appropriately notified of such extension as required
          by section 1925(a)(2).
 
              "(B) Child support.--A State to which a grant is made under
          section 403 and which has a State plan approved under title XIX shall
          provide that in the case of a family that is treated (under section
          1931(b)(1)(A) for purposes of title XIX) as receiving aid under a
          State plan approved under this part (as in effect on July 16, 1996),
          that would become ineligible for such aid as a result (wholly or
          partly) of the collection of child or spousal support under part D
          and that was so treated as receiving such aid in at least 3 of the 6
          months immediately preceding the month in which such ineligibility
          begins, the family shall remain eligible for medical assistance under
          the State's plan approved under title XIX for an extended period or
          periods as provided in section 1931(c)(1).
 
      "(b) Individual Responsibility Plans.--
 
          "(1) Assessment.--The State agency responsible for administering the
      State program funded under this part shall make an initial assessment of
      the skills, prior work experience, and employability of each recipient of
      assistance under the program who--
 
              "(A) has attained 18 years of age; or
 
              "(B) has not completed high school or obtained a certificate of
          high school equivalency, and is not attending secondary school.
 
          "(2) Contents of plans.--
 
              "(A) In general.--On the basis of the assessment made under
          subsection (a) with respect to an individual, the State agency, in
          consultation with the individual, may develop an individual
          responsibility plan for the individual, which--
 
                  "(i) sets forth an employment goal for the individual and a
              plan for moving the individual immediately into private sector
              employment;
 
                  "(ii) sets forth the obligations of the individual, which may
              include a requirement that the individual attend school, maintain
              certain grades and attendance, keep school age children of the
              individual in school, immunize children, attend parenting and
              money management classes, or do other things that will help the
              individual become and remain employed in the private sector;
 
                  "(iii) to the greatest extent possible is designed to move
              the individual into whatever private sector employment the
              individual is capable of handling as quickly as possible, and to
              increase the responsibility and amount of work the individual is
              to handle over time;
 
                  "(iv) describes the services the State will provide the
              individual so that the individual will be able to obtain and keep
              employment in the private sector, and describe the job counseling
              and other services that will be provided by the State; and
 
                  "(v) may require the individual to undergo appropriate
              substance abuse treatment.
 
              "(B) Timing.--The State agency may comply with paragraph (1) with
          respect to an individual--
 
                  "(i) within 90 days (or, at the option of the State, 180
              days) after the effective date of this part, in the case of an
              individual who, as of such effective date, is a recipient of aid
              under the State plan approved under part A (as in effect
              immediately before such effective date); or
 
                  "(ii) within 30 days (or, at the option of the State, 90
              days) after the individual is determined to be eligible for such
              assistance, in the case of any other individual.
 
          "(3) Penalty for noncompliance by individual.--In addition to any
      other penalties required under the State program funded under this part,
      the State may reduce, by such amount as the State considers appropriate,
      the amount of assistance otherwise payable under the State program to a
      family that includes an individual who fails without good cause to comply
      with an individual responsibility plan signed by the individual.
 
          "(4) State discretion.--The exercise of the authority of this
      subsection shall be within the sole discretion of the State.
 
      "(c) Nondiscrimination Provisions.--The following provisions of law shall
  apply to any program or activity which receives funds provided under this
  part:
 
          "(1) The Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.).
 
          "(2) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794).
 
          "(3) The Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et
      seq.).
 
          "(4) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et
      seq.).
 
      "(d) Aliens.--For special rules relating to the treatment of aliens, see
  section 402 of the Personal Responsibility and Work Opportunity
  Reconciliation Act of 1996.
 
 
  "SEC. 409. PENALTIES.
 
      "(a) In General.--Subject to this section:
 
          "(1) Use of grant in violation of this part.--
 
              "(A) General penalty.--If an audit conducted under chapter 75 of
          title 31, United States Code, finds that an amount paid to a State
          under section 403 for a fiscal year has been used in violation of
          this part, the Secretary shall reduce the grant payable to the State
          under section 403(a)(1) for the immediately succeeding fiscal year
          quarter by the amount so used.
 
              "(B) Enhanced penalty for intentional violations.--If the State
          does not prove to the satisfaction of the Secretary that the State
          did not intend to use the amount in violation of this part, the
          Secretary shall further reduce the grant payable to the State under
          section 403(a)(1) for the immediately succeeding fiscal year quarter
          by an amount eq