HR 3625 IH

To reauthorize and reform the program of block grants to States for temporary assistance for needy families, and for other purposes.

January 24, 2002

Mr. CARDIN (for himself, Mr. STARK, Mr. LEVIN, Mr. MCDERMOTT, and Mr. DOGGETT) introduced the following bill; which was referred to the Committee on Ways and Means

To reauthorize and reform the program of block grants to States for temporary assistance for needy families, and for other purposes.

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 `Next Step in Reforming Welfare Act'.

SEC. 2. TABLE OF CONTENTS.

The table of contents of this Act is as follows:

Sec. 1. Short title.

Sec. 2. Table of contents.

Sec. 3. Amendment of Social Security Act.

TITLE I--CONTINUATION OF CERTAIN GRANTS

Sec. 101. Family assistance grants.

Sec. 102. Bonus to reward high performance States.

Sec. 103. Extension of supplemental grants.

Sec. 104. Additional grants for States with low Federal funding per poor child.

Sec. 105. Contingency fund.

TITLE II--POVERTY REDUCTION

Sec. 201. Additional purpose of TANF program.

Sec. 202. Child poverty reduction grants.

Sec. 203. Review and conciliation process.

Sec. 204. Replacement of caseload reduction credit with employment credit.

Sec. 205. Restoration of funding of the Social Services Block Grant.

TITLE III--REQUIRING AND REWARDING WORK

Sec. 301. Effect of wage subsidies on 5-year limit.

Sec. 302. Child care.

Sec. 303. Competitive grants to improve access to various benefit programs.

Sec. 304. Assessments for TANF recipients.

TITLE IV--HELPING WELFARE LEAVERS CLIMB THE EMPLOYMENT LADDER

Sec. 401. State plan requirement on employment advancement.

Sec. 402. Employment Advancement Fund.

Sec. 403. Elimination of limit on number of TANF recipients enrolled in vocational education or high school who may be counted towards the work participation requirement.

Sec. 404. Counting of up to 2 years of vocational and educational training as work activity.

Sec. 405. Limited counting of certain activities leading to employment as work activity.

Sec. 406. Clarification of authority of States to use TANF funds carried over from prior years to provide TANF benefits and services.

TITLE V--PROMOTING FAMILY FORMATION AND RESPONSIBLE PARENTING

Sec. 501. Family Formation Fund.

Sec. 502. Distribution of child support collected by States on behalf of children receiving certain welfare benefits.

Sec. 503. Elimination of separate work participation rate for 2-parent families.

Sec. 504. Ban on imposition of stricter eligibility criteria for 2-parent families; State opt-out.

TITLE VI--RESTORING FAIRNESS FOR IMMIGRANT FAMILIES

Sec. 601. Treatment of aliens under the TANF program.

Sec. 602. Treatment of aliens under the SSI program.

Sec. 603. Effective date and applicability.

TITLE VII--ENSURING STATE ACCOUNTABILITY

Sec. 701. Inflation adjustment of maintenance-of-effort requirement.

Sec. 702. Ban on using Federal TANF funds to replace State and local spending that does not meet the definition of qualified State expenditures.

TITLE VIII--IMPROVING INFORMATION ABOUT TANF RECIPIENTS AND PROGRAMS

Sec. 801. Extension of funding of studies and demonstrations.

Sec. 802. Longitudinal studies of employment and earnings of TANF leavers.

Sec. 803. Inclusion of disability status in information States report about TANF families.

Sec. 804. Annual report to the Congress to include greater detail about State programs funded under TANF.

Sec. 805. Enhancement of understanding of the reasons individuals leave State TANF programs.

Sec. 806. Standardized State plans.

TITLE IX--EFFECTIVE DATE

Sec. 901. Effective date.

SEC. 3. AMENDMENT OF SOCIAL SECURITY ACT.

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

TITLE I--CONTINUATION OF CERTAIN GRANTS

SEC. 101. FAMILY ASSISTANCE GRANTS.

(a) IN GENERAL- Section 403(a)(1)(A) (42 U.S.C. 603(a)(1)(A)) is amended by striking `1996' and all that follows through `2002' and inserting `2003 through 2007'.

(b) INFLATION ADJUSTMENT- Section 403(a)(1) (42 U.S.C. 603(a)(1)) is amended--

(1) in subparagraph (B)--

(A) by striking `means the greatest of--' and inserting `means, with respect to a fiscal year specified in subparagraph (A) of this paragraph--

`(i) the greatest of--';

(B) by redesignating each of clauses (i), (ii)(I), (ii)(II), and (iii) as subclauses (I), (II)(aa), (II)(bb), and (III), respectively;

(C) by indenting each of the provisions specified in subparagraph (B) of this paragraph 2 additional ems to the right;

(D) by striking the period and inserting `; multiplied by'; and

(E) by adding at the end the following:

`(ii) 1.00, plus the inflation percentage (as defined in subparagraph (F) of this paragraph) in effect for the fiscal year specified in subparagraph (A) of this paragraph.'; and

(2) by adding at the end the following:

`(F) INFLATION PERCENTAGE- For purposes of subparagraph (B) of this paragraph, the inflation percentage applicable to a fiscal year is the percentage (if any) by which--

`(i) the average of the Consumer Price Index (as defined in section 1(f)(5) of the Internal Revenue Code of 1986) for the 12-month period ending on September 30 of the immediately preceding fiscal year; exceeds

`(ii) the average of the Consumer Price Index (as so defined) for the 12-month period ending on September 30, 2001.'.

SEC. 102. BONUS TO REWARD HIGH PERFORMANCE STATES.

Section 403(a)(4) (42 U.S.C. 603(a)(4)) is amended--

(1) in subparagraph (D), by striking `$1,000,000,000' and inserting `$1,800,000,000';

(2) in subparagraph (E), by striking `and 2003' and inserting `2003, 2004, 2005, 2006, and 2007'; and

(3) in subparagraph (F), by striking `2003 $1,000,000,000' and inserting `2002 $800,000,000, and for fiscal years 2003 through 2007 $1,000,000,000,'.

SEC. 103. EXTENSION OF SUPPLEMENTAL GRANTS.

Section 403(a)(3) (42 U.S.C. 603(a)(3)) is amended--

(1) in subparagraph (A)--

(A) by striking `and' at the end of clause (i);

(B) by striking the period at the end of clause (ii) and inserting `; and'; and

(C) by adding at the end the following:

`(iii) for each of fiscal years 2003 through 2007, a grant in an amount equal to the amount required to be paid to the State under this paragraph in fiscal year 2001.';

(2) in subparagraph (E), by striking `1998' and all that follows and inserting `2003 through 2007 $1,597,250,000 for grants under this paragraph.'; and

(3) by striking subparagraph (G).

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

Section 403(a) (42 U.S.C. 603(a)) is amended by adding at the end the following:

`(6) ADDITIONAL GRANTS FOR STATES WITH LOW FEDERAL FUNDING PER POOR CHILD-

`(A) IN GENERAL- The Secretary shall make a grant pursuant to this paragraph to a State--

`(i) for fiscal year 2003, if the State is an inadequately poverty-funded State for fiscal year 2002; and

`(ii) for any of fiscal years 2004 through 2007, if the State is an inadequately poverty-funded State for any prior fiscal year after fiscal year 2002.

`(B) INADEQUATELY POVERTY-FUNDED STATE- For purposes of this paragraph, a State is an inadequately poverty-funded State for a particular fiscal year if--

`(i) the total amount of the grants made to the State under paragraph (1), paragraph (3), and this paragraph for the particular fiscal year, divided by the number of children in poverty in the State with respect to the particular fiscal year is less than 75 percent of the total amount of grants made to all eligible States under paragraph (1), paragraph (3), and this paragraph for the particular fiscal year, divided by the total number of children living in poverty in all eligible States with respect to the particular fiscal year; and

`(ii) the total of the amounts paid to the State under this subsection for all prior fiscal years that have not been expended by the State by the end of the preceding fiscal year is less than 50 percent of State family assistance grant for the particular fiscal year.

`(C) AMOUNT OF GRANT- The amount of the grant to be made under this paragraph to a State for a particular fiscal year shall be--

`(i) if the particular fiscal year is fiscal year 2003, an amount equal to--

`(I) the number of children in poverty in the State for the then preceding fiscal year, divided by the total number of children in poverty in all States that are inadequately poverty-funded States for the then preceding fiscal year; multiplied by

`(II) the amount appropriated pursuant to subparagraph (G) for the particular fiscal year; or

`(ii) if the particular fiscal year is any of fiscal years 2004 through 2007, an amount equal to--

`(I) the amount required to be paid to the State under this paragraph for the then preceding fiscal year; plus

`(II) if the State is an inadequately poverty-funded State for the then preceding fiscal year--

`(aa) the number of children in poverty in the State for the then preceding fiscal year, divided by the total number of children in poverty in all States that are inadequately poverty-funded States for the then preceding fiscal year; multiplied by

`(bb) the amount appropriated pursuant to subparagraph (G) for the particular fiscal year.

`(D) USE OF GRANT- A State to which a grant is made under this paragraph shall use the grant for any purpose for which a grant made under this part may be used.

`(E) DEFINITIONS- In this paragraph:

`(i) CHILDREN IN POVERTY- The term `children in poverty' means, with respect to a State and a fiscal year, the number of children residing in the State who had not attained 18 years of age and whose family income was less than the poverty line then applicable to the family, as of the end of the fiscal year.

`(ii) POVERTY LINE- The term `poverty line' has the meaning given the term in section 673(2) of the Omnibus Budget Reconciliation Act of 1981, including any revision required by such section.

`(F) FAMILY INCOME DETERMINATIONS- For purposes of this paragraph, family income includes cash income, except cash benefits from means-tested public programs and child support payments.

`(G) APPROPRIATIONS-

`(i) IN GENERAL- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for grants under this paragraph--

`(I) $65,000,000 for fiscal year 2003;

`(II) $130,000,000 for fiscal year 2004;

`(III) $195,000,000 for fiscal year 2005;

`(IV) $260,000,000 for fiscal year 2006; and

`(V) $325,000,000 for fiscal year 2007.

`(ii) AVAILABILITY- Amounts made available under clause (i) shall remain available until expended.'.

SEC. 105. CONTINGENCY FUND.

(a) IN GENERAL- Section 403(b) (42 U.S.C. 603(b)) is amended--

(1) in paragraph (2), by striking `1997' and all that follows and inserting `2003 through 2007 such sums as are necessary for payments under this subsection'; and

(2) in paragraph (3), by striking subparagraph (C) and inserting the following:

`(C) LIMITATION ON MONTHLY PAYMENT TO A STATE- The total amount paid to a single State under subparagraph (A) during a fiscal year shall not exceed 20 percent of the State family assistance grant.'.

(b) APPLICATION OF REGULAR MAINTENANCE OF EFFORT REQUIREMENT- Section 409(a)(10) (42 U.S.C. 609(a)(10)) is amended by striking `100 percent of historic State expenditures (as defined in paragraph (7)(B)(iii) of this subsection)' and inserting `the applicable percentage (as defined in paragraph (7)(B)(ii) of this subsection) of inflation-adjusted historic State expenditures (as defined in paragraph (7)(B)(vi) of this subsection)'.

(c) MODIFICATION OF UNEMPLOYMENT TEST TO BECOME NEEDY STATE- Section 403(b)(5)(A) (42 U.S.C. 603(b)(5)(A)) is amended to read as follows:

`(A) the average rate of total unemployment in the State (seasonally adjusted) for the period consisting of the most recent 3 months for which data are available has increased by the lesser of 1.5 percentage points or by 50 percent over the corresponding 3-month period in the preceding fiscal year; or'.

(d) MODIFICATION OF FOOD STAMP TEST TO BECOME NEEDY STATE- Section 403(b)(5)(B) (42 U.S.C. 603(b)(5)(B)) is amended to read as follows:

`(B) as determined by the Secretary of Agriculture, the monthly average number of households (as of the last day of each month) that participated in the food stamp program in the State in the then most recently concluded 3-month period for which data are available exceeds by at least 10 percent the monthly average number of households (as of the last day of each month) in the State that participated in the food stamp program in the corresponding 3-month period in the preceding fiscal year.'.

(e) SIMPLIFICATION OF RECONCILIATION FORMULA- Section 403(b)(6) (42 U.S.C. 603(b)(6)) is amended to read as follows:

`(6) ANNUAL RECONCILIATION-

`(A) IN GENERAL- Notwithstanding paragraph (3), if the Secretary makes a payment to a State under this subsection in a fiscal year, then the State shall remit to the Secretary, within 1 year after the end of the first subsequent period of 3 consecutive months for which the State is not a needy State, an amount equal to the amount (if any) by which--

`(i) the maintenance of effort level (as defined in subparagraph (B)(i) of this paragraph) for the fiscal year, plus the State contribution (as defined in subparagraph (B)(ii) of this paragraph) in the fiscal year; exceeds

`(ii) the qualified State expenditures (as defined in section 409(a)(7)(B)(i)) in the fiscal year.

`(B) DEFINITIONS- In subparagraph (A):

`(i) MAINTENANCE OF EFFORT LEVEL- The term `maintenance of effort level' means, with respect to a State and a fiscal year, an amount equal to the applicable percentage of historic State expenditures (as defined in section 409(a)(7)(B)) for the fiscal year.

`(ii) STATE CONTRIBUTION- The term `State contribution' means, with respect to a fiscal year--

`(I) the total amount paid to the State under this subsection in the fiscal year; multiplied by

`(II) 1 minus the greater of 75 percent or the Federal medical assistance percentage for the State (as defined in section 1905(b)), divided by the greater of 75 percent or the Federal medical assistance percentage for the State (as defined in section 1905(b)).'.

(f) INCREASE IN NUMBER OF MONTHS FOR WHICH STATE MAY QUALIFY FOR PAYMENTS- Section 403(b)(4) (42 U.S.C. 603(b)(4)) is amended by striking `2-month' and inserting `3-month'.

TITLE II--POVERTY REDUCTION

SEC. 201. ADDITIONAL PURPOSE OF TANF PROGRAM.

Section 401(a) (42 U.S.C. 601(a)) is amended--

(1) by striking `and' at the end of paragraph (3);

(2) by striking the period at the end of paragraph (4) and inserting `; and'; and

(3) by adding at the end the following:

`(5) reduce the extent and severity of poverty and promote self-sufficiency among families with children.'.

SEC. 202. CHILD POVERTY REDUCTION GRANTS.

Section 403(a) (42 U.S.C. 603(a)) is further amended by adding at the end the following:

`(7) BONUS TO REWARD STATES THAT REDUCE CHILD POVERTY-

`(A) IN GENERAL- Beginning with fiscal year 2003, the Secretary shall make a grant pursuant to this paragraph to each State for each fiscal year for which the State is a qualified child poverty reduction State.

`(B) AMOUNT OF GRANT-

`(i) IN GENERAL- Subject to this subparagraph, the amount of the grant to be made to a qualified child poverty reduction State for a fiscal year shall be an amount equal to--

`(I) the number of children who had not attained 18 years of age by the end of the then most recently completed calendar year and who resided in the State as of the end of such calendar year, divided by the number of such children who resided in the United States as of the end of such calendar year; multiplied by

`(II) the amount appropriated pursuant to subparagraph (F) for the fiscal year.

`(ii) LIMITATIONS-

`(I) MINIMUM GRANT- The amount of the grant to be made to a qualified child poverty reduction State for a fiscal year shall be not less than $1,000,000.

`(II) MAXIMUM GRANT- The amount of the grant to be made to a qualified child poverty reduction State for a fiscal year shall not exceed an amount equal to 5 percent of the State family assistance grant for the fiscal year.

`(iii) PRO RATA INCREASE- If the amount available for grants under this paragraph for a fiscal year is greater than the total amount of payments otherwise required to be made under this paragraph for the fiscal year, then the amount otherwise payable to any State for the fiscal year under this paragraph shall, subject to clause (ii)(II), be increased by such equal percentage as may be necessary to ensure that the total of the amounts payable for the fiscal year under this paragraph equals the amount available for the grants.

`(iv) PRO RATA REDUCTION- If the amount available for grants under this paragraph for a fiscal year is less than the total amount of payments otherwise required to be made under this paragraph for the fiscal year, then the amount otherwise payable to any State for the fiscal year under this paragraph shall, subject to clause (ii)(I), be reduced by such equal percentage as may be necessary to ensure that the total of the amounts payable for the fiscal year under this paragraph equals the amount available for the grants.

`(C) USE OF GRANT- A State to which a grant is made under this paragraph shall use the grant for any purpose for which a grant made under this part may be used.

`(D) DEFINITIONS- In this paragraph:

`(i) QUALIFIED CHILD POVERTY REDUCTION STATE- The term `qualified child poverty reduction State' means, with respect to a fiscal year, a State if--

`(I) the child poverty rate achieved by the State for the then most recently completed calendar year for which such information is available is less than the lowest child poverty rate achieved by the State during the applicable period; and

`(II) the average depth of child poverty in the State for the then most recently completed calendar year for which such information is available is not greater than the average depth of child poverty in the State for the calendar year that precedes such then most recently completed calendar year.

`(ii) APPLICABLE PERIOD- In clause (i), the term `applicable period' means, with respect to a State and the calendar year referred to in clause (i)(I), the period that--

`(I) begins with the calendar year that, as of October 1, 2002, precedes the then most recently completed calendar year for which such information is available; and

`(II) ends with the calendar year that precedes the calendar year referred to clause (i)(I).

`(iii) CHILD POVERTY RATE- The term `child poverty rate' means, with respect to a State and a calendar year, the percentage of children residing in the State during the calendar year whose family income for the calendar year is less than the poverty line then applicable to the family.

`(iv) AVERAGE DEPTH OF CHILD POVERTY- The term `average depth of child poverty' means with respect to a State and a calendar year, the average dollar amount by which family income is exceeded by the poverty line, among children in the State whose family income for the calendar year is less than the applicable poverty line.

`(v) POVERTY LINE- The term `poverty line' has the meaning given the term in section 673(2) of the Omnibus Budget Reconciliation Act of 1981, including any revision required by such section applicable to a family of the size involved.

`(E) FAMILY INCOME DETERMINATIONS- For purposes of this paragraph, family income includes cash income, child support payments, government cash payments, and benefits under the Food Stamp Act of 1977 that are received by any family member, and family income shall be determined after payment of all taxes and receipt of any tax refund or rebate by any family member.

`(F) APPROPRIATIONS-

`(i) IN GENERAL- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for each of fiscal years 2003 through 2007 $150,000,000 for grants under this paragraph.

`(ii) AVAILABILITY- Amounts made available under clause (i) shall remain available until expended.'.

SEC. 203. REVIEW AND CONCILIATION PROCESS.

(a) REQUIREMENT- Section 408(a) (42 U.S.C. 608(a)) is amended by adding at the end the following:

`(12) REVIEW AND CONCILIATION PROCESS REQUIREMENTS- A State to which a grant is made under section 403 shall not impose a sanction against a person under the State program funded under this part, unless the State--

`(A) has attempted at least twice (using at least 2 different methods) to notify the person of the impending imposition of the sanction, the reason for the proposed sanction, the amount of the sanction, the length of time during which the proposed sanction would be in effect, and the steps required to come into compliance or to show good cause for noncompliance;

`(B) has afforded the person an opportunity--

`(i) to meet with the caseworker involved or another individual who has authority to determine whether to impose the sanction; and

`(ii) to explain why the person did not comply with the requirement on the basis of which the sanction is to be imposed;

`(C) has considered and taken any such explanation into account in determining to impose the sanction;

`(D) has specifically considered whether certain conditions exist, such as a physical or mental impairment, domestic violence, or limited proficiency in English, that contributed to the noncompliance of the person; and

`(E) in determining whether to impose the sanction, has used screening tools developed in consultation with individuals or groups with expertise in matters described in subparagraph (D).'.

(b) PENALTY- Section 409(a) (42 U.S.C. 609(a)) is amended by adding at the end the following:

`(15) PENALTY FOR FAILURE OF STATE TO USE REVIEW AND CONCILIATION PROCESS-

`(A) IN GENERAL- If the Secretary determines that a State to which a grant is made under section 403 for a fiscal year has violated section 408(a)(12) during the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to 5 percent of the State family assistance grant.

`(B) PENALTY BASED ON SEVERITY OF FAILURE- The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of noncompliance.'.

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

(a) EMPLOYMENT CREDIT TO REWARD STATES IN WHICH FAMILIES LEAVE WELFARE FOR WORK; ADDITIONAL CREDIT FOR FAMILIES WITH HIGHER EARNINGS- Section 407(a) (42 U.S.C. 607(a)) is amended by adding at the end the following:

`(3) EMPLOYMENT CREDIT-

`(A) IN GENERAL- The minimum participation rate otherwise applicable to a State under this subsection for a fiscal year shall be reduced by the number of percentage points in the employment credit for the State for the fiscal year.

`(B) CALCULATION OF CREDIT-

`(i) IN GENERAL- The employment credit for a State for a fiscal year is an amount equal to--

`(I) twice the number of families that, during the estimating period, ceased to receive cash payments under the State program funded under this part, and that, during the employment period, had earnings; divided by

`(II) the average monthly number of families that include an adult who, during the estimating period, received cash payments under the State program funded under this part.

`(ii) DEFINITIONS- In clause (i):

`(I) ESTIMATING PERIOD- The term `estimating period' means, with respect to a fiscal year, the 1st quarter of the preceding fiscal year.

`(II) EMPLOYMENT PERIOD- The term `employment period' means, with respect to a fiscal year, the 3rd quarter of the preceding fiscal year.

`(iii) SPECIAL RULE FOR FORMER RECIPIENTS WITH HIGHER EARNINGS- In caculating the employment credit for a State for a fiscal year, a family that, during the employment period, earned more than 33 percent of the average wage in the State (determined on the basis of State unemployment data) shall be considered to be 1.5 families.

`(4) TRANSITION RULE- Notwithstanding the preceding provisions of this subsection, if the minimum participation rate applicable to a State under this section for the preceding fiscal year (determined as if paragraph (3) of subsection (b), as in effect immediately before the effective date of this paragraph, were still in effect) would be less than 50 percent, the minimum participation rate applicable to the State under this section for the fiscal year shall be the lesser of--

`(A) 10 percentage points greater than the minimum participation rate applicable to the State under this section for the preceding fiscal year; or

`(B) 50 percent.'.

(b) ELIMINATION OF CASELOAD REDUCTION CREDIT- Section 407(b) (42 U.S.C. 607(b)(3)) is amended by striking paragraph (3) and redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively.

SEC. 205. RESTORATION OF FUNDING OF THE SOCIAL SERVICES BLOCK GRANT.

Section 2003(c) (42 U.S.C. 1379b(c)) is amended--

(1) in paragraph (10), by striking `and';

(2) in paragraph (11), by striking `2001 and each fiscal year thereafter.' and inserting `2001; and'; and

(3) by adding at the end the following:

`(12) $2,800,000,000 for fiscal year 2003 and each succeeding fiscal year.'.

TITLE III--REQUIRING AND REWARDING WORK

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

Section 408(a)(7) (42 U.S.C. 608(a)(7)) is amended by adding at the end the following:

`(H) LIMITATION ON MEANING OF `ASSISTANCE' FOR FAMILIES WITH INCOME FROM EMPLOYMENT- For purposes of this paragraph, a benefit or service provided to a family during a month under the State program funded under this part shall not be considered assistance under the program if, during the month, the family includes an adult or a minor child head of household who has received at least such amount of income from employment as the State may establish.'.

SEC. 302. CHILD CARE.

(a) INCREASE IN ENTITLEMENT FUNDING- Section 418(a)(3) (42 U.S.C. 618(a)(3)) is amended--

(1) by striking `and' at the end of subparagraph (E);

(2) by striking the period at the end of subparagraph (F) and inserting a semicolon; and

(3) by adding at the end the following:

`(G) $3,967,000,000 for fiscal year 2003;

`(H) $4,467,000,000 for fiscal year 2004;

`(I) $4,967,000,000 for fiscal year 2005;

`(J) $5,467,000,000 for fiscal year 2006; and

`(K) $5,967,000,000 for fiscal year 2007.'.

(b) INCREASE IN SET ASIDE FOR CHILD CARE QUALITY- Section 658G of the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858e) is amended by striking `4 percent' and inserting `12 percent'.

(c) APPLICABILITY OF STATE OR LOCAL HEALTH AND SAFETY STANDARDS TO OTHER TANF CHILD CARE SPENDING- Section 402(a) (42 U.S.C. 602(a)) is amended by adding at the end the following:

`(8) CERTIFICATION OF PROCEDURES TO ENSURE THAT CHILD CARE PROVIDERS COMPLY WITH APPLICABLE STATE OR LOCAL HEALTH AND SAFETY STANDARDS- A certification by the chief executive officer of the State that procedures are in effect to ensure that any child care provider in the State that provides services for which assistance is provided under the State program funded under this part complies with all applicable State or local health and safety requirements as described in section 658E(c)(2)(F) of the Child Care and Development Block Grant Act of 1990.'.

(d) AVAILABILITY OF CHILD CARE FOR PARENTS REQUIRED TO WORK- Section 407(e)(2) (42 U.S.C. 607(e)(2)) is amended by striking `6' and inserting `13'.

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

(a) PURPOSES- The purposes of this section are to--

(1) inform low-income families with children about programs available to families leaving welfare and other programs to support low-income families with children;

(2) provide incentives to States and counties to improve and coordinate application and renewal procedures for low-income family with children support programs; and

(3) track the extent to which low-income families with children receive the benefits and services for which they are eligible.

(b) DEFINITIONS- In this section:

(1) LOCALITY- The term locality means a municipality that does not administer a temporary assistance for needy families program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) (in this section referred to as `TANF').

(2) LOW-INCOME FAMILY WITH CHILDREN SUPPORT PROGRAM- The term `low-income family with children support program' means a program designed to provide low-income families with assistance or benefits to enable the family to become self-sufficient and includes--

(A) TANF;

(B) the food stamp program established under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) (in this section referred to as `food stamps');

(C) the medicaid program funded under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.);

(D) the State children's health insurance program (SCHIP) funded under title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.);

(E) the child care program funded under the Child Care Development Block Grant Act of 1990 (42 U.S.C. 9858 et seq.);

(F) the child support program funded under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.);

(G) the earned income tax credit under section 32 of the Internal Revenue Code of 1986;

(H) the low-income home energy assistance program (LIHEAP) established under the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C 8621 et seq.);

(I) the special supplemental nutrition program for women, infants, and children (WIC) established under section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786);

(J) programs under the Workforce Investment Act of 1998 (29 U.S.C. 2801 et seq.); and

(K) any other Federal or State funded program designed to provide family and work support to low-income families with children.

(3) NONPROFIT- The term `nonprofit', as applied to a school, agency, organization, or institution means a school, agency, organization, or institution owned and operated by 1 or more nonprofit corporations or associations, no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.

(4) SECRETARY- The term `Secretary' means the Secretary of Health and Human Services.

(5) STATE- The term `State' means each of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, and the United States Virgin Islands.

(c) AUTHORIZATION OF GRANTS-

(1) STATES AND COUNTIES-

(A) IN GENERAL- The Secretary is authorized to award grants to States and counties to pay the Federal share of the costs involved in improving the administration of low-income family with children support programs, including simplifying application, recertification, reporting, and verification rules, and promoting participation in such programs.

(B) FEDERAL SHARE- The Federal share shall be 80 percent.

(2) NONPROFITS AND LOCALITIES- The Secretary is authorized to award grants to nonprofits and localities to promote participation in low-income family with children support programs, and distribute information about and develop service centers for low-income family with children support programs.

(d) GRANT APPROVAL CRITERIA-

(1) IN GENERAL- The Secretary, in consultation with the Secretary of Agriculture, shall establish criteria for approval of an application for a grant under this section that include consideration of--

(A) the extent to which the proposal, if funded, is likely to result in improved service and higher participation rates in low-income children's support programs;

(B) an applicant's ability to reach hard-to-serve populations;

(C) the level of innovation in the applicant's grant proposal; and

(D) any partnerships between the public and private sector in the applicant's grant proposal.

(2) SEPARATE CRITERIA- Separate criteria shall be established for the grants authorized under paragraphs (1) and (2) of subsection (c).

(e) USES OF FUNDS-

(1) STATES AND COUNTIES-

(A) IMPROVEMENTS IN PROGRAMS- Grants awarded to States and counties under subsection (c)(1) shall be used to--

(i) simplify low-income family with children support program application, recertification, reporting, and verification rules;

(ii) create uniformity in eligibility criteria for low-income family with children support programs;

(iii) develop options for families to apply for low-income family with children support programs through the telephone, mail, facsimile, Internet, or electronic mail, and submit any recertifications or reports required for such families through these options;

(iv) co-locate eligibility workers for various low-income family with children support programs at strategically located sites;

(v) develop or enhance one-stop service centers for low-income family with children support programs, including establishing evening and weekend hours at these centers; and

(vi) improve training of staff in low-income families with children support programs to enhance their ability to enroll eligible applicants in low-income family with children support programs, provide case management, and refer eligible applicants to other appropriate programs.

(B) CUSTOMER SURVEYS-

(i) IN GENERAL- A grant awarded to a State or county under subsection (c)(1) shall be used to carry out a customer survey.

(ii) MODEL SURVEYS- The customer survey under clause (i) of this subparagraph shall be modeled after a form developed by the Secretary under subsection (g).

(iii) REPORTS TO SECRETARY- Not later than 1 year after a State or county is awarded a grant under subsection (c)(1), and annually thereafter, the State or county shall submit a report to the Secretary detailing the results of the customer survey carried out under clause (i) of this subparagraph.

(iv) REPORTS TO PUBLIC- A State or county receiving a grant under subsection (c)(1) and the Secretary shall make the report required under clause (iii) of this subparagraph available to the public.

(v) PUBLIC COMMENT- A State or county receiving a grant under subsection (c)(1) shall accept public comments and hold public hearings on the report made available under clause (iv) of this subparagraph.

(C) TRACKING SYSTEMS-

(i) IN GENERAL- A grant awarded to a State or county under subsection (c)(1) shall be used to implement a tracking system to determine the level of participation in low-income family with children support programs of the eligible population.

(ii) REPORTS- Not later than 1 year after a State or county is awarded a grant under subsection (c)(1), and annually thereafter, the State or county shall submit a report to the Secretary detailing the effectiveness of the tracking system implemented under clause (i) of this subparagraph.

(D) IN-PERSON INTERVIEWS- A State or county awarded a grant under subsection (c)(1) may expend funds made available under the grant to provide for reporting and recertification procedures through the telephone, mail, facsimile, Internet, or electronic mail.

(E) JURISDICTION-WIDE IMPLEMENTATION-

(i) IN GENERAL- A grant awarded to a State or county under subsection (c)(1) shall be used for activities throughout the jurisdiction.

(ii) EXCEPTION- A State or county awarded a grant under subsection (c)(1) may use grant funds to develop one-stop service centers and telephone, mail, facsimile, Internet, or electronic mail application and renewal procedures for low-income family with children support programs without regard to the requirements of clause (i) of this subparagraph.

(F) SUPPLEMENT NOT SUPPLANT- Funds provided to a State or county under a grant awarded under subsection (c)(1) shall be used to supplement and not supplant other State or county public funds expended to provide support services for low-income families.

(2) NONPROFITS AND LOCALITIES- A grant awarded to a nonprofit or locality under subsection (c)(2) shall be used to--

(A) develop one-stop service centers for low-income family with children support programs in cooperation with States and counties; or

(B) provide information about and referrals to low-income family with children support programs through the dissemination of materials at strategic locations, including schools, clinics, and shopping locations.

(f) APPLICATION-

(1) IN GENERAL- Each applicant desiring a grant under paragraph (1) or (2) of subsection (c) shall submit an application to the Secretary at such time, in such manner, and accompanied by such information as the Secretary may reasonably require.

(2) STATES AND COUNTIES-

(A) NON-FEDERAL SHARE- Each State or county applicant shall provide assurances that the applicant will pay the non-Federal share of the activities for which a grant is sought.

(B) PARTNERSHIPS- Each State or county applicant shall submit a memorandum of understanding demonstrating that the applicant has entered into a partnership to coordinate its efforts under the grant with the efforts of other State and county agencies that have responsibility for providing low-income families with assistance or benefits.

(g) DUTIES OF THE SECRETARY-

(1) SURVEY FORM- The Secretary, in cooperation with other relevant agencies, shall develop a customer survey form to determine whether low-income families--

(A) encounter any impediments in applying for or renewing their participation in low-income family with children support programs; and

(B) are unaware of low-income family with children support programs for which they are eligible.

(2) REPORTS-

(A) ANNUAL REPORTS- Not later than 1 year after the date of enactment of this Act, and annually thereafter, the Secretary shall submit a report to Congress describing the uses of grant funds awarded under this section.

(B) RESULTS OF TRACKING SYSTEMS AND SURVEYS- The Secretary shall submit a report to Congress detailing the results of the tracking systems implemented and customer surveys carried out by States and counties under subsection (e) as the information becomes available.

(h) MISCELLANEOUS-

(1) MATCHING FUNDS- Matching funds required from a State or county awarded a grant under subsection (c)(1) of this section may--

(A) include in-kind services and expenditures by municipalities and private entities; and

(B) be considered a qualified State expenditure for purposes of determining whether the State has satisfied the maintenance of effort requirements of the temporary assistance for needy families program under section 409(a)(7) of the Social Security Act (42 U.S.C. 609(a)(7)).

(2) LIMITATION ON EXPENDITURES- Subject to paragraph (3) of this subsection, not more than 20 percent of a grant awarded under subsection (c) shall be expended on customer surveys or tracking systems.

(3) REVERSION OF FUNDS- Any funds not expended by a grantee within 2 years after awarded a grant shall be available for redistribution among other grantees in such manner and amount as the Secretary may determine, unless the Secretary extends by regulation the 2-year time period to expend funds.

(4) NONAPPORTIONMENT- Notwithstanding any other provision of law, a State, county, locality, or nonprofit awarded a grant under subsection (c) is not required to apportion the costs of providing information about low-income family with children support programs among all low-income family with children support programs.

(5) ADMINISTRATIVE COSTS OF THE SECRETARY- Not more than 5 percent of the funds appropriated to carry out this section shall be expended on administrative costs of the Secretary.

(i) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this section $500,000,000 for the period of fiscal years 2003 through 2007.

SEC. 304. ASSESSMENTS FOR TANF RECIPIENTS.

Section 408(b) (42 U.S.C. 608(b)) is amended--

(1) by striking paragraph (1) and inserting the following:

`(1) ASSESSMENT- The State agency responsible for administering the State program funded under this part shall, for each recipient of assistance under the program who is a head of household, make an initial assessment of the skills, prior work experience, and circumstances related to the employability of the recipient, including physical or mental impairments, proficiency in English, child care needs, and whether the recipient is a victim of domestic violence.'; and

(2) by striking paragraph (4).

TITLE IV--HELPING WELFARE LEAVERS CLIMB THE EMPLOYMENT LADDER

SEC. 401. STATE PLAN REQUIREMENT ON EMPLOYMENT ADVANCEMENT.

(a) IN GENERAL- Section 402(a)(1)(A) (42 U.S.C. 602(a)(1)(A)) is amended by adding at the end the following:

`(vii) Establish goals and take action to improve initial earnings, job advancement, and employment retention for individuals in and individuals leaving the program.'.

(b) INCLUSION IN ANNUAL REPORTS OF PROGRESS IN ACHIEVING EMPLOYMENT ADVANCEMENT GOALS- Section 411(b) (42 U.S.C. 611(b)) is amended--

(1) by striking `and' at the end of paragraph (3);

(2) by striking the period at the end of paragraph (4) and inserting `; and' ; and

(3) by adding at the end the following:

`(5) in each report submitted after fiscal year 2003, the progress made by the State in achieving the goals referred to in section 402(a)(1)(A)(vii) in the most recent State plan submitted pursuant to section 402(a).'.

SEC. 402. EMPLOYMENT ADVANCEMENT FUND.

Section 403(a) (42 U.S.C. 603(a)) is further amended by adding at the end the following:

`(8) EMPLOYMENT ADVANCEMENT FUND-

`(A) IN GENERAL- The Secretary shall provide grants to States and localities for research, evaluation, technical assistance, and demonstration projects that focus on--

`(i) improving wages for low-income workers, regardless of whether such workers are recipients of assistance under a State program funded under this part, through training and other services; and

`(ii) enhancing employment prospects for recipients of such assistance with barriers to employment, such as a physical or mental impairment, a substance abuse problem, or limited proficiency in English.

`(B) ADMINISTRATION-

`(i) ALLOCATION OF FUNDS- The Secretary shall allocate at least 40 percent of the funds made available pursuant to this paragraph for projects that focus on

the matters described in subparagraph (A)(i), and at least 40 percent of the funds for projects that focus on the matters described in subparagraph (A)(ii).

`(ii) DIVERSITY OF PROJECTS- The Secretary shall attempt to provide funds under this paragraph for diverse projects from geographically different areas.

`(C) AID UNDER THIS PARAGRAPH NOT `ASSISTANCE'- A benefit or service provided with funds made available under this paragraph shall not, for any purpose, be considered assistance under a State program funded under this part.

`(D) APPROPRIATION- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for each of fiscal years 2003 through 2007 $150,000,000 for grants under this paragraph.'.

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

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

SEC. 404. COUNTING OF UP TO 2 YEARS OF VOCATIONAL AND EDUCATIONAL TRAINING AS WORK ACTIVITY.

Section 407(d)(8) (42 U.S.C. 607(d)(8)) is amended--

(1) by striking `vocational educational training' and inserting `vocational and educational training (including postsecondary education)'; and

(2) by striking `12' and inserting `24'.

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

(a) IN GENERAL- Section 407(d) (42 U.S.C. 607(d)) is amended--

(1) by striking `and' at the end of paragraph (11);

(2) by striking the period at the end of paragraph (12) and inserting `; and'; and

(3) by adding at the end the following:

`(13) Up to 6 months of participation (as determined by the State) in services designed to improve future employment opportunities, including substance abuse treatment services, services to address sexual or domestic violence, and physical rehabilitation and mental health services.'.

(b) CONFORMING AMENDMENT- Section 407(c)(1) (42 U.S.C. 607(c)(1)) is amended by striking `and (12)' each place it appears and inserting `(12), and (13)'.

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

Section 404(e) (42 U.S.C. 604(e)) is amended--

(1) in the subsection heading, by striking `ASSISTANCE' and inserting `BENEFITS OR SERVICES'; and

(2) after the heading, by striking `assistance' and inserting `any benefit or service that may be provided'.

TITLE V--PROMOTING FAMILY FORMATION AND RESPONSIBLE PARENTING

SEC. 501. FAMILY FORMATION FUND.

Section 403(a)(2) (42 U.S.C. 603(a)(2)) is amended to read as follows:

`(2) FAMILY FORMATION FUND-

`(A) IN GENERAL- The Secretary shall provide grants to States and localities for research, technical assistance, and demonstration projects to promote and fund best practices in the following areas:

`(i) Promoting the formation of 2-parent families.

`(ii) Reducing teenage pregnancies.

`(iii) Increasing the ability of noncustodial parents to financially support and be involved with their children.

`(B) ALLOCATION OF FUNDS- In making grants under this paragraph, the Secretary shall ensure that not less than 30 percent of the funds made available pursuant to this paragraph for a fiscal year are used in each of the areas described in subparagraph (A).

`(C) CONSIDERATION OF DOMESTIC VIOLENCE IMPACT- In making grants under this paragraph, the Secretary shall consider the potential impact of a project on the incidence of domestic violence.

`(D) APPROPRIATION- Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for each of fiscal years 2003 through 2007 $100,000,000 for grants under this paragraph.'.

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

(a) MODIFICATION OF RULE REQUIRING ASSIGNMENT OF SUPPORT RIGHTS AS A CONDITION OF RECEIVING TANF- Section 408(a)(3) (42 U.S.C. 608(a)(3)) is amended to read as follows:

`(3) NO ASSISTANCE FOR FAMILIES NOT ASSIGNING CERTAIN SUPPORT RIGHTS TO THE STATE- A State to which a grant is made under section 403 shall require, as a condition of providing assistance to a family under the State program funded under this part, that a member of the family assign to the State any rights the family member

may have (on behalf of the family member or of any other person for whom the family member has applied for or is receiving such assistance) to support from any other person, not exceeding the total amount of assistance paid to the family under the program, which accrues during the period that the family receives assistance under the program.'.

(b) INCREASING CHILD SUPPORT PAYMENTS TO FAMILIES AND SIMPLIFYING CHILD SUPPORT DISTRIBUTION RULES-

(1) DISTRIBUTION RULES-

(A) IN GENERAL- Section 457(a) (42 U.S.C. 657(a)) is amended to read as follows:

`(a) IN GENERAL- Subject to subsections (d) and (e), the amounts collected on behalf of a family as support by a State pursuant to a plan approved under this part shall be distributed as follows:

`(1) FAMILIES RECEIVING ASSISTANCE- In the case of a family receiving assistance from the State, the State shall--

`(A) pay to the Federal Government the Federal share of the amount collected, subject to paragraph (3)(A);

`(B) retain, or pay to the family, the State share of the amount collected, subject to paragraph (3)(B); and

`(C) pay to the family any remaining amount.

`(2) FAMILIES THAT FORMERLY RECEIVED ASSISTANCE- In the case of a family that formerly received assistance from the State:

`(A) CURRENT SUPPORT- To the extent that the amount collected does not exceed the current support amount, the State shall pay the amount to the family.

`(B) ARREARAGES- To the extent that the amount collected exceeds the current support amount, the State--

`(i) shall first pay to the family the excess amount, to the extent necessary to satisfy support arrearages not assigned pursuant to section 408(a)(3);

`(ii) if the amount collected exceeds the amount required to be paid to the family under clause (i), shall--

`(I) pay to the Federal Government, the Federal share of the excess amount described in this clause, subject to paragraph (3)(A); and

`(II) retain, or pay to the family, the State share of the excess amount described in this clause, subject to paragraph (3)(B); and

`(iii) shall pay to the family any remaining amount.

`(3) LIMITATIONS-

`(A) FEDERAL REIMBURSEMENTS- The total of the amounts paid by the State to the Federal Government under paragraphs (1) and (2) of this subsection with respect to a family shall not exceed the Federal share of the amount assigned with respect to the family pursuant to section 408(a)(3).

`(B) STATE REIMBURSEMENTS- The total of the amounts retained by the State under paragraphs (1) and (2) of this subsection with respect to a family shall not exceed the State share of the amount assigned with respect to the family pursuant to section 408(a)(3).

`(4) FAMILIES THAT NEVER RECEIVED ASSISTANCE- In the case of any other family, the State shall pay the amount collected to the family.

`(5) FAMILIES UNDER CERTAIN AGREEMENTS- Notwithstanding paragraphs (1) through (4), in the case of an amount collected for a family in accordance with a cooperative agreement under section 454(33), the State shall distribute the amount collected pursuant to the terms of the agreement.

`(6) STATE FINANCING OPTIONS- To the extent that the State share of the amount payable to a family for a month pursuant to paragraph (2)(B) of this subsection exceeds the amount that the State estimates (under procedures approved by the Secretary) would have been payable to the family for the month pursuant to former section 457(a)(2) (as in effect for the State immediately before the date this subsection first applies to the State) if such former section had remained in effect, the State may elect to use the grant made to the State under section 403(a) to pay the amount, or to have the payment considered a qualified State expenditure for purposes of section 409(a)(7), but not both.

`(7) STATE OPTION TO PASS THROUGH ADDITIONAL SUPPORT WITH FEDERAL FINANCIAL PARTICIPATION-

`(A) IN GENERAL- Notwithstanding paragraphs (1) and (2), a State shall not be required to pay to the Federal Government the Federal share of an amount collected on behalf of a family that is not a recipient of assistance under the State program funded under part A, to the extent that the State pays the amount to the family.

`(B) RECIPIENTS OF TANF FOR LESS THAN 5 YEARS- Notwithstanding paragraphs (1) and (2), a State shall not be required to pay to the Federal Government the Federal share of an amount collected on behalf of a family that is a recipient of assistance under the State program funded under part A and that has received the assistance for not more than 5 years after the date of the enactment of this paragraph, to the extent that the State pays the amount to the family.'.

(B) APPROVAL OF ESTIMATION PROCEDURES- Not later than October 1, 2002, the Secretary of Health and Human Services, in consultation with the States (as defined for purposes of part D of title IV of the Social Security Act), shall establish the procedures to be

used to make the estimate described in section 457(a)(6) of such Act.

(2) CURRENT SUPPORT AMOUNT DEFINED- Section 457(c) (42 U.S.C. 657(c)) is amended by adding at the end the following:

`(5) CURRENT SUPPORT AMOUNT- The term `current support amount' means, with respect to amounts collected as support on behalf of a family, the amount designated as the monthly support obligation of the noncustodial parent in the order requiring the support.'.

(c) BAN ON RECOVERY OF MEDICAID COSTS FOR CERTAIN BIRTHS- Section 454 (42 U.S.C. 654) is amended--

(1) by striking `and' at the end of paragraph (32);

(2) by striking the period at the end of paragraph (33) and inserting `; and'; and

(3) by inserting after paragraph (33) the following:

`(34) provide that the State shall not use the State program operated under this part to collect any amount owed to the State by reason of costs incurred under the State plan approved under title XIX for the birth of a child for whom support rights have been assigned pursuant to section 408(a)(3), 471(a)(17), or 1912.'.

(d) STATE OPTION TO DISCONTINUE CERTAIN SUPPORT ASSIGNMENTS- Section 457(b) (42 U.S.C. 657(b)) is amended by striking `shall' and inserting `may'.

(e) CONFORMING AMENDMENTS-

(1) Section 409(a)(7)(B)(i)(I)(aa) (42 U.S.C. 609(a)(7)(B)(i)(I)(aa)) is amended by striking `457(a)(1)(B)' and inserting `457(a)(1)'.

(2) Section 404(a) (42 U.S.C. 604(a)) is amended--

(A) by striking `or' at the end of paragraph (1);

(B) by striking the period at the end of paragraph (2) and inserting `; or'; and

(C) by adding at the end the following:

`(3) to fund payment of an amount pursuant to clause (i) or (ii) of section 457(a)(2)(B), but only to the extent that the State properly elects under section 457(a)(6) to use the grant to fund the payment.'.

(3) Section 409(a)(7)(B)(i) (42 U.S.C. 609(a)(7)(B)(i)) is amended by adding at the end the following:

`(V) PORTIONS OF CERTAIN CHILD SUPPORT PAYMENTS COLLECTED ON BEHALF OF AND DISTRIBUTED TO FAMILIES NO LONGER RECEIVING ASSISTANCE- Any amount paid by a State pursuant to clause (i) or (ii) of section 457(a)(2)(B), but only to the extent that the State properly elects under section 457(a)(6) to have the payment considered a qualified State expenditure.'.

(f) EFFECTIVE DATE-

(1) IN GENERAL- Except as provided in paragraph (2) of this subsection and section 901(b) of this Act, the amendments made by this section shall take effect on October 1, 2006, and shall apply to payments under parts A and D of title IV of the Social Security Act for calendar quarters beginning on or after such date, without regard to whether regulations to implement the amendments are promulgated by such date.

(2) STATE OPTION TO ACCELERATE EFFECTIVE DATE- A State may elect to have the amendments made by this section apply to the State and to amounts collected by the State, on and after such date as the State may select that is after the date of the enactment of this Act and before the effective date provided in paragraph (1).

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

Section 407 (42 U.S.C. 607) is amended--

(1) in subsection (a)--

(A) by striking `(a) PARTICIPATION RATE REQUIREMENTS- ' and all that follows through `A State' in paragraph (1) and inserting the following:

`(a) PARTICIPATION RATE REQUIREMENT- A State'; and

(B) by striking paragraph (2); and

(2) in subsection (b)--

(A) by striking paragraphs (2) and (3);

(B) in paragraph (4), by striking `paragraphs (1)(B) and (2)(B)' and inserting `paragraph (1)(B)';

(C) in paragraph (5), by striking `rates' and inserting `rate'; and

(D) by redesignating paragraphs (4) and (5) as paragraphs (2) and (3), respectively.

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

(a) PROHIBITION- Section 408(a) (42 U.S.C. 608(a)) is further amended by adding at the end the following:

`(13) BAN ON IMPOSITION OF STRICTER ELIGIBILITY CRITERIA FOR 2-PARENT FAMILIES-

`(A) IN GENERAL- In determining the eligibility of a 2-parent family for assistance under a State program funded under this part, the State shall not impose a requirement that does not apply in determining the eligibility of a 1-parent family for such assistance.

`(B) STATE OPT-OUT- Subparagraph (A) shall not apply to a State if the State legislature, by law, has elected to make subparagraph (A) inapplicable to the State.'.

(b) PENALTY- Section 409(a) (42 U.S.C. 609(a)) is further amended by adding at the end the following:

`(16) PENALTY FOR IMPOSITION OF STRICTER ELIGIBILITY CRITERIA FOR 2-PARENT FAMILIES-

`(A) IN GENERAL- If the Secretary determines that a State to which a grant is made under section 403 for a fiscal year has violated section 408(a)(13) during the fiscal year, the

Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to 5 percent of the State family assistance grant.

`(B) PENALTY BASED ON SEVERITY OF FAILURE- The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of noncompliance.'.

TITLE VI--RESTORING FAIRNESS FOR IMMIGRANT FAMILIES

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

(a) EXCEPTION TO 5-YEAR BAN FOR QUALIFIED ALIENS- Section 403(c)(2) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 1613(c)(2)) is amended by adding at the end the following:

`(L) Benefits under the Temporary Assistance for Needy Families program described in section 402(b)(3)(A).'.

(b) BENEFITS NOT SUBJECT TO REIMBURSEMENT- Section 423(d) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 1138a note) is amended by adding at the end the following:

`(12) Benefits under part A of title IV of the Social Security Act except for cash assistance provided to a sponsored alien who is subject to deeming pursuant to section 408(h) of the Social Security Act.'.

(c) TREATMENT OF ALIENS- Section 408 (42 U.S.C. 608) is amended by adding at the end the following:

`(h) SPECIAL RULES RELATING TO THE TREATMENT OF 213A ALIENS-

`(1) IN GENERAL- In determining whether a 213A alien is eligible for cash assistance under a State program funded under this part, and in determining the amount or types of such assistance to be provided to the alien, the State shall apply the rules of paragraphs (1), (2), (3), (5), and (6) of subsection (f) of this section by substituting `213A' for `non-213A' each place it appears, subject to section 421(e) of the Personal Responsibility and Work Opportunity Reconcilation Act of 1996, and subject to section 421(f) of such Act (which shall be applied by substituting `section 408(h) of the Social Security Act' for `subsection (a)').

`(2) 213A ALIEN DEFINED- An alien is a 213A alien for purposes of this subsection if the affidavit of support or similar agreement with respect to the alien that was executed by the sponsor of the alien's entry into the United States was executed pursuant to section 213A of the Immigration and Nationality Act.'.

(d) INCLUSION OF PARTICIPATION IN ENGLISH-AS-A-SECOND-LANGUAGE PROGRAM AMONG PERMISSIBLE WORK ACTIVITIES- Section 407(d) (42 U.S.C. 607(d)) is further amended--

(1) by striking `and' at the end of paragraph (11);

(2) by striking the period at the end of paragraph (12) and inserting `; and'; and

(3) by adding at the end the following:

`(14) participation in an English-as-a-second-language program.'.

SEC. 602. TREATMENT OF ALIENS UNDER THE SSI PROGRAM.

(a) ELIGIBILITY OF QUALIFIED ALIENS FOR BENEFITS-

(1) ELIMINATION OF PROHIBITION- Section 402(a) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 1612(a)) is amended--

(A) by striking paragraph (3)(A); and

(B) in paragraph (2) by striking subparagraphs (D)(i), (E), and (H).

(2) EXCEPTION TO 5-YEAR BAN- Section 403(c)(2) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 1613(c)(2)) is amended by adding at the end the following:

`(M) Assistance or benefits under the supplemental security income program under title XVI of the Social Security Act, including supplementary payments pursuant to an agreement for Federal administration under section 1616(a) of the Social Security Act and payments pursuant to an agreement entered into under section 212(b) of Public Law 93-66 (commonly known as SSI).'.

(b) BENEFITS NOT SUBJECT TO REIMBURSEMENT- Section 423(d) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 1138a note) is further amended by adding at the end the following:

`(13) Assistance under the supplemental security income program under title XVI of the Social Security Act, except assistance provided to a sponsored alien who is subject to deeming pursuant to section 1621 of the Social Security Act.'.

(c) CONFORMING AMENDMENTS- Section 402(b)(2)(F) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 1612(b)(2)(F)) is amended by striking `program defined in subsection (a)(3)(A) (relating to the supplemental security income program)' and inserting `supplemental security income program under title XVI of the Social Security Act, including supplementary payments pursuant to an agreement for Federal administration under section 1616(a) of the Social Security Act and payments pursuant to an agreement entered into under section 212(b) of Public Law 93-66'.

(d) PERIOD FOR ATTRIBUTION OF SPONSOR'S INCOME AND RESOURCES- Section 1621 (42 U.S.C. 1382j) is amended in each of subsections (a), (c), (d), and (e), by striking `3' and inserting `5'.

SEC. 603. EFFECTIVE DATE AND APPLICABILITY.

(a) EFFECTIVE DATE- The amendments made by this title shall take effect October 1, 2002.

(b) APPLICABILITY- The amendments made by the provisions of this title apply to benefits provided on or after the effective date of this title.

TITLE VII--ENSURING STATE ACCOUNTABILITY

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

Section 409(a)(7) (42 U.S.C. 609(a)(7)) is amended--

(1) in subparagraph (A), by inserting `inflation-adjusted' before `historic State expenditures'; and

(2) in subparagraph (B), by adding at the end the following:

`(vi) INFLATION-ADJUSTED HISTORIC STATE EXPENDITURES- The term `inflation-adjusted historic State expenditures' means, with respect to a fiscal year, historic State expenditures with respect to the fiscal year, multiplied by the sum of 1.00 plus the inflation percentage (as defined in section 403(a)(2)(F)) in effect for the fiscal year.'.

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

(a) PROHIBITION- Section 408(a) (42 U.S.C. 608(a)) is further amended by adding at the end the following:

`(14) BAN ON USING FEDERAL TANF FUNDS TO REPLACE STATE OR LOCAL SPENDING THAT DOES NOT MEET THE DEFINITION OF QUALIFIED STATE EXPENDITURES- A State to which a grant is made under section 403 and a sub-State entity that receives funds from such a grant shall not expend any part of the grant funds to supplant State or local spending for benefits or services which are not qualified State expenditures (within the meaning of section 409(a)(7)(B)(i)).'.

(b) PENALTY- Section 409(a) (42 U.S.C. 609(a)) is further amended by adding at the end the following:

`(17) PENALTY FOR USING FEDERAL TANF FUNDS TO REPLACE STATE OR LOCAL SPENDING THAT DOES NOT MEET THE DEFINITION OF QUALIFIED STATE EXPENDITURES-

`(A) IN GENERAL- If the Secretary determines that a State to which a grant is made under section 403 for a fiscal year has violated section 408(a)(14) during the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to 5 percent of the State family assistance grant.

`(B) PENALTY BASED ON SEVERITY OF FAILURE- The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of noncompliance.'.

TITLE VIII--IMPROVING INFORMATION ABOUT TANF RECIPIENTS AND PROGRAMS

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

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

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

Section 413 (42 U.S.C. 613) is amended--

(1) in subsection (h)(1)--

(A) by striking `and' at the end of subparagraph (C);

(B) by striking the period and inserting `; and'; and

(C) by adding at the end the following:

`(E) the cost of conducting the studies described in subsection (k).'; and

(2) by adding at the end the following:

`(k) LONGITUDINAL STUDIES OF EMPLOYMENT AND EARNINGS OF TANF LEAVERS-

`(1) IN GENERAL- The Secretary, directly or through grants, contracts, or interagency agreements shall conduct a study in each eligible State of a statistically relevant cohort of individuals who leave the State program funded under this part during fiscal year 2003 and individuals who leave the program during fiscal year 2005, which uses State unemployment insurance data to track the employment and earnings status of the individuals during the 3-year period beginning at the time the individuals leave the program.

`(2) REPORTS- The Secretary shall annually publish the findings of the studies conducted pursuant to paragraph (1) of this subsection, and shall annually publish the earnings data used in making determinations under section 407(b).'.

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

Section 411(a)(1)(A) (42 U.S.C. 611(a)(1)(A)) is amended by adding at the end the following:

`(xviii) Whether the head of the family has a significant physical or mental impairment.

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

Section 411(b)(3) (42 U.S.C. 611(b)(3)), as amended by section 401(b)(1) of this Act, is amended to read as follows:

`(3) the characteristics of each State program funded under this part, including, with respect to each program funded with amounts provided under this part or with amounts the expenditure of which is counted as a qualified State expenditure for purposes of section 409(a)(7)--

`(A) the name of the program;

`(B) whether the program is authorized at a sub-State level (such as at the county level);

`(C) the purpose of the program;

`(D) the main activities of the program;

`(E) the total amount received by the program from amounts provided under this part;

`(F) the total of the amounts received by the program that are amounts the expenditure of which are counted as qualified State expenditures for purposes of section 409(a)(7);

`(G) the total funding level of the program;

`(H) the total number of individuals served by the program, and the number of such individuals served specifically with funds provided under this part or with amounts the expenditure of which are counted as qualified State expenditures for purposes of section 409(a)(7); and

`(I) the eligibility criteria for participation in the program;'.

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

(a) DEVELOPMENT OF COMPREHENSIVE LIST OF CASE CLOSURE REASONS- The Secretary of Health and Human Services shall develop, in consultation with States and policy experts, a comprehensive list of reasons why individuals leave State programs funded under this part. The list shall be aimed at substantially reducing the number of case closures under the programs for which a reason is not known.

(b) INCLUSION IN QUARTERLY STATE REPORTS- Section 411(a)(1)(A)(xvi) (42 U.S.C. 611(a)(1)(A)(xvi)) is amended--

(1) by striking `or' at the end of subclause (IV);

(2) by striking the period at the end and inserting `; or'; or

(3) by adding at the end the following:

`(VI) a reason specified in the list developed under section 805(a) of the Next Step in Reforming Welfare Act.'.

SEC. 806. STANDARDIZED STATE PLANS.

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

TITLE IX--EFFECTIVE DATE

SEC. 901. EFFECTIVE DATE.

(a) IN GENERAL- Except as provided in section 502(f) and in subsection (b) of this section, the amendments made by this Act shall take effect on October 1, 2002, and shall apply to payments under parts A and D of title IV of the Social Security Act for calendar quarters beginning on or after such date, without regard to whether regulations to implement the amendments are promulgated by such date.

(b) DELAY PERMITTED IF STATE LEGISLATION REQUIRED- In the case of a State plan under section 402(a) or 454 of the Social Security Act which the Secretary of Health and Human Services determines requires State legislation (other than legislation appropriating funds) in order for the plan to meet the additional requirements imposed by the amendments made by this Act, the State plan shall not be regarded as failing to comply with the requirements of such section 402(a) or 454 solely on the basis of the failure of the plan to meet such additional requirements before the 1st day of the 1st calendar quarter beginning after the close of the 1st regular session of the State legislature that begins after the date of the enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of such session shall be deemed to be a separate regular session of the State legislature.

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