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SEC. 110. WORK PARTICIPATION REQUIREMENTS.

(a) IN GENERAL- Section 407 (42 U.S.C. 607) is amended by striking all that precedes subsection (b)(3) and inserting the following:

`SEC. 407. WORK PARTICIPATION REQUIREMENTS.

`(a) PARTICIPATION RATE REQUIREMENTS- A State to which a grant is made under section 403 for a fiscal year shall achieve a minimum participation rate equal to not less than--

`(1) 50 percent for fiscal year 2003;

`(2) 55 percent for fiscal year 2004;

`(3) 60 percent for fiscal year 2005;

`(4) 65 percent for fiscal year 2006; and

`(5) 70 percent for fiscal year 2007 and each succeeding fiscal year.

`(b) CALCULATION OF PARTICIPATION RATES-

`(1) AVERAGE MONTHLY RATE- For purposes of subsection (a), the participation rate of a State for a fiscal year is the average of the participation rates of the State for each month in the fiscal year.

`(2) MONTHLY PARTICIPATION RATES; INCORPORATION OF 40-HOUR WORK WEEK STANDARD-

`(A) IN GENERAL- For purposes of paragraph (1), the participation rate of a State for a month is--

`(i) the total number of countable hours (as defined in subsection (c)) with respect to the counted families for the State for the month; divided by

`(ii) 160 multiplied by the number of counted families for the State for the month.

`(B) COUNTED FAMILIES DEFINED-

`(i) IN GENERAL- In subparagraph (A), the term `counted family' means, with respect to a State and a month, a family that includes a work-eligible individual and that receives assistance in the month under the State program funded under this part, subject to clause (ii).

`(ii) STATE OPTION TO EXCLUDE CERTAIN FAMILIES- At the option of a State, the term `counted family' shall not include--

`(I) a family in the first month for which the family receives assistance from a State program funded under this part on the basis of the most recent application for such assistance; or

`(II) on a case-by-case basis, a family in which the youngest child has not attained 12 months of age.

`(iii) STATE OPTION TO INCLUDE INDIVIDUALS RECEIVING ASSISTANCE UNDER A TRIBAL FAMILY ASSISTANCE PLAN OR TRIBAL WORK PROGRAM- At the option of a State, the term `counted family' may include families in the State that are receiving assistance under a tribal family assistance plan approved under section 412 or under a tribal work program to which funds are provided under this part.

`(C) WORK-ELIGIBLE INDIVIDUAL DEFINED- In this section, the term `work-eligible individual' means an individual--

`(i) who is married or a single head of household; and

`(ii) whose needs are (or, but for sanctions under this part that have been in effect for more than 3 months (whether or not consecutive) in the preceding 12 months or under part D, would be) included in determining the amount of cash assistance to be provided to the family under the State program funded under this part.'.

(b) RECALIBRATION OF CASELOAD REDUCTION CREDIT- Section 407(b)(3)(A)(ii) (42 U.S.C. 607(b)(3)(A)(ii)) is amended to read as follows:

`(ii) the average monthly number of families that received assistance under the State program funded under this part during--

`(I) if the fiscal year is fiscal year 2003, fiscal year 1996;

`(II) if the fiscal year is fiscal year 2004, fiscal year 1998;

`(III) if the fiscal year is fiscal year 2005, fiscal year 2001; or

`(IV) if the fiscal year is fiscal year 2006 or any succeeding fiscal year, the then 4th preceding fiscal year.'.

(c) SUPERACHIEVER CREDIT- Section 407(b) (42 U.S.C. 607(b)) is amended by striking paragraphs (4) and (5) and inserting the following:

`(4) SUPERACHIEVER CREDIT-

`(A) IN GENERAL- The participation rate, determined under paragraphs (1) and (2) of this subsection, of a superachiever State for a fiscal year shall be increased by the lesser of--

`(i) the amount (if any) of the superachiever credit applicable to the State; or

`(ii) the number of percentage points (if any) by which the minimum participation rate required by subsection (a) for the fiscal year exceeds 50 percent.

`(B) SUPERACHIEVER STATE- For purposes of subparagraph (A), a State is a superachiever State if the State caseload for fiscal year 2001 has declined by at least 60 percent from the State caseload for fiscal year 1995.

`(C) AMOUNT OF CREDIT- The superachiever credit applicable to a State is the number of percentage points (if any) by which the decline referred to in subparagraph (B) exceeds 60 percent.

`(D) DEFINITIONS- In this paragraph:

`(i) STATE CASELOAD FOR FISCAL YEAR 2001- The term `State caseload for fiscal year 2001' means the average monthly number of families that received assistance during fiscal year 2001 under the State program funded under this part.

`(ii) STATE CASELOAD FOR FISCAL YEAR 1995- The term `State caseload for fiscal year 1995' means 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.'.

(d) COUNTABLE HOURS- Section 407 of such Act (42 U.S.C. 607) is amended by striking subsections (c) and (d) and inserting the following:

`(c) COUNTABLE HOURS-

`(1) DEFINITION- In subsection (b)(2), the term `countable hours' means, with respect to a family for a month, the total number of hours in the month in which any member of the family who is a work-eligible individual is engaged in a direct work activity or other activities specified by the State (excluding an activity that does not address a purpose specified in section 401(a)), subject to the other provisions of this subsection.

`(2) LIMITATIONS- Subject to such regulations as the Secretary may prescribe:

`(A) MINIMUM WEEKLY AVERAGE OF 24 HOURS OF DIRECT WORK ACTIVITIES REQUIRED- If the work-eligible individuals in a family are engaged in a direct work activity for an average total of fewer than 24 hours per week in a month, then the number of countable hours with respect to the family for the month shall be zero.

`(B) MAXIMUM WEEKLY AVERAGE OF 16 HOURS OF OTHER ACTIVITIES- An average of not more than 16 hours per week of activities specified by the State (subject to the exclusion described in paragraph (1)) may be considered countable hours in a month with respect to a family.

`(3) SPECIAL RULES- For purposes of paragraph (1):

`(A) PARTICIPATION IN QUALIFIED ACTIVITIES-

`(i) IN GENERAL- If, with the approval of the State, the work-eligible individuals in a family are engaged in 1 or more qualified activities for an average total of at least 24 hours per week in a month, then all such engagement in the month shall be considered engagement in a direct work activity, subject to clause (iii).

`(ii) QUALIFIED ACTIVITY DEFINED- The term `qualified activity' means an activity specified by the State (subject to the exclusion described in paragraph (1)) that meets such standards and criteria as the State may specify, including--

`(I) substance abuse counseling or treatment;

`(II) rehabilitation treatment and services;

`(III) work-related education or training directed at enabling the family member to work;

`(IV) job search or job readiness assistance; and

`(V) any other activity that addresses a purpose specified in section 401(a).

`(iii) LIMITATION-

`(I) IN GENERAL- Except as provided in subclause (II), clause (i) shall not apply to a family for more than 3 months in any period of 24 consecutive months.

`(II) SPECIAL RULE APPLICABLE TO EDUCATION AND TRAINING - A State may, on a case-by-case basis, apply clause (i) to a work-eligible individual so that participation by the individual in education or training , if needed to permit the individual to complete a certificate program or other work-related education or training directed at enabling the individual to fill a known job need in a local

area, may be considered countable hours with respect to the family of the individual for not more than 4 months in any period of 24 consecutive months.

`(B) SCHOOL ATTENDANCE BY TEEN HEAD OF HOUSEHOLD- The work-eligible members of a family shall be considered to be engaged in a direct work activity for an average of 40 hours per week in a month if the family includes an individual who is married, or is a single head of household, who has not attained 20 years of age, and the individual--

`(i) maintains satisfactory attendance at secondary school or the equivalent in the month; or

`(ii) participates in education directly related to employment for an average of at least 20 hours per week in the month.

`(d) DIRECT WORK ACTIVITY- In this section, the term `direct work activity' means--

`(1) unsubsidized employment;

`(2) subsidized private sector employment;

`(3) subsidized public sector employment;

`(4) on-the-job training ;

`(5) supervised work experience; or

`(6) supervised community service.'.

(e) PENALTIES AGAINST INDIVIDUALS- Section 407(e)(1) (42 U.S.C. 607(e)(1)) is amended to read as follows:

`(1) REDUCTION OR TERMINATION OF ASSISTANCE-

`(A) IN GENERAL- Except as provided in paragraph (2), if an individual in a family receiving assistance under a State program funded under this part fails to engage in activities required in accordance with this section, or other activities required by the State under the program, and the family does not otherwise engage in activities in accordance with the self-sufficiency plan established for the family pursuant to section 408(b), the State shall--

`(i) if the failure is partial or persists for not more than 1 month--

`(I) 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 failure occurs; or

`(II) terminate all assistance to the family, subject to such good cause exceptions as the State may establish; or

`(ii) if the failure is total and persists for at least 2 consecutive months, terminate all cash payments to the family including qualified State expenditures (as defined in section 409(a)(7)(B)(i)) for at least 1 month and thereafter until the State determines that the individual has resumed full participation in the activities, subject to such good cause exceptions as the State may establish.

`(B) SPECIAL RULE- In the event of a conflict between a requirement of clause (i)(II) or (ii) of subparagraph (A) and a requirement of a State constitution, or of a State statute that, before 1966, obligated local government to provide assistance to needy parents and children, the State constitutional or statutory requirement shall control.'.

(f) CONFORMING AMENDMENTS-

(1) Section 407(f) (42 U.S.C. 607(f)) is amended in each of paragraphs (1) and (2) by striking `work activity described in subsection (d)' and inserting `direct work activity'.

(2) The heading of section 409(a)(14) (42 U.S.C. 609(a)(14)) is amended by inserting `OR REFUSING TO ENGAGE IN ACTIVITIES UNDER A FAMILY SELF-SUFFICIENCY PLAN' after `WORK'.

SEC. 111. MAINTENANCE OF EFFORT.

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

(1) in subparagraph (A) by striking `fiscal year 1998, 1999, 2000, 2001, 2002, or 2003' and inserting `fiscal year 2003, 2004, 2005, 2006, 2007 or 2008'; and

(2) in subparagraph (B)(ii)--

(A) by inserting `preceding' before `fiscal year'; and

(B) by striking `for fiscal years 1997 through 2002,'.

(b) STATE SPENDING ON PROMOTING HEALTHY MARRIAGE-

(1) IN GENERAL- Section 404 (42 U.S.C. 604) is amended by adding at the end the following:

`(l) MARRIAGE PROMOTION- A State, territory, or tribal organization to which a grant is made under section 403(a)(2) may use a grant made to the State, territory, or tribal organization under any other provision of section 403 for marriage promotion activities, and the amount of any such grant so used shall be considered State funds for purposes of section 403(a)(2).'.

(2) FEDERAL TANF FUNDS USED FOR MARRIAGE PROMOTION DISREGARDED FOR PURPOSES OF MAINTENANCE OF EFFORT REQUIREMENT- Section 409(a)(7)(B)(i) (42 U.S.C. 609(a)(7)(B)(i)), as amended by section 103(c) of this Act, is amended by adding at the end the following:

`(VI) EXCLUSION OF FEDERAL TANF FUNDS USED FOR MARRIAGE PROMOTION ACTIVITIES- Such term does not include the amount of any grant made to the State under section 403 that is expended for a marriage promotion activity.'.

SEC. 112. PERFORMANCE IMPROVEMENT.

(a) STATE PLANS- Section 402(a) (42 U.S.C. 602(a)) is amended--

(1) in paragraph (1)--

(A) in subparagraph (A)--

(i) by redesignating clause (vi) and clause (vii) (as added by section 103(a) of this Act) as clauses (vii) and (viii), respectively; and

(ii) by striking clause (v) and inserting the following:

`(v) The document shall--

`(I) describe how the State will pursue ending dependence of needy families on government benefits and reducing poverty by promoting job preparation and work;

`(II) describe how the State will encourage the formation and maintenance of healthy 2-parent married families, encourage responsible fatherhood, and prevent and reduce the incidence of out-of-wedlock pregnancies;

`(III) include specific, numerical, and measurable performance objectives for accomplishing subclauses (I) and (II), and with respect to subclause (I), include objectives consistent with the criteria used by the Secretary in establishing performance targets under section 403(a)(4)(B) if available; and

`(IV) describe the methodology that the State will use to measure State performance in relation to each such objective.

`(vi) Describe any strategies and programs the State may be undertaking to address--

`(I) employment retention and advancement for recipients of assistance under the program, including placement into high-demand jobs, and whether the jobs are identified using labor market information;

`(II) efforts to reduce teen pregnancy;

`(III) services for struggling and noncompliant families, and for clients with special problems; and

`(IV) program integration, including the extent to which employment and training services under the program are provided through the One-Stop delivery system created under the Workforce Investment Act of 1998, and the extent to which former recipients of such assistance have access to additional core, intensive, or training services funded through such Act.'; and

(B) in subparagraph (B), by striking clause (iii) (as so redesignated by section 107(b)(1) of this Act) and inserting the following:

`(iii) The document shall describe strategies and programs the State is undertaking to engage religious organizations in the provision of services funded under this part and efforts related to section 104 of the Personal Responsibility and Work Opportunity Reconcilation Act of 1996.

`(iv) The document shall describe strategies to improve program management and performance.'; and

(2) in paragraph (4), by inserting `and tribal' after `that local'.

(b) CONSULTATION WITH STATE REGARDING PLAN AND DESIGN OF TRIBAL PROGRAMS- Section 412(b)(1) (42 U.S.C. 612(b)(1)) 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 `; and'; and

(3) by adding at the end the following:

`(G) provides an assurance that the State in which the tribe is located has been consulted regarding the plan and its design.'.

(c) PERFORMANCE MEASURES- Section 413 (42 U.S.C. 613) is amended by adding at the end the following:

`(k) PERFORMANCE IMPROVEMENT- The Secretary, in consultation with the States, shall develop uniform performance measures designed to assess the degree of effectiveness, and the degree of improvement, of State programs funded under this part in accomplishing the purposes of this part.'.

(d) ANNUAL RANKING OF STATES- Section 413(d)(1) (42 U.S.C. 613(d)(1)) is amended by striking `long-term private sector jobs' and inserting `private sector jobs, the success of the recipients in retaining employment, the ability of the recipients to increase their wages'.

SEC. 113. DATA COLLECTION AND REPORTING.

(a) CONTENTS OF REPORT- Section 411(a)(1)(A) (42 U.S.C. 611(a)(1)(A)) is amended--

(1) in clause (vii), by inserting `and minor parent' after `of each adult';

(2) in clause (viii), by striking `and educational level';

(3) in clause (ix), by striking `, and if the latter 2, the amount received';

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