[WPRT 104-15]
[From the U.S. Government Printing Office]


[Ways and Means Committee Print WMCP: 104-15]
[Summary of Welfare Reforms Made by Public Law 104-193]
[From the U.S. Government Printing Office Online via GPO Access]



104th Congress                                                    WMCP:
   2d Session                 COMMITTEE PRINT                    104-15
                                              
_______________________________________________________________________

                                     


                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                               __________
 
         SUMMARY OF WELFARE REFORMS MADE BY PUBLIC LAW 104-193

            THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY
                           RECONCILIATION ACT
                       AND ASSOCIATED LEGISLATION


                                     


                                     
                            NOVEMBER 6, 1996

 Prepared for the use of Members of the Committee on Ways and Means by 
members of its staff. This document has not been officially approved by 
       the Committee and may not reflect the views of its Members

                               __________


                     U.S. GOVERNMENT PRINTING OFFICE
27-305 CC                   WASHINGTON: 1996





                      COMMITTEE ON WAYS AND MEANS

                     U.S. HOUSE OF REPRESENTATIVES

                              ----------                              


                      ONE HUNDRED FOURTH CONGRESS

                      BILL ARCHER, Texas, Chairman

                              ----------                              


                   Phillip D. Moseley, Chief of Staff

    This document was prepared by the staff of the Committee of 
Ways and Means and is issued under the authority of Chairman 
Bill Archer. This document has not been reviewed or officially 
approved by the Members of the Committee.


                            C O N T E N T S

                               __________

                                                                   Page

SECTION 1. HISTORICAL BACKGROUND AND NEED FOR REFORM.............     1
SECTION 2. SUMMARY OF THE NEW WELFARE REFORM LAW BY TITLE........    13
  Title  I. Block Grants to States for Temporary Assistance of 
    Needy Families (TANF)........................................    14
  Title  II. Supplemental Security Income........................    24
  Title  III. Child Support......................................    27
  Title  IV. Restricting Welfare and Public Benefits for 
    Noncitizens..................................................    34
  Title  V. Child Protection.....................................    40
  Title  VI. Child Care..........................................    42
  Title  VII. Child Nutrition....................................    48
  Title  VIII. Food Stamps and Commodity Distribution............    60
  Title  IX. Miscellaneous.......................................    76

SECTION 3. STATE-BY-STATE ALLOCATION OF GRANTS FOR TEMPORARY 
  ASSISTANCE FOR NEEDY FAMILIES AND CHILD CARE...................    78

SECTION 4. SUMMARY OF EFFECTIVE DATES BY TITLE...................    96

SECTION 5. CONGRESSIONAL BUDGET OFFICE ESTIMATES.................   110
      
=======================================================================




                               SECTION 1.



                         HISTORICAL BACKGROUND



                                  AND



                            NEED FOR REFORM

=======================================================================




          SECTION 1. HISTORICAL BACKGROUND AND NEED FOR REFORM

                                Overview

    The Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 (Public Law 104-193) signed into law 
on August 22, 1996, transforms large parts of the Nation's 
welfare system. The most important change is that the 
entitlement to cash welfare under title IV-A of the Social 
Security Act is ended. In place of the entitlement concept, the 
new law creates two block grants that provide States with the 
funds necessary to help families escape welfare. In particular, 
States are given a block grant to provide cash and other 
benefits to help needy families support their children while 
simultaneously requiring families to make verifiable efforts to 
leave welfare for work and to avoid births outside marriage. In 
addition, funds from the block grant can be used by States to 
encourage the formation and maintenance of two-parent families.
    The second block grant provides funds to States to help 
them subsidize child care for families on welfare, families 
leaving welfare, and low-income families whose precarious 
financial status may result in future welfare spells.
    The new law also limits the provision of welfare benefits 
to several categories of recipients for whom the continued 
provision of permanent entitlement benefits was viewed as 
inappropriate. These groups include most noncitizens, families 
that have been on welfare for more than 5 years, and children 
who are judged to be disabled solely because of age-
inappropriate behavior. In earlier versions of the welfare 
reform bill in the 104th Congress, the entitlement to cash 
payments under the Supplemental Security Income Program for 
drug addicts and alcoholics also was ended. Congress passed 
this provision as part of Public Law 104-121, the Contract With 
America Advancement Act.
    The welfare reform law also contains major new policies 
aimed at reducing the rate of nonmarital births as well as 
substantial revisions in the Federal-State child support 
enforcement program, in the food stamp and commodity 
distribution programs, and in child nutrition programs. Taken 
together, the provisions of this legislation constitute the 
most far-reaching reform of the Nation's welfare system in 
several decades.

                       Highlights of the New Law

    Since creation of the first Federal welfare entitlements in 
1935 to help States aid the needy who were aged, blind, or 
children, the Federal Government has gradually expanded the 
entitlement concept. As a result, the Nation's welfare system 
now provides millions of families headed by able-bodied adults 
with a package of guaranteed benefits. These entitlement 
benefits include cash, medical care, and food stamps. The 
combined value of this package of benefits in 1995 was about 
$12,000 per year in the median State (about $8,300 of which was 
paid with Federal funds). In addition to these entitlement 
programs, scores of additional programs, most provided on a 
nonentitlement basis, are available to poor and low-income 
individuals and families (see table 1). In fiscal year 1994, 
one-sixth of the Federal budget--about $246 billion--was spent 
on means-tested aid (Burke, 1995).

    TABLE 1.--NUMBER OF PROGRAMS IN EIGHT SOCIAL POLICY DOMAINS, 1994   
------------------------------------------------------------------------
             Social Policy Domain                  Number of Programs   
------------------------------------------------------------------------
Cash Welfare                                                      8 \1\ 
Child Welfare and Child Abuse                                    38 \2\ 
Child Care                                                       46 \3\ 
Employment and Training                                         154 \4\ 
Social Services                                                  30 \5\ 
Food and Nutrition                                               11 \1\ 
Housing                                                          27 \6\ 
Health                                                           22 \7\ 
------------------------------------------------------------------------
Note. Some programs counted as separate programs in this table are      
  actually part of larger programs; e.g., child care is a component of  
  both several job training programs and food and nutrition programs. In
  addition, some programs may be counted in more than one of the eight  
  domains.                                                              
Sources: \1\ Burke (1995); \2\ Robinson & Forman (1994); \3\ Forman     
  (1994); \4\ U.S. General Accounting Office (1994); \5\ Robinson       
  (1994); \6\ Vanhorenbeck & Foote (1994); \7\ Klebe (1994).            

    Although roughly half the families that enter AFDC leave 
the rolls within 1 year, most of them return. In fact, as 
indicated in chart 1, of the 4.4 million families now on 
welfare, about 65 percent or 2.9 million will eventually be on 
welfare for 8 years or more (Ellwood, 1986). Research also 
shows that despite the short welfare spells of some families, 
the average length of stay on welfare, counting repeat spells, 
for families enrolled at any given moment is 13 years (Pavetti, 
1995).

          CHART 1. LONG-TERM DEPENDENCY OF WELFARE RECIPIENTS


    Source: Ellwood (1986).
    The major goal of Public Law 104-193 is to reduce the 
length of welfare spells by attacking dependency while 
simultaneously preserving the function of welfare as a safety 
net for families experiencing temporary financial problems. 
Based on the view that the permanent guarantee of benefits 
plays a major role in welfare dependency, Congress is 
fundamentally altering the nature of the AFDC Program by making 
cash welfare benefits temporary and provisional. Both food 
stamps and Medicaid, however, continue as individual 
entitlements.
    Welfare under the new block grant is made temporary by 
limiting the receipt of cash benefits from the block grant to 5 
years (although the law allows States to exempt up to 20 
percent of their caseload from this provision). Welfare under 
the block grant is made contingent by requiring recipients to 
work. All able-bodied adults who have been on welfare for 2 
years must participate in some activity designed to help them 
become self-supporting. In addition, the law establishes strict 
work standards. When fully implemented, States are required to 
have one-half of their recipients in work programs for 30 hours 
per week.
    To help States meet their participation standards while 
encouraging adults to leave welfare for work, the legislation 
also combines funds from several child care programs under 
jurisdiction of the House Committees on Ways and Means and 
Economic and Educational Opportunities to create a single child 
care block grant. Money for the child care block grant is 
increased by more than $4 billion over the amount of money 
available under prior law. Equally important, States will have 
great flexibility in using the child care money to meet the 
needs of low-income parents for child care, thereby allowing 
available funds to be used more efficiently.
    In addition to repealing the entitlement to cash benefits 
under the AFDC Program, the new law ends or modifies the 
entitlement benefits of several other groups receiving welfare 
benefits. Although the concept of entitlement has been the 
focus of congressional debate for several years, Public Law 
104-193 marks the first time that major welfare entitlement 
benefits have been repealed or substantially altered.
    The children's entitlement under the Supplemental Security 
Income Program is also reformed by the act. The number of 
children on SSI has increased substantially in recent years, 
rising from about 300,000 in 1989 to nearly 900,000 in 1994, an 
increase of 200 percent in just 5 years. If recent trends had 
been allowed to continue, SSI enrollment could have reached 1.9 
million by the year 2000, according to the U.S. General 
Accounting Office (1995a).
    The new law focuses on the ``Individualized Functional 
Assessment'' (IFA) process that purports to detect whether a 
child behaves in an age-inappropriate manner and therefore 
qualifies for SSI. A recent U.S. General Accounting Office 
report (1995b) concluded that there were fundamental flaws in 
the IFA. The report stated that ``each step of the process 
relies heavily on adjudicators' judgments, rather than 
objective criteria from the Social Security Administration, to 
assess the age-appropriateness of children's behavior. As a 
result, the subjectivity of the process calls into question the 
Social Security Administration's ability to assure reasonable 
consistency in administering the SSI program'' (p. 2). By the 
end of 1994, about 225,000 of the 890,000 children on SSI had 
qualified under an IFA.
    Public Law 104-193 ends the IFA process. Children who are 
truly disabled continue to receive benefits through the 
reformed program. Although the new approach prevents the 
provision of benefits to about 235,000 children annually who 
would have qualified under the IFA process, the number of 
children receiving SSI will nonetheless grow from 995,000 to 
1,089,000 between 1996 and 2002.
    Another major area of entitlement reform taken up by the 
Congress was welfare benefits for noncitizens. The reforms of 
entitlement benefits for noncitizens include a broad ban on 
benefits for illegal aliens that applies to most entitlement 
and nonentitlement programs. The result is that, with the 
exception of selected emergency benefits and benefits that 
promote public health, illegal aliens no longer qualify for 
most public benefits, including means-tested benefits.
    Since Congress passed the first immigration law in 1882, it 
has been a basic tenet of American immigration policy that 
legal aliens should not be eligible for public aid. Immigration 
officials are charged with being certain that immigrants will 
be self-supporting before they can be admitted to the United 
States. Moreover, for over 100 years, immigration law has 
stated that becoming a public charge is cause for deportation. 
Even so, welfare use among noncitizens has increased rapidly in 
recent years. By 1995, the Federal Government was spending 
about $8 billion annually on welfare for noncitizens, and 
spending was increasing dramatically each year. In the 
Supplemental Security Income Program, for example, the number 
of noncitizens receiving benefits increased from over 244,000 
in 1986 to almost 800,000 in 1996, an increase of about 230 
percent (U.S. General Accounting Office, 1996). By 1995, 
slightly more than one-half the SSI benefits provided to the 
elderly were collected by noncitizens. GAO (1995a) has 
estimated that if current policies had remained in place, by 
the year 2000, nearly 2 million noncitizens would have been 
receiving SSI benefits.
    Given the expansion of welfare use by noncitizens, the 
original welfare reform bill (H.R. 1157) reported by the House 
Committee on Ways and Means on March 15, 1995, ended welfare 
benefits for most noncitizens. The exact provisions were 
modified several times during the course of congressional 
debate, particularly by exempting from the ban military 
veterans and families that had combined work histories of 10 
years or more. In addition, several programs were exempted from 
the ban, including education and training programs that 
noncitizens could use to better prepare for work and public 
health programs designed to protect public safety.
    Thus, Public Law 104-193 returns American policy on welfare 
for noncitizens to its roots by barring most noncitizens who 
arrive in the future from receiving welfare benefits. Current 
resident noncitizens face changes only in those programs 
subject to abuse (SSI and food stamps) or with a significant 
State financial commitment (cash welfare, Medicaid, and social 
services).
    In addition to welfare dependency and entitlements, another 
major social problem addressed by this legislation is the high 
rate of nonmarital births. In 1994, nearly one-third of the 
Nation's children were born outside marriage; among black 
Americans the rate was 70 percent (chart 2). In some inner-city 
neighborhoods, 8 of 10 babies are born to single mothers.

CHART 2. ILLEGITIMACY RATE AS A PERCENTAGE OF LIVE BIRTHS


    Source: National Center for Health Statistics (1977, 1988); 
Ventura, et al. (1994, 1995).

    There is substantial evidence that children reared without 
the active involvement of two parents are at a substantial 
disadvantage. These children are more likely to be abused, to 
make poor grades in school, to quit school, to be unemployed as 
adults, to be poor, to go on welfare, to have long welfare 
spells, and to commit crimes (Maynard, 1996; Zill, 1996). In 
addition, research shows that teens who give birth outside 
marriage are very likely to use welfare. Within 5 years of a 
nonmarital birth, more than 75 percent of teen mothers are or 
have been on welfare (Adams & Williams, 1990). Nor are the 
impacts of nonmarital births on welfare use confined to teen 
mothers. Across all mothers who give birth outside marriage, 
the percentage of those who have welfare spells of 10 years or 
more is nearly 3 times greater than the percentage of divorced 
mothers who have spells totaling 10 years or more (Ellwood, 
1986).
    Given the negative impacts of nonmarital births on mothers 
and children, Public Law 104-193 contains several provisions 
designed to reduce nonmarital births in general and teen 
nonmarital births in particular. These measures include 
requiring teen mothers to live at home or with a responsible 
adult; requiring teen mothers to attend school; imposing a 
mandatory 25 percent benefit reduction on unmarried mothers who 
do not help establish paternity; providing entitlement funding 
for abstinence education; requiring the Secretary of Health and 
Human Services to annually rank States 
on their performance in reducing nonmarital birth ratios; 
providing $1 billion over 5 years for performance bonuses to 
reward States that achieve the goals of the act, including 
reduced nonmarital births and increased incidence of two-parent 
families; and providing $400 million in bonus payments to 
States that reduce their illegitimacy rates.
    Finally, the new law addresses one of the most vexing 
social problems faced by the Nation today; namely, the 
remarkably low level of child support payments by noncustodial 
parents. Some scholars have estimated that a highly effective 
child support system could produce as much as $34 billion more 
for children than the amount now collected (Sorensen, 1995). 
The reformed child support program attacks this problem by 
pursuing five major goals: automating many child support 
enforcement procedures; establishing uniform tracking 
procedures; strengthening interstate child support enforcement; 
requiring States to adopt stronger measures to establish 
paternity; and creating new and stronger enforcement tools to 
increase actual child support collections. The law envisions a 
child support system in which all States have similar child 
support laws, all States share information through the Federal 
child support office, mass processing of information is 
routine, and interstate cases are handled expeditiously.

                                Spending

    According to the Congressional Budget Office, total 
spending over 6 years on all welfare programs affected by H.R. 
104-193 will grow from $198 billion in 1996 to $296.6 billion 
in 2002. As shown in chart 3, the budget impact of the act is 
to reduce the rate of growth of welfare spending somewhat below 
the rate of growth in prior law baseline spending, while still 
providing for an increase in welfare spending of about 50 
percent in 6 years. As shown by the budget projections in table 
2, spending under nearly all the constituent programs grows 
over the period. Across the 6 years covered by the act, total 
spending under all the affected programs will be $1.509 
trillion, as compared with $1.563 trillion under the prior-law 
CBO baseline. Thus, the budget impact of the reforms is to 
reduce the budget deficit by nearly $55 billion by moderating 
the rate of welfare spending growth.

 CHART 3. PUBLIC LAW 104-193 MODERATES THE GROWTH OF WELFARE SPENDING 
                       WHILE SAVING $54.6 BILLION


    Source: Congressional Budget Office.

                                     TABLE 2--SPENDING ON WELFARE PROGRAMS AFFECTED BY PUBLIC LAW 104-193, 1996-2002                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Year                                                       
                 Welfare Program                 ------------------------------------------------------------------------------------------- Total  1997-
                                                      1996         1997         1998         1999         2000         2001         2002         2002   
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Under Prior Law Baseline                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
Family Support Payments.........................      $18,371      $18,805      $19,307      $19,935      $20,557      $21,245      $21,937     $121,786
Supplemental Security Income....................       24,017       27,904       30,210       32,576       37,995       34,515       40,348      203,548
Child Protection................................        3,840        4,285        4,687        5,083        5,506        5,960        6,433       31,954
Child Nutrition.................................        8,428        8,898        9,450       10,012       10,580       11,166       11,767       61,873
Medicaid........................................       95,786      105,081      115,438      126,366      138,154      151,512      166,444      802,995
Food Stamps.....................................       26,220       28,094       29,702       31,092       32,476       33,847       35,283      190,494
Social Services Block Grant.....................        2,880        3,010        3,050        3,000        2,920        2,870        2,840       17,690
Earned Income Credit............................       18,440       20,191       20,894       21,691       22,586       23,412       24,157      132,931
                                                                                                                                                        
                                                 -------------------------------------------------------------------------------------------------------
        Total...................................      197,982      216,268      232,738      249,755      270,774      284,527      309,209    1,563,271
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Under Public Law 104-193                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
Family Support Payments.........................       18,371       19,680       20,207       20,842       21,334       21,716       21,806      125,585
Supplemental Security Income....................       24,017       27,111       26,284       28,296       33,171       30,171       35,390      180,823
Child Protection................................        3,840        4,353        4,712        5,099        5,537        6,001        6,484       32,186
Child Nutrition.................................        8,428        8,770        9,047        9,518       10,027       10,561       11,097       59,020
Medicaid........................................       95,786      105,043      114,924      125,799      137,573      150,564      165,011      978,914
Food Stamps.....................................       26,220       25,996       25,753       26,953       28,267       29,498       30,700      167,167
Social Services Block Grant.....................        2,880        2,635        2,630        2,580        2,500        2,450        2,420       15,215
Earned Income Credit............................       18,440       19,746       20,438       21,228       22,106       22,919       23,642      130,079
                                                                                                                                                        
                                                 -------------------------------------------------------------------------------------------------------
        Total...................................      197,982      213,334      224,395      240,315      260,515      273,880      296,550  \1\ 1,508,9
                                                                                                                                                      89
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office                                                                                                                     
\1\ Total does not include an additional $394 million in revenues that result from the Earned Income Credit reforms, $203 in spending on abstinence     
  education under Title V of the Social Security Act, or $85 million in savings under the Disability Insurance Program.                                 

                               References

Adams, G., & Williams, R.C. (1990). Targeting would-be long-
        term recipients of AFDC (Department of Health and Human 
        Services Contract No. 100-84-0059). Princeton, NJ: 
        Mathematica Policy Research.
Burke, V. (1995, December 19). Cash and noncash benefits for 
        persons with limited income: Eligibility rules, 
        recipient and expenditure data, FYs 1992-1994 (96-159 
        EPW). Washington, DC: Congressional Research Service.
Ellwood, D.T. (1986, January). Targeting ``would-be'' long-term 
        recipients of AFDC (MPR No. 7617-953). Princeton, NJ: 
        Mathematica Policy Research.
Forman, M. (1994, October 20). Federal funding for child care 
        (Memorandum to the Committee on Ways and Means). 
        Washington, DC: Congressional Research Service.
Klebe, E.R. (1994, November 25). Health programs for low-income 
        persons (Memorandum to the Committee on Ways and 
        Means). Washington, DC: Congressional Research Service.
Maynard, R. (Ed.). (1996). Kids having kids. New York: Robin 
        Hood Foundation.
National Center for Health Statistics. (1977). Vital statistics 
        of the United States, 1973 (Vol. 1: Natality). 
        Washington, DC: U.S. Public Health Service.
National Center for Health Statistics. (1988). Vital statistics 
        of the United States, 1985 (Vol. 1: Natality). 
        Washington, DC: U.S. Public Health Service.
Pavetti, L. (1995, September). Questions and answers on welfare 
        dynamics. Washington, DC: Urban Institute.
Robinson, D. (1994, November 23). Comparison of selected 
        Federal social service programs (Memorandum to the 
        Committee on Ways and Means). Washington, DC: 
        Congressional Research Service.
Robinson, D. & Forman, M. (1994, November 8). Comparison of 
        selected Federal child welfare and child abuse programs 
        (Memorandum to the Committee on Ways and Means). 
        Washington, DC: Congressional Research Service.
Sorensen, E. (1995, April). The benefits of increased child 
        support enforcement (Welfare Reform Briefs, No. 2). 
        Washington, DC: Urban Institute.
U.S. General Accounting Office. (1994, January). Multiple 
        employment and training programs: Overlapping programs 
        can add unnecessary administrative costs (GAO/HEHS-94-
        80). Washington, DC: Author.
U.S. General Accounting Office. (1995a, January 27). 
        Supplemental Security Income: Recent growth in rolls 
        raises fundamental program concerns (GAO/T-HEHS-95-67). 
        Washington, DC: Author.
U.S. General Accounting Office. (1995b, March). Social 
        Security: New functional assessments for children raise 
        eligibility questions (GAO/HEHS-95-66). Washington, DC: 
        Author.
U.S. General Accounting Office. (1996). Supplemental Security 
        Income: Noncitizen caseload continues to grow (GAO/T-
        HEHS-96-149). Washington, DC: Author.
Vanhorenbeck, S. & Foote, B. (1994, November 22). Table of 
        authorizations and FY 1995 appropriations for housing 
        programs (Memorandum to the Committee on Ways and 
        Means). Washington, DC: Congressional Research Service.
Ventura, S.J., Martin, J.A., Taffel, S.M., Mathews, T.J., & 
        Clarke, S.C. (1994, October 25). Advance report of 
        final natality statistics, 1992. Monthly Vital 
        Statistics Report, 43(5). Washington, DC: U.S. Public 
        Health Service.
Ventura, S.J., Martin, J.A., Taffel, S.M., Mathews, T.J. & 
        Clarke, S.C. (1995, September 21). Advance report of 
        final natality statistics, 1993. Monthly Vital 
        Statistics Report, 44(3). Washington, DC: U.S. Public 
        Health Service.
Zill, N. (1996, March 12). Unmarried parenthood as a risk 
        factor for children. The causes of poverty, with a 
        focus on out-of-wedlock births: Hearing before the 
        Subcommittee on Human Resources of the Committee on 
        Ways and Means, U.S. House of Representatives, 104th 
        Congress, 2d Sess.
      

      
=======================================================================




                               SECTION 2.




                       SUMMARY OF THE NEW WELFARE



                          REFORM LAW BY TITLE

=======================================================================


           SECTION 2. SUMMARY OF THE NEW WELFARE LAW BY TITLE

  Title I: Block Grants to States for Temporary Assistance for Needy 
                            Families (TANF)

Creation of the cash welfare block grant
    The Personal Responsibility and Work Opportunity 
Reconciliation Act creates a cash welfare block grant called 
Temporary Assistance for Needy Families (TANF). Its purpose is 
to increase State flexibility in providing assistance to needy 
families so that children may be cared for at home; end the 
dependence of needy parents on government benefits by promoting 
job preparation, work, and marriage; prevent and reduce the 
incidence of out-of-wedlock pregnancies; and encourage the 
formation and maintenance of two-parent families. The TANF 
block grant replaces four current cash welfare and related 
programs: Aid to Families With Dependent Children (AFDC), AFDC 
Administration, the Job Opportunities and Basic Skills Training 
(JOBS) Program, and the Emergency Assistance Program. In 
addition, a new block grant for child care replaces AFDC-
related child care, effective October 1, 1996. To allow States 
the opportunity to pass legislation needed to implement 
reformed welfare programs, the implementation date for the TANF 
block grant is July 1, 1997, but States may begin their block 
grant programs sooner.
    Spending through the TANF block grant is capped and funded 
at $16.4 billion per year, slightly above fiscal year 1995 
Federal expenditures for the four component programs. Each year 
between 1996 and 2002, the basic block grant provides each 
State with the amount of Federal money it received for the four 
constituent programs in fiscal year 1995, fiscal year 1994 
(increased in some cases by higher Emergency Assistance 
spending in fiscal year 1995), or the average of fiscal year 
1992 through fiscal year 1994, whichever is highest.
    To receive each year's full TANF block grant, a State must 
spend in the previous year on behalf of TANF-eligible families 
a sum equal to 75 percent of State funds used in fiscal year 
1994 on the replaced programs (its ``historic'' level of 
welfare expenditures). If a State fails to meet work 
participation rates, its required ``maintenance of effort'' 
spending rises to 80 percent.
    Over 6 years, the Congressional Budget Office (CBO) 
estimates that Federal spending on family support payments (a 
classification that includes cash welfare, work programs for 
welfare recipients, and welfare-related child care) will be 
$3.8 billion above projected spending under the superseded AFDC 
law. This increased spending is due to several factors: (1) 
States are eligible to receive a TANF block grant that matches 
the highest of recent annual funding levels; (2) Federal 
outlays under the new child care block grant are estimated by 
CBO to be $3.5 billion higher than projected outlays under old 
law; (3) States with above-average population growth or below-
average Federal welfare funding per poor person will qualify 
for supplemental grants above their TANF block grant (out of a 
total of $800 million provided over 4 years); (4) States that 
attain a performance score (for achieving the goals of the TANF 
block grant) that equals a threshold set by the HHS Secretary 
will receive a high-performance bonus (out of a total of $1 
billion provided over 5 years); and (5) up to 5 States will 
receive bonuses for achieving the largest percentage reduction 
in the number of out-of-wedlock births while also reducing the 
rate of abortion (a total of $400 million is available over 4 
years). In addition, States undergoing recession, as shown by 
high and rising unemployment or rising food stamp caseloads, 
may be eligible to receive up to $2 billion over 5 years in 
matching ``contingency'' funds (CBO estimates Federal outlays 
of contingency funds at more than $1 billion). Taken together, 
these provisions are intended to ensure that States, even in 
times of recession, have sufficient funds to operate welfare 
programs that stress work instead of government dependence.
    The new law earmarks some TANF funds (to be subtracted from 
relevant State block grants) for direct administration by 
applicant Indian tribes and Native Alaskan organizations. It 
entitles Puerto Rico, Guam, and the Virgin Islands to TANF 
grants plus reimbursement (at a 75 percent Federal rate) for 
welfare outlays above the Federal block grant level, but below 
new and enlarged funding ceilings. (For details of financing 
and State TANF allocations, see appendix.)
    The individual entitlement to cash welfare payments 
currently provided under the Aid to Families With Dependent 
Children Program is ended by the new law. TANF block grant 
funds are guaranteed payments to States, but can be reduced if 
States fail to meet specified requirements such as providing 
data to the Federal Government, ensuring that funds are spent 
on children and families, enforcing penalties against persons 
who fail to cooperate in establishing paternity, maintaining 
specified levels of State spending, and meeting work 
participation requirements. State plans must set forth 
objective criteria for the delivery of benefits and the 
determination of eligibility and for fair and equitable 
treatment, and must explain how States will provide 
opportunities for appeal by adversely affected recipients.
Requiring work and rewarding States that conduct successful work 
        programs
    The new law contains three provisions requiring work or 
work preparation by adults in welfare families:
 1. Adults receiving assistance through the block grant are 
        required to ``engage in work'' (as defined by the 
        State) after 2 years (or less at State option); 
        otherwise, their assistance under the block grant is 
        ended. Unless States opt out, adult recipients not 
        working must participate in community service 
        employment with hours and tasks set by the State after 
        receiving benefits for 2 months. This requirement does 
        not apply to single parents of a child under 6 who are 
        unable to obtain needed child care. Further, States may 
        exempt parents of a child under age 1 from this or any 
        other work requirement.
 2. States are required to have a specific and gradually 
        increasing percentage of their caseload in work 
        activities. Work activities are tightly defined to 
        include actual work in the private or public sector 
        plus, to a limited degree, education, vocational 
        education training, and job search. (See below.) The 
        participation requirement begins at 25 percent in 1997 
        and increases by 5 percentage points a year to 50 
        percent in 2002. In calculating required participation 
        rates, States are given credit for reducing their 
        welfare rolls, provided the decrease is not due to 
        changed eligibility criteria (the required 
        participation rate is adjusted down one percentage 
        point for each percentage point that the State's 
        welfare caseload is below fiscal year 1995 levels). As 
        noted above, States may exempt single parents of a 
        child under age 1 from the work requirement. If they do 
        so, these families are omitted from the calculation of 
        work participation rates (for no more than a total of 
        12 months for any single family). At least one adult in 
        75 percent of two-parent families must be working in 
        1997 and 1998, as under previous law, but the rate 
        rises so that adults in at least 90 percent of two-
        parent families on welfare must be working in 1999 and 
        thereafter. States not meeting these work participation 
        rates for single-parent or two-parent families face a 
        reduction in TANF block grant funds: 5 percent the 
        first year and then 7 percent, 9 percent, 11 percent 
        and so forth in subsequent consecutive years of 
        failure; the maximum penalty for failing to meet State 
        work requirements is the loss of 21 percent of the 
        State's block grant.
 3. Cash payments and other benefits from the block grant are 
        forbidden for a family with a member who has received 
        aid as an adult for 5 years. States may set a shorter 
        time limit. The maximum time limit of 5 years requires 
        families to become independent of TANF block grant 
        assistance at that point (eligibility for other 
        programs such as food stamps and Medicaid would 
        continue, subject to program income limits). States may 
        make exceptions to the 5-year limit for up to 20 
        percent of their caseload if the State judges that 
        special circumstances (for example, family violence or 
        borderline disabilities) justify an extension of 
        benefits. In addition, States may use their own funds 
        to assist families made ineligible by the 5-year time 
        limit; States also may use title XX social services 
        block grant funds (including amounts transferred out of 
        the cash welfare block grant into the title XX block 
        grant) to provide assistance to these families.
    For purposes of calculating State participation rates 
described in (2) above, the new law defines 12 activities as 
``work activities:'' unsubsidized employment; subsidized 
private employment; subsidized public employment; work 
experience; on-the-job training; job search and job readiness 
assistance, for up to 6 weeks (12 weeks, if the State's 
unemployment rate is 50 percent above the national average), of 
which only 4 can be consecutive; community service programs; 
vocational education training (for a maximum of 12 months); 
provision of child care to TANF recipients participating in a 
community service program; job skills training directly related 
to employment; education directly related to employment (for 
high school dropouts only); or satisfactory attendance at 
secondary school or in a course of study leading to an 
equivalency certificate (for high school dropouts only). Not 
more than 20 percent of the required number of work 
participants can qualify because they participated in 
vocational training or were a teen head-of-household in 
secondary school.
    In order to count toward fulfilling a State's participation 
rate, a recipient generally must engage in one of the first 
nine activities above (that is, one other than job skills 
training or education) for an average of 20 hours weekly. The 
total number of required hours of work rises to 25 in fiscal 
year 1999 and to a peak of 30 in fiscal year 2000. However, 
required work hours of a single parent of a child under 6 do 
not rise above 20, and a teen head of household (under age 20) 
without a high school diploma is counted as a work participant 
if she maintains secondary school attendance or, for the 
required minimum number of hours, participates in education 
directly related to employment.
    Special rules apply to two-parent families. An adult in 
these families must work an average of 35 hours weekly, with at 
least 30 hours attributable to one of the first nine activities 
cited above. Also, if the family receives federally funded 
child care, the second parent, unless disabled or caring for a 
disabled child, must make satisfactory progress for at least 20 
hours weekly in employment, work experience, on-the-job 
training, or community service.
    Expressed as a percentage, work participation rates equal 
the number of all recipient families in which an individual is 
engaged in work activities for the month, divided by the number 
of recipient families with an adult recipient, but excluding 
families with children under 1 for up to a total of 12 months 
per family, if the State exempts them from work, and excluding 
families being sanctioned (for no more than 3 months within the 
preceding 12 months) for refusal to work.
    A TANF recipient may fill a vacant employment position in 
order to engage in a work activity. However, no adult in a work 
activity who receives Federal funds shall be employed or 
assigned to a position when another person is on layoff from 
the same or any substantially equivalent job. States must 
establish and maintain a grievance procedure for resolving 
complaints of alleged job displacement.
    Adults who refuse to engage in required work will face at 
least pro rata reductions in benefits. Thus, if a parent is 
required to work 20 hours and works only 10, her benefit will 
be reduced by at least 50 percent. States may not penalize 
single parents with children under 6 if the parent proves her 
inability to obtain needed child care for a specified reason. 
States are encouraged to place the highest priority on 
requiring adults in two-parent families and single parents with 
school-age children (especially older school-age children) to 
participate in work activities. Congressional committees are to 
review the implementation of State work programs during fiscal 
year 1999.
    As noted before, States are required to maintain 75 percent 
of their 1994 level of State spending on the replaced programs 
for 6 years, fiscal year 1997 through 2002; however, States 
that fail to meet required work participation rates must 
maintain at least 80 percent of historic spending levels. In 
addition, the law creates a $1 billion performance bonus to 
provide cash rewards to States that succeed in meeting program 
goals, as measured by a formula to be developed by the 
Secretary in consultation with the National Governors' 
Association and the American Public Welfare Association
    The Secretary is required to annually rank the States in 
order of their success in placing recipients of assistance in 
long-term private sector jobs and in reducing the overall 
caseload.

              Providing Child Care for Recipients Who Work

    The act repeals the child care guarantee for recipients of 
cash aid who need it to work or study and, for up to 1 year, 
for individuals who leave welfare bcause of employment. The act 
also ends existing AFDC-related child care programs. It 
entitles States to $13.9 billion for child care under title IV-
A of the Social Security Act for a period of over 6 years. This 
amount is comprised of $1.2 billion annually in 100 percent 
Federal grants (roughly equal to recent Federal spending for 
AFDC-related child care) and an average of about $1.1 billion 
yearly in matching grants, which are subject to maintenance-of-
effort spending rules. At least 70 percent of these entitlement 
funds must be spent for services for TANF recipients or ex-
recipients or low-income working families at risk of TANF 
eligibility. These welfare-related child care funds are 
transferred to the lead agency under the Child Care and 
Development Block Grant (CCDBG) and made subject to its rules. 
For CCDBG, the law authorizes $1 billion annually in 
discretionary funds. (For further information, see title VI: 
Child Care, below.)

 Combating Out-of-Wedlock Births and Promoting Paternity Establishment

    The new law gives States wide flexibility along with added 
funds to combat the rising number of out-of-wedlock births, 
which increase welfare use and long-term dependency. For 
example, unmarried teen parents must live at home or in another 
adult-supervised setting and attend school in order to be 
eligible for payments; States may end cash payments altogether 
for teen parents who have children outside marriage. Further, 
States may end the practice of providing extra Federal payments 
to families that have an additional child while on welfare, 
employing a policy sometimes called the ``family cap.''
    The new law contains several provisions that encourage 
marriage and family and discourage out-of-wedlock childbearing. 
More specifically, the legislation:
 1. Creates a $90 billion TANF block grant for States to use to 
        ``prevent and reduce the incidence of out-of-wedlock 
        pregnancies,'' among other purposes;
 2. Requires State plans to establish goals and take action to 
        prevent and reduce the incidence of out-of-wedlock 
        pregnancies, with special emphasis on teenage 
        pregnancies, and to establish numerical goals for 
        reducing the State illegitimacy ratio for 1996 through 
        2005;
 3. Provides a total of $400 million in added grants (of up to 
        $25 million annually per State) for the five States 
        that are the most successful in reducing the number of 
        out-of-wedlock births while decreasing abortion rates;
 4. Makes States that are successful in reducing illegitimacy, 
        strengthening families, and meeting other program goals 
        eligible for a share of a new $1 billion ``performance 
        bonus'' fund;
 5. Provides $50 million in entitlement funding for abstinence 
        education for each of fiscal years 1998 through 2002;
 6. Allows any State to establish a family cap policy ending 
        the practice of increasing Federal cash welfare 
        benefits when mothers on welfare have babies;
 7. Allows States to limit or deny cash welfare for unmarried 
        teen parents;
 8. Requires unwed teen parents to be in school and living at 
        home or with an adult in order to receive assistance; 
        States may use block grant funds to provide, or assist 
        in locating, adult-supervised living arrangements, such 
        as second-chance homes, for teen mothers;
 9. Deters out-of-wedlock births, encourages paternity 
        establishment, and provides for the payment of child 
        support by: (1) requiring States to reduce cash welfare 
        payments by at least 25 percent for families that 
        include a parent who fails to cooperate in establishing 
        paternity or obtaining child support (States may end 
        benefits altogether); and (2) barring Federal funds for 
        families with a member who has not assigned support 
        rights to the State;
10. Requires the Secretary of HHS to implement, within 1 year, 
        a strategy for preventing teen pregnancies, assuring 
        that 25 percent of communities have prevention 
        programs;
11. Requires the Secretary of Health and Human Services to 
        annually rank all States according to out-of-wedlock 
        birth ratios and changes in ratios over time, and to 
        review the five highest and five lowest ranking States; 
        and
12. Includes numerous findings on the crisis posed by out-of-
        wedlock births for children, families, and the Nation; 
        encourages States to adopt an effective strategy to 
        combat teen pregnancy by addressing the issue of male 
        responsibility, including statutory rape culpability 
        and prevention.

                  Providing Maximum State Flexibility

    To increase State flexibility in the use of Federal funds, 
States are allowed to transfer up to 30 percent of their 
Temporary Assistance for Needy Families block grant into the 
Child Care and Development Block Grant (CCDBG) and the title XX 
social services block grant. However, States may shift no more 
than one-third of the total amount transferred (that is, no 
more than 10 percent of the TANF block grant) into the social 
services block grant; funds transferred into the social 
services block grant must be used only for programs and 
services for children and families with incomes below 200 
percent of the poverty level. The law explicitly permits use of 
funds transferred into the Social Services Block Grant for 
families who lose TANF eligibility because of the 5-year time 
limit or because the State adopts a family cap.
    To assist in recessions or other emergencies, States may: 
(1) receive matching grants from the $2 billion contingency 
fund described above; (2) borrow from a $1.7 billion Federal 
loan fund; and (3) save an unlimited amount of their TANF block 
grant funds for use in later years.
    The new law also contains supplemental grants to assist 
States with above average population growth and below average 
Federal welfare funding per poor person (reflecting 
historically low benefit levels). These grants will provide 
eligible States with an additional $800 million in Federal 
funds between fiscal year 1998 and 2001.
    States may provide families on welfare moving into the 
State with the same benefit they received in their former State 
for a period of up to 12 months.
    States shall not be prohibited by the Federal Government 
from testing recipients for use of controlled substances nor 
from sanctioning those who test positive.
    To encourage work, States may use TANF block grant funds to 
operate an employment placement program. States may not use 
block grant funds to provide medical services (but may use them 
for family planning) and may not spend more than 15 percent of 
the block grant on administrative expenses. Spending for 
information technology and computerization required to perform 
case tracking and monitoring, however, is not counted toward 
the 15 percent cap on administrative expenditures.
    To encourage saving for specified purposes, States may use 
block grant funds to help fund individual development accounts 
(IDAs) for persons eligible for TANF, with no dollar limit.
    In recognition of the fact that creating block grants and 
increasing State control over program operation will lessen 
Federal control, the law requires a reduction of 75 percent of 
the full-time positions at the Department of Health and Human 
Services that relate to any direct spending program, or program 
funded through discretionary spending, that is converted into a 
block grant program. The law specifies that the Secretary of 
HHS must reduce the Federal welfare work force by 245 full-time 
positions related to the AFDC Program and by 60 full-time 
equivalent managerial positions.
    To encourage States to involve religious and other private 
organizations in the delivery of welfare services to the 
greatest extent possible, States are specifically authorized to 
administer and provide family assistance services through 
contracts with charitable, religious, or private organizations 
or through vouchers or certificates that may be redeemed for 
services at charitable, religious, or private organizations.
    To encourage States to adopt an electronic benefits 
transfer (EBT) system for TANF, the new law permits use of TANF 
funds for implementing EBT and limits State liability for lost/
stolen benefits distributed via EBT.
    States will set TANF eligibility standards and benefit 
levels. They may deny or offer aid to two-parent families or to 
any group; however, as noted above, if States offer TANF to 
unmarried teen parents they must require them to meet Federal 
conditions concerning living arrangements and school.

                      Setting National Priorities

    The new law gives States the widest possible latitude in 
developing innovative programs that will get families off 
welfare and into jobs. Nonetheless, a small set of principles 
must be followed to ensure the nationwide success of welfare 
reform. States therefore are prohibited from using Federal cash 
welfare block grant funds to:
 1. Pay benefits to parents who fail to participate in work or 
        a State-designed welfare-to-work program after 24 
        months (or a shorter period) of receiving cash welfare;
 2. Provide cash or noncash TANF benefits to families in which 
        a member--as an adult--already has received assistance 
        through the block grant for 5 years (however, up to 20 
        percent of the State's caseload may receive an 
        exemption, and funds transferred to the title XX social 
        services block grant and State funds may aid these 
        families); and
 3. Pay TANF benefits to noncitizens arriving after the date of 
        enactment during their first 5 years in the United 
        States (for details, see title IV: Restricting Welfare 
        and Public Benefits for Noncitizens).
    In addition, only families with minor children and pregnant 
women are eligible for assistance under the block grant. No 
assistance can be provided to families that include a child who 
has been absent from the home for more than 45 days, nor can 
assistance be given to a parent or caretaker who fails to 
report a missing child within 5 days.
    Individuals convicted of fraudulently misrepresenting 
residence to obtain Federal welfare benefits in two or more 
States at the same time must be denied benefits for 10 years. 
States are prohibited from providing assistance from the 
Temporary Family Assistance Block Grant, food stamps, or 
Supplemental Security Income to fugitive felons fleeing 
prosecution or confinement or violating probation or parole. 
State welfare agencies are required to share information on 
fugitive felons with law enforcement officials under most 
circumstances.
    Unless a State ``opts out'' by enacting a new law, an 
individual convicted after August 22, 1996, of a felony 
involving the possession, use, or distribution of illegal drugs 
shall not be eligible for cash welfare benefits or food stamps. 
States may limit the period of ineligibility by passage of a 
new law, and children in families that include an adult 
affected by this prohibition would continue to be eligible to 
receive benefits.

           Ensuring Medical Coverage for Low-Income Families

    States are required to provide Medicaid coverage to:
 1. Families that become ineligible for cash welfare assistance 
        because of increased earnings from work (for 1 year--6 
        months of full Medicaid, 6 months of subsidized 
        Medicaid if family income is less than 185 percent of 
        the Federal poverty level);
 2. Families that become ineligible for cash welfare assistance 
        because of increased earnings from child support (for 4 
        months); and
 3. Families that would have been eligible for AFDC--and as a 
        result guaranteed Medicaid coverage--under program 
        income and resource standards in effect on July 16, 
        1996. States may reduce these standards to their May 1, 
        1988, level and may increase them by the rise in the 
        Consumer Price Index.
The first two provisions are designed to maintain current law 
standards ensuring Medicaid coverage for families who move off 
welfare. The third provision, by requiring Medicaid coverage 
for families according to recent AFDC standards, assures 
medical assistance to many families that might not qualify for 
benefits under States' new TANF block grant programs. To 
encourage work, however, States may end medical coverage for 
parents who become ineligible for TANF benefits because of a 
failure to work (children in these families would remain 
eligible for medical assistance). The law also extends the 
authorization of the first two provisions above until 2002.

              Ensuring Compliance With National Priorities

    In addition to the penalty of losing 5 percent or more of 
the State's block grant for failing to meet required work 
participation rates (see above), States are subject to several 
other penalties if they fail to meet certain Federal standards:
 1. If block grant funds are found by audit to have been 
        misspent, the State loses an equal amount from its next 
        block grant payment, and it must repay the misspent 
        amount using State funds (if the State cannot prove 
        that the misuse was unintentional, an additional 5 
        percent of its annual block grant will be deducted from 
        the next quarterly payment);
 2. States that fail to submit required reports lose 4 percent 
        of their block grant;
 3. States that fail to participate in the Income and 
        Eligibility Verification System (IEVS) lose up to 2 
        percent of their block grant;
 4. States that fail to enforce penalties requested by the 
        child support agency against persons who do not 
        cooperate in establishing paternity or in establishing, 
        modifying, or enforcing a child support order lose up 
        to 5 percent of their block grant; States that do not 
        comply substantially with child support enforcement 
        program requirements face these penalties: 1 to 2 
        percent of the block grant for the first finding of 
        noncompliance; 2 to 3 percent for the second finding; 
        and 5 percent for the third or later finding;
 5. States that fail to repay loans from the Federal loan fund 
        in a timely fashion have any outstanding loan plus 
        interest deducted from their next block grant payment;
 6. States that fail to maintain 75 percent of historic State 
        spending in fiscal year 1998 through 2003 (or 80 
        percent in the case of States that fail to meet minimum 
        work participation rates) lose the difference between 
        what the State actually spent and the minimum required 
        level of spending from the following year's block 
        grant;
 7. States that fail to comply with the 5-year limit on 
        assistance lose 5 percent of their block grant;
 8. States that fail to maintain 100 percent of historic 
        spending levels during fiscal years in which the State 
        receives contingency funds have the amount of the 
        contingency funds subtracted from their following 
        year's block grant; and
 9. States that penalize for failure to work single parents 
        with children under age 6 who have a demonstrated 
        inability to obtain child care lose up to 5 percent of 
        their block grant.
    States must replace with State funds any block grant 
amounts lost because of the above penalties. Except in the case 
of failure to repay loan funds or failure to maintain 75 (or 
80) percent of historic levels of State welfare spending, the 
Secretary may opt not to impose the above penalties if she 
determines that the State had reasonable cause not to comply. 
States may enter into a corrective action plan upon being 
notified of their failure to comply with any of the above 
provisions; if the Secretary of Health and Human Services 
accepts the plan and the State corrects the violation, no 
penalty will be assessed. When penalties are assessed, total 
penalties cannot exceed 25 percent of the block grant in any 
single quarter. Penalties that exceed 25 percent are to be 
assessed in subsequent quarters. With the exception of 
penalties for the misuse of funds (and penalties that could 
take effect only at later dates), States will not face 
penalties for failing to comply with new Federal requirements 
until the later of July 1, 1997, or the date that is 6 months 
after the State submits its plan. Penalties will apply only to 
conduct that occurs after these dates. Finally, States have the 
right to appeal adverse decisions made by the Secretary.

                          Treatment of Waivers

    State programs may include provisions granted by waivers 
under section 1115 before enactment of the new law on August 
22, 1996. On the other hand, States have the option of 
terminating waiver projects before their scheduled expiration 
date. States that elect to end ongoing waivers are held 
harmless for accrued cost neutrality liabilities if the request 
is submitted promptly. If States opt to continue a waiver, they 
must bring their programs in line with the terms and conditions 
of the revised block grant program once the waiver expires.
    Waivers granted after the date of enactment may not 
override provisions of the TANF law that concern mandatory work 
requirements. For these postenactment waivers, a State must 
demonstrate to the satisfaction of the Secretary that the 
waiver will not result in increasing Federal welfare spending 
above the TANF block grant level.

                     Data Reporting and Evaluation

    To help Congress determine whether the purposes of this 
legislation are being achieved, and to help Congress, the 
States, scholars, and the American public learn whether the 
reforms are producing positive results, States are required to 
report a broad range of data and several studies are 
authorized. States may fulfill the data collection and 
reporting requirements by reporting data for their entire 
caseload under the block grant or by use of statistical 
sampling, on the condition that sampling methods must be 
approved by the Secretary of HHS as scientifically acceptable.
    The Census Bureau is provided with $10 million per year to 
expand the ongoing Survey of Income and Program Participation 
(SIPP) and to focus special data collection efforts on welfare 
families. By studying a random sample of American families both 
before and after implementation of this legislation, the Census 
Bureau will provide useful and reliable information on whether 
families were able to escape welfare, on the factors that 
facilitate and impede movement off welfare, on the types of 
jobs obtained by former welfare recipients, on the impact of 
welfare reform on children, and on a host of other issues. The 
study will pay particular attention to the issues of welfare 
dependency, out-of-wedlock births, the beginning and end of 
welfare spells, and causes of repeat welfare spells. The Census 
Bureau also is directed to expand questions on the decennial 
and the mid-decade census to distinguish the number of 
households in which a grandparent is the primary care giver.
    Within 6 months of enactment, the Secretary of Health and 
Human Services must report to Congress on the ability of States 
to employ automatic data processing systems capable of 
gathering required information, limiting fraud and abuse, and 
maintaining State progress in achieving the goals of this 
legislation. States must comply with the new data reporting 
requirements by July 1, 1997, and must continue to report 
information according to current law requirements until that 
date.
    Beginning 3 years after the date of enactment, the 
Secretary must submit annual reports to Congressional 
committees on the impact of program changes on: (1) children in 
families made ineligible for assistance by the 5-year time 
limit, (2) children born to teenage parents, and (3) teenage 
parents. States must annually submit to the Secretary a 
statement of the child poverty rate in the State. If the child 
poverty rate has increased by 5 percent or more in the 
preceding year ``as a result of'' the TANF block grant program, 
the State must submit a corrective action plan outlining how it 
will reduce child poverty rates.
    The Secretary may assist States in developing innovative 
welfare approaches and shall evaluate them. States are eligible 
to receive funding to evaluate their programs, but must 
generally pay at least 10 percent of the cost.
    The Secretary must submit to Congress by September 30, 
1998, a study on ways to evaluate program success other than by 
using minimum work participation rates. This study of 
``alternative outcomes measures'' shall indicate whether the 
measures should be applied nationally or on a State-by-State 
basis.
    The law limits Federal authority, providing that no officer 
or employee of the Federal Government may regulate the conduct 
of States under title IV-A of the Social Security Act (which 
authorizes the TANF block grant program) or enforce any 
provisions of title IV-A, except to the extent expressly 
provided in title IV-A.

                 Title II: Supplemental Security Income

Ensuring that prisoners and other criminals do not receive SSI benefits
    The new law provides for incentive payments from SSI 
Program funds to State and local penal institutions for 
furnishing information (date of confinement and certain other 
identifying information) to the Social Security Administration 
(SSA) that results in suspension of benefits (up to $400 for 
information received within 30 days of confinement or up to 
$200 for information received from 31 to 90 days after 
confinement). The provision applies to individuals whose period 
of confinement commences on or after March 1, 1997.
    In order to facilitate the exchange of information, the SSI 
reporting agreements under which incentive payments are made 
are exempted from the Computer Matching and Privacy Protection 
Act of 1988. SSA is authorized to provide, on a reimbursable 
basis, information obtained pursuant to SSI reporting 
agreements to any Federal or federally assisted cash, food, or 
medical assistance program for eligibility purposes.
    The Commissioner of the Social Security Administration is 
required to study and report to Congress within 1 year of 
enactment on the feasibility of information exchange on 
prisoners, especially by electronic means, between SSA, the 
courts, and correctional facilities. SSA also is required to 
provide Congress not later than October 1, 1998, with a list of 
institutions that are and are not providing information on SSI 
recipients to SSA.
     The law denies eligibility for SSI to individuals fleeing 
prosecution, to fugitive felons, or to those violating a 
condition of probation or parole imposed under State or Federal 
law. SSA must provide, upon written request of any law 
enforcement officer, the current address, Social Security 
number, and photograph (if available) of any SSI recipient who: 
is fleeing to avoid prosecution, custody, or confinement after 
a felony conviction; is violating a condition of probation or 
parole; or has information necessary for the officer to conduct 
his official duties.
    The law denies SSI benefits for a period of 10 years to an 
individual convicted in Federal or State court of having made a 
fraudulent statement with respect to his or her place of 
residence in order to receive benefits simultaneously in two or 
more States.
Reforming the disability determination process for children
    The new law makes several changes designed to maintain the 
SSI Program's goal of providing benefits for severely disabled 
children while preventing children without serious impairments 
from receiving benefits.
    First, the act replaces the former law ``comparable 
severity'' test with the following new definition of childhood 
disability:

    An individual under the age of 18 is considered disabled 
under SSI if the child has a medically determinable physical or 
mental impairment, which results in marked and severe 
functional limitations, and which can be expected to result in 
death or which has lasted or can be expected to last for a 
continuous period of not less than 12 months.

    Second, the Commissioner of SSA is required to discontinue 
use of the Individualized Functional Assessment (IFA), an 
evaluation instrument that requires subjective judgment to 
determine children's eligibility for SSI. The IFA is also the 
source of many complaints about SSI providing cash benefits to 
children who act up in school or demonstrate only mild 
impairments.
    Third, the Commissioner of SSA must eliminate references to 
``maladaptive behavior'' in the Listings of Impairments (among 
medical criteria for evaluation of mental and emotional 
disorders in the domain of personal/behavioral function).
    The provisions eliminating the use of the IFA and 
eliminating references to maladaptive behavior in the listings 
are effective for all new and pending applications upon 
enactment. Current beneficiaries receiving benefits due to an 
IFA or maladaptive behavior listing will receive notice no 
later than January 1, 1997, that their benefits may end and 
their case will be redetermined. The Commissioner will 
redetermine eligibility of those currently receiving benefits 
using the new eligibility criteria within 1 year from the date 
of enactment. Should an individual be found ineligible for 
benefits, his benefits will end July 1, 1997, or the date of 
the redetermination, whichever is later.
    At least once every 3 years, the Commissioner must conduct 
continuing disability reviews (CDRs) of children receiving SSI 
benefits. At the time of the CDR, the representative payee 
(usually a parent or other family member) must provide evidence 
demonstrating that the child is, and has been, receiving 
treatment, if appropriate. If the representative payee refuses 
to comply, an alternative representative payee will be found.
    The eligibility of children qualifying for SSI benefits 
must be redetermined under the adult criteria within 1 year 
after the child turns 18. In addition, a CDR must be completed 
12 months after the birth of a child who was allowed benefits 
because of low birth weight.
    The new law makes several other changes designed to improve 
accountability in the SSI Program. First, the act requires lump 
sum payments in excess of $2,820 to children under age 18 
(effective with respect to payments made after the date of 
enactment) to be paid into a dedicated savings account. 
Spending from this account must be for allowable expenses and 
must be monitored by the Commissioner. Allowable expenses 
include personal needs assistance, education or job skills 
training, special equipment, home modifications, medical 
treatment, therapy or rehabilitation services, or other items 
approved by the Commissioner so long as the expenses benefit 
the child or are related to the child's disability.
    Second, the act requires that past-due benefits (effective 
with respect to past-due benefits payable after the third month 
following the month of enactment) larger than $5,640 for an 
individual and $8,460 for a couple be paid via three 
installments in 6-month intervals. Installment limits may be 
exceeded, however, to pay certain debts and expenses, and 
certain other exceptions apply.
    Finally, children in medical institutions with private 
insurance currently receiving a full SSI benefit will have 
their benefits reduced to a personal needs allowance of $30 per 
month, the same amount that is given to children in 
institutions for whom more than half the costs are paid by the 
Medicaid Program. This provision is effective with respect to 
benefits for months beginning 90 or more days after the date of 
enactment.
    New regulations implementing the changes related to 
benefits for disabled children must be promulgated by SSA 
within 3 months after the enactment date. These regulations 
(with supporting documentation including a cost analysis, 
workload impact, and caseload projections that will result from 
the new regulations) must be provided to Congress at least 45 
days before they are implemented.
    Within 180 days of enactment, the Commissioner will send to 
Congress a report on the progress made in implementing the 
provisions of these amendments.
    The act takes a number of steps to evaluate and improve the 
disability determination process and to assess the effect of 
changes on families and children:
 1. The SSA Commissioner, not later than May 30 of each year, 
        must prepare and present an annual report to the 
        President and the Congress on the SSI Program; and
 2. The General Accounting Office, not later than January 1, 
        1999, must study the impact of the reforms; the study 
        must include an examination of extra expenses (if any) 
        incurred by families of children receiving SSI benefits 
        that are not covered by other Federal, State, or local 
        programs.
    The act authorizes the appropriation of an additional $150 
million in fiscal year 1997 and $100 million in fiscal year 
1998 for the costs of processing CDRs and redeterminations.
Other SSI changes
    The new law provides that an individual's application for 
SSI benefits would be effective on the first day of the month 
following the date on which the application is filed, or on 
which the individual first becomes eligible, whichever is 
later. The law also permits the issuance of an emergency 
advance payment to an individual who is presumptively eligible 
and has a financial emergency in the month the application is 
filed. The emergency advance payment must be repaid through 
proportional reductions in benefits payable over a period of 
not more than 6 months. These provisions are effective for 
applications filed on or after the date of enactment.
    A provision denying SSI or disability benefits to persons 
disabled solely because of addictions became part of H.R. 3136, 
the Contract With America Advancement Act (Public Law 104-121).

                        Title III: Child Support

    The act contains nearly 50 changes, many of them major, to 
current child support law. The summary below organizes these 
changes into several major categories.
State obligation to provide services and distribution rules
    The rules governing how child support collections are 
distributed among the Federal Government, State governments, 
and families that are on or have been on welfare are 
substantially changed. The current passthrough of the first $50 
in child support collections to families on welfare is no 
longer a Federal requirement. Instead, payments to families 
that leave welfare are more generous. By October 1, 1997, 
States must distribute to the family current support and 
arrears that accrue after the family leaves welfare before the 
State is reimbursed for welfare costs. By October 1, 2000, 
States must also distribute to the family arrears that accrued 
before the family began receiving welfare before the State is 
reimbursed. These new rules, however, do not apply to 
collections made by intercepting tax refunds. The result of 
these changes is that States are required to pay a higher 
fraction of child support collections on arrearages to families 
that have left welfare by making these payments to families 
first (before the State). If this change in policy results in 
States losing money relative to current law, the Federal 
Government will reimburse States for any losses. This section 
of the law also contains clarifications of the ``fill-the-gap'' 
policy so that States now operating those programs can continue 
to do so, provides safeguards against unauthorized use of 
paternity or child support information, requires States to 
inform parents of proceedings in which child support might be 
established or modified, and requires States to provide parents 
with a copy of any changes in the child support order within 14 
days.
Locate and case tracking
    The Federal Government makes major new investments to help 
States acquire, automate, and use information. First, States 
must establish a registry of all IV-D cases and all other new 
or modified child support cases in the State. The registry must 
contain specified minimum data elements for all cases. For 
cases enforced by the State child support enforcement (IV-D) 
program, the registry must also contain a wide array of 
information that is regularly updated, including the amount of 
each order and a record of payments and arrearages. In the case 
of orders that include withholding but are not in the IV-D 
system, the State must also keep records of payments. In IV-D 
cases, this information is used both to enforce and update 
child support orders by conducting matches with information in 
other State and Federal data systems and programs. Second, 
States must create an automated disbursement unit to which 
child support payments are paid and from which they are 
distributed and that contains accurate records of child support 
payments. This disbursement unit will handle payments in all 
cases enforced by the IV-D program and in all cases in the 
State with income withholding orders. In IV-D cases requiring 
income withholding, within 2 days of receipt of information 
about a support order and a parent's source of income, the 
automated system must send a withholding notice to employers. 
Third, States must require employers to send information on new 
employees to a centralized State Directory of New Hires within 
20 days of the date of hire; employers that report 
electronically or by magnetic tape can file twice per month. 
States must routinely match the new hire information, which 
must be entered in the State data base within 5 days, against 
the State Case Registry using Social Security numbers. In the 
case of matches, within 2 days of entry of data in the 
Registry, employers must be notified of the amount to be 
withheld and where to send the money. Within 3 days, new 
employee information must be reported by States to the National 
Directory of New Hires. New hire information must also be 
shared with State agencies administering unemployment, workers' 
compensation, welfare, Medicaid, food stamp, and other 
specified programs. States using private contractors may share 
the new hire information with the private contractors, subject 
to privacy safeguards.
    States must have laws clarifying that child support orders 
not subject to income withholding must immediately become 
subject to income withholding without a hearing if arrearages 
occur. The law includes rules that clarify how employers are to 
accomplish income withholding in interstate cases and 
establishes a uniform definition of income. Employers must 
remit withheld income to the State Disbursement Unit within 7 
days of the normal date of payment to the employee.
    All State and Federal child support agencies must have 
access to the motor vehicle and law enforcement locator systems 
of all States.
    The Federal Parent Locator Service (FPLS) is given several 
new functions. The law clarifies that the purposes for which 
the FPLS can be used include establishing parentage, setting, 
modifying or enforcing support orders, and enforcing custody or 
visitation orders. In addition to being the repository for 
information from every State Case Registry and Directory of New 
Hires (information on new hires must be entered in the FPLS 
within 2 days of receipt), the FPLS must match information from 
State case registries with information from State new hire 
directories at least every 2 days and report matches to State 
agencies within 2 days. All Federal agencies must also report 
information, including wages, on all employees (except those 
involved in security activities who might be compromised) to 
the FPLS for use in matching against State child support cases. 
State unemployment agencies must report quarterly wage and 
unemployment compensation information to the FPLS. The 
Secretary must ensure that FPLS information is shared with the 
Social Security Administration, State child support agencies, 
and other agencies authorized by law. However, the Secretary 
must also ensure both that fees are established for agencies 
that use FPLS information and that the information is used only 
for authorized purposes.
    The Secretaries of HHS and Labor must work together to 
develop a cost-effective means of accessing information in the 
various directories established by the law.
    All States must have procedures for recording the Social 
Security numbers of applicants on the application for 
professional licenses, commercial drivers' licenses, 
occupational licenses, and marriage licenses; States must also 
record Social Security numbers in the records of divorce 
decrees, child support orders, paternity orders, and death 
certificates.
Streamlining and uniformity of procedures
    All States must enact the Uniform Interstate Family Support 
Act (UIFSA), including all amendments adopted by the National 
Conference of Commissioners of Uniform State Laws before 
January 1, 1998. Recent provisions recommended by the 
Commissioners on procedures in interstate cases are included in 
the law. States are not required to use UIFSA in all cases if 
they determine that using other interstate procedures would be 
more effective. The law also clarifies the definition of a 
child's home State, makes several revisions to ensure that full 
faith and credit laws can be applied consistently with UIFSA, 
and clarifies the rules regarding which child support order 
States must honor when there is more than one order.
    States must have laws that permit them to send orders to 
and receive orders from other States. Responding States must, 
within 5 days of receiving a case from another State, match the 
case against its data bases, take appropriate action if a match 
occurs, and send any collections to the initiating State. The 
Secretary must issue forms that States must use for withholding 
income, imposing liens, and issuing administrative subpoenas in 
interstate cases.
    States must adopt laws that provide the child support 
agency with the authority to initiate a series of expedited 
procedures without the necessity of obtaining an order from any 
other administrative or judicial tribunal. These actions 
include: ordering genetic testing; issuing subpoenas; requiring 
public and private employers and other entities to provide 
information on employment, compensation, and benefits or be 
subject to penalties; obtaining access to vital statistics, 
State and local tax records, real and personal property 
records, records of occupational and professional licenses, 
business records, employment security and public assistance 
records, motor vehicle records, corrections records, customer 
records of utilities and cable TV companies pursuant to an 
administrative subpoena, and records of financial institutions; 
directing the obligor to make payments to the child support 
agency in public assistance or income withholding cases; 
ordering income withholding in IV-D cases; securing assets to 
satisfy arrearages, including the seizure of lump sum payments, 
judgments, and settlements; and increasing the monthly support 
due to make payments on arrearages.
Paternity establishment
    States are required to have laws that permit paternity 
establishment until at least age 18 even in cases previously 
dismissed because a shorter statute of limitations was in 
effect. In contested paternity cases, except where barred by 
State laws or where there is good cause not to cooperate, all 
parties must submit to genetic testing at State expense; States 
may recoup costs from the father if paternity is established. 
States must take several actions to promote paternity 
establishment including creating a simple civil process for 
voluntary acknowledgment of paternity, maintaining a hospital-
based paternity acknowledgment program as well as programs in 
other State agencies (including the birth record agency), and 
issuing an affidavit of voluntary paternity acknowledgment 
based on a form developed by the Secretary. When the child's 
parents are unmarried, the father's name will not appear on the 
birth certificate unless there is an acknowledgment or 
adjudication of paternity. Signed paternity acknowledgments 
must be considered a legal finding of paternity unless 
rescinded within 60 days; thereafter, acknowledgments can be 
challenged only on the basis of fraud, duress, or material 
mistake of fact, with the burden of proof on the challenger. 
Results of genetic testing must be admissible in court without 
foundation or other testimony unless objection is made in 
writing. State law must establish either a rebuttable or 
conclusive presumption of paternity when genetic testing 
indicates a threshold probability of paternity.
    States must require issuance of temporary support orders if 
paternity is indicated by genetic testing or other clear and 
convincing evidence. Bills for pregnancy, childbirth, and 
genetic testing must be admissible in judicial proceedings 
without foundation testimony and must constitute prima facie 
evidence of costs incurred for such services. Fathers must have 
a reasonable opportunity to initiate a paternity action. 
Voluntary acknowledgments of paternity and adjudications of 
paternity must be filed with the State registry of birth 
records for matches with the State Case Registry of Child 
Support Orders and States must publicize the availability and 
encourage the use of procedures for voluntary establishment of 
paternity and child support.
    Individuals who apply for public assistance must provide 
specific identifying information about the noncustodial parent 
and must appear at interviews, hearings, and other legal 
proceedings. States must have good cause and other exceptions 
from these requirements which take into account the best 
interests of the child. Exceptions may be defined and applied 
by the State child support, welfare, or Medicaid agencies. 
Families that refuse to cooperate with these requirements must 
have their grant reduced at least 25 percent.
Program administration and funding
    The Secretary must develop a proposal for a new child 
support incentive system and report the details to Congress by 
March 1, 1997. States are given a new option for computing the 
paternity establishment rate; in addition to the current 
procedure of calculating the rate relative to the IV-D 
caseload, States may calculate the rate relative to all out-of-
wedlock births in the State. The mandatory paternity 
establishment rate of prior law is increased from 75 percent to 
90 percent. States are allowed several years to reach the 90 
percent standard, but must increase their establishment rate by 
2 percentage points a year when the State rate is between 75 
and 90 percent.
    States must annually review and report to the Secretary 
information adequate to determine the State's compliance with 
Federal requirements for expedited procedures, timely case 
processing, and improvement on the performance indicators. The 
Secretary must establish, and States must use, uniform 
definitions in complying with this requirement. The Secretary 
must use this information to calculate incentive payments and 
penalties as well as to review compliance with Federal 
requirements. To determine the quality of data reported by 
States for calculating performance indicators and to assess the 
adequacy of financial management of the State program, the 
Secretary must conduct an audit of every State at least once 
every 3 years and more often if a State fails to meet Federal 
requirements.
    States must establish an automated data system that 
maintains data necessary to meet Federal reporting 
requirements, that calculates State performance for incentives 
and penalties, and that ensures the completeness, reliability, 
and accuracy of data. The system must also have privacy 
safeguards. Data requirements enacted before or during 1988 
must be met by October 1, 1997; funding that includes the 90 
percent Federal match is made available (including retroactive 
funding for amounts spent since October 1, 1995) to meet these 
requirements. A total of $400 million, to be divided among the 
States in a manner determined by the Secretary, is made 
available for meeting the data requirements imposed by this 
legislation; this money is made available to States at a 
Federal match rate of 80 percent.
    The Secretary can use 1 percent of the Federal share of 
child support collections on behalf of welfare families to 
provide technical assistance to the States; if needed, the 
Secretary can use up to 2 percent of the Federal share to 
operate the Federal Parent Locator Service.
    The Secretary is required to provide several new pieces of 
information to the Congress on an annual basis. This new 
information includes the total amount of child support 
collected, the costs to the State and Federal Governments of 
furnishing child support services, and the total amount of 
support due and collected as well as due and unpaid.
Establishment and modification of support orders
    The mandatory 3-year review of child support orders is 
slightly modified to permit States some flexibility in 
determining which reviews of welfare cases should be pursued 
and in choosing methods of review; States must review orders 
every 3 years (or more often at State option) if either parent 
or the State requests a review in welfare cases or if either 
parent requests a review in nonwelfare IV-D cases. Consumer 
credit agencies must release information on parents who owe 
child support to child support agencies that follow several 
requirements such as ensuring privacy. Financial institutions 
are provided immunity from prosecution for providing 
information to child support agencies; however, individuals who 
knowingly make unauthorized disclosures of financial records 
are subject to civil actions and a maximum penalty of $1,000 
for each unauthorized disclosure.
Enforcement of support orders
    Child support enforcement for Federal employees, including 
retirees and military personnel, is substantially revamped and 
strengthened. As under prior law, Federal employees are subject 
to wage withholding and other actions taken against them by 
State child support agencies. Every Federal agency is 
responsible for responding to a State child support program as 
if the Federal agency were a private business. The head of each 
Federal agency must designate an agent, whose name and address 
must be published annually in the Federal Register, to be 
responsible for handling child support cases. The agent must 
respond to withholding notices and other matters brought to her 
attention by child support officials. The definition of income 
for Federal employees is broadened to conform to the general 
IV-D definition and child support claims are given priority in 
the allocation of Federal employee income. The Secretary of 
Defense must establish a central personnel locator service, 
which must be updated on a regular basis, that permits location 
of every member of the Armed Services. The Secretary of each 
branch of the military service must grant leave to facilitate 
attendance at child support hearings and other child support 
proceedings. The Secretary of each branch must also withhold 
support from retirement pay and forward it to State 
disbursement units.
    States must have laws that permit the voiding of any 
transfers of income or property that were made to avoid paying 
child support. State law must permit a court or administrative 
process to issue an order requiring individuals owing past-due 
support to either pay the amount due, follow a plan for 
repayment, or participate in work activities. States must 
periodically report to credit bureaus, after fulfilling due 
process requirements, the names of parents owing past-due child 
support. States must also have procedures under which liens 
arise by operation of law against property for the amount of 
overdue child support; States must grant full faith and credit 
to the liens of other States. States also must have the 
authority to withhold, suspend, or restrict the use of drivers' 
licenses, professional and occupational licenses, and 
recreational licenses of individuals owing past-due child 
support. In addition, State child support agencies must enter 
into agreements with financial institutions to develop and 
operate a data match system in which the financial institution 
supplies, on a quarterly basis, the name, address, and Social 
Security number of parents identified by the State as owing 
past-due child support. In response to a lien or levy from the 
State, financial institutions must surrender or encumber assets 
of the parent owing delinquent child support.
    The Internal Revenue Code is amended so that no additional 
fees can be assessed for adjustments to previously certified 
amounts for the same obligor. In the case of individuals owing 
child support arrearages in excess of $5,000, the Secretary of 
HHS must request that the State Department deny, revoke, 
restrict, or limit the individual's passport.
    The Secretary of State, working with the Secretary of HHS, 
is authorized to declare reciprocity with foreign countries for 
the purposes of establishing and enforcing support orders. U.S. 
residents must be able to access services, free of cost, in 
nations with which the United States has reciprocal agreements; 
these services should include establishing parentage, 
establishing and enforcing support, and disbursing payments. 
State plans for child support must include provision for 
treating requests for services from other nations the same as 
interstate cases.
    The United States Bankruptcy Code is amended to ensure that 
any child support debt that is owed to a State and that is 
enforceable under the child support section of the Social 
Security Act (title IV-D) cannot be discharged in bankruptcy 
proceedings.
    A State that has Indian country may enter into a 
cooperative agreement with an Indian tribe if the tribe 
demonstrates it has an established court system that can enter 
child support and paternity orders; the Secretary may make 
direct payments to tribes that have approved plans.
Medical support
    The definition of ``medical child support order'' in the 
Employee Retirement Income Security Act (ERISA) is expanded to 
clarify that any judgment, decree, or order that is issued by a 
court or by an administrative process has the force and effect 
of law. All orders enforced by the State child support agency 
must include a provision for health care coverage. If the 
noncustodial parent changes jobs and the new employer provides 
health coverage, the State must send notice of coverage to the 
new employer; the notice must serve to enroll the child in the 
health plan of the new employer.
Enhancing responsibility and opportunity for nonresidential parents
    The act guarantees $10 million per year for funding grants 
to States for access and visitation programs including 
mediation, counseling, education, development of parenting 
plans, and supervised visitation. A formula for dividing the 
grant money among the States is included. States must monitor, 
evaluate, and report on their program in accord with 
regulations issued by the Secretary.

   Title IV: Restricting Welfare and Public Benefits for Noncitizens

Overview
    Title IV of the Personal Responsibility and Work 
Opportunity Reconciliation Act makes significant changes in the 
eligibility of noncitizens, both legal and illegal, for 
Federal, State, and local benefits.
    Regarding Federal programs, the act contains three new 
restrictions on the eligibility of legal aliens for means-
tested benefits. The first of these is a bar on qualified 
aliens, a term that includes legal immigrants, from 
Supplemental Security Income (SSI) and food stamps. The second 
is a bar of most qualified aliens arriving after August 22, 
1996, from most means-tested programs during their first 5 
years here. The third restriction, which applies to aliens in 
the United States on August 22, 1996, and to new entrants after 
their first 5 years, is a State option to deny qualified aliens 
assistance under the following federally funded programs: 
Temporary Assistance for Needy Families (TANF), which replaces 
AFDC; social services block grants; and Medicaid (other than 
emergency services). The new restrictions are not absolute, and 
the exceptions to them are discussed below.
    Additionally, the act expands sponsor-to-alien deeming, 
which imputes the income and resources of a sponsor to an alien 
who is applying for needs-based assistance. This expansion may 
further affect eligibility for and the amount of needs-based 
benefits for certain qualified aliens who arrive after the date 
of enactment.
    Separately, the act denies most Federal benefits, 
regardless of whether they are means tested, to aliens who are 
not qualified aliens--illegal aliens, aliens admitted 
temporarily for a limited purpose (nonimmigrants), aliens 
paroled into the United States by the Attorney General for 
briefer than a year, and other aliens allowed to reside in the 
United States (e.g., those granted deferred action status or 
stay of deportation). This denial covers many programs whose 
enabling statutes do not make citizenship or immigration status 
a criterion for participation.
    Regarding State benefits, States are given broad authority 
to decide which noncitizens may participate in State and local 
programs, including authority to mirror Federal sponsor-to-
alien deeming rules. However, the act initially denies illegal 
aliens most State and local benefits, and illegal aliens may 
qualify for those benefits only through newly enacted State 
laws which explicitly extend eligibility for benefits to 
illegal aliens.
    While the act's new restrictions on the eligibility of 
aliens for public benefits are extensive, they cease to apply 
upon naturalization. Once an alien becomes a citizen, she 
becomes eligible for benefits on the same basis as other 
citizens.
Federal benefits
    ``Qualified'' aliens.-- Section 402 of the act restricts 
eligibility for major programs for qualified aliens, including 
legal permanent residents, aliens paroled into the United 
States for at least 1 year, refugees, and aliens granted asylum 
or certain similar relief. The restrictions include a direct 
bar on eligibility for: (1) the Supplemental Security Income 
(SSI) Program under title XVI of the Social Security Act, 
including State supplementary payments paid through the Federal 
Government; and (2) the Food Stamp Program. The restrictions 
also include a State option to restrict the eligibility of some 
or all qualified aliens under: (1) block grants to States for 
Temporary Assistance for Needy Families (TANF); (2) block 
grants to States for social services under title XX of the 
Social Security Act; and (3) Medicaid, except that treatment 
for emergency medical conditions (other than those related to 
an organ transplant) may not be restricted.
    The act contains three exceptions to the SSI/food stamp bar 
and the State option for qualified aliens who meet other 
eligibility requirements. The first is a time-limited exception 
for humanitarian entrants. Under this exception, benefits may 
not be restricted during the 5 years after an alien is admitted 
as a refugee or is granted asylum or similar relief.
    The second exception is based on service in the United 
States Armed Forces. Honorably discharged veterans, active duty 
service personnel (other than those on active duty for 
training), and their spouses and unmarried dependent children 
fall within the service-related exception. The third exception 
is premised on working in the United States. The work-related 
exception covers permanent resident aliens who have worked, or 
may be credited with, at least 40 qualifying quarters of 
employment for purposes of title II of the Social Security Act. 
In applying this test, the alien may take into account 
qualifying quarters of work performed by: (1) the alien; (2) 
the alien's spouse after their marriage (but only if the alien 
remains married to the spouse or the spouse is deceased); or 
(3) the alien's parent before the alien reached age 18. At the 
same time, no qualifying quarter beginning after 1996 may be 
credited if the worker (be it the alien or the alien's spouse 
or parent) received means-based Federal assistance during the 
period.
    Agencies that administer the SSI and Food Stamp Programs 
are to redetermine the eligibility of recipients within 1 year 
of enactment. The State option regarding TANF, social services 
block grants, and Medicaid may not be exercised until January 
1, 1997, for legal residents who were receiving benefits on the 
date of enactment.
    Five-year bar on new entrants.--With limited exception, 
section 403 of the act makes qualified aliens who enter the 
United States after enactment ineligible for Federal means-
tested benefits for 5 years after entry. Honorably discharged 
veterans, active duty service personnel (other than those on 
active duty for training), and their spouses and unmarried 
dependent children are excepted from the 5-year bar, as are 
refugees and aliens granted asylum or similar relief.
    Several types of benefits are also excepted, including:
 1. Treatment under Medicaid for emergency medical conditions 
        (other than those related to an organ transplant);
 2. Short-term, in-kind emergency disaster relief;
 3. Assistance under the National School Lunch Act or the Child 
        Nutrition Act of 1966;
 4. Immunizations against diseases and testing for and 
        treatment of symptoms of communicable diseases;
 5. Foster care and adoption assistance under title IV of the 
        Social Security Act, unless the foster parent or 
        adoptive parent is an alien other than a qualified 
        alien;
 6. Education assistance under the Elementary and Secondary 
        Education Act of 1965, specified titles (IV, V, IX, and 
        X) of the Higher Education Act of 1965, or specified 
        titles (III, VII, and VIII) of the Public Health 
        Service Act;
 7. Benefits under the Head Start Act;
 8. Benefits under the Job Training Partnership Act; and
 9. Services or assistance (such as soup kitchens, crisis 
        counseling and intervention, and short-term shelters) 
        designated by the Attorney General as: (i) delivering 
        in-kind services at the community level; (ii) providing 
        assistance without individual determinations of each 
        recipient's needs; and (iii) being necessary for the 
        protection of life and safety.
    A separate exception is made for refugee and entrant 
assistance under title IV of the Immigration and Nationality 
Act and section 501 of the Refugee Education Assistance Act of 
1980 provided to Cuban and Haitian entrants (as defined in 
section 501 of the Refugee Education Assistance Act of 1980).
    Once the initial 5-year period expires, an alien becomes 
subject to other restrictions on alien eligibility for Federal 
benefits in the act (i.e., the SSI/food stamp bar; the State 
option for Medicaid, TANF, and social services block grants; 
and sponsor-to-alien deeming) or, if those restrictions do not 
pertain, to alienage restrictions in pertinent enabling 
statutes or other applicable laws.
    Aliens other than ``qualified'' aliens.--Section 401 of the 
act makes ineligible for Federal public benefits aliens who are 
not qualified aliens. These aliens include illegal aliens, 
aliens in the United States without valid immigration documents 
or other legal permission; nonimmigrant aliens, or aliens 
admitted into the United States for a limited time for a 
limited purpose (e.g., tourists, students, business visitors); 
aliens paroled into the United States by the Attorney General 
for briefer than 1 year; and other aliens allowed by the 
Attorney General to reside in the United States (e.g., those 
granted deferred action status or stay of deportation).
    The Federal public benefits denied other aliens are broadly 
defined to include: (1) grants, contracts, loans, and licenses 
and (2) retirement, welfare, health, disability, housing, food, 
unemployment, postsecondary education, and similar benefits. 
Excepted programs include:
 1. Treatment under Medicaid for emergency medical conditions 
        (other than those related to an organ transplant);
 2. Short-term, in-kind emergency disaster relief;
 3. Immunizations against immunizable diseases and testing for 
        and treatment of symptoms of communicable diseases;
 4. Services or assistance (such as soup kitchens, crisis 
        counseling and intervention, and short-term shelters) 
        designated by the Attorney General as: (i) delivering 
        in-kind services at the community level; (ii) providing 
        assistance without individual determinations of each 
        recipient's needs; and (iii) being necessary for the 
        protection of life and safety; and
 5. To the extent that an alien is receiving assistance on the 
        date of enactment, programs administered by the 
        Secretary for Housing and Urban Development, programs 
        under title V of the Housing Act of 1949, and 
        assistance under section 306C of the Consolidated Farm 
        and Rural Development Act.
    Section 401 also excepts Old Age, Survivors, and Disability 
Insurance benefits under title II of the Social Security Act 
that are protected by that title or by treaty or that are paid 
under applications made before enactment. Licenses and 
contracts related to a nonimmigrant's lawful employment 
activities also are excepted. Separately, section 742 of the 
act states that individuals who are eligible for free public 
education benefits under State and local law shall remain 
eligible to receive school lunch and school breakfast benefits. 
(The act itself does not address a State's obligation to grant 
all aliens equal access to education in accordance with the 
Supreme Court's decision in Plyler v. Doe.) Section 742 further 
states that nothing shall prohibit or require a State to 
provide aliens who are not qualified aliens other benefits 
under the National School Lunch Act or the Child Nutrition Act 
or under the Emergency Food Assistance Act, section 4 of the 
Agriculture and Consumer Protection Act, or the food 
distribution program on Indian reservations under the Food 
Stamp Act.
    Sponsor-to-alien deeming and affidavits of support.--The 
Immigration and Nationality Act excludes from the United States 
aliens who appear likely to become a public charge at any time. 
Unless this ground for exclusion is waived, as it is in the 
case of refugees and asylees, an alien seeking to become a 
legal permanent resident must show adequate resources or job 
prospects or, in their absence, must present one or more 
affidavits of support signed by U.S. residents. Under sponsor-
to-alien deeming, the income and resources of an individual who 
signed an affidavit (the ``sponsor'') and those of the 
sponsor's spouse are added to the means of a sponsored alien 
who applies for needs-based assistance during the applicable 
``deeming period'' in determining whether the alien is 
sufficiently needy to qualify for assistance.
    Approximately one-half of the aliens who obtain permanent 
resident status have had affidavits of support filed on their 
behalf. Despite the frequency of their use, the pledges of 
support contained in affidavits have not been regarded by the 
courts to be legally enforceable. Section 423 of the Personal 
Responsibility and Work Opportunity Reconciliation Act aims to 
rectify this problem. Under the act, sponsors must sign 
affidavits of support that allow sponsored aliens to seek 
support. The affidavits also would permit government agencies 
to obtain reimbursement of benefits provided to sponsored 
aliens. Sponsors are not required to reimburse benefits made 
available under those programs that are excepted from the 5-
year bar for new entrants, which are listed above. However, the 
obligation to reimburse covered benefits applies to all 
benefits provided before a sponsored alien becomes a citizen 
even if sponsor-to-alien deeming has ended before then.
    Section 421 of the act imposes additional sponsor-to-alien 
deeming requirements on sponsored aliens who have had one of 
the new, enforceable affidavits filed for them. Generally, if a 
sponsor has executed an affidavit that complies with the act's 
requirements, the income and resources of the sponsor and the 
sponsor's spouse are added to those of the sponsored alien in 
determining the eligibility of the alien under Federal needs-
based programs until the alien becomes a citizen. Nevertheless, 
sponsor-to-alien deeming may end before the alien becomes a 
citizen if the alien meets the 40 qualifying quarter test that 
applies under the SSI/food stamp restrictions, described above. 
The programs that are excepted from the 5-year bar for new 
entrants, which are listed above, also are excepted from the 
sponsor-to-alien deeming requirements.
    Earned income credit.--The act conditions eligibility for 
the earned income credit (EIC) on an individual's including his 
or her Social Security number and that of the individual's 
spouse on their tax return for the applicable taxable year. 
This requirement is intended to disqualify illegal aliens and 
other noncitizens who are not authorized to work in the United 
States.
State benefits
    Three sections of the Personal Responsibility and Work 
Opportunity Reconciliation Act address alien eligibility for 
State and local public benefits.
    Section 411 of the act directly denies State and local 
benefits to aliens who are not qualified aliens, nonimmigrant 
aliens, aliens paroled into the United States for briefer than 
1 year, or other aliens allowed by the Attorney General to 
reside in the United States (e.g., those granted deferred 
action stay or stay of deportation). State and local benefits 
are broadly defined to include licenses, contracts, grants, 
loans, and assistance, but State and local benefits do not 
include those funded or provided in part by the Federal 
Government. Also, exceptions from the bar on State and local 
benefits are made for:
 1. Treatment for emergency medical conditions (other than 
        those related to an organ transplant);
 2. Short-term, in-kind emergency disaster relief;
 3. Immunizations against diseases and testing for and 
        treatment of symptoms of communicable diseases; and
 4. Services or assistance (such as soup kitchens, crisis 
        counseling and intervention, and short-term shelters) 
        designated by the Attorney General as: (i) delivering 
        in-kind services at the community level; (ii) providing 
        assistance without individual determinations of each 
        recipient's needs; and (iii) being necessary for the 
        protection of life and safety.
    Additionally, section 433 states that nothing in the act is 
to be construed as addressing eligibility for basic public 
education. Notwithstanding its broad ban on State and local 
benefits for illegal aliens, section 411 permits States to 
provide illegal aliens with other barred benefits through 
enactment of new State laws.
    Section 412 of the act authorizes the States to determine 
the eligibility for State and local benefits of qualified 
aliens, nonimmigrant aliens, and aliens paroled into the United 
States for briefer than 1 year. However, this authority cannot 
be exercised with respect to a refugee during the 5 years 
following admission nor with respect to an alien granted asylum 
or similar relief during the 5 years following the granting of 
relief. Also excepted are honorably discharged veterans, active 
duty service personnel (other than those on active duty for 
training), and their spouses and unmarried dependent children. 
Finally, there is a 40 qualifying quarter exception to State 
authority to deny State and local benefits that is similar to 
the exception that applies to the State option regarding 
Medicaid and designated block grants, described above. The 
authority to deny State and local benefits under section 412 
cannot be exercised until January 1997 with respect to aliens 
who were receiving assistance on August 22, 1996.
    Section 422 of the act allows States and their political 
subdivisions to mirror Federal sponsor-to-alien deeming 
requirements in their programs.
Verification and reporting
    Under section 432 of the act, the Attorney General, in 
consultation with the Secretary of Health and Human Services, 
is required to adopt regulations within 18 months of enactment 
on verifying immigration status for the purpose of implementing 
the act's denial of Federal benefits to aliens who are not 
qualified aliens. States that administer a program through 
which a restricted federally assisted benefit is provided must 
have a verification program that complies with these 
regulations within 24 months of their adoption.
    Section 404 of the act requires the following entities to 
provide the Immigration and Naturalization Service (INS) at 
least 4 times annually and at INS' request the name, address, 
and other information they have regarding each individual whom 
they know is in the United States unlawfully: (1) States 
receiving block grants for Temporary Assistance for Needy 
Families (TANF); (2) the Commissioner of Social Security; (3) 
States operating under agreements for the payment of SSI State 
supplements through the Federal Government; (4) the Secretary 
of Housing and Urban Development; and (5) public housing 
agencies operating under contracts for assistance under 
sections 6 or 8 of the United States Housing Act of 1937. 
Separately, section 434 of the act states that no State or 
local entity may be prohibited or in any way restricted from 
sending to or receiving from the INS information regarding an 
individual's immigration status.
    The alien eligibility rules were amended and supplemented 
in the Illegal Immigration Reform and Immigrant Responsibility 
Act of 1996. This immigration enforcement legislation, which 
was enacted as Division C of H.R. 3610, Department of Defense 
Appropriations for fiscal year 1997, the Omnibus Consolidated 
Appropriations Act of 1997 Public Law 104-208, makes affidavits 
of support mandatory for most family-sponsored immigrants. It 
also sets a minimum means test of 125 percent of poverty level 
for sponsors and requires sponsors to provide sponsored aliens 
with a corresponding level of support. At the same time, 
sponsorship is not limited to the person who is seeking 
immigration preference for a relative, but rather an affidavit 
of support may be cosigned by a third party who meets the 
minimum income requirements.
    Additionally, the new immigration law allows nonprofit 
charitable organizations to provide a Federal public benefit 
without having to verify the immigration status of the 
recipients. In other ways, however, the law expands the alien 
eligibility verification and reporting requirements of the 
welfare bill. Regarding alien access to benefits, the 
immigration law classifies certain alien battered spouses and 
children as ``qualified aliens,'' delays the beginning of the 
transition period for redetermination of food stamp eligibility 
until April 1, 1997, and specifically prohibits payment of 
Social Security benefits to aliens not lawfully present. It 
puts certain housing restrictions in statute.

                       Title V: Child Protection

    The Personal Responsibility and Work Opportunity 
Reconciliation Act contains several amendments to prior law 
governing child protection programs. However, unlike the House-
passed version of H.R. 3734 and earlier welfare reform 
legislation in the 104th Congress, the final conference 
agreement makes no significant changes in current programs.
    Grants to States for child welfare services will continue 
to be authorized under title IV-B of the Social Security Act as 
a discretionary program. Likewise, grants to States for family 
preservation and family support services will continue to be 
authorized under title IV-B as a capped entitlement. The 
existing open-ended entitlement under title IV-E for foster 
care and adoption assistance maintenance payments, 
administration and training is retained, as well as capped 
entitlement grants to States for independent living services. 
The new law makes no amendments to the existing Child Abuse 
Prevention and Treatment Act (CAPTA) and related discretionary 
programs.
Foster care payments to for-profit institutions
    Under title IV-E, Federal foster care payments can be made 
to licensed foster family homes and to licensed public or 
private nonprofit child care institutions. The law deletes the 
word ``nonprofit'' from the statute so that States may use the 
services of any private institution that meets their standards, 
regardless of whether the institution is operated for profit. 
States remain responsible for establishing and enforcing 
licensing standards and for ensuring that children are in safe 
and reliable care.
Enhanced match for statewide automated child welfare information 
        systems
    In 1986, Congress authorized a planning process that was 
intended to result in a comprehensive, nationwide system for 
collecting data on foster care and adoption. The Department of 
Health and Human Services (HHS) published final regulations for 
this new Adoption and Foster Care Analysis and Reporting System 
(AFCARS) in December 1993, and the first transmission of data 
was due May 1995. All States currently are participating in the 
mandatory AFCARS system and HHS is analyzing the first data 
sets transmitted by the States. The system is intended to 
provide data on child welfare trends; to enable policymakers to 
track children in foster care; and to learn why children enter 
foster care, how long children stay in care, and what happens 
to children during their foster care stay as well as after they 
leave care.
    Under title IV-E of the Social Security Act, States are 
eligible to receive 50 percent Federal matching funds for these 
data collection functions. However, in 1993, Congress 
authorized enhanced Federal matching of 75 percent during 
fiscal years 1994-96 to help States automate their data 
collection systems. To receive these enhanced funds, State 
systems must: meet AFCARS requirements; provide for electronic 
data exchange within the State among related systems; provide 
for automated data collection on all children in foster care 
under State responsibility; collect information necessary to 
deliver services and determine program eligibility; support 
case management requirements; monitor case plan development and 
other ongoing activities; and ensure confidentiality and 
security of information.
    Enhanced Federal matching for statewide Automated Child 
Welfare Information Systems (SACWIS) is scheduled to expire at 
the end of fiscal year 1996. Public Law 104-193 extends the 75 
percent matching rate for one additional year, through fiscal 
year 1997, to enable more States to complete their automation 
process.
National random sample study of child welfare
    The law provides the Secretary of HHS with $6 million in 
entitlement funds for each of fiscal years 1996 through 2002 to 
conduct a national random sample study of children who are at 
risk of abuse or neglect, or who have been determined by States 
to have been abused or neglected. The study must have a 
longitudinal component and yield data that are reliable at the 
State level for as many States as the Secretary determines is 
feasible. The law states that the Secretary should carefully 
consider selecting the sample from confirmed cases of abuse or 
neglect, and to follow each case for several years.
    Among other types of information to be collected, the law 
states that the Secretary should collect information on the 
type of abuse or neglect involved; the frequency of contact 
with State or local agencies; whether the child had been 
separated from the family and the circumstances of such 
separation; the number, type and characteristics of out-of-home 
placements for the child; and the average duration of each 
placement. The Secretary is directed to prepare reports 
summarizing the results of the study and to make them available 
to the public.
Kinship care
    The law amends title IV-E of the Social Security Act, which 
specifies provisions that must be included in State foster care 
and adoption assistance plans. The law adds a new plan element 
by requiring that State plans provide that the State shall 
consider giving preference to an adult relative over a 
nonrelated care giver when determining a placement for a child, 
as long as the relative care giver meets all relevant State 
child protection standards.
Provision removing barriers to interethnic adoption
    The provision to remove barriers to interethnic adoption 
has an extensive legislative history. It was contained in the 
Contract With America and was passed by the House as part of 
H.R. 3286, the Adoption Promotion and Stability Act of 1996. 
The interethnic adoption provision also passed the House as 
part of welfare reform in H.R. 4, H.R. 2491, and subsequently, 
H.R. 3734. The provision was deleted from the final Conference 
Report accompanying H.R. 3734 because of a Senate parliamentary 
rule that restricts provisions allowed on a reconciliation 
bill. However, the provision was added to H.R. 3448, the Small 
Business Job Protection Act of 1996, which was signed into law 
by the President on August 20, 1996 (Public Law 104-188).
    Many States require race matching foster or adoptive 
parents with children either through regulation, statute, 
policy or practice. The Howard M. Metzenbaum Multiethnic 
Placement Act of 1994 (Public Law 103-382) was intended to end 
the delays that children experience waiting for foster or 
adoptive families because of race matching practices. Section 
553 of the Metzenbaum Act, however, contained language that was 
internally inconsistent with the purpose of the act (section 
552); moreover, it lacked a strong enforcement provision. To 
remedy these deficiencies, section 553 of the Metzenbaum Act 
was repealed by Public Law 104-188.
    In its place, section 1808 of the Small Business Job 
Protection Act of 1996 amends the Social Security Act to 
prohibit a State or other entity that receives Federal 
assistance from denying to any person the opportunity to become 
an adoptive or a foster parent on the basis of the race, color, 
or national origin of the person or of the child involved. 
Similarly, no State or other entity receiving Federal funds can 
delay or deny the placement of a child for adoption or foster 
care on the basis of the race, color, or national origin of the 
adoptive or foster parent or of the child involved.
    Violations of the act can be discovered as a result of a 
review conducted under section 1123A of the Social Security Act 
``or otherwise'' (that is, through the filing of a complaint by 
an individual, a group of individuals, or an agency). If a 
State is found to have violated the terms of this act, the 
State must correct the violation within 6 months (or less, at 
the Secretary's discretion); failure to do so will result in 
the imposition of graduated penalties. States found to be in 
violation would have their quarterly funds under title IV-E of 
the Social Security Act reduced by 2 percent for the first 
violation, by 3 percent for the second violation, and by 5 
percent for the third or subsequent violation. The total amount 
of penalties which can be applied in a fiscal year cannot 
exceed 5 percent of a State's total IV-E grant.
    Noncompliance with this provision is also deemed a 
violation of title VI of the Civil Rights Act of 1964. The 
Indian Child Welfare Act of 1978 is not affected by changes 
made in this title.

                          Title VI: Child Care

    The Personal Responsibility and Work Opportunity 
Reconciliation Act combines four major child care programs for 
low-income families into a single block grant to States. An 
expanded Child Care and Development Block Grant (CCDBG) becomes 
the primary Federal child care subsidy program and replaces 
child care activities previously authorized under title IV-A of 
the Social Security Act (AFDC Child Care, Transitional Child 
Care for former AFDC recipients, and At-Risk Child Care for 
low-income working families).
    This consolidation eliminates conflicting provisions among 
programs, including income eligibility standards, time limits 
on the receipt of assistance, and work requirements. Under the 
new system, Federal funds will follow the parent whether the 
parent is receiving public cash assistance while participating 
in a work-related activity or education program, has recently 
left public assistance, or is working but very low income and 
would be at risk of becoming dependent on welfare in the 
absence of subsidized child care. This approach is intended to 
eliminate the eligibility gaps, service disruptions, and 
paperwork caused by having separate programs for each of these 
groups of parents.
    The law's child care provisions are structured as an 
amendment to the Child Care and Development Block Grant Act. 
Unless amended or repealed as described below, prior law under 
the CCDBG remains in effect. At the Federal level, the program 
is administered by the Department of Health and Human Services 
(HHS).
Goals
    The new law establishes five goals for the expanded CCDBG, 
including: allowing States maximum flexibility in developing 
their programs; promoting parental choice; encouraging States 
to provide consumer education information to parents; helping 
States provide child care to parents trying to become 
independent of public assistance; and helping States implement 
health, safety, licensing, and registration standards 
established in State regulations.
Funding provisions
    Discretionary funds.--The law provides both discretionary 
and entitlement funding for child care services. Discretionary 
funds are provided by reauthorization of the CCDBG through 
fiscal year 2002, at an annual authorization level of $1 
billion. These funds are allocated among States according to 
the existing CCDBG formula, which is based on the number of 
children in low-income families and State per capita income. 
Territories will continue to receive one-half of 1 percent of 
discretionary funds.
    As under prior law, there is no requirement for States to 
match these discretionary funds. The new law deletes a prior 
law provision that required States to use CCDBG funds to 
supplement, rather than supplant, other public funds available 
for child care. The new law also amends prior law to require 
States to obligate funds either in the year they are received 
or in the subsequent fiscal year. Previously, States had 3 
years and 1 day in which to expend their funds. Prior law 
provisions that require the Secretary to reallocate unused 
funds remain in effect.
    Entitlement funds.--Entitlement funding is provided for 
child care under the amended title IV-A of the Social Security 
Act, which authorizes Temporary Assistance for Needy Families 
(TANF). These entitlement funds are provided to the lead CCDBG 
agency and spent subject to the requirements and limitations of 
the CCDBG Act. The bill authorizes and appropriates the 
following entitlement funds for child care: $2 billion in 
fiscal year 1997; $2.1 billion in fiscal year 1998; $2.2 
billion in fiscal year 1999; $2.4 billion in fiscal year 2000; 
$2.6 billion in fiscal year 2001; and $2.7 billion in fiscal 
year 2002.
    When added together, discretionary and entitlement funding 
for child care provided under the law equals $20 billion during 
the 6-year period, fiscal years 1997-2002. (Earlier 
descriptions have stated that the bill provides $22 billion 
during the 7-year period, fiscal years 1996-2002; the $22 
billion figure includes fiscal year 1996 spending.)
    Of all funds appropriated for child care, both 
discretionary and entitlement, the Secretary must reserve 
between 1 and 2 percent for payments to Indian tribes and 
tribal organizations. After funds are reserved for Indian 
tribes, remaining entitlement funds are allocated to States in 
two components. First, each State will receive a fixed amount 
each year, equal to the funding received by the State under the 
previous child care programs authorized by title IV-A (AFDC 
Child Care, Transitional Child Care, and At-Risk Child Care) in 
fiscal years 1994 or 1995, or the average of fiscal years 1992-
94, whichever is greatest. This amount is expected to equal 
approximately $1.2 billion each year in fiscal years 1997-2002. 
No State match is required for these funds, which will remain 
available for expenditure by States with no fiscal year 
limitation.
    Second, remaining entitlement funds (up to the total dollar 
amounts described above) are allocated to States according to 
each State's share of children under age 13. States must meet 
maintenance-of-effort and matching requirements to receive 
these funds. States must spend all of their ``guaranteed'' 
Federal entitlement funds for child care described above, plus 
100 percent of the amount they spent of their own funds in 
fiscal years 1994 or 1995, whichever is higher, under the 
previous child care programs under title IV-A. Further, States 
must provide matching funds at the fiscal year 1995 Medicaid 
matching rate to receive these additional entitlement funds for 
child care. These remaining funds also are subject to 
redistribution rules. If the Secretary determines that a State 
will not spend its entire allotment for a given fiscal year, 
then the unused amounts are redistributed among other States 
which apply for the funds according to those States' share of 
children under age 13.
Use of funds for certain populations
    Of their total entitlement funds, States must use at least 
70 percent to provide child care services to families that are 
receiving public assistance under the new TANF Program, 
families that are trying to become independent of public 
assistance through work activities, and families that are at 
risk of becoming dependent on public assistance. In their State 
plans, States must demonstrate how they will meet the specific 
child care needs of these families. Of their remaining child 
care funds (including discretionary funds), States must ensure 
that a substantial portion is used for child care services to 
eligible families other than those described above. The 
definition of ``eligible child'' is revised to increase the 
maximum family income to 85 percent of State median, instead of 
75 percent as contained in prior law.
State administration
    As under prior law, States are required to designate a lead 
agency for administration of Federal funds received for child 
care. However, the new law allows the State lead agency to 
administer the program directly or through an appropriate 
public or private entity. The lead agency is required to 
provide sufficient time and statewide notice of public hearings 
to be held on development of the State plan.
    The law establishes a limit of 5 percent on the States' use 
of funds for administrative costs. This limit applies to all 
funds received for child care, both discretionary and 
entitlement. The law states that the term ``administrative 
costs'' does not include the costs of providing services. The 
conference agreement further states that the Secretary should 
issue regulations that define administrative costs, and that 
the following activities should not be considered 
administrative costs: eligibility determination and 
redetermination, preparation and participation in judicial 
hearings, child care placement, recruitment, licensing, 
inspection, reviews and supervision of child care placements, 
rate setting, resource and referral services, training, and 
establishment and maintenance of computerized child care 
information.
Application and plan
    Under the law, States are required to submit plans covering 
a 2-year period. The new law amends prior law to require that 
States ``certify'' rather than ``provide assurances'' with 
regard to the plan components. As described below, State plans 
must make several certifications regarding parental choice, 
access, and complaints, consumer education information, 
licensing and regulation, and health and safety requirements.
    Parental choice, access and complaints.--Prior law 
provisions that promote parental choice of providers, require 
unlimited access by parents to their children while in care, 
and require States to maintain and make available a record of 
substantiated parent complaints about providers remain 
unchanged, including the requirement that parents be offered 
the option of receiving child care assistance through 
certificates (vouchers) or cash. The law adds a new requirement 
that State plans include a detailed description of how these 
provisions are implemented.
    The law also expands the definition of ``child care 
certificate'' to allow its use as a deposit for child care 
services, if such deposits are required of other children cared 
for by the same provider. The definition of ``eligible child 
care provider'' also is expanded to include individuals caring 
for their great grandchild or sibling (if the sibling provider 
lives in a separate residence). The prior law requirement that 
relative care givers be registered is deleted; relatives are 
required to comply with any ``applicable'' rather than 
``State'' requirements.
    Consumer education information.--States are required to 
collect and disseminate, to parents of eligible children and to 
the general public, consumer education information that 
promotes informed child care choices. Previously, the CCDBG 
required States to make information available regarding 
licensing and regulatory requirements, complaint procedures, 
and child care policies and practices within the State.
    Licensing and regulation.--The law requires that States 
have in effect licensing requirements applicable to child care 
services provided within the State, and requires State plans to 
include a detailed description of these requirements and how 
they are effectively enforced. This provision shall not be 
construed to require that licensing requirements be applied to 
specific types of providers. The legislation is not intended to 
either prohibit or require States to differentiate between 
federally subsidized child care and nonsubsidized child care 
with regard to the application of specific standards and 
regulations.
    The prior law provision that required unlicensed or 
unregulated child care providers to register with the State is 
deleted. Likewise, provisions that require States to notify HHS 
of any reduction in their child care standards, and to conduct 
a review of their licensing and regulatory requirements within 
18 months of enactment of the CCDBG Act of 1990, also are 
repealed.
    Health and safety requirements.--The new law leaves intact 
the requirement that States must have in effect, under State or 
local law, health and safety requirements that are applicable 
to child care providers, and that procedures are in effect to 
ensure that subsidized child care providers comply with 
applicable health and safety requirements. States must have 
health and safety requirements in the following areas: 
prevention and control of infectious diseases (including 
immunization), building and physical premises safety, and 
health and safety training.
Use of funds
    Funds provided under the bill may be used for child care 
services provided on a sliding fee scale basis, activities to 
improve the quality or availability of child care, or any other 
activity considered appropriate by the State to achieve the 
goals described above.
    Child care services.--As under prior law, States must 
establish payment rates for child care services that are 
sufficient to ensure equal access for eligible children to 
comparable services provided to children whose parents are not 
eligible for subsidies. The act eliminates the requirement that 
payment rates must consider the variations in costs of serving 
children in different settings, of different age groups, and 
with special needs. The law adds a requirement that State plans 
must include a summary of the facts relied upon by the State to 
determine the sufficiency of payment rates to ensure equal 
access.
    Quality and availability improvement.--The law requires 
States to spend no less than 4 percent of their total child 
care funds each year (discretionary and entitlement) for 
activities to provide comprehensive consumer education to 
parents and the public, activities that increase parental 
choice, and activities designed to improve the quality and 
availability of child care (such as resource and referral 
services).
    The law deletes a former provision that reserved 25 percent 
of discretionary CCDBG funds for two functions: activities to 
improve the quality and availability of child care, and 
expansion of before and afterschool child care and early 
childhood development services.
Federal Enforcement
    The law authorizes the Secretary, upon finding that a State 
is out of compliance with the act or the State plan, to require 
that the State reimburse the Federal Government for any 
misspent funds, or to withhold the amount from the 
administrative portion of the State's allotment for the next 
fiscal year, or to take a combination of these steps. Prior law 
required the Secretary to withhold any future payments to a 
State until the compliance failure was corrected.
Data collection
    Under the former CCDBG, States were required to submit 
annual aggregate data reports to HHS on their child care 
programs, and the Secretary was required to report annually to 
Congress. The new law replaces these provisions with a 
requirement that States submit disaggregated data on children 
and families receiving assistance to HHS every quarter, and 
aggregate data twice a year. The law further requires the 
Secretary to submit a report to Congress once every 2 years.
    Specifically, States must collect the following information 
on each family unit receiving assistance, to be included in 
quarterly reports: family income; county of residence; gender, 
race, and age of children receiving assistance; whether the 
family includes only one parent; sources of family income, 
separately identified and including amounts; number of months 
the family has received benefits; the type of child care 
received; whether the child care provider was a relative; the 
cost of child care; and the average hours per week of care.
    Aggregate data to be reported every 6 months include: the 
number of child care providers that receive funding under this 
program, separately identified by type; the monthly cost of 
child care services, and the portion that is subsidized by this 
program, identified by type; the number of payments made by the 
State through vouchers, contracts, cash, and disregards under 
public benefit programs, identified by type of child care 
provided; the manner in which consumer education information 
was provided and the number of parents to whom it was provided; 
and the total unduplicated number of children and families 
served by this program.
Indian tribes and tribal organizations
    As described earlier, the Secretary must reserve between 1 
and 2 percent of all child care funds, both discretionary and 
entitlement, for payments to Indian tribes and tribal 
organizations. The law also requires the Secretary to 
reallocate among other tribes and organizations any 
discretionary funds that an Indian tribe or tribal organization 
does not use in a manner consistent with the statute.
    The Secretary, in consultation with the tribes and tribal 
organizations, must develop minimum child care standards that 
reflect tribal needs and available resources. These standards 
apply to child care provided by Indian tribes and tribal 
organizations in lieu of licensing and regulatory requirements 
that would otherwise be applicable under State or local law.
    Under prior law, CCDBG funds could not be used for 
construction or renovation of facilities. However, the new law 
allows Indian tribes or tribal organizations to submit a 
request to the Secretary to use funds for these purposes. The 
Secretary may approve the request after a determination that 
adequate facilities are not otherwise available and that the 
lack of such facilities will inhibit the operation of child 
care programs in the future. The Secretary may not approve the 
request if it will reduce the level of child care services 
provided from the level provided by the tribe or organization 
in the previous year.
Effective date
    All amendments are effective on October 1, 1996, except for 
the authorization of appropriations for the CCDBG, which 
becomes effective upon enactment.

                       Title VII: Child Nutrition

Overview
    The amendments made by title VII of the Personal 
Responsibility and Work Opportunity Reconciliation Act are 
intended to better target Federal child nutrition support on 
low-income children, conform summer program subsidies more 
closely to rates paid in other child nutrition programs, reduce 
requirements for ``expanding'' child nutrition programs, and 
return more program control to States and localities. Child 
nutrition provisions:
 1. Means test the family and group day care home component of 
        the child and adult care food program, reducing Federal 
        subsidies for meals and supplements (snacks) served by 
        eligible day care homes not located in low-income areas 
        or without a low-income provider;
 2. Reduce subsidies for summer food service programs;
 3. End special startup and expansion grants for school 
        breakfast and summer food service programs;
 4. Change rounding rules applied to Federal subsidies for 
        meals/snacks served to children who pay ``full price'' 
        in school lunch and breakfast programs and child care 
        centers (i.e., for meals/snacks served to children not 
        receiving free or reduced-price meals/snacks because of 
        their families' limited income); and
 5. Remove numerous overly prescriptive Federal rules governing 
        operations of State and local child nutrition 
        providers, as well as over 20 out-of-date and redundant 
        provisions of the National School Lunch and Child 
        Nutrition Acts.
    The new law also: (1) allows all schools that participate 
under a provision of law (``provision 2'') that permits them to 
collect applications for free and reduced-price meals less 
frequently than once a year (in exchange for offering all meals 
free) to participate under the terms of provision 2 for 5 
years, rather than 3 years, without a redetermination of their 
status; (2) eliminates subsidies for a fourth meal/snack each 
day in summer camps, migrant service institutions, and child 
care centers; (3) ends a requirement for advance payments to 
participating child care institutions; (4) eliminates special 
summer food service program rules for National Youth Sports 
Program sponsors; (5) makes funding for the nutrition education 
and training program a ``discretionary'' appropriation, rather 
than ``mandatory'' spending; and (6) disqualifies stores 
participating in the special supplemental nutrition program for 
women, infants, and children (the WIC Program) if they are 
disqualified for Food Stamp Program violations.
    The Congressional Budget Office (CBO) estimates that these 
changes in child nutrition law will reduce Federal outlays by 
$2.853 billion for fiscal years 1997 through 2002, with savings 
rising from $128 million in 1997 to $670 million in 2002. The 
bulk of this spending reduction (85 percent) is the result of 
restructured subsidies for day care homes.
Child and adult care food program: day care homes
    The new act completely restructures the subsidies received 
by family and group day care homes under the child and adult 
care food program.\1\
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    \1\ Federal payments to day care centers under the child and adult 
care food program are not currently affected by these changes. However, 
changes to rounding rules and elimination of payments for a fourth 
meal/snack each day will reduce some payments to day care centers. (See 
below.)
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    Federal payments for homes.--Federal subsidy rates for 
meals/snacks served to children in eligible day care homes are 
not currently differentiated by the family income of the child, 
unlike payments to day care centers (and schools).\2\ Standard 
day care home rates are 7-15 percent lower (depending upon the 
meal served) than those for free meals/snacks served to low-
income children by participating centers, but much higher (3 to 
9 times more) than rates for meals/snacks served to nonpoor 
children in centers. However, approximately two-thirds of the 
spending for the day care home component of the child and adult 
care food program goes to support meals/snacks served to 
nonpoor children with family income above 185 percent of the 
Federal poverty guidelines (the income ceiling for receipt of 
free or reduced-price meals in other child nutrition programs). 
For the July 1996 to June 1997 period, the subsidy rates for 
day care homes are: $1.575 for each lunch/supper, 86.25 cents 
for breakfasts, and 47 cents for snacks. Assuming a 3-percent 
inflation adjustment in July 1997, the rates would rise to 
about $1.62, 88 cents, and 48 cents, respectively, under former 
rules.
---------------------------------------------------------------------------
    \2\ Day care centers typically serve more than 40 children; homes 
generally have 4-7 children.
---------------------------------------------------------------------------
    In order to better target Federal support for day care 
homes to low-income children, the new act divides participating 
homes into two categories, or ``tiers,'' and bases their 
Federal reimbursement on which tier they qualify for.
    Tier I homes will be: (1) those located in low-income areas 
(areas in which at least half of the children are in households 
with income below 185 percent of the poverty guidelines, based 
on Census data, or served by a school enrolling elementary 
students in which at least half the children are certified 
eligible to receive free or reduced-price school meals), and 
(2) those operated by a provider whose income is verified by a 
sponsor to be below 185 percent of the poverty guidelines. 
These homes will receive payments very close to those provided 
under preamendment rules, with two relatively minor 
differences: beginning with the July 1997 annual inflation 
adjustment: (1) adjustments for inflation will be based on 
changes in the ``food at home'' component of the CPI-U, rather 
than the ``food away from home'' component; and (2) after 
adjusting for inflation, payment rates will be rounded down to 
the nearest whole cent, rather than rounded to the nearest 
quarter cent.\3\ The CBO estimates that about 35 percent of 
meals/snacks served by day care homes will be subsidized at 
tier I rates.
---------------------------------------------------------------------------
    \3\ Although each payment rate is rounded down, the bases used for 
the next adjustment will be the unrounded rates for the previous 12 
months.
---------------------------------------------------------------------------
    Tier II homes will be those that do not meet tier I low-
income standards. With the exception of tier II homes that take 
advantage of a conditional option to receive the higher tier I 
rates (see below), the act sets base rates for tier II homes at 
95 cents for lunches/suppers, 27 cents for breakfasts, and 13 
cents for supplements. These base rates will be indexed for 
inflation on July 1, 1997 (the effective date for the new two-
tiered system), and, because of this, when the new system is 
actually implemented, the initial subsidy rate for lunches/
suppers will be slightly higher. Assuming 3 percent inflation, 
the July 1997 lunch/supper rate will probably be 97 cents.\4\ 
As with tier I rates, inflation adjustments applied to tier II 
subsidies will be based on the CPI-U food at home component and 
rounded down to the nearest whole cent.
---------------------------------------------------------------------------
    \4\ A 3-percent adjustment will not be large enough to affect 
initial subsidy rates for breakfasts and snacks.
---------------------------------------------------------------------------
    Following preamendment procedures, the new tier II rates 
will be varied for Alaska and Hawaii (as will tier I rates), 
and rules against subsidies for providers' children unless they 
meet free or reduced-price income standards are retained.
    The new legislation was designed to better target 
assistance to day care homes, but not to impose too great an 
administrative burden on homes and their sponsors by mandating 
income-testing of individual children. However, tier II homes 
will be able to elect to receive higher tier I subsidies for 
meals/snacks served to children who are members of households 
with income below 185 percent of the poverty guidelines if 
their sponsor collects the necessary information and makes the 
appropriate eligibility determination in accordance with 
Federal rules. Tier II homes also will be able to opt to 
receive tier I subsidies for meals/snacks served to children 
(or children whose parents are) participating in, or subsidized 
under, a federally or State-supported child care or other 
benefit program with an income eligibility limit that does not 
exceed 185 percent of the poverty guidelines. And they will be 
allowed to restrict their claim for tier I reimbursement to 
these ``program-eligible'' children if they choose not to 
collect income statements from all parents/caretakers.
    In determining homes' tier I or II status, the most current 
available data (Census, enrollment, provider income) must be 
used, and a determination that a home is located in a tier I 
area will generally be effective for 3 years.
    Federal payments for sponsors.--Basic Federal payments made 
to day care home sponsoring organizations for administrative 
costs (based on the number of homes sponsored) are not affected 
by the new two-tier system. However, the act does make two 
changes to the rules governing administrative funding sponsors 
receive. It prohibits funding for sponsors that base payments 
to employees on the number of homes ``recruited.'' And it 
replaces existing permission for sponsors to use administrative 
funds to conduct ``outreach'' to and ``recruitment'' of 
unlicensed day care homes so that they may become licensed with 
permission to use administrative funds to assist unlicensed 
homes in becoming licensed.
    New Federal and State responsibilities.--Under the new 2-
tier system for day care homes, the Agriculture Department will 
have new responsibilities. It is required to provide Census 
data necessary for determining homes' tier I/II status and will 
establish minimum requirements for verifying children's family 
income and program participation status when tier II homes 
elect to claim tier I reimbursement rates. It also is required 
to prescribe ``simplified'' meal counting and reporting 
procedures for use when tier II homes elect to claim tier I 
reimbursement for children meeting income or program 
participation standards for low income. These procedures can 
include: (1) setting an annual percentage of meals/snacks to be 
subsidized at tier I rates based on the family income of 
children enrolled in a specific month or other period; (2) 
placing a home in a Federal reimbursement category based on its 
percentage of children with household income below 185 percent 
of the poverty guidelines; or (3) any other procedures judged 
appropriate. In addition, States are required to provide school 
enrollment data necessary to determine homes' tier I/II status.
    Implementation grants.--In order to assist implementation 
of the new 2-tier subsidy system for day care homes, the new 
act requires that $5 million be reserved from fiscal year 1997 
funding for the child and adult care food program and used to 
make grants to States to aid homes and their sponsors in 
putting the new system in place.\5\ The grants are to be used 
to: (1) assist sponsors (and other appropriate organizations) 
in securing and providing training, materials, automated data 
processing, and other aid for sponsors' staff; and (2) provide 
training and other implementation assistance to participating 
homes. States may retain no more than 30 percent of their grant 
for their use.
---------------------------------------------------------------------------
    \5\ This $5 million is to be allocated among the States based on 
the number of day care homes participating in fiscal year 1995, with a 
minimum allocation of $30,000 for each State.
---------------------------------------------------------------------------
    Study.--The Agriculture Department, in conjunction with the 
Department of Health and Human Services, is required to 
undertake a comprehensive study of the participation and 
nutrition effects of the amendments restructuring day care home 
reimbursements, due in August 1998. To facilitate the study, 
States must submit participation and other data requested by 
the Agriculture Department.
    Implementation schedule.--The new two-tier subsidy system 
is effective beginning July 1, 1997. However, the act directs 
the Agriculture Department to issue interim regulations related 
to the restructuring of subsidies for day care homes, provision 
of data necessary to implement the new system, and changes to 
rules governing sponsors' use of administrative funds by 
January 1, 1997. Final regulations are required by July 1, 
1997. The change affecting funding for sponsors basing payments 
to employees on the number of homes recruited is effective on 
August 22, 1996.
Child and adult care food program: additional amendments
    Rounding rule.--As with day care home subsidies, the new 
act requires that, when adjusted annually for inflation, 
Federal subsidy rates for meals and snacks served by child and 
adult care centers to participants that are not eligible for 
free or reduced-price meals/snacks must be rounded down to the 
nearest whole cent (rather than rounded to the nearest quarter 
cent). Although the result of each annual inflation adjustment 
will be rounded down to the nearest whole cent, the base for 
the next adjustment will be the unrounded amount calculated for 
the previous 12-month period.
    Advance payments.--States must provide monthly advance 
payments to approved day care institutions in an amount that 
reflects the level of valid claims customarily received (or the 
State's best estimate in the case of newly participating 
institutions). The new act makes provision of advance payments 
a State option.
    Additional meals/snacks.--The act authorizes Federal 
payments to day care centers for up to two meals and one snack 
each day. Prior law allowed payment for two meals and two 
snacks or three meals and one snack for children in child care 
for 8 or more hours a day.
    Paperwork, outreach, and administrative provisions.--The 
Agriculture Department has a responsibility to act to 
``expand'' child care food services, and States must take 
affirmative action to expand the availability of child and 
adult care food program benefits, including annual notification 
to all nonparticipating day care homes. The Department also 
must conduct demonstration projects to test approaches to 
removing or reducing barriers to participation by homes; the 
Department and the States must provide training and technical 
assistance to day care home sponsors in reaching low-income 
children; and States are required to provide information and 
training about child health and development through sponsors. 
The Department is further required to provide State agencies 
with information about the WIC Program, and State agencies must 
provide child care institutions with specific WIC materials, 
annually update the materials, and ensure that, at least once a 
year, the institutions provide parents with written information 
about the WIC Program. Finally, the Department is required to 
provide ``additional'' technical assistance to child care 
institutions and sponsors that are having difficulty 
maintaining compliance with nutrition requirements, and State 
agencies must provide technical assistance to institutions 
submitting incomplete applications.
    The new act deletes all of these requirements on the 
Department and the States and replaces them with a general 
requirement that States provide sufficient training, technical 
assistance, and monitoring to facilitate effective operation of 
the child and adult care food program. Further, the Agriculture 
Department must assist States in developing plans to do so. A 
requirement that States and participating institutions make 
accounts and records available at all times is changed to a 
requirement that they be available at ``any reasonable time.''
Summer food service program
    The new law makes five major substantive changes to the 
summer food service program: lowering Federal subsidy rates, 
changing the rounding rule, ending authority for reimbursements 
for a fourth meal/snack each day, dropping special rules for 
national youth sports program sponsors, and permitting some 
summer sponsors to exercise an ``offer versus serve'' option. 
In addition, it makes a number of administrative amendments to 
delete unnecessary Federal requirements. With the exception of 
the reduction in Federal subsidies (effective January 1, 1997, 
for the summer of 1997), the summer food service program 
amendments are effective on August 22, 1996.
    Reduced Federal subsidies.--Federal operating cost subsidy 
rates for meals/snacks served free by summer food service 
providers are substantially higher than those for free meals/
snacks in other child nutrition programs. For the summer of 
1996, the rates are: $2.1675 for each lunch/supper, $1.2075 for 
breakfasts, and 57 cents for snacks. Assuming a 3 percent 
inflation adjustment in January 1997 (for the summer of 1997), 
they would rise to about $2.23, $1.24, and 58 cents, 
respectively, under prior rules. By comparison, the basic July 
1996 to June 1997 rate for free lunches in the school lunch 
program (including commodity assistance) is $1.98, and the 
basic July 1996 to June 1997 rate for free breakfasts in the 
school breakfast program is $1.0175.
    In order to more closely conform summer food service 
program operating subsidies to those for free meals/snacks in 
other child nutrition programs (while recognizing the higher 
costs of summer sponsors), the act reduces summer program 
reimbursement rates beginning with the summer of 1997. The new 
base rates are set at $1.97 for lunches/suppers, $1.13 for 
breakfasts, and 46 cents for snacks. However, these rates will 
be indexed for inflation on January 1, 1997, and, because of 
this, when they actually take effect in the summer of 1997, 
they will be somewhat higher than the base rates laid out in 
the new law. Assuming a 3 percent inflation adjustment, they 
probably will be about $2.02, $1.16, and 47 cents, 
respectively.
    Summer food service program providers also receive 
inflation-indexed administrative cost payments based on the 
number of meals/snacks served. These amounts are not changed by 
the new law.
    Rounding rule.--When indexed annually for inflation, summer 
program operating cost subsidy rates will be rounded down to 
the nearest whole cent (rather than rounded to the nearest 
quarter cent), beginning with the January 1997 adjustment. 
Annual adjustments will be based on the unrounded rates for the 
previous 12-month period.
    Additional meals/snacks.--Payments to summer camps and 
institutions serving migrants will be limited to the regular 
three meals or two meals and a snack under the provisions of 
the new act, rather than the four meals/snacks under prior law.
    National Youth Sports Program.--Higher education 
institutions operating programs under the National Youth Sports 
Program (NYSP) may be summer program sponsors; several special 
rules apply to them. They may receive payments for meals/snacks 
served in months other than the normal program months of May 
through September, and children and institutions are eligible 
to participate ``without application.'' Their meal/snack 
subsidy rates are different than other summer sponsors--lunches 
and suppers are reimbursed at the school lunch program's free 
lunch rate, and breakfasts and snacks are subsidized at the 
school breakfast program's ``severe need'' rate. And they 
operate under different meal pattern requirements than other 
summer sponsors. The new act removes these special provisions 
for NYSP sponsors.
    ``Offer versus serve.''--The new law authorizes school food 
authorities participating as summer program sponsors to permit 
children attending a site on school premises operated by the 
authority to refuse 1 or more items of a meal without affecting 
reimbursement for the meal--using rules the school uses for its 
school meal programs.
    Additional amendments.--The new law deletes certain 
detailed mandates on the Department of Agriculture and State 
agencies in administering the summer food service programs. The 
Agriculture Department has a responsibility to ``expand'' the 
summer food service program and provide ``additional'' 
technical assistance to summer program sponsors that are having 
difficulty maintaining compliance with nutrition requirements. 
The new act eliminates these provisions of law.
    State agencies must establish and implement an ongoing 
training and technical assistance program for private nonprofit 
sponsors. They also must include in their State plans: (1) the 
State's method of assessing need for the summer program; (2) 
the State's best estimate of the number and character of 
service institutions and sites to be approved (and children and 
meals to be served), as well as the estimating methods used; 
(3) the State's schedule for providing technical assistance and 
training to service institutions; and (4) the State's plans and 
schedule for informing service institutions of the availability 
of the summer food service program. The new act drops these 
requirements on States.
    Under prior law, three advance payments to summer program 
operators were required during any summer program. The second 
of these may not be released to any service institution that 
has not certified it has held training sessions for its own 
personnel and site personnel. The act limits this condition for 
receiving the second advance payment to nonschool providers. It 
also replaces a requirement that service institutions' 
contracts with food service management companies must require 
that bacteria levels conform to standards applied by the local 
health authority with a more general requirement that these 
contracts conform to all standards set by local health 
authorities. Finally, the new act revises a requirement that 
States and summer program service institutions make accounts 
and records available at all times to a requirement that they 
be available ``at any reasonable time.''
Startup and expansion grants
    Provisions in the Child Nutrition Act require the 
Agriculture Department to use $5 million a year through fiscal 
year 1997, $6 million in 1998, and $7 million in each 
subsequent year to fund a program of competitively bid grants 
to State education agencies for the purpose of initiating or 
expanding the school breakfast and summer food service 
programs. The act ends the requirement for these startup and 
expansion grants, effective October 1, 1996.
Eligibility of aliens
    Section 742 of the act modifies provisions of title IV that 
would bar illegally present aliens from eligibility for 
programs under the National School Lunch and Child Nutrition 
Acts. The section provides that individuals eligible to receive 
free public education benefits under State or local law will 
not be made ineligible for benefits under the school lunch and 
breakfast programs on the basis of citizenship, alienage, or 
immigration status. In addition, nothing in the new act 
(including the provisions of title IV) will ``prohibit or 
require a State to provide'' other benefits under the National 
School Lunch and Child Nutrition Acts to illegally present 
aliens. This provision is effective on August 22, 1996.
School meal programs
    In addition to provisions dealing with startup and 
expansion grants for the school breakfast program and the 
eligibility of illegal aliens (both noted above), the new law 
makes one major substantive amendment affecting the school 
lunch and breakfast programs. Effective with the next annual 
inflation adjustment to school meal subsidy rates (July 1, 
1997), it requires that the rates for ``full price'' lunches 
and breakfasts be rounded down to the nearest whole cent 
(rather than rounded to the nearest quarter cent).\6\ The new 
law includes a number of administrative amendments dropping or 
revising overly prescriptive provisions of law governing school 
meal programs. More specifically, the new act removes:
---------------------------------------------------------------------------
    \6\ As with other changes in rounding rules, annual adjustments 
will be based on the unrounded rates for the previous 12-month period, 
then rounded down.
---------------------------------------------------------------------------
 1. A requirement that the Agriculture Department establish 
        ``administrative procedures'' designed to diminish food 
        waste in schools;
 2. A requirement that schools use commodities designated as 
        being in ``abundance;''
 3. A prohibition against States imposing any requirement with 
        respect to teaching personnel, curriculum, and 
        instruction in any school when carrying out provisions 
        of the National School Lunch and Child Nutrition Acts 
        (a similar prohibition on the Federal Government is 
        retained);
 4. With respect to waivers, requirements that: (1) waiver 
        applications describe ``management goals'' to be 
        achieved, a timetable for implementation, and the 
        process to be used for monitoring progress in 
        implementing the waiver (including cost implications); 
        (2) the Agriculture Department state in writing the 
        expected outcome of any approved waiver; (3) the 
        Agriculture Department's decision on any waiver be 
        disseminated through ``normal means of communication;'' 
        (4) waivers may not exceed 3 years (unless extended); 
        (5) waivers relating to ``offer versus serve'' rules 
        are prohibited; and (6) service providers annually 
        submit reports describing the use of their waivers and 
        evaluating how the waiver contributed to improved 
        services (and that States submit a summary of these);
 5. A requirement that the Agriculture Department provide 
        ``additional'' technical assistance to schools that are 
        having difficulty maintaining compliance with nutrition 
        requirements; and
 6. A requirement that the Agriculture Department and State 
        education agencies carry out information, promotion, 
        and outreach programs to expand the school breakfast 
        program, including the use of ``language-appropriate'' 
        materials.
    The new law also revises existing Federal requirements:
 1. It makes clear that States can terminate or suspend 
        agreements with schools participating in school meal 
        programs;
 2. It replaces existing mandates to notify children and 
        parents about the nutrition content of school meals and 
        their consistency with the Dietary Guidelines for 
        Americans with a requirement that schools serve meals 
        that are consistent with the Dietary Guidelines by the 
        beginning of the 1996-97 school year, unless a waiver 
        is granted by a State education agency. Meals must 
        provide, on average over each week, at least one-third 
        of the National Academy of Sciences' daily recommended 
        dietary allowances (in the case of lunches) or one-
        quarter of the allowances (in the case of 
        breakfasts);\7\
---------------------------------------------------------------------------
    \7\ This amendment does not affect provisions of law enacted 
earlier this year (the Healthy Meals for Children Act; Public Law 104-
149) that provided that schools may use ``any reasonable approach'' to 
meeting Federal nutrition standards for school meals.
---------------------------------------------------------------------------
 3. It provides that school food authorities may not be 
        required to submit free and reduced-price ``policy 
        statements'' to State education agencies unless there 
        is a substantive change in policy. Routine changes 
        (e.g., adjusting income eligibility standards for 
        inflation) are not sufficient cause for requiring 
        submission of a policy statement;
 4. Schools electing to serve all children free meals for three 
        successive years may be paid special assistance 
        payments for free and reduced-price meals based on the 
        number of meals served free or at a reduced price in 
        the first year (``provision 2''). Schools that elected 
        this option as of November 1994 are allowed to receive 
        a 2-year extension if it is determined that the income 
        level of the school's population has remained stable, 
        and schools receiving a 2-year extension are eligible 
        to receive subsequent 5-year extensions. The new law 
        allows all schools taking the provision two option to 
        qualify for extensions;
 5. It removes a requirement that State education agencies 
        report each month the average number of children 
        receiving free and reduced price lunches in the 
        immediately preceding month and replaces it with a 
        provision to report this information at the Agriculture 
        Department's request; and
 6. It revises a requirement that States, State education 
        agencies, and schools make accounts and records 
        available at all times to a requirement that they be 
        available at ``any reasonable time.''
Assistance for State administrative expenses
    The new law makes two changes in rules governing Federal 
aid for State child nutrition administrative expenses:
 1. It eliminates a provision of law that authorizes the 
        Agriculture Department to withhold Federal funding for 
        State administrative expenses when a State fails to 
        agree to participate in a study or survey under the 
        National School Lunch or Child Nutrition Acts; and
 2. It removes a requirement for annual plans for the use of 
        State administrative expense funds and replaces it with 
        a mandate to submit any substantive plan changes for 
        approval.
Commodity distribution
    The new law includes four changes that affect commodity 
distribution for child nutrition programs:
 1. A requirement that cereal and shortening and oil products 
        be included among products donated to the school lunch 
        program is eliminated;
 2. A mandate to purchase specific amounts of low-fat cheese 
        for school meal programs is ended;
 3. The requirement for formal State advisory councils on 
        selection and distribution of commodities is replaced 
        with a requirement that State agencies meet with local 
        school food service personnel when making decisions 
        regarding commodities used in school meal programs; and
 4. Authority for the Agriculture Department to prescribe the 
        terms and conditions under which donated commodities 
        will be used in schools and other participating 
        institutions is ended.
The WIC Program
    The act adds a new major provision affecting operations of 
the special supplemental food program for women, infants, and 
children (WIC). Effective on enactment, WIC vendors that have 
been disqualified from participation in the Food Stamp Program 
will be disqualified as WIC vendors. The disqualification is 
for the same period as the food stamp disqualification and will 
not be subject to separate WIC Program administrative and 
judicial review procedures. In addition, effective on 
enactment, the new law contains a number of administrative 
amendments removing or revising Federal requirements.
    Detailed mandates and requirements that are eliminated by 
the new act include:
 1. A requirement that the Agriculture Department ``promote'' 
        the WIC Program by producing and distributing 
        materials, including public service announcements in 
        English and other appropriate languages;
 2. A requirement for a biennial report from the Agriculture 
        Department on the characteristics of WIC participants, 
        participation by migrants, and other matters;
 3. A mandate that State agencies annually evaluate nutrition 
        education and breast feeding support and promotion 
        activities;
 4. Specific permission for local WIC agencies to use ``master 
        files'' with regard to monitoring individuals required 
        to be included in group nutrition education classes;
 5. A State plan requirement for an estimate of increased 
        participation when ``funds conversion'' authority is 
        opted for by a State;
 6. Requirements as to how quickly State agencies must respond 
        to local agency applications to participate; 
        requirements as to the content of recipient suspension 
        and termination notices;
 7. A directive for Federal administrative standards for 
        States, including staffing standards;
 8. A provision that stipulates that products specifically 
        designed for pregnant, postpartum, and breastfeeding 
        women or infants, may be made available if they are 
        commercially available or are federally approved based 
        on clinical tests;
 9. A provision specifically allowing States to adopt benefit 
        delivery methods that accommodate the special needs and 
        problems of incarcerated individuals;
10. A requirement for pilot projects to determine the 
        feasibility of using ``universal product codes'' to aid 
        vendors in providing the correct infant formula to WIC 
        participants;
11. Specific rules governing the Agriculture Department when it 
        solicits infant formula bids on behalf of States 
        (authority to do so is retained); \8\ and
---------------------------------------------------------------------------
    \8\ None of the amendments affecting procurement practices are to 
affect contracts for infant formula in effect on August 22, 1996.
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12. Requirements that the Agriculture Department ``promote'' 
        the joint purchase of infant formula by States, 
        ``encourage'' the purchase of items other than infant 
        formula under ``cost containment'' procedures, inform 
        States of the benefits of cost containment procedures, 
        and provide technical assistance related to cost 
        containment.
    In other areas, the new legislation changes Federal rules 
by:
 1. Stipulating that, after 1 year in a temporary 
        accommodation, individuals will not be considered 
        ``homeless;''
 2. Removing requirements that State agencies ``ensure'' that: 
        (1) written information about food stamps and the AFDC 
        and child support enforcement programs is provided to 
        WIC applicants and participants; and (2) local agencies 
        maintain and make available a list of local resources 
        for substance abuse counselling and treatment. These 
        are replaced with: (1) authority for State agencies to 
        provide local agencies with materials describing other 
        programs for which WIC participants may be eligible; 
        and (2) a requirement that local agencies maintain and 
        make available lists of local substance abuse 
        counselling and treatment resources;
 3. Revising a requirement for annual State plans to provide 
        that State agencies only be required to submit 
        substantive changes in their plan for Federal approval;
 4. Removing State plan requirements for coordination with a 
        specific list of special counselling services and 
        programs and replacing them with a general directive to 
        coordinate WIC operations with other services and 
        programs;
 5. Dropping requirements that State plans include an 
        explanation of how the State will provide WIC benefits 
        to unserved and underserved areas, those most in need, 
        and incarcerated persons, but retaining plan 
        requirements for improving access for the employed and 
        those in rural areas and reaching and enrolling 
        migrants and women in the early months of pregnancy;
 6. Converting the requirement to provide WIC services and 
        materials in languages other than English from a 
        mandate to an option;
 7. Revising authority for the Agriculture Department to ask 
        for such other information ``as may be required'' in a 
        State's plan to a stipulation that plans must include 
        only other information as may ``reasonably'' be 
        required;
 8. Changing the requirement that State and local WIC agencies 
        make accounts and records available at all times to a 
        requirement that they be made available at ``any 
        reasonable time;''
 9. Making it a local agency option whether to provide 
        information about other potential sources of food 
        assistance; and
10. Providing that the National Advisory Council on Maternal, 
        Infant, and Fetal Nutrition rather than the Secretary 
        of Agriculture, will select its Chairman and Vice 
        Chairman.
Nutrition education and training
    The primary amendment made to provisions for the nutrition 
education and training program converts it from a program for 
which funding is ``mandatory'' (required and permanently 
appropriated) to one for which funding is ``discretionary'' 
(dependent on decisions made with each year's appropriations). 
State grants from the amount appropriated will be based on a 
rate of 50 cents for each child enrolled in schools and 
institutions participating in child nutrition programs, with a 
minimum award of $75,000. If funds are insufficient to provide 
grants based on the 50 cent/$75,000 rule, the amount of each 
State's grant will be ratably reduced.
    In addition to the funding amendment, the new law rewords 
and simplifies the statute's provisions regarding the purpose 
of the nutrition education and training program, revises a 
requirement that State education agencies make accounts and 
records available at all times to a directive that they be 
available at ``any reasonable time,'' and, in the interest of 
limiting Federal directives to States, eliminates specific 
provisions of law directing how nutrition education and 
training funds may be spent. The bill replaces the following 
detailed list of purposes for which specific permission is 
given with general authority for States to use nutrition, 
education, and training funds for other ``appropriate 
activities'' as determined by the State:
 1. Funding a nutrition component in homemaking and health 
        education;
 2. Instructing teachers and school staff on how to promote 
        better nutritional health and motivate children from a 
        variety of linguistic and cultural backgrounds to 
        practice sound eating habits;
 3. Developing means of providing nutrition education in 
        ``language-appropriate'' materials through afterschool 
        programs;
 4. Training related to healthy and nutritious meals;
 5. Creating instructional programming on the ``Food Guide 
        Pyramid'' (including language-appropriate materials);
 6. Funding aspects of the ``Strategic Plan for Nutrition 
        Education;''
 7. Encouraging public service advertisements to promote 
        healthy eating habits for children (including language-
        appropriate materials and advertisements);
 8. Coordinating and promoting nutrition education and training 
        activities in local school districts;
 9. Contracting with public and private nonprofit education 
        institutions to conduct nutrition education and 
        training;
10. Increasing public awareness of the importance of 
        breakfasts; and
11. Coordinating and promoting nutrition education and training 
        activities that include the summer and child care food 
        programs.
    The new legislation also: (1) ends planning and assessment 
grants for nutrition education and training (and their 
attendant comprehensive plans); and (2) eliminates specific 
Federal requirements for State nutrition education 
coordinators' assessment of the nutrition education and 
training needs of the State.
Pilot projects
    The act makes two changes affecting pilot project authority 
under the National School Lunch Act:
 1. It eliminates authorization for ``universal free lunch'' 
        projects that are similar to ``provision 2'' authority 
        found elsewhere in law (separate, additional authority 
        for ``universal'' free meal projects is retained); and
 2. It makes funding for pilot projects for grants to provide 
        meals and snacks to adolescents in programs outside 
        school hours optional and authorizes ``such sums as are 
        necessary'' for fiscal years 1997 and 1998.\9\
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    \9\ Under prior law, these projects were required to be funded at 
$475,000 a year in fiscal years 1996 and 1997 and $525,000 in 1998.
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Coordination
    Finally, the new act requires the Agriculture Department to 
develop proposed changes to regulations for the school lunch, 
school breakfast, and summer food service programs in order to 
simplify them and coordinate them into a comprehensive meal 
program. The Department must consult with local, State, and 
regional administrators in developing these proposed changes 
and submit to Congress a report on them by November 1, 1997.

           Title VIII: Food Stamps and Commodity Distribution

Overview
    Subtitle A of title VIII of the Personal Responsibility and 
Work Opportunity Reconciliation Act contains major and 
extensive revisions to the Food Stamp Program, the most 
substantial changes since the Food Stamp Act was rewritten in 
1977. It greatly expands States' role in the program (helping 
to broaden their authority over the welfare system, as with 
other components of the act), adds to and strengthens work and 
other nonfinancial eligibility requirements, controls future 
spending increases, expands penalties for rules violations and 
controls over food stamp trafficking, and encourages the 
electronic delivery of benefits. It also authorizes food stamp 
appropriations through fiscal year 2002, without specific 
dollar limits on appropriations or spending. Separately, title 
IV of the act bars food stamp eligibility for most legally 
present aliens (illegal aliens are already ineligible for food 
stamps), and provisions in title I disqualify those convicted 
of drug-related felonies.
    Subtitle B of title VIII amends various laws to combine the 
emergency food assistance program with other commodity 
distribution programs for soup kitchens and food banks. It also 
requires that $100 million a year (through fiscal year 2002) be 
used for purchasing commodities for the new combined emergency 
food assistance program--drawn from food stamp appropriations.
    Congressional Budget Office (CBO) estimates of the act's 
spending effects indicate that changes made to the regular Food 
Stamp Program by the amendments specific to the Food Stamp Act 
itself will reduce projected spending growth under preamendment 
law by $23.7 billion through fiscal year 2002.\10\ In addition, 
denial of food stamp eligibility to legally resident aliens 
will, it is estimated, bring on spending reductions totaling 
$3.7 billion through 2002, for an overall total of $27.4 
billion. However, net savings will be less than this amount. 
The act includes a provision that requires new spending 
(reducing savings) under the aegis of Food Stamp Act 
appropriations: $600 million (through 2002) for the new 
combined emergency food assistance program. And savings are 
further lessened because of provisions in the new act that 
significantly change the operations of other welfare programs 
(e.g., approximately $3 billion in added food stamp costs 
because of the act's SSI and TANF block grant provisions). As a 
result, the net Federal food-stamp-related outlay savings under 
the act are estimated at $23.3 billion through 2002.
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    \10\ This amount does not include some $345 million in fiscal year 
1997 savings that the CBO has attributed to the fiscal year 1997 
agriculture appropriations measure, which included an amendment 
identical to one in the Personal Responsibility and Work Opportunity 
Reconciliation Act (freezing the ``standard deduction'' for fiscal year 
1997).
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Expanding State control and options
    State option for a simplified Food Stamp Program.--The new 
act's primary change giving States more control over the Food 
Stamp Program permits them to operate a ``simplified Food Stamp 
Program'' under which they may determine food stamp benefits 
for households in which all members receive TANF aid using TANF 
rules and procedures, food stamp rules and procedures, or a 
combination of both.\11\ In doing so, States may operate a 
simplified program statewide or in regions of the State and may 
standardize food stamp ``deductions.'' However, they must 
comply with the following Federal food stamp rules:
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    \11\ Households in which all members are TANF recipients are 
automatically eligible for food stamps, but households may not receive 
food stamp benefits under a simplified program unless the Agriculture 
Department determines that any household with income above 130 percent 
of the Federal poverty guidelines is ineligible for the program.
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 1. Requirements governing issuance procedures and the rule 
        that benefits be calculated by subtracting 30 percent 
        of household income (as determined under the simplified 
        program option by State-established, not Federal, 
        standards) from the maximum food stamp benefit;
 2. Bars against counting food stamp benefits as income or 
        resources in other programs and for tax purposes and 
        against discrimination by reason of race, sex, 
        religious creed, national origin, or politics;
 3. Requirements that State agencies assume responsibility for 
        eligibility certification and issuance of benefits and 
        keep records for inspection and audit;
 4. Requirements related to submission and approval of State 
        plans of operation, and administration of the Food 
        Stamp Program on reservations;
 5. Limits on the use and disclosure of information about food 
        stamp households;
 6. Requirements for notice to and fair hearings for aggrieved 
        households (or comparable requirements established by 
        the State);
 7. Requirements for submission of reports and other federally 
        required information;
 8. The requirement to report illegally resident aliens to the 
        INS; and
 9. Requirements to ensure that households are not receiving 
        duplicate benefits and that they provide Social 
        Security numbers as a condition of eligibility.
    In addition, States' simplified programs may not increase 
Federal food stamp costs. If the Agriculture Department 
determines that a State's program has increased Federal costs 
for any year (or portion of a year), it must notify the State 
within 30 days.\12\ Within 90 days, the State must then submit, 
for Federal approval, a corrective action plan designed to 
prevent its simplified program from increasing Federal food 
stamp costs. If the State does not submit or carry out a plan, 
its simplified program will be terminated, and the State will 
be ineligible to operate a simplified program in the future.
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    \12\ In carrying out this cost-neutrality requirement, States may 
not be required to collect information on households not in their 
simplified programs, and the Agriculture Department may approve 
alternative (nonfiscal-year) accounting periods.
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    States opting for a simplified program must include in 
their State plans the rules and procedures they will follow, 
how they will address the needs of households with high shelter 
costs, and a description of how they will carry out their Food 
Stamp Program ``quality control'' system obligations (these 
remain in place for opting States).
    Finally, simplified programs may include households in 
which members are not TANF recipients, if approved by the 
Agriculture Department, and congressional conferees on the 
measure encourage the Department to work with States to test 
methods for applying a single set of rules and procedures to 
households in which some, but not all, members receive cash 
welfare benefits under State rules.

    Food stamp treatment for violations of other programs' 
rules.--The act makes three revisions in how food stamp 
recipients are treated if they are penalized under another 
public assistance program.

    If an individual is disqualified for failure to perform an 
action required under a Federal, State, or local law related to 
means-tested public assistance, the State agency is permitted 
to impose the same disqualification for food stamps, and, if 
the disqualification is imposed under a TANF program's rules, 
States may use TANF rules and procedures to impose the food 
stamp disqualification.\13\ Individuals disqualified from food 
stamps because of this new rule, are permitted to apply for 
food stamps again as new applicants after the disqualification 
period has expired, but prior disqualification under Food Stamp 
Program work/training rules must be considered in reinstating 
their eligibility.

    \13\ State plans must include the guidelines used in carrying out 
this new disqualification rule.
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    A requirement that a cash welfare or unemployment insurance 
program work requirement must be ``comparable'' to a food stamp 
work requirement to bring on disqualification from food stamps 
is eliminated.

    Increased food stamp allotments are barred when nonfood-
stamp benefits to a household are reduced under a Federal, 
State, or local means-tested public assistance program for 
failure to perform a required action. In addition, States are 
permitted to reduce a household's food stamp allotment by up to 
25 percent in these cases, and, if the allotment reduction is 
for failure to perform an action required under a TANF program, 
the State may use TANF rules and procedures to do so.

    Waivers of Federal rules.--Under prior law, Federal Food 
Stamp Act requirements could be waived to conduct pilot/
demonstration projects, but, in general, no project could be 
implemented that would lower or restrict benefits or 
eligibility standards. The new legislation permits the 
Agriculture Department to conduct pilots and demonstrations and 
waive Food Stamp Act requirements to the extent necessary, with 
a number of limitations and conditions that are, overall, 
somewhat less restrictive than prior law.

 1. Projects/demonstrations must be consistent with the Food 
        Stamp Program goal of providing food assistance to 
        raise levels of nutrition among low-income individuals 
        and must include an evaluation and be limited to a 
        specific time period.

 2. Permissible projects are those that will improve 
        administration of the Food Stamp Program, increase 
        self-sufficiency of participants, test innovative 
        welfare reform strategies, or allow greater conformity 
        with the rules of other programs. However, if the 
        Agriculture Department finds that a project/
        demonstration would require the reduction of benefits 
        by more than 20 percent, for more than 5 percent of the 
        households subject to the project/demonstration, the 
        project cannot include more than 15 percent of the 
        State's food stamp population and is limited to 5 years 
        (unless an extension is approved).\14\
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    \14\ The 5-percent rule does not include those whose benefits would 
be reduced because of a failure to comply with work or other conduct-
related requirements.
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 3. Waivers cannot be approved for projects that: (1) involve 
        the payment of food stamp allotments in cash (unless 
        approved prior to enactment); (2) have the effect of 
        transferring Food Stamp Program funds to services or 
        benefits provided through another public assistance 
        program; (3) have the effect of using Food Stamp 
        Program funds for any purpose other than the purchase 
        of food, program administration, or an employment and 
        training program; (4) have the effect of granting or 
        increasing shelter expense deductions to households 
        with either no out-of-pocket shelter expenses or 
        shelter expenses that represent a low percentage of 
        their income; or (5) have the effect of absolving the 
        State from acting with reasonable promptness on 
        substantial reported changes in income or household 
        size (other than changes related to deductions). In 
        addition, waivers of simplified Food Stamp Program 
        provisions are not allowed when carrying out a 
        simplified program.
 4. Pilot/demonstration projects with waivers may not be 
        conducted if they are inconsistent with certain Food 
        Stamp Act requirements: (1) the bar against providing 
        benefits to those in institutions (with certain 
        exceptions); (2) the requirement to provide assistance 
        to all those eligible (so long as they have not failed 
        to comply with any food stamp or other program's work, 
        behavioral, or other ``conduct'' requirements); (3) the 
        gross income eligibility limit (130 percent of the 
        Federal poverty guidelines) for households without an 
        elderly or disabled member; (4) a rule that no parent/
        caretaker of a dependent child under age 6 will be 
        subject to work/training requirements;\15\ (5) the rule 
        that the total hours of work required in an employment/
        training or workfare program be limited to the 
        household's monthly allotment divided by the applicable 
        minimum wage; (6) the limit on the amount of 
        employment/training funding under the Food Stamp Act 
        that can be used for TANF recipients; (7) the 
        requirement that the value of food stamp benefits not 
        be considered income or resources for any other 
        purpose; (8) application and application processing 
        requirements (including the rule that benefits must be 
        provided within 30 days, but not including expedited 
        service requirements); (9) Federal-State cost-sharing 
        rules; (10) ``quality control'' requirements; and (11) 
        the waiver limits themselves.
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    \15\ Certain projects allowing this are permitted. See the 
discussion of new work rules.
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    Moreover, the new law requires that, not later than 60 days 
after receiving a demonstration/pilot project waiver request, 
the Agriculture Department must (1) approve the request, (2) 
deny it and explain any modifications needed for approval, (3) 
deny it and explain the grounds for denial, or (4) ask for 
clarification of the request. If a response is not forthcoming 
in 60 days, the waiver is considered approved; if a waiver is 
denied, the Agriculture Department must provide a copy of the 
request and the grounds for denial to Congress.
    Expedited service.--The new act: (1) requires that State 
agencies provide ``expedited service'' to certain households 
within 7 (rather than 5) days of application; (2) removes a 
requirement for expedited service to ``homeless'' households 
that do not otherwise meet criteria for severely limited income 
and resources; and (3) for those entitled to expedited service 
who apply after the 15th of the month, allows (rather than 
requires) State agencies to provide an allotment that is the 
aggregate of their initial (prorated) allotment and their first 
regular allotment (as is the case with others applying after 
the 15th of the month).
    Collecting overissued benefits.--The new legislation 
replaces overissuance collection rules that generally restrict 
State agencies' collection efforts with provisions requiring 
them to collect any overissued benefits by reducing future 
benefits, withholding unemployment compensation, recovering 
from Federal pay or income tax refunds, or any other means--
unless the State agency demonstrates that all of the means 
available are not cost effective. Benefit reduction collections 
(absent an intentional program violation) are limited to the 
greater of 10 percent of the monthly allotment or $10 a month. 
State agencies may collect overissued benefits in accordance 
with State-established requirements for notice, electing a 
means of payment, and setting a schedule for payment.
    In addition, the new law changes the percentage of over 
issuance collections that States may retain--from 50 percent of 
collections in ``fraud'' cases and 25 percent of collections in 
``nonfraud'' cases (other than those arising from State agency 
error) to 35 and 20 percent, respectively.
    Child support.--The amendments in the act give States the 
option to disqualify individuals from food stamps when they do 
not cooperate with child support agencies or are in arrears in 
their child support.
    Custodial parents of children under age 18 who have an 
absent parent may be disqualified unless they cooperate with 
the State child support enforcement agency in establishing the 
child's paternity and obtaining support for themselves and the 
child. Cooperation is not required if the State finds there is 
good cause for the failure (in accordance with Federal 
standards that take into account the child's best interest), 
and fees or other costs for services may not be charged.
    Noncustodial parents of children under 18 also may be 
disqualified if they fail to cooperate with the State child 
support enforcement agency in establishing paternity and 
providing support for the child. The Agriculture and Health and 
Human Services Departments must develop guidelines as to what 
constitutes a refusal to cooperate in these instances, and 
States must develop procedures (using these guidelines) for 
determining whether there has been a refusal to cooperate. Fees 
and other costs for services may not be charged, and States 
must provide privacy safeguards.
    Finally, States may disqualify individuals during any 
period in which they are delinquent in any court-ordered child 
support payment, unless the court is allowing a delay or they 
are complying with a payment plan approved by the court or a 
State child support agency.
    Eligibility certification periods.--The new act replaces 
provisions that limit State agencies' authority to establish 
eligibility certification periods with a general requirement 
that certification periods not exceed 12 months, or 24 months 
if all adult household members are elderly or disabled. 
However, State agencies must have at least 1 contact with each 
certified household every 12 months.
    Operation of food stamp offices and administrative rules.--
The new law changes State plan requirements as to the operation 
of food stamp offices, removing numerous specific Federal rules 
and replacing them with more general mandates. Moreover, it 
amends a series of other Federal administrative rules 
controlling State agency operations.
    State plan requirements.--The specific State plan 
provisions removed include requirements that States must:
 1. Allow households contacting a food stamp office in person 
        during office hours to make an oral/written request for 
        aid and receive and file an application on the same 
        day;
 2. Use a simplified, uniform, federally designed application, 
        unless a waiver is approved;
 3. Include certain specific information in applications;
 4. Waive in-person interviews under certain circumstances and 
        use telephone interviews or home visits instead;
 5. Provide for telephone contact and mail application by 
        households with transportation or similar difficulties;
 6. Assist households in obtaining verification and completing 
        applications;
 7. Not require additional verification of currently verified 
        information (unless there is reason to believe that the 
        information is inaccurate, incomplete, or 
        inconsistent);
 8. Not deny an application solely because a nonhousehold 
        member fails to cooperate and process applications if 
        the household meets cooperation requirements;
 9. Give households a Statement of reporting responsibilities 
        at certification and recertification;
10. Provide a toll-free or local telephone number at which 
        households can reach State agency personnel;
11. Display and make available nutrition information; and
12. Use mail issuance in rural areas where low-income 
        households face substantial difficulties in obtaining 
        transportation.
    In place of these provisions, the new law requires that 
States:
 1. Establish procedures governing the operation of food stamp 
        offices that they determine will best serve households 
        in the State, including those with special needs (such 
        as households with elderly or disabled members, those 
        in rural areas, the homeless, households residing on 
        reservations, and households speaking a language other 
        than English);
 2. Provide timely, accurate, and fair service to applicants 
        and recipients; and
 3. Permit applicants to apply and participate on the same day 
        they first contact a food stamp office during office 
        hours and consider an application filed on the date an 
        application is filed with the applicant's name, 
        address, and signature.
    Additional State plan amendments include provisions that: 
(1) permit States to establish operating procedures that vary 
for local food stamp offices; and (2) make clear that nothing 
in the Food Stamp Act prohibits electronic storage of 
application and other information.
    Other administrative rules.--Amendments made to 
administrative rules by the new law also include provisions 
that:
 1. Drop requirements as to joint interviews and applications 
        for food stamps and public assistance and food stamp 
        determinations based on other public assistance program 
        information;
 2. Permit State agencies to allow households to withdraw fair 
        hearing requests in writing or orally (if it is an oral 
        request, the State must provide written notice 
        confirming the request and give the household another 
        chance to ask for a fair hearing);
 3. Make it a State option to use the Federal ``income and 
        eligibility verification systems'' established under 
        provisions of the Social Security Act (including a 
        system for verifying financial circumstances, ``IEVS,'' 
        and a system for verifying alien status, ``SAVE''); and
 4. In the case of substance abuse centers with food stamp 
        recipient residents, allow State agencies to: (1) 
        divide a month's food stamp benefits between the center 
        and a recipient who leaves the center; and (2) require 
        center residents to designate the center as their 
        ``authorized representative.''
    Calculating income.--The new act gives States greater 
latitude in calculating the cost of producing self-employment 
income and the income of households containing certain 
ineligible aliens. It provides that the Agriculture Department 
must establish procedures by which States may submit for 
approval a method for determining reasonable estimates of the 
cost of producing self-employment income (so long as the method 
is designed not to increase Federal costs). Further, it gives 
States the option to count all of the income and resources of 
an alien who is ineligible for food stamps under provisions of 
the Food Stamp Act as available to the remainder of the 
household in which the alien lives (as opposed to counting the 
alien's income and resources, less a pro rata share for the 
alien).
    Federal standards.--The new law eliminates certain Federal 
standards governing State administration. It drops requirements 
that the Agriculture Department establish standards for 
efficient and effective administration (including standards for 
review of food stamp office hours) and that States report on 
administrative actions taken to meet the standards. Moreover, 
it deletes a Federal requirement that States provide continuing 
and comprehensive training for all certification personnel 
(including provisions for intensive training of those 
certifying farm households and training and assistance to 
organizations offering outreach services and eligibility 
screening).
Work and training
    New work requirement.--The new act adds a new work 
requirement for able-bodied adult food stamp recipients without 
dependents.
    The requirement.--No covered individual (see below for 
exemptions) may be eligible for food stamps if, during the 
preceding 36-month period, the individual received food stamp 
benefits for any 3 months while not: (1) working at least 20 
hours a week (averaged monthly); (2) participating in and 
complying with a work program for at least 20 hours a week (as 
determined by the State agency); or (3) participating in and 
complying with a workfare program. A work program is defined as 
a program under the Job Training Partnership Act (JTPA), a 
Trade Adjustment Assistance Act Program, or a program of 
employment and training operated or supervised by a State or 
political subdivision that meets standards approved by the 
Governor--including a Food Stamp Act employment and training 
program, but not including job search or job search training 
activities.
    Individuals denied eligibility under the new work rule can 
regain eligibility if, during a 30-day period, the individual: 
(1) works 80 or more hours; (2) participates in and complies 
with the requirements of a work program (as defined above) for 
80 or more hours (as determined by the State agency); or (3) 
participates in and complies with a workfare program. After 
having met this 30-day work/training requirement, the 
individual can remain eligible for a consecutive period of 3 
months without working at least 20 hours a week or 
participating in an employment/training or workfare program. 
For example, if an individual works 20 hours a week for at 
least 30 days and reenters the Food Stamp Program, but then 
loses a job, the individual could retain food stamp eligibility 
for 3 consecutive months without working or being in a 
training/workfare program. But individuals cannot take 
advantage of this provision for an additional 3 months of 
eligibility (while not working or in an employment/training or 
workfare program) for more than a single 3-month period in any 
36 months. Individuals regaining eligibility also can remain 
eligible for food stamps as long as they continue to meet 
requirements as to working at least 20 hours a week or 
participating in a training/workfare program.
    Exemptions and waivers.--The new work rule does not apply 
to: (1) those under 18 or over 50; (2) those who are medically 
certified as physically or mentally unfit for employment; (3) 
parents or other household members with the responsibility for 
a dependent child; (4) pregnant women; and (5) those otherwise 
exempt from any Food Stamp Program work requirement (e.g., 
those responsible for the care of an incapacitated person, 
postsecondary students already meeting a similar work 
requirement, residents of substance abuse treatment programs, 
or those meeting unemployment compensation requirements).
    In addition, on a State agency's request, the Agriculture 
Department may waive application of the new work requirement to 
any group of individuals if the Department determines that the 
area where they reside (1) has an unemployment rate over 10 
percent or (2) does not have a sufficient number of jobs to 
provide them employment. The basis for any waiver must be 
reported to Congress.
    Receipt of food stamp benefits while exempt (including 
participation under the additional 3-month eligibility 
provision described above) or covered by a waiver will not 
count toward an individual's basic 3-month eligibility period 
under the new work rule.
    Transition provision.--The 36-month period established by 
the new work requirement will not include any period before the 
earlier of the date the State notifies recipients about the new 
rule (through individual notices or otherwise) or November 22, 
1996.
    Expansion of existing work/training requirements and 
penalties.--In addition to establishing the new work 
requirement for adults without dependents, the legislation 
expands on prior work/training requirements and sets mandatory 
minimum disqualification periods related to these and the prior 
requirements.
    The new act adds work-related eligibility conditions making 
individuals ineligible if they: (1) refuse without good cause 
to provide sufficient information to allow the State agency to 
determine their employment status or job availability; or (2) 
voluntarily and without good cause reduce work effort and 
(after the reduction) are working less than 30 hours a week. It 
also provides that all individuals (not just heads of 
household) will be ineligible if they voluntarily quit a job 
without good cause and removes lack of child care as an 
explicit good cause exemption for refusal to participate in an 
employment or training program.
    New provisions as to the duration of ineligibility and 
household (as opposed to individual) ineligibility are added. 
Mandatory minimum disqualification periods are established for 
individuals failing to comply with prior work requirements (as 
expanded):
 1. For the first violation, individuals are ineligible until 
        they fulfill work/training conditions, for 1 month, or 
        for a period (set by the State agency) not to exceed 3 
        months--whichever is later;
 2. For the second violation, individuals are ineligible until 
        they fulfill work/training conditions, for 3 months, or 
        for a period (set by the State agency) not to exceed 6 
        months--whichever is later; and
 3. For a third or subsequent violation, individuals are 
        ineligible until they fulfill work/training conditions, 
        for 6 months, until a date set by the State agency, or 
        (at State option) permanently, whichever is longer.
    The new rule pertaining to the ineligibility of households 
when an individual fails to comply with work/training 
conditions is: if any individual who is head of household is 
disqualified, the entire household is, at State option, 
ineligible for a period not to exceed the duration of the 
individual's ineligibility or 180 days, whichever is shorter.
    Finally, the new law permits certain States to partially 
limit an exemption from employment and training requirements 
for parents and caretakers of children under age 6. States that 
have requested a waiver to lower the age of a dependent child 
that exempts the parent or caretaker, and had the waiver denied 
as of August 1, 1996, may lower that age (to not under age 1) 
for not more than 3 years.
    Revision of requirements for employment and training 
programs.--The new act changes the Federal rules governing 
State-operated employment and training programs for food stamp 
recipients. It:
 1. Makes clear that work experience is a purpose of employment 
        and training programs and requires that each component 
        of an employment/training program be delivered through 
        a ``Statewide work force development system,'' where 
        available;
 2. Expands the State option to apply work/training 
        requirements to applicants to include all requirements, 
        not only job search;
 3. Removes specific Federal rules governing job search 
        components of State programs;
 4. Drops provisions requiring that employment/training 
        components of State programs related to work experience 
        be in public service work and use recipients' prior 
        training/experience;
 5. Removes specific Federal rules as to States' authority to 
        exempt persons form employment/training requirements, 
        giving them full latitude to determine exemptions;
 6. Eliminates requirements for serving volunteers;
 7. Drops a requirement for ``conciliation procedures'' for 
        resolving disputes involving participation in 
        employment/training programs; and
 8. Removes provisions for Federal performance standards for 
        States' employment/training programs.
    Funding for employment and training programs.--The new law 
increases the base Federal funding level for employment and 
training programs from $75 million a year to $79 million in 
fiscal year 1997, $81 million in 1998, $84 million in 1999, $86 
million in 2000, $88 million in 2001, and $90 million in 2002. 
State allocations from these amounts are to be based on a 
``reasonable formula'' (determined by the Agriculture 
Department) that gives consideration to each State's population 
of persons subject to the new work requirement (described 
earlier). The existing 50-percent Federal match for costs above 
each State's share of these basic grants is retained, and a 
specific provision is included allowing these funds to be used 
for case management/casework. Finally, the provisions of the 
new act limit Food Stamp Program employment and training 
funding for services to TANF recipients to the amount used by 
the State for AFDC recipients in fiscal year 1995.
    Work supplementation or support programs.--The new act 
establishes an option for States to operate work 
supplementation or support programs under which the value of 
public assistance benefits, including food stamps, are provided 
to employers who hire recipients and, in turn, use the benefits 
to supplement the wages paid to the recipient. These programs 
must adhere to standards set by the Agriculture Department, be 
available for new employees only, and not displace employment 
of those who are not supplemented/supported. The food stamp 
benefit value of the supplement will not be considered income 
for other purposes, and opting States must provide a 
description of how recipients in their program will, within a 
specific period of time, be moved to unsubsidized employment.
    Employment initiatives program.--The new legislation 
provides an option for a limited number of States (those with 
not less than half their food stamp households receiving AFDC 
benefits in 1993) to issue food stamps in cash to households 
participating in both the State's TANF program and food 
stamps--if a member of the household has been working for at 
least 3 months and earns at least $350 a month in unsubsidized 
employment. Those receiving cash payments may continue to 
receive them after leaving a TANF program because of increased 
earnings, and a household eligible to receive its allotment in 
cash may choose food stamps instead. States opting for these 
cash payments are required to increase food stamp benefits (and 
pay for the increase) to compensate for any State/local sales 
taxes on food purchases and must provide a written evaluation.
Benefits and eligibility
    Limiting basic benefits.--The new act reduces basic 
(maximum) food stamp monthly benefits from amounts equal to 103 
percent of the cost of the Agriculture Department's ``Thrifty 
Food Plan'' (its cheapest plan for purchasing a low-cost 
nutritious diet) to 100 percent of cost of the plan. However, 
benefits will not drop below current levels due to this change. 
Basic benefits will continue to be indexed annually for food-
price inflation measured by the cost of the Thrifty Food Plan. 
This change is effective October 1, 1996, and coincides with 
the regular inflation increase in basic benefits. As a result, 
food stamp benefits will rise, but by less than under prior law 
because the 3-percent ``add-on'' will not be included.
    Deductions from income.--When recipients' benefits are 
calculated, their counted monthly income is reduced by several 
``deductions,'' including (1) a ``standard deduction'' and (2) 
a deduction for excessively high shelter expenses, thereby 
raising food stamp allotments. The standard deduction normally 
is inflation indexed every October, and a monthly dollar limit 
on shelter expense deductions (applied to households without 
elderly or disabled members) was, under prior law, scheduled to 
be eliminated in January 1997.
    The new act freezes the standard deduction at its current 
level ($134 a month, with differing amounts for Alaska, Hawaii, 
and outlying areas).\16\ It also repeals the scheduled end of 
the limit on shelter expense deductions, replacing it with an 
increase in the existing ceiling: the ``cap'' on shelter 
expense deductions will rise, in 3 steps, from the current $247 
a month to $300 beginning in fiscal year 2001.\17\
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    \16\ The fiscal year 1996 appropriations measure for food stamps 
(Public Law 104-37) stipulated that the normal October inflation 
increase in the standard deduction not be implemented for fiscal year 
1996; it would have risen to $138. Separately from this welfare reform 
measure, the freeze on the amount of the standard deduction was 
continued for fiscal year 1997 in the 1997 agriculture appropriations 
measure (Public Law 104-180); it would have risen to $142. The 
Congressional Budget Office attributes the 1997 Federal outlay savings 
for this freeze (some $345 million) to the appropriations act.
    \17\ The cap will first rise to $250 in January 1997, and then be 
increased to $275 in October 1998 and $300 in October 2000. Concurrent 
increases are included for the separate excess shelter expense 
deduction ceilings for Alaska, Hawaii, and outlying areas.
---------------------------------------------------------------------------
    In addition, the new legislation:
 1. Permits States to make use of ``standard utility 
        allowances'' (as opposed to actual utility costs) 
        mandatory for all households when calculating the 
        amount of a household's shelter expenses (if the 
        Agriculture Department approves them and they will not 
        result in increased Federal costs);
 2. Allows States not choosing to make standard utility 
        allowances mandatory to limit the extent to which 
        households may switch between claiming a standard 
        allowance and actual costs (i.e., only at certification 
        and recertification of eligibility;
 3. Disallows ``earned income deductions'' (20 percent of any 
        earnings) for income not reported in a timely manner 
        and for the public assistance portion of income earned 
        under a work supplementation/support program (see 
        earlier discussion); and
 4. Allows (rather than requires) States to develop and mandate 
        the use of a special ``homeless shelter allowance'' for 
        those not in free shelter throughout a month --as long 
        as it is not more than $143 a month (the former, 
        inflation-indexed maximum).
    Energy assistance.--The new law requires that State and 
local energy assistance be counted as income and mandates an 
income disregard for one-time payments or allowances under a 
Federal or State law for the costs of weatherization or 
emergency repair/replacement of unsafe/inoperative furnaces or 
heating/cooling devices. prior treatment of Federal energy 
assistance (e.g., a disregard of assistance under the Low-
Income Home Energy Assistance Act) is not changed.
    Vehicle allowance.--In determining a household's liquid 
assets for food stamp eligibility purposes, a vehicle's fair 
market value in excess of $4,600 is counted. Under prior law, 
this threshold was scheduled to be increased (to $5,000) and 
inflation indexed beginning in October 1996. The new act raises 
it to $4,650 (effective October 1996), but provides for no 
further increases.
    Treatment of children living at home.--The new law requires 
all children 21 years of age or younger who live with their 
parents to apply together with their parents as a single food 
stamp household--removing an exception for children living with 
their parents who are themselves married or have children.
    Student earnings.--The new legislation requires that the 
earnings of secondary school students be counted for food stamp 
purposes once they reach age 18--as opposed to age 22.
    Benefits on recertification of eligibility.--For those who 
do not complete all eligibility recertification requirements in 
the last month of their certification period, but are then 
determined to be eligible after their certification period has 
expired, the new law requires that they receive reduced 
benefits for the first month of the new certification period 
(i.e., their first-month benefits will be pro-rated to the date 
they met eligibility requirements). This eliminates a rule 
giving these households a 1-month ``grace period'' to meet 
eligibility requirements before their benefits are reduced.
    Minimum allotments.--The new act drops a requirement that 
minimum allotments for one- and two-person households (set at 
$10 a month) be indexed for inflation.
    Transitional housing.--The new law ends a rule disregarding 
as income housing assistance paid by cash welfare programs on 
behalf of households residing in ``transitional housing for the 
homeless.''
Program integrity
    Increased penalties for intentional violations and 
trafficking.--The new act increases the Food Stamp Program 
disqualification period for a first intentional violation of 
program requirements from 6 months to 1 year, and the 
disqualification penalty for a second intentional violation 
(and the first involving a controlled substance) from 1 year to 
2 years.\18\ It also adds a requirement for permanent 
disqualification for persons convicted of trafficking in food 
stamps where the benefits have a value of $500 or more.
---------------------------------------------------------------------------
    \18\ Requirements for longer (including permanent) disqualification 
are retained; e.g., permanent disqualification is required for a third 
intentional violation, a second violation involving trading of a 
controlled substance, and the first violation involving trading of 
firearms, ammunition, or explosives.
---------------------------------------------------------------------------
    Disqualification for receipt of multiple benefits.--The new 
law adds a provision making individuals ineligible for food 
stamps for 10 years if they are found to have made a fraudulent 
Statement with respect to identity or residence in order to 
receive food stamp benefits in multiple jurisdictions 
simultaneously.
    Disqualification of fleeing felons.--The legislation adds a 
provision making individuals ineligible while they are fleeing 
to avoid prosecution, custody, or confinement for a felony or 
attempted felony (or violating a condition of probation or 
parole).
    Criminal forfeiture rules.--The new law establishes 
``criminal forfeiture'' rules for those involved in food stamp 
trafficking. In imposing sentence on those convicted of 
trafficking, courts are required to order that the person 
forfeit property to the United States. Property subject to 
forfeiture includes all property (real and personal) used in a 
transaction (or attempted transaction) to commit (or facilitate 
the commission of) a trafficking violation other than a 
misdemeanor. Proceeds traceable to the violation also are 
subject to forfeiture, but an owner's property interest would 
not be subject to forfeiture if the owner establishes that the 
violation was committed without the owner's knowledge or 
consent. The proceeds from any sale of forfeited property, and 
any money forfeited, is required to be used to reimburse 
Federal and State agencies for their investigative and 
prosecutorial costs and, by the Agriculture Department, for 
retailer/wholesaler monitoring activities.
    Retailer/wholesaler disqualification related to the WIC 
Program.--The legislation requires the Agriculture Department 
to issue regulations providing criteria for disqualifying from 
Food Stamp Program participation retailers/wholesalers that 
have been disqualified from the WIC Program. Disqualification 
must be for the same length of time, may begin at a later date, 
and is not subject to separate food stamp administrative or 
judicial review provisions.
    Suspension of retailers and wholesalers.--The new act 
requires that any permanent disqualification of a retailer or 
wholesaler from the Food Stamp Program (i.e., disqualification 
for a serious violation) be effective from the date of receipt 
of notice of the disqualification determination, pending 
administrative and judicial review. If the disqualification is 
reversed through administrative/judicial review, the Federal 
Government will not be liable for lost sales.
    Authorization periods for retailers and wholesalers.--The 
new law requires the Agriculture Department to establish 
specific time periods during which retail food stores' and 
wholesale food concerns' authorization to accept and redeem 
food stamp benefits will be valid.
    Waiting periods.--The law provides that retailers and 
wholesalers that have failed to be approved for participation 
in the Food Stamp Program may not submit a new application to 
participate for at least 6 months. The Agriculture Department 
may establish longer periods (including permanent 
disqualification) that reflect the severity of the basis for 
denial.
    Falsified retailer/wholesaler applications.--The new act 
requires disqualification for retailers and wholesalers that 
knowingly submit an application to accept and redeem food stamp 
benefits that contains false information about a substantive 
matter--for a reasonable period of time determined by the 
Agriculture Department (including permanent disqualification).
    Verifying retailer/wholesaler eligibility to participate.--
The law permits: (1) the Agriculture Department to require that 
retailers and wholesalers seeking approval to accept and redeem 
food stamp benefits submit relevant income and sales tax filing 
documents; and (2) Federal regulations requiring retailers and 
wholesalers to provide written authorization for the 
Agriculture Department to verify all relevant tax filings and 
obtain corroborating documentation from other sources in order 
to verify the accuracy of the information provided.
    Evidence for retailer/wholesaler violations.--The new act 
requires that Federal regulations provide criteria for the 
finding of retailer/wholesaler violations on the basis of 
evidence that may include facts established through onsite 
investigations, inconsistent benefit redemption data, or 
evidence obtained through electronic benefit transaction 
reports.
    Visits prior to approval.--The new law provides that no 
food concerns (of a type determined by the Agriculture 
Department based on factors including size, location, and types 
of items sold) will be approved for participation unless 
visited by an Agriculture Department employee, or, whenever 
possible, a State or local government designee.
Electronic benefit transfer (EBT) systems
    Regulation E.--The new act provides that the Federal 
Reserve Board's ``Regulation E'' (dealing with certain 
protections for consumers using cards to electronically access 
their accounts) will not apply to any EBT system distributing 
needs-tested benefits established or administered by State or 
local governments. In addition, it incorporates language that 
specifically provides that Regulation E will not apply to food 
stamp benefits delivered through an EBT system.
    Antitying restrictions.-- The new law stipulates that a 
company may not sell or provide EBT services, or fix or vary 
the consideration for these services, on the condition or 
requirement that the customer obtain some additional point-of-
sale service from the company or any affiliate. The Agriculture 
Department is required to consult with the Federal Reserve 
before issuing regulations to carry out this provision against 
tying of services. In effect, this applies the ``antitying'' 
restrictions of the Bank Holding Act amendments of 1970 to EBT 
services offered by ``nonbanks.''
    Other rules for EBT systems.--The new legislation also:
 1. Deletes a requirement that EBT systems be cost neutral 
        compared to coupon-based systems in any given year;
 2. Adds a requirement that regulations regarding the 
        replacement of benefits and liability for replacement 
        under an EBT system be similar to those in effect for a 
        paper coupon food stamp issuance system;
 3. Permits State agencies to collect a charge for replacing 
        EBT cards by reducing food stamp allotments;
 4. Provides that States must implement EBT systems (``on-
        line'' or ``off-line'') before October 2002, unless a 
        waiver is granted;
 5. Permits State agencies to procure and implement EBT systems 
        under the terms, conditions, and design they consider 
        appropriate--subject to Federal standards, which are 
        expanded to include procurement standards;
 6. Adds a requirement for EBT standards that follow generally 
        accepted operating rules based on commercial 
        technology, the need to permit interstate operations 
        and law enforcement, and the need to permit monitoring 
        and investigations by law enforcement officials;
 7. Adds requirements that Federal EBT standards include 
        measures to maximize security and (not later than 
        August 22, 1998) measures to permit EBT systems to 
        differentiate among food items; and
 8. With certain conditions, permits State agencies to require 
        that EBT cards contain the photograph of 1 or more 
        household members.
Miscellaneous additional provisions
    Federal cost sharing for outreach activities.--The new act 
terminates any Federal cost sharing for ``recruitment 
activities'' that are part of any State-option informational 
(outreach) efforts.
    Exchange of law enforcement information.--The legislation 
requires State food stamp agencies to make available to law 
enforcement officers the address, Social Security number, and 
photograph (when available) of food stamp recipients if the 
officer furnishes the recipient's name and notifies the agency 
that the individual is fleeing to avoid prosecution, custody, 
or confinement for a felony, is violating a condition of parole 
or probation, or has information necessary for the officer to 
conduct an official duty related to a felony/parole violation.
    Definition of a homeless individual.--For purposes of the 
Food Stamp Program, the new law provides that persons whose 
primary nighttime residence is a temporary accommodation in the 
home of another may be considered homeless only if the 
accommodation is for no more than 90 days.
    Definition of ``coupon.''--In order to ensure that all 
forms of food stamp benefit delivery are covered by trafficking 
restrictions and penalties, the new legislation expands the 
definition of food stamp ``coupon'' to include authorization 
cards, cash or checks issued in lieu of coupons, and ``access 
devices'' (including electronic benefit transfer cards and 
personal identification numbers).
    Vitamins and minerals study.--The law requires that the 
Agriculture Department, in consultation with the National 
Academy of Sciences and Centers for Disease Control and 
Prevention, conduct a study of the use of food stamp benefits 
to purchase vitamins and minerals. A report is due to Congress 
no later than December 15, 1998.
Commodity distribution
    The new law establishes a single emergency food assistance 
program to distribute federally donated commodities that 
combines the preexisting emergency food assistance program, the 
commodity distribution program for soup kitchens, and the 
commodity distribution program for food banks. States will 
receive Federal commodities under a formula allocation (based 
on unemployment and other factors) and distribute them to 
emergency feeding organizations, soup kitchens, food banks, and 
other outlets under the terms of their State plans. Through 
fiscal year 2002, an annual amount of $100 million (drawn from 
Food Stamp Act appropriations) is required to be spent for 
purchasing commodities for this new, combined emergency food 
assistance program. Funding for administrative and distribution 
costs continues to be authorized, not required.

                        Title IX: Miscellaneous

    The Personal Responsibility and Work Opportunity 
Reconciliation Act makes the following miscellaneous changes:
 1. Funds from certain Federal block grants to the States must 
        be expended in accordance with the laws and procedures 
        applicable to the expenditure of the States' own 
        resources (i.e., appropriated through the State 
        legislature). This provision applies to block grants 
        for Temporary Assistance for Needy Families (TANF) and 
        child care (CCDBG). Thus, in the States in which the 
        Governor previously had control over Federal funds, the 
        State legislatures now would share control according to 
        State laws regarding State expenditures;
 2. States must not be prohibited by the Federal Government 
        from sanctioning welfare recipients who test positive 
        for use of controlled substances;
 3. Persons who are fleeing to avoid prosecution after 
        conviction for a crime, or attempt to commit a crime, 
        that is a felony where committed (or, in the case of 
        New Jersey, is a high misdemeanor), or who is violating 
        a condition of probation or parole, immediately lose 
        their eligibility for public housing and section 8 
        housing assistance. Specified public housing agencies 
        must furnish any Federal, State, or local law 
        enforcement officer, upon request by the officer, with 
        the current address, Social Security number, and 
        photograph (if applicable) of any SSI recipient, if the 
        officer furnishes the public housing agency with the 
        person's name and notifies the agency that the 
        recipient is a fugitive felon (or in the case of New 
        Jersey, a person fleeing because of a high misdemeanor) 
        or a probation or parole violator or that the person 
        has information that is necessary for the officer to 
        conduct his official duties. The location or 
        apprehension of the recipient must be within the 
        officer's official duties;
 4. The law expresses the sense of the Senate that States 
        should pursue child support payments under all 
        circumstances even if the noncustodial parent is 
        unemployed or his whereabouts are unknown. States are 
        also encouraged to pursue pilot programs in which the 
        parents of a minor noncustodial parent who refuses or 
        is unable to pay child support contribute to the child 
        support owed;
 5. The law requires the Secretary of HHS to establish and 
        implement by January 1, 1997, a strategy for reducing 
        out-of-wedlock teenage pregnancies while assuring that 
        at least 25 percent of U.S. communities have teenage 
        pregnancy programs in place. The Department of HHS is 
        required to report to Congress by June 30, 1998, on 
        progress made toward meeting these two goals;
 6. State and local jurisdictions are encouraged to 
        aggressively enforce statutory rape laws;
 7. The law exempts from Regulation E requirements (a 
        regulation issued under the authority of the Electronic 
        Funds Transfer Act that contains consumer protections 
        for those using electronic funds transfer systems) any 
        EBT program distributing means-tested benefits 
        established under State or local law or administered by 
        a State or local government;
 8. For the fiscal years 1997 through 2002, the Social Services 
        block grant authorized by title XX of the Social 
        Security Act is reduced by 15 percent from its former 
        $2.8 billion annual level. In fiscal year 2003 and 
        thereafter the block grant is returned to $2.8 billion 
        per year;
 9. The new law contains three modifications of the earned 
        income credit (EIC). One of these, the provision 
        requiring that returns that do not include the worker's 
        taxpayer identification number be treated by the 
        Internal Revenue Service as a mathematical or clerical 
        error, was described above as part of title IV. The 
        second provision expands the definition of disqualified 
        income to include capital gains net income and net 
        passive income other than self-employment income. This 
        provision also reduces the threshold for disqualified 
        income from $2,350 to $2,200 and indexes the threshold 
        for inflation. Third, the law modifies the definition 
        of adjusted gross income (AGI) for phasing out the 
        earned income credit by disregarding certain losses;
10. If a person's means-tested benefits from a Federal, State, 
        or local program are reduced because of an act of 
        fraud, his benefits from public or assisted housing 
        (and food stamps and AFDC or TANF) may not be increased 
        in response to the income loss caused by the penalty;
11. The law amends the Maternal and Child Health block grant 
        (title V of the Social Security Act) to directly 
        appropriate $50 million for each of fiscal years 1998 
        through 2002 to provide abstinence education and to 
        provide, at State option, mentoring, counseling, and 
        adult supervision to promote abstinence. Abstinence 
        programs must be directed at those groups most likely 
        to bear children outside marriage.
      

      
=======================================================================




                               SECTION 3.




                  STATE-BY-STATE ALLOCATION OF GRANTS



                        FOR TEMPORARY ASSISTANCE



                   FOR NEEDY FAMILIES AND CHILD CARE

=======================================================================


SECTION 3. STATE-BY-STATE ALLOCATION OF GRANTS FOR TEMPORARY ASSISTANCE 
                 FOR NEEDY FAMILIES AND CHILD CARE \1\

                              Introduction
---------------------------------------------------------------------------

    \1\ This section was prepared by the Congressional Research 
Service.
---------------------------------------------------------------------------
    The Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 ends Aid to Families With Dependent 
Children (AFDC) and related programs and replaces them with a 
new program of Temporary Assistance for Needy Families (TANF). 
TANF provides capped Federal funding through fiscal year 2002 
of $16.4 billion per year (plus supplemental grants--see 
below). The new law also restructures and expands the Child 
Care and Development Block Grant (CCDBG). Among other reforms, 
the expanded block grant authorizes a total of $6 billion in 
discretionary and $14 billion in entitlement child care funds 
for the States and Indian tribes over the 6-year period fiscal 
year 1997 through fiscal year 2002.

                Temporary Assistance for Needy Families

    TANF replaces AFDC, State and local administration of AFDC 
and related programs, Emergency Assistance, and the Job 
Opportunities and Basic Skills (JOBS) program. States must end 
these programs and begin TANF by July 1, 1997, but can opt to 
begin TANF sooner.
    TANF creates a basic annual block grant for States as well 
as several supplemental grants to serve special purposes. Each 
grant is outlined in separate sections below.
Family assistance grant
    TANF's basic block grant is the family assistance grant, 
which entitles the 50 States and the District of Columbia to a 
total of $16.4 billion annually through fiscal year 2002. TANF 
is 100 percent federally funded, but would be reduced if a 
State failed to meet a fiscal maintenance of effort 
requirement. The family assistance grant must also be reduced 
for other penalties levied against the State.
    The family assistance grant is based on the Federal 
payments to the States during recent fiscal years. States would 
be entitled to the greatest of:
 1. Average required Federal payments to the States for AFDC, 
        AFDC Administration, Emergency Assistance, and JOBS for 
        fiscal year 1992 through fiscal year 1994;
 2. Required Federal payments to the States for these programs 
        for fiscal year 1994 (adjusted for higher 1995 EA 
        payments to States that amended their EA plans in 
        fiscal year 1994 or fiscal year 1995); or
 3. Required Federal payments to the States for these programs 
        for fiscal year 1995.
    Table 3 (all tables are located at the end of this section) 
shows the basic family assistance grant for the 50 States and 
the District of Columbia under TANF. The territories would also 
operate temporary assistance programs, but they are treated 
separately from the 50 States and the District of Columbia. The 
grants shown in table 3 are before States pay the Federal 
Government for its share of child support enforcement 
collections for families receiving assistance payments. Under 
current law, these collections are deducted from AFDC grants to 
States.
    The estimated payments to the States provided in table 3 
are based on available State-reported financial data. For AFDC, 
State and local administration (including the program for 
enhanced payments for developing automated management 
information systems), and Emergency Assistance, the financial 
data represent the Federal share of total expenditures for the 
programs as reported to the Department of Health and Human 
Services (DHHS) by the States. The information is reported by 
the States to DHHS on ACF Form 231 each quarter. The Federal 
share of total expenditures are expenditures reported for the 
current quarter plus or minus any adjustments for prior quarter 
expenditures.
    The Federal share of AFDC expenditures used in calculating 
the family assistance grant is a gross amount, before 
deductions for the Federal share of child support enforcement 
collections. The State expenditure reports include both the 
gross Federal share and a net Federal share of AFDC 
expenditures. The net Federal share includes a deduction for 
the Federal share of child support enforcement collections. 
Reporting of the net Federal share of AFDC expenditures was 
necessary because, under prior law, AFDC payments to the States 
were reduced for a share of child support enforcement 
collections for families receiving AFDC (above the $50 passed 
through to the families). TANF grant allotments are not reduced 
for the Federal share of child support enforcement collections, 
though title IV-D continues the requirement that States remit 
to the Federal Government a share of child support enforcement 
collections.
    Because States may revise their financial reports, section 
403(a)(1) specifies that the Secretary use the data available 
as of a certain date for each of the fiscal years. For JOBS, 
the financial data represent grant awards, though for fiscal 
year 1992 through fiscal year 1994 any adjustments for actual 
State expenditures after the close of the fiscal year are 
reflected in the data. The JOBS grant awards, rather than the 
Federal share of expenditures, were used to compute the family 
assistance grant because JOBS expenditure data are incomplete 
far into subsequent fiscal years. States have 2 years in which 
to expend JOBS funds. Therefore, States may expend fiscal year 
1995 JOBS funds through September 30, 1996, making this 
information incomplete for the purposes of computing the family 
assistance grant.
    Fiscal year 1995 payments are annualized data from the 
first three quarters of the fiscal year for AFDC, State and 
local administration, and Emergency Assistance plus the JOBS 
grant awards as of October 5, 1996. The formula for the family 
assistance grant dates back to that contained in the Balanced 
Budget Act of 1995 (H.R. 2491), which passed Congress in 
November 1995 but was vetoed by President Clinton. At that 
time, only the first three quarters of expenditure information 
on AFDC and related programs were available.
Grants to States that reduce out-of-wedlock births
    Additional funds are provided to States that have lower 
out-of-wedlock births and lower abortion rates than in fiscal 
year 1995. The five States with the greatest decline in out-of-
wedlock births, and that also reduce their abortion rates, 
receive a bonus of $20 million. If there are fewer than five 
States eligible for these funds, the bonus would increase to 
$25 million.
Supplemental grants to States with high population growth and/or low 
        grants per poor person
    For fiscal year 1998 through fiscal year 2001, certain 
States will qualify for supplemental funds based on their 
population growth or their low Federal AFDC-related spending 
per poor person. A total of $800 million is provided for these 
States over the 4 years. Under this supplemental grant, certain 
States qualify for supplemental funds automatically for each 
year from fiscal year 1998 to fiscal year 2001. A State is 
deemed to automatically qualify in all 4 years if it:
 1. Had fiscal year 1994 Federal expenditures per poor person 
        (poverty count based on the 1990 census) for AFDC and 
        related programs below 35 percent of the national 
        average welfare spending per poor person; or
 2. Had population growth in excess of 10 percent from April 1, 
        1990 to July 1, 1994.
Based on Congressional Research Service (CRS) calculations, 11 
States would automatically qualify for supplemental funds--
Alabama, Arkansas, Louisiana, Mississippi, and Texas because 
these States met the very low Federal expenditure per poor 
person criterion in 1994, and Alaska, Arizona, Colorado, Idaho, 
Nevada, and Utah because these States met the very high 
population growth criterion in 1990-94.
    To qualify otherwise, States must meet each of two 
conditions:
 1. Federal expenditures per poor person (poverty count based 
        on the 1990 census) for AFDC and related programs below 
        the fiscal year 1994 national average Federal 
        expenditures per poor person in AFDC and related 
        programs; and
 2. A population growth rate that exceeds the rate of growth 
        for the Nation as a whole.
In order to qualify for supplemental funds on these dual 
grounds, States must meet the qualification criteria in fiscal 
year 1998. CRS estimates that nine additional States would 
qualify on these grounds: Florida, Georgia, Montana, New 
Mexico, North Carolina, South Carolina, Tennessee, Virginia, 
and Wyoming. These estimates are based on forecasts of 
population growth. The number of States that actually qualify 
will be determined when the Census Bureau releases its 
estimates of actual population growth between 1995 and 1996. 
Census Bureau population estimates of actual population growth 
are usually made available in December of each year.
    For fiscal year 1998, the supplemental grant is computed as 
2.5 percent of the amount required to be paid to the State 
under AFDC and related programs in fiscal year 1994. In 
subsequent years, it is computed as 2.5 percent of the sum of 
fiscal year 1994 expenditures and the prior year's supplemental 
grant.
    Total supplemental grants are limited to $800 million for 
the 4 years fiscal year 1998 through fiscal year 2001. If 
funding is insufficient to pay the full supplemental amounts, 
grants would be proportionately reduced for each qualifying 
State so that the $800 million limit would not be breached. 
Based on CRS estimates, the $800 million would be sufficient to 
pay the full supplemental grant in fiscal year 1998 through 
fiscal year 2000, but funding would be exhausted in fiscal year 
2001, requiring a pro rata reduction in the supplemental 
grants. No supplemental funds are provided in fiscal year 2002, 
the last year of the TANF program. Table 4 shows CRS estimates 
of supplemental grants for population growth and/or low grant 
amounts per poor person for fiscal year 1998 through fiscal 
year 2001.
Bonus to reward high-performance States
    For fiscal year 1999 through fiscal year 2003, additional 
funds are provided for States that are successful in meeting 
the goals of the TANF program. Within 1 year of enactment, the 
Secretary of DHHS, in consultation with the National Governors 
Association and the American Public Welfare Association, is 
required to develop a formula for measuring State performance 
under the program. In developing the performance bonus formula, 
the criteria for successful performance are the purposes of the 
TANF block grant. More specifically, the criteria are providing 
assistance to needy families so that children can be reared at 
home or with relatives; ending the dependence of needy parents 
on government benefits by promoting job preparation, work, and 
marriage; preventing and reducing the incidence of out-of-
wedlock pregnancies and establishing numerical goals for 
preventing and reducing these pregnancies; and encouraging the 
formation and maintenance of two-parent families. The Secretary 
is required to set a performance threshold that States must 
meet in order to receive bonus payments. Total bonuses for the 
5 years are set at $1 billion.
Contingency fund
    TANF provides additional matching grants for States that 
experience high and increasing unemployment rates or increased 
food stamp caseloads. A total of $2 billion is appropriated for 
fiscal year 1997 through fiscal year 2001.
    To qualify for contingency funds, a State must expend from 
its own funds on TANF an amount equal to at least 100 percent 
of the amount it spent on AFDC, State and local administration, 
Emergency Assistance, AFDC-related child care, and JOBS in 
fiscal year 1994. It must also meet one of two need-based 
criteria:
 1. Its seasonally adjusted unemployment rate averaged over the 
        most recent 3-month period must be at least 6.5 percent 
        and at least 10 percent higher than the rate in the 
        corresponding 3-month period in either of the previous 
        2 years; or
 2. Its food stamp caseload over the most recent 3-month period 
        must be at least 10 percent higher than the food stamp 
        caseload would have been, according to the Secretary of 
        Agriculture, in the corresponding 3-month period in 
        fiscal year 1994 or 1995 if Public Law 104-193 had been 
        in effect then.
    The unemployment criteria are the same as the optional 
criteria available to the States for triggering extended 
benefits (EB) in the unemployment compensation program. The 
information to determine whether a State qualifies for 
contingency funds is available from the Department of Labor, 
which issues weekly extended benefit trigger notices.
    The Secretary of the Department of Agriculture determines 
whether a State qualifies for contingency funds based on a rise 
in food stamp caseloads. The Secretary is instructed to adjust 
the fiscal year 1994 caseload data to determine what the 
caseload would have been had the amendments made by the 
Personal Responsibility and Work Opportunity Reconciliation Act 
of 1996 been in effect during that year.
    The amount of contingency funds for a State is the Federal 
Medical Assistance Percentage of a State's excess expenditures 
in the TANF program. Excess expenditures are the difference 
between a State's total TANF expenditures from its own funds 
(plus expenditures financed from advances from the contingency 
fund itself) minus an amount equal to fiscal year 1994 State 
spending on AFDC, State and local administration, Emergency 
Assistance, AFDC-related child care, and JOBS. If a State 
receives matching funds for child care, any child expenditures 
made under TANF are disregarded in the calculation and AFDC-
related child care spending also is subtracted from the fiscal 
year 1994 base.
    Contingency funds are capped at 20 percent of the State's 
family assistance grant. A State may receive in each month that 
it qualifies, up to one-twelfth of its maximum contingency 
grant. States must remit any overpayments made under the 
contingency fund at the end of the fiscal year. If a State 
failed to meet the maintenance of effort requirement for 
contingency funds, but received contingency money, its 
subsequent year s family assistance grant would be reduced by 
the amount of contingency funds it received.

                               Child Care

    Under the reformed Child Care and Development Block Grant 
(CCDBG), the Federal Government provides States with both 
discretionary and entitlement funding for child care. Over the 
6 years, fiscal year 1997 through fiscal year 2002, a maximum 
of $19.9 billion would be provided for child care. Of this 
amount, $6 billion are in discretionary funds, and hence actual 
funding will be determined by annual appropriations. However, a 
total of $13.9 billion is provided as entitlements to States 
and Indian tribes. All Federal funds are consolidated under the 
expanded CCDBG. More specifically:
 1. Discretionary funds.--CCDBG discretionary funding is 
        authorized at $1 billion per year through fiscal year 
        2002. Actual funding would depend upon annual 
        appropriations. Up to 2 percent of appropriated funds, 
        but no less than 1 percent of the amount appropriated, 
        is reserved for Indian tribes;
 2. Entitlements to the States.--The law provides $1.967 
        billion in entitlement funds for fiscal year 1997. The 
        annual entitlement amount then gradually rises to 
        $2.717 billion in fiscal year 2002. These funds are 
        divided as follows:
  -- States would receive grants totaling $1.2 billion each 
            year based on Federal payments to the States for 
            AFDC-related child care programs in recent fiscal 
            years;
  -- Indian tribes would be entitled to up to 2 percent, but 
            not less than 1 percent, of the amount of 
            entitlement funds provided for child care; and
  -- Remaining funds would be available for matching grants to 
            the States.
    Table 5 provides an estimate of the maximum potential 
allocations to each State for child care for fiscal year 1997 
through fiscal year 2002. The table assumes that: (1) Congress 
appropriates the full $1 billion authorized each year for 
discretionary child care funds; (2) all States receive the 
maximum matching grant for child care; and (3) Indian tribes 
receive their maximum 2 percent of child care funds.

                         Discretionary Funding

     Discretionary funds are allocated to the States based on 
the formula in the CCDBG which divides appropriated funds based 
on each State's: (1) share of the population aged 5 and 
younger; (2) share of children receiving free or reduced price 
school lunches; and (3) per-capita income. State allotments are 
determined after funds are set aside for Indian tribes and the 
territories. Indian tribes will receive up to 2 percent, but no 
less than 1 percent of appropriated funds. The territories of 
Guam, the Virgin Islands, and the Northern Marianas are 
eligible for one-half of 1 percent of appropriated funds 
(Puerto Rico is treated as a State).
    Table 6 provides estimated allocations to the States for 
discretionary child care funds. For the 50 States, the District 
of Columbia, and Puerto Rico, the estimates are from DHHS and 
reflect the State shares based on preliminary fiscal year 1996 
allocation. Territory allotments are based on estimated fiscal 
year 1996 shares of the territory set-aside allotted to each of 
the territories. It should be noted that changes in formula 
factors over the fiscal year 1997 through fiscal year 2002 
period may occur, and therefore each year's actual 
discretionary allotments may differ from those based on fiscal 
year 1997 shares. The estimates also assume that Indian tribes 
receive the maximum set-aside of 2 percent and that DHHS 
withholds one-fourth of 1 percent of State allotments for 
technical assistance.

                           Mandatory Funding

    States are also entitled to mandatory funding under the 
CCDBG. These grants would replace the prior law title IV-A 
child care programs of AFDC/JOBS, transitional, and at-risk 
child care. Federal funds for child care provided under title 
IV-A are transferred to the CCDBG, and are subject to the rules 
and conditions that apply to the CCDBG.
    Mandatory child care funding is divided into three parts. 
First, States are entitled to a certain amount based on their 
recent expenditures in the prior law title IV-A programs. These 
recent expenditures are the greatest of the Federal share of 
expenditures for title IV-A child care programs: (1) in fiscal 
year 1995; (2) in fiscal year 1994; or (3) on average, over the 
fiscal year 1992 to fiscal year 1994 period. The total of these 
expenditures is $1.2 billion annually. This $1.2 billion is 
referred to as the amount guaranteed to the States for child 
care. Second, Indian tribes are entitled to up to 2 percent of 
mandatory child care funding. Third, remaining funds are 
available for matching grants. In order to qualify for matching 
grants, a State must first expend on child care all of its 
guaranteed child care grant (its share of the $1.2 billion a 
year) plus an amount equal to what was spent from its own funds 
on title IV-A child care in fiscal year 1994 or fiscal year 
1995, whichever is higher. State matching grants are capped 
based on a share of available funds. The State's share, in 
turn, is based on its share of the population under age 13.
    Table 7 shows the amount guaranteed to the States for each 
year, fiscal year 1997 through fiscal year 2002. Table 8 shows 
each State's estimated yearly maximum matching grant.

           TABLE 3.--ANNUAL FAMILY ASSISTANCE GRANTS BY STATE,          
                         FISCAL YEARS 1997-2002                         
                            [$ in thousands]                            
------------------------------------------------------------------------
                                  Family                        Family  
            State               assistance       State        assistance
                                  grant                         grant   
------------------------------------------------------------------------
Alabama......................      $93,006  Montana........      $45,534
Alaska.......................       63,609  Nebraska.......       58,029
Arizona......................      222,420  Nevada.........       43,977
Arkansas.....................       56,733  New Hampshire..       38,521
California...................    3,733,818  New Jersey.....      404,035
Colorado.....................      135,553  New Mexico.....      126,103
Connecticut..................      266,788  New York.......    2,359,975
Delaware.....................       32,291  North Carolina.      302,240
District of Columbia.........       92,610  North Dakota...       25,888
Florida......................      560,956  Ohio...........      727,968
Georgia......................      330,742  Oklahoma.......      148,014
Hawaii.......................       98,905  Oregon.........      167,925
Idaho........................       31,851  Pennsylvania...      719,499
Illinois.....................      585,057  Rhode Island...       95,022
Indiana......................      206,799  South Carolina.       99,968
Iowa.........................      130,088  South Dakota...       21,894
Kansas.......................      101,931  Tennessee......      189,788
Kentucky.....................      181,288  Texas..........      486,257
Louisiana....................      163,972  Utah...........       74,952
Maine........................       78,121  Vermont........       47,353
Maryland.....................      229,098  Virginia.......      158,285
Massachusetts................      459,371  Washington.....      399,637
Michigan.....................      775,353  West Virginia..      110,176
Minnesota....................      266,398  Wisconsin......      318,188
Mississippi..................       86,768  Wyoming........       21,781
Missouri.....................      214,582                              
------------------------------------------------------------------------
                                            Total..........  16,389,114 
------------------------------------------------------------------------
Source: Table prepared by the Congressional Research Service based on   
  allocations from the U.S. Department of Health and Human Services.    


   TABLE 4.--ESTIMATED GRANTS TO STATES WITH HIGH POPULATION GROWTH AND/OR LOW WELFARE GRANTS PER POOR PERSON,  
                                             FISCAL YEARS 1998-2001                                             
                                                [$ in thousands]                                                
----------------------------------------------------------------------------------------------------------------
                                                                                       Year                     
                              State                              -----------------------------------------------
                                                                     1998        1999        2000        2001   
----------------------------------------------------------------------------------------------------------------
Alabama.........................................................      $2,671      $5,410      $8,216      $8,264
Alaska..........................................................       1,659       3,359       5,102       5,131
Arizona.........................................................       5,762      11,667      17,720      17,822
Arkansas........................................................       1,497       3,032       4,606       4,632
California......................................................           0           0           0           0
Colorado........................................................       3,268       6,617      10,051      10,108
Connecticut.....................................................           0           0           0           0
Delaware........................................................           0           0           0           0
District of Columbia............................................           0           0           0           0
Florida.........................................................      14,547      29,457      44,740      44,997
Georgia.........................................................       8,978      18,181      27,614      27,773
Hawaii..........................................................           0           0           0           0
Idaho...........................................................         842       1,706       2,591       2,606
Illinois........................................................           0           0           0           0
Indiana.........................................................           0           0           0           0
Iowa............................................................           0           0           0           0
Kansas..........................................................           0           0           0           0
Kentucky........................................................           0           0           0           0
Louisiana.......................................................       4,100       8,303      12,611      12,684
Maine...........................................................           0           0           0           0
Maryland........................................................           0           0           0           0
Massachusetts...................................................           0           0           0           0
Michigan........................................................           0           0           0           0
Minnesota.......................................................           0           0           0           0
Mississippi.....................................................       2,176       4,406       6,692       6,731
Missouri........................................................           0           0           0           0
Montana.........................................................       1,131       2,289       3,477       3,497
Nebraska........................................................           0           0           0           0
Nevada..........................................................         899       1,821       2,765       2,781
New Hampshire...................................................           0           0           0           0
New Jersey......................................................           0           0           0           0
New Mexico......................................................       3,246       6,573       9,983      10,041
New York........................................................           0           0           0           0
North Carolina..................................................       8,696      17,609      26,745      26,899
North Dakota....................................................           0           0           0           0
Ohio............................................................           0           0           0           0
Oklahoma........................................................           0           0           0           0
Oregon..........................................................           0           0           0           0
Pennsylvania....................................................           0           0           0           0
Rhode Island....................................................           0           0           0           0
South Carolina..................................................       2,596       5,257       7,984       8,030
South Dakota....................................................           0           0           0           0
Tennessee.......................................................       5,193      10,516      15,973      16,064
Texas...........................................................      12,693      25,703      39,039      39,263
Utah............................................................       2,096       4,245       6,447       6,484
Vermont.........................................................           0           0           0           0
Virginia........................................................       4,381       8,873      13,476      13,553
Washington......................................................           0           0           0           0
West Virginia...................................................           0           0           0           0
Wisconsin.......................................................           0           0           0           0
Wyoming.........................................................         582       1,178       1,790       1,800
                                                                 -----------------------------------------------
  Annual total..................................................      87,014     176,204     267,623     269,160
                                                                 ===============================================
  Cumulative total..............................................      87,014     263,218     530,840    800,000 
----------------------------------------------------------------------------------------------------------------
Source: Table prepared by Congressional Research Service based on data from the Department of Health and Human  
  Services and the Bureau of the Census.                                                                        


                            TABLE 5.--TOTAL FUNDING UNDER THE CHILD CARE AND DEVELOPMENT BLOCK GRANT, FISCAL YEARS 1997-2002                            
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Year                                                             
                  State                  ------------------------------------------------------------------------------------------------  Total  1997- 
                                               1997            1998            1999            2000            2001            2002            2002     
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.................................         $47,775         $49,936         $51,610         $54,896         $58,215         $60,764        $323,196
Alaska..................................           7,480           7,953           8,279           8,912           9,555          10,053          52,233
Arizona.................................          51,166          52,071          53,808          57,194          60,601          63,196         338,036
Arkansas................................          23,824          24,617          25,475          27,216          28,953          30,258         160,343
California..............................         309,577         325,220         339,349         367,123         395,348         417,180       2,153,796
Colorado................................          31,519          32,780          34,199          37,010          39,817          41,931         217,255
Connecticut.............................          34,522          35,566          36,628          38,786          40,893          42,391         228,785
Delaware................................           9,191           9,479           9,745          10,273          10,800          11,197          60,685
District of Columbia....................           7,987           7,929           8,024           8,256           8,484           8,646          49,325
Florida.................................         129,038         132,336         136,984         146,278         155,539         162,442         862,616
Georgia.................................          88,883          91,473          94,338          99,961         105,616         109,908         590,178
Hawaii..................................          12,207          12,778          13,298          14,304          15,344          16,165          84,096
Idaho...................................          11,494          11,998          12,533          13,573          14,636          15,471          79,705
Illinois................................         130,341         134,581         138,967         147,766         156,547         163,117         871,318
Indiana.................................          59,542          61,857          63,968          68,179          72,388          75,545         401,478
Iowa....................................          25,406          26,520          27,434          29,332          31,216          32,605         172,513
Kansas..................................          25,862          26,954          27,907          29,849          31,798          33,266         175,636
Kentucky................................          44,508          45,938          47,272          49,952          52,634          54,636         294,939
Louisiana...............................          53,260          54,951          56,525          59,795          63,076          65,578         353,186
Maine...................................          10,126          10,479          10,815          11,542          12,252          12,752          67,966
Maryland................................          50,172          52,689          54,687          58,619          62,545          65,486         344,196
Massachusetts...........................          74,745          76,331          78,138          81,852          85,442          87,934         484,443
Michigan................................          87,517          91,905          95,473         102,626         109,756         115,048         602,325
Minnesota...............................          49,714          51,293          52,870          56,108          59,303          61,632         330,920
Mississippi.............................          31,409          32,273          33,237          35,218          37,203          38,710         208,050
Missouri................................          57,153          58,830          60,577          64,182          67,741          70,370         378,853
Montana.................................           8,774           9,085           9,404          10,047          10,698          11,195          59,204
Nebraska................................          21,415          22,042          22,610          23,786          24,961          25,834         140,648
Nevada..................................          11,012          11,287          11,899          13,071          14,253          15,158          76,680
New Hampshire...........................          10,721          11,007          11,363          12,102          12,821          13,331          71,345
New Jersey..............................          71,278          74,083          76,995          82,729          88,420          92,602         486,107
New Mexico..............................          23,363          24,157          24,925          26,434          27,970          29,165         156,014
New York................................         210,973         216,787         222,960         235,437         247,717         256,586       1,390,460
North Carolina..........................         116,740         118,734         121,354         126,478         131,585         135,400         750,291
North Dakota............................           6,572           6,748           6,929           7,328           7,719           8,004          43,300
Ohio....................................         135,123         139,091         142,885         150,579         158,189         163,764         889,630
Oklahoma................................          49,138          50,099          51,170          53,417          55,664          57,350         316,838
Oregon..................................          37,571          38,935          40,143          42,529          44,951          46,827         250,958
Pennsylvania............................         118,360         122,295         126,141         133,952         141,601         147,094         789,443
Rhode Island............................          11,880          12,151          12,445          13,058          13,655          14,074          77,263
South Carolina..........................          37,794          39,519          40,897          43,657          46,419          48,501         256,787
South Dakota............................           6,961           7,295           7,575           8,144           8,718           9,147          47,840
Tennessee...............................          72,107          73,649          75,464          79,080          82,678          85,369         468,347
Texas...................................         209,799         216,455         224,252         239,766         255,444         267,471       1,413,186
Utah....................................          28,824          29,895          30,918          32,944          35,039          36,700         194,320
Vermont.................................           7,381           7,585           7,771           8,155           8,532           8,804          48,229
Virginia................................          57,639          60,439          62,867          67,660          72,435          75,998         397,038
Washington..............................          72,671          75,324          77,553          81,918          86,348          89,761         483,575
West Virginia...........................          20,692          21,376          21,926          23,047          24,159          24,981         136,180
Wisconsin...............................          53,294          55,226          56,983          60,568          64,109          66,703         356,883
Wyoming.................................           5,789           6,034           6,219           6,602           6,998           7,313          38,954
Indian set-aside........................          59,340          61,340          63,340          67,340          71,340          74,340         397,040
Puerto Rico \1\.........................          24,956          24,956          24,956          24,956          24,956          24,956         149,735
Guam \1\................................           2,404           2,404           2,404           2,404           2,404           2,404          14,425
Virgin Islands \1\......................           1,687           1,687           1,687           1,687           1,687           1,687          10,121
Northern Marianas \1\...................             909             909             909             909             909             909           5,454
                                         ===============================================================================================================
  Totals................................       2,959,583       3,059,333       3,159,083       3,358,583       3,558,083       3,707,708     19,802,370 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Funding in thousands. These allocations also reflect a regulatory provision that withholds 1/4 of 1 percent of State allotments for payment to    
  DHHS for technical assistance. This reduction in State allotments currently applies to discretionary CCDBG funds.                                     
\1\ Discretionary amounts for the territories.                                                                                                          
Source: Table prepared by the Congressional Research Service. Fiscal year 1997 allocations are from the Department of Health and Human Services.        


  TABLE 6.--STATE ANNUAL ALLOTMENTS OF DISCRETIONARY CHILD CARE FUNDS,  
                         FISCAL YEARS 1997-2002                         
                            [$ in thousands]                            
------------------------------------------------------------------------
                      State                        Allotment    Percent 
------------------------------------------------------------------------
Alabama.........................................      $20,236       2.03
Alaska..........................................        1,907       0.19
Arizona.........................................       18,512       1.86
Arkansas........................................       11,896       1.19
California......................................      120,467      12.08
Colorado........................................       11,060       1.11
Connecticut.....................................        7,225       0.72
Delaware........................................        2,112       0.21
District of Columbia............................        1,979       0.20
Florida.........................................       50,046       5.02
Georgia.........................................       32,158       3.22
Hawaii..........................................        3,662       0.37
Idaho...........................................        5,134       0.51
Illinois........................................       37,706       3.78
Indiana.........................................       18,065       1.81
Iowa............................................        9,229       0.93
Kansas..........................................        8,899       0.89
Kentucky........................................       17,943       1.80
Louisiana.......................................       26,680       2.67
Maine...........................................        3,873       0.39
Maryland........................................       13,203       1.32
Massachusetts...................................       14,395       1.44
Michigan........................................       29,218       2.93
Minnesota.......................................       13,483       1.35
Mississippi.....................................       17,359       1.74
Missouri........................................       18,227       1.83
Montana.........................................        3,213       0.32
Nebraska........................................        5,537       0.56
Nevada..........................................        4,134       0.41
New Hampshire...................................        2,567       0.26
New Jersey......................................       18,640       1.87
New Mexico......................................        9,447       0.95
New York........................................       57,493       5.76
North Carolina..................................       28,149       2.82
North Dakota....................................        2,345       0.24
Ohio............................................       35,119       3.52
Oklahoma........................................       15,233       1.53
Oregon..........................................        9,973       1.00
Pennsylvania....................................       32,711       3.28
Rhode Island....................................        2,721       0.27
South Carolina..................................       18,121       1.82
South Dakota....................................        3,155       0.32
Tennessee.......................................       20,849       2.09
Texas...........................................       92,921       9.32
Utah............................................        9,396       0.94
Vermont.........................................        1,715       0.17
Virginia........................................       19,258       1.93
Washington......................................       15,905       1.59
West Virginia...................................        7,719       0.77
Wisconsin.......................................       14,924       1.50
Wyoming.........................................        1,627       0.16
Indian tribe set-aside..........................       20,000       2.01
Puerto Rico.....................................       24,956       2.50
Guam............................................        2,404       0.24
Virgin Islands..................................        1,687       0.17
Northern Marianas...............................          909       0.09
                                                 -----------------------
  Total.........................................      997,500    100.00 
------------------------------------------------------------------------
Note: State allotments are based on the fiscal year 1996 State shares of
  Child Care and Development Block Grant (CCDBG) funds. The shares may  
  change over time.                                                     
                                                                        
Source: Table prepared by the Congressional Research Service (CRS).     
  Allotments for the 50 States, District of Columbia, and Puerto Rico   
  are estimates from the Department of Health and Human Services based  
  on 1996 shares. Allotments for the territories are CRS estimates based
  on each territory's share of the 0.5 percent set-aside for the        
  territories in fiscal year 1996 published in the Administration for   
  Children and Families appropriation justifications document for fiscal
  year 1997.                                                            


   TABLE 7.--STATE ANNUAL ALLOTMENTS OF GUARANTEED CHILD CARE FUNDING,  
                         FISCAL YEARS 1997-2002                         
                             [in thousands]                             
------------------------------------------------------------------------
                                Guaranteed                    Guaranteed
            State               child care       State        child care
                                  funds                         funds   
------------------------------------------------------------------------
Alabama......................      $16,442  Montana........       $3,191
Alaska.......................        3,545  Nebraska.......       11,338
Arizona......................       19,891  Nevada.........        2,580
Arkansas.....................        5,300  New Hampshire..        5,052
California...................       92,946  New Jersey.....       31,663
Colorado.....................       10,174  New Mexico.....        8,703
Connecticut..................       18,738  New York.......      104,894
Delaware.....................        5,179  North Carolina.       69,639
District of Columbia.........        4,721  North Dakota...        2,506
Florida......................       43,027  Ohio...........       70,445
Georgia......................       36,523  Oklahoma.......       24,910
Hawaii.......................        5,221  Oregon.........       19,409
Idaho........................        2,868  Pennsylvania...       55,337
Illinois.....................       59,609  Rhode Island...        6,634
Indiana......................       26,182  South Carolina.        9,867
Iowa.........................        8,878  South Dakota...        1,711
Kansas.......................        9,812  Tennessee......       37,702
Kentucky.....................       16,702  Texas..........       59,844
Louisiana....................       13,865  Utah...........       12,592
Maine........................        3,137  Vermont........        4,148
Maryland.....................       23,301  Virginia.......       21,329
Massachusetts................       44,973  Washington.....       41,948
Michigan.....................       32,082  West Virginia..        8,841
Minnesota....................       23,368  Wisconsin......       24,511
Mississippi..................        6,293  Wyoming........        2,815
Missouri.....................       24,669                              
------------------------------------------------------------------------
                                            Total..........   1,199,051 
------------------------------------------------------------------------
Source: Table prepared by the Congressional Research Service based on   
  allotments from the Department of Health and Human Services.          


  TABLE 8.--STATE ESTIMATED ALLOTMENTS UNDER THE ENTITLEMENT CHILD CARE MATCHING GRANTS, FISCAL YEARS 1997-2002 
----------------------------------------------------------------------------------------------------------------
                                                                     Year                                       
            State            -----------------------------------------------------------------------------------
                                  1997          1998          1999          2000          2001          2002    
----------------------------------------------------------------------------------------------------------------
Alabama.....................       $11,097       $13,259       $14,932       $18,218       $21,537       $24,086
Alaska......................         2,029         2,502         2,828         3,461         4,104         4,602
Arizona.....................        12,763        13,668        15,405        18,791        22,198        24,793
Arkansas....................         6,628         7,421         8,278        10,019        11,757        13,062
California..................        96,164       111,808       125,936       153,710       181,936       203,767
Colorado....................        10,285        11,546        12,965        15,776        18,584        20,697
Connecticut.................         8,559         9,603        10,665        12,823        14,930        16,428
Delaware....................         1,900         2,188         2,454         2,982         3,509         3,906
District of Columbia........         1,287         1,229         1,324         1,556         1,784         1,946
Florida.....................        35,965        39,264        43,911        53,205        62,466        69,369
Georgia.....................        20,202        22,792        25,657        31,281        36,935        41,227
Hawaii......................         3,324         3,895         4,415         5,421         6,461         7,282
Idaho.......................         3,492         3,997         4,532         5,571         6,635         7,470
Illinois....................        33,026        37,266        41,652        50,451        59,232        65,802
Indiana.....................        15,294        17,609        19,721        23,932        28,140        31,297
Iowa........................         7,299         8,413         9,327        11,225        13,109        14,498
Kansas......................         7,151         8,243         9,197        11,138        13,088        14,556
Kentucky....................         9,864        11,294        12,627        15,307        17,989        19,991
Louisiana...................        12,715        14,407        15,981        19,250        22,532        25,033
Maine.......................         3,116         3,468         3,804         4,532         5,242         5,742
Maryland....................        13,667        16,184        18,182        22,115        26,040        28,981
Massachusetts...............        15,377        16,963        18,770        22,484        26,073        28,565
Michigan....................        26,217        30,605        34,173        41,327        48,456        53,748
Minnesota...................        12,863        14,442        16,019        19,257        22,452        24,781
Mississippi.................         7,757         8,620         9,585        11,565        13,550        15,058
Missouri....................        14,258        15,934        17,681        21,286        24,845        27,474
Montana.....................         2,371         2,682         3,001         3,644         4,295         4,792
Nebraska....................         4,540         5,167         5,735         6,911         8,086         8,959
Nevada......................         4,298         4,572         5,185         6,356         7,539         8,444
New Hampshire...............         3,102         3,389         3,744         4,483         5,203         5,713
New Jersey..................        20,975        23,781        26,693        32,427        38,118        42,300
New Mexico..................         5,213         6,007         6,776         8,285         9,821        11,016
New York....................        48,587        54,400        60,573        73,051        85,331        94,200
North Carolina..............        18,951        20,946        23,565        28,689        33,797        37,612
North Dakota................         1,721         1,897         2,078         2,477         2,868         3,153
Ohio........................        29,559        33,527        37,321        45,015        52,625        58,200
Oklahoma....................         8,995         9,956        11,027        13,274        15,521        17,207
Oregon......................         8,189         9,554        10,762        13,148        15,569        17,446
Pennsylvania................        30,311        34,247        38,093        45,904        53,553        59,046
Rhode Island................         2,525         2,797         3,091         3,703         4,301         4,719
South Carolina..............         9,806        11,531        12,909        15,669        18,431        20,513
South Dakota................         2,095         2,429         2,709         3,278         3,852         4,281
Tennessee...................        13,557        15,098        16,914        20,529        24,128        26,818
Texas.......................        57,034        63,690        71,487        87,001       102,679       114,706
Utah........................         6,837         7,908         8,930        10,957        13,052        14,712
Vermont.....................         1,519         1,723         1,908         2,292         2,670         2,942
Virginia....................        17,052        19,853        22,280        27,073        31,848        35,411
Washington..................        14,818        17,470        19,700        24,065        28,495        31,907
West Virginia...............         4,132         4,816         5,366         6,487         7,599         8,421
Wisconsin...................        13,859        15,791        17,548        21,133        24,674        27,268
Wyoming.....................         1,347         1,592         1,777         2,160         2,556         2,871
                             -----------------------------------------------------------------------------------
  Totals....................       723,692       821,442       919,192     1,114,692     1,310,192    1,456,817 
----------------------------------------------------------------------------------------------------------------
Note: Funding in thousands. These allocations assume a maximum 2 percent set-aside for Indians. They also       
  reflect a regulatory provision that withholds 1/4 of 1 percent of State allotments for payment to the         
  Department of Health and Human Services (DHHS) for technical assistance. This reduction in State allotments   
  currently applies to discretionary Child Care and Development Block Grant funds.                              
Source: Table prepared by the Congressional Research Service. Fiscal year 1997 allocations are from DHHS.       

      

      
=======================================================================




                               SECTION 4.




                       SUMMARY OF EFFECTIVE DATES



                                BY TITLE

=======================================================================


                                                     SECTION 4.--SUMMARY OF EFFECTIVE DATES BY TITLE                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
            Section                                       Provision                                                 Effective date                      
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Title I. Temporary Assistance for Needy Families Block Grant                                              
--------------------------------------------------------------------------------------------------------------------------------------------------------
103a(402) \1\..................  State plan requirements                                      July 1, 1997, or earlier at State option.                 
103a(403a1)....................  Block grants to States                                       July 1, 1997, or earlier at State option.                 
103a(403a2)....................  Illegitimacy reduction bonus                                 Oct. 1, 1998.                                             
103a(403a3)....................  Population growth fund                                       Oct. 1, 1997.                                             
103a(403a4)....................  High performance bonus                                       Oct. 1, 1998.                                             
103a(403b).....................  Contingency fund                                             Oct. 1, 1996.                                             
103a(404)......................  Conditions on use of block grants to States                  July 1, 1997, or earlier at State option.                 
103a(405)......................  Administrative provisions                                    July 1, 1997, or earlier at State option.                 
103a(406)......................  Federal loan fund                                            Oct. 1, 1996.                                             
103a(407a-h)...................  Mandatory work requirements                                  July 1, 1997, or earlier at State option. (annual work    
                                                                                               participation rates apply to all of fiscal year 1997     
                                                                                               regardless of when State begins operating its block grant
                                                                                               program; however, the penalty for failure to meet        
                                                                                               participation rates does not take effect until the later 
                                                                                               of July 1, 1997 or 6 months after plan submission and    
                                                                                               shall apply only to conduct that occurs on that date or  
                                                                                               later; see ``Penalties'' below).                         
103a(407i).....................  Review of implementation of work programs                    Between Oct. 1, 1998 and Sept. 30, 1999 (reviews by       
                                                                                               Congressional committees must be conducted in fiscal year
                                                                                               1999).                                                   
103a(408)......................  Prohibitions, requirements                                   July 1, 1997, or earlier at State option (prohibitions and
                                                                                               requirements take effect on the date the State begins    
                                                                                               operating its block grant program; e.g., the 5-year time 
                                                                                               limit for benefit eligibility, requirement that teenage  
                                                                                               parents attend school, etc.).                            
103a(409)......................  Penalties                                                    For failure to repay loans and for failure to maintain    
                                                                                               prior spending, Oct. 1, 1996; otherwise the later of July
                                                                                               1, 1997, or 6 months after the State submits its plan.   
103a(410)......................  Appeal of adverse decision                                   Follows penalty schedule above; requires timely notice of 
                                                                                               adverse action; specifies time allowed for appeals       
                                                                                               (administrative and Federal) and for administrative      
                                                                                               decision on appeal.                                      
103a(411)......................  Data collection and reporting                                Later of July 1, 1997, or 6 months after the State submits
                                                                                               its plan; the Secretary must send Congress a report by   
                                                                                               Mar. 31, 1998, and annually thereafter, on whether States
                                                                                               are meeting major goals and on program characteristics.  
103a(412)......................  Direct funding and administration by Indian tribes           Oct. 1, 1996.                                             
103a(413)......................  Research, evaluation, and national studies                   1. Annual ranking of States on work and on illegitimacy:  
                                                                                               July 1, 1997 (or earlier if State begins operating its   
                                                                                               TANF block grant program sooner).                        
                                                                                              2. Reports by Secretary on children affected by changes:  
                                                                                               Aug. 22, 1999.                                           
                                                                                              3. States must submit annual reports of child poverty     
                                                                                               rates beginning not later than Nov. 20, 1996.            
103a(414)......................  Study by Census Bureau                                       Aug. 22, 1996.                                            
103a(415)......................  Waivers                                                      Aug. 22, 1996 (current waivers may continue to supersede  
                                                                                               provisions of this law, including work requirements, for 
                                                                                               the life of the waiver and for the area and issue of the 
                                                                                               waiver only).                                            
103a(416)......................  Administration                                               July 1, 1997.                                             
103a(417)......................  Limitation on Federal authority                              July 1, 1997 (earlier if State opts for TANF sooner).     
103b...........................  Grants to outlying areas (Puerto Rico, Virgin Islands,       For increase in funding ceilings, Oct. 1, 1996; for the   
                                  American Samoa)                                              start of the TANF block grant, July 1, 1997 (or earlier  
                                                                                               at the option of the territory).                         
103c...........................  Elimination of child care programs under the Social          Oct. 1, 1996.                                             
                                  Security Act                                                                                                          
104............................  Services provided by charitable, religious, or private       July 1, 1997 (earlier if State opts for TANF sooner).     
                                  organizations                                                                                                         
105............................  Census data on grandparents as primary care givers           Not later than Nov. 20, 1996.                             
106............................  Report on data processing                                    Not later than Feb. 22, 1997.                             
107............................  Study on alternative outcomes measures                       Secretary must consider alternatives to work requirements 
                                                                                               (which begin Oct. 1, 1996) and must report findings to   
                                                                                               Congress no later than Sept. 30, 1998.                   
108............................  Conforming amendments to the Social Security Act             July 1, 1997 (except section 603 provisions about the new 
                                                                                               child care entitlement in the Social Security Act, which 
                                                                                               take effect Oct. 1, 1996).                               
109............................  Conforming amendments to the Food Stamp Act                  July 1, 1997.                                             
110............................  Conforming amendments to other laws                          July 1, 1997.                                             
111............................  Development of prototype of counterfeit-resistant Social     Commissioner of Social Security must report to Congress by
                                  Security card                                                Aug. 22, 1997.                                           
112............................  Modification of JOLI program                                 July 1, 1997.                                             
113............................  Secretarial submission of technical and conforming           Secretary must submit proposal by Nov. 20, 1996.          
                                  amendments                                                                                                            
114............................  Assuring Medicaid coverage                                   July 1, 1997 (earlier if State opts for TANF sooner).     
115............................  Denial of assistance for drug-related convictions            July 1, 1997 (mandated restrictions, from which States    
                                                                                               could ``opt-out,'' apply only to individuals convicted   
                                                                                               after Aug. 22, 1996).                                    
116a-b.........................  Effective date, transition rule                              General effective date is July 1, 1997; special transition
                                                                                               rules apply for States opting to begin their block grant 
                                                                                               programs earlier.                                        
116c...........................  Termination of individual entitlement to AFDC                Oct. 1, 1996.                                             
                                                      Title II. Supplemental Security Income (SSI)                                                      
--------------------------------------------------------------------------------------------------------------------------------------------------------
201............................  Denial of SSI benefits for 10 years to individuals found to  Aug. 22, 1996.                                            
                                  have fraudulently misrepresented residence in order to                                                                
                                  obtain benefits simultaneously in two or more States                                                                  
202............................  Denial of SSI benefits for fugitive felons and probation     Aug. 22, 1996.                                            
                                  and parole violators                                                                                                  
203............................  Financial incentives for State or local penal institutions   Applies to individuals whose period of confinement in an  
                                  to provide SSA information on prisoners receiving benefits   institution commences on or after Mar. 1, 1997.          
                                 Study of other potential improvements in the collection of   Aug. 22, 1996; results of the study are due Aug. 22, 1997.
                                  information regarding public inmates                                                                                  
                                 Institution compliance report                                Aug. 22, 1996; report due Oct. 1, 1998.                   
204............................  Effective date of application for benefits                   Applies to applications filed on or after Aug. 22, 1996.  
211............................  New definition of childhood disability, elimination of       Applies to new and pending applications on or after Aug.  
                                  references to maladaptive behavior and discontinuance of     22, 1996. Current beneficiaries must be notified by Jan. 
                                  the individualized functional assessment                     1, 1997, and redeterminations are to be completed by Aug.
                                                                                               22, 1997. Current beneficiaries found ineligible upon    
                                                                                               redetermination will continue to receive benefits until  
                                                                                               July 1, 1997 or the date of their redetermination,       
                                                                                               whichever is later.                                      
                                 Progress report on implementation to Congress                Aug. 22, 1996; report due within 180 days.                
                                 Regulations submitted to Congress for review                 Aug. 22, 1996; regulations must be submitted for review   
                                                                                               not later than 45 days before the effective date of the  
                                                                                               regulations.                                             
                                 Authorization of additional funding                          Aug. 22, 1996.                                            
212............................  Eligibility redeterminations and continuing disability       Applies to benefits for the months beginning on or after  
                                  reviews                                                      Aug. 22, 1996.                                           
213............................  Requirement to establish an account                          Applies to payments made after Aug. 22, 1996.             
214............................  Reduction in cash benefits payable to institutionalized      Applies to benefits beginning in Dec. 1996.               
                                  individuals whose medical costs are covered by private                                                                
                                  insurance                                                                                                             
215............................  Regulations                                                  Are required to be published by Nov. 22, 1996.            
221............................  Installment payment of large past-due SSI benefits           Effective with respect to past-due benefits payable after 
                                                                                               Nov. 1996.                                               
222............................  Regulations                                                  Are required to be published by Nov. 22, 1996.            
231............................  Annual report on the SSI Program                             Aug. 22, 1996; report due not later than May 30 of each   
                                                                                               year.                                                    
232............................  GAO study                                                    Aug. 22, 1996; report due not later than Jan. 1, 1999.    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Title III. Child Support                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
302............................  Distribution of arrear ages that accrued after the family    Oct. 1, 1997.                                             
                                  ceased to receive welfare                                                                                             
302............................  Distribution of arrear ages that accrued before the family   Oct. 1, 2000.                                             
                                  received welfare                                                                                                      
302............................  Study by Secretary on new rules of child support             Oct. 1, 1998.                                             
                                  distribution                                                                                                          
302............................  General effective date for distribution rules and ``gap''    Oct. 1, 1996, or earlier at State option.                 
                                  payments                                                                                                              
303............................  Privacy safeguards for all child support information         Oct. 1, 1997.                                             
304............................  Right to notification of hearing                             Oct. 1, 1997.                                             
311............................  State Case Registry                                          Oct. 1, 1998.                                             
312............................  State Disbursement Unit                                      Oct. 1, 1998.                                             
313............................  Directory of New Hires                                       Oct. 1, 1997 (but States that have a new hire system in   
                                                                                               place may continue their system until Oct. 1, 1998).     
313............................  Comparison of new hire information in State Case Registry    May 1, 1998.                                              
                                  and other sources and sending information to the National                                                             
                                  Directory of New Hires                                                                                                
314............................  Orders not subject to withholding must automatically be      Oct. 1, 1996.                                             
                                  subject to withholding if arrearages occur                                                                            
316............................  Expansion of Federal Parent Locator Service to include       Oct. 1, 1998.                                             
                                  Federal Case Registry of Orders                                                                                       
316............................  Expansion of Federal Parent Locator Service to include the   Oct. 1, 1997.                                             
                                  National Directory of New Hires                                                                                       
321............................  Adoption of Uniform Interstate Family Support Act (UIFSA)    Jan. 1, 1998.                                             
322............................  Improvements to full faith and credit for child support      Aug. 22, 1996.                                            
                                  orders                                                                                                                
324............................  Secretary promulgate forms to be used in interstate cases    Oct. 1, 1996.                                             
                                  for use in withholding income, imposing liens, and issuing                                                            
                                  administering subpoenas                                                                                               
324............................  States must use the forms promulgated by the Secretary for   Mar. 1, 1997.                                             
                                  income withholding, liens and administrative subpoenas                                                                
341............................  Secretary's report on a new incentive system of child        Mar. 1, 1997.                                             
                                  support financing                                                                                                     
341............................  Implementation of revised incentive system                   Oct. 1, 1999.                                             
341............................  State option for calculation of paternity establishment      Aug. 22, 1996.                                            
                                  percentage                                                                                                            
342............................  Federal and State reviews and audits                         First calendar quarter after Aug. 22, 1996.               
343............................  Required reporting procedures                                Aug. 22, 1996.                                            
344............................  Completion of automated data processing requirements in      Oct. 1, 1997                                              
                                  effect on or before the enactment of the Family Support                                                               
                                  Act of 1988                                                                                                           
344............................  Completion of automated data processing enacted on or        Oct. 1, 2000.                                             
                                  before Aug. 22, 1996                                                                                                  
345............................  Technical assistance                                         Aug. 22, 1996.                                            
346............................  New requirements for Secretary's annual report to Congress   Oct. 1, 1996.                                             
352............................  Consumer reports                                             Aug. 22, 1996.                                            
353............................  Nonliability for financial institutions                      Aug. 22, 1996.                                            
361............................  Fees for Internal Revenue Service collection of arrearages   Oct. 1, 1997.                                             
362............................  Reforms of Child Support Collections for Federal Employees   Feb. 22, 1997.                                            
                                  (including military personnel)                                                                                        
363............................  Enforcement of child support obligations of military         Aug. 22, 1996.                                            
                                  personnel                                                                                                             
366............................  Definition of support order                                  Aug. 22, 1996.                                            
370............................  Denial of passports for nonpayment of child support          Oct. 1, 1997.                                             
371............................  International support enforcement                            Aug. 22, 1996.                                            
374............................  Nondischargeability in bankruptcy                            Aug. 22, 1996.                                            
381............................  Correction of ERISA definition of medical child support      General effective date is Aug. 22, 1996, but if pension   
                                  order                                                        plan needs to be amended, first plan year after Jan. 1,  
                                                                                               1997.                                                    
391............................  Grants to States for access and visitation programs          Aug. 22, 1996.                                            
395............................  General effective date                                       Provisions of this act that require amendment of State    
                                                                                               laws under section 466 of the Social Security Act, or    
                                                                                               revision of State plans under section 454, are effective 
                                                                                               on Oct. 1, 1996; all other provisions (except those with 
                                                                                               special effective dates as outlined above) are effective 
                                                                                               upon enactment; if States must amend State law to comply 
                                                                                               with this act, the changes must be made no later than the
                                                                                               first day of the first quarter after the close of the    
                                                                                               first regular session of the State legislature that      
                                                                                               begins after enactment of this act. If States must amend 
                                                                                               their constitution to comply with this act, the State is 
                                                                                               not out of compliance until the earlier of 1 year after  
                                                                                               the effective date of a State constitutional amendment or
                                                                                               Aug. 22, 2001.                                           
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Title IV. Restricting Welfare and Public Benefits for Aliens                                              
--------------------------------------------------------------------------------------------------------------------------------------------------------
401............................  Illegal aliens and nonimmigrants ineligible for most         Aug. 22, 1996.                                            
                                  Federal benefits                                                                                                      
402a...........................  Legal noncitizens ineligible for SSI and food stamps         Current recipients may remain eligible until as late as   
                                                                                               Aug. 22, 1997; all others ineligible after Aug. 22, 1996.
402b...........................  State option to provide AFDC/cash welfare, Medicaid, and     State option after Aug. 22, 1996 (other than for future   
                                  social services to legal noncitizens                         entrants during their first 5 years--see below), but     
                                                                                               current recipients remain eligible until Jan. 1, 1997.   
403............................  5-year limited eligibility for most Federal welfare          Changes affect noncitizens arriving after Aug. 22, 1996,  
                                  benefits for future entrants                                 for the individual's first 5 years in the U.S.           
404............................  Agencies must inform the public and notify recipients        After Aug. 22, 1996 (current recipients of SSI must be    
                                  affected by eligibility changes                              notified by Mar. 1, 1997).                               
411............................  Illegal aliens ineligible for most State benefits (with      Aug. 22, 1996.                                            
                                  State ``opt-out'')                                                                                                    
412............................  State authority to limit eligibility for most State welfare  State option after Aug. 22, 1996, but current recipients  
                                  benefits for legal noncitizens                               remain eligible until Jan. 1, 1997.                      
421............................  Deeming of sponsor's income in determining noncitizen        Changes apply only to individuals arriving under revised  
                                  eligibility for most Federal benefits                        sponsorship agreements (see below).                      
422............................  State authority to expand deeming to apply to most State     Changes apply only to individuals arriving under revised  
                                  programs                                                     sponsorship agreements (see below).                      
423............................  Requirements for revised sponsorship agreements (affidavits  Attorney General must formulate revised affidavits within 
                                  of support)                                                  90 days of Aug. 22, 1996; the revised affidavits become  
                                                                                               effective between 60 and 90 days after the Attorney      
                                                                                               General has finalized the form.                          
432............................  Verification of eligibility for Federal public benefits      By Feb. 22, 1998, the Attorney General must promulgate    
                                                                                               regulations requiring verification of eligibility for    
                                                                                               Federal benefits; States that administer programs        
                                                                                               providing Federal public benefits have 24 months         
                                                                                               following the promulgation of regulations to have        
                                                                                               verification systems in effect.                          
435............................  No counting of quarters of work during which an alien        Begins Jan. 1, 1997.                                      
                                  received welfare benefits                                                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Title V. Child Protection \2\                                                             
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Title VI. Child Care \3\                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
603a...........................  Authorization of appropriations and entitlement authority    Authorization for discretionary grants to Child Care and  
                                                                                               Development Block Grant (CCDBG): Aug. 22, 1996;          
                                                                                               appropriation for new mandatory child care block grants, 
                                                                                               Oct. 1, 1996.                                            
612............................  Report by the Secretary                                      Oct. 1, 1996 (first biennial report must be submitted no  
                                                                                               later than Dec. 31, 1997).                               
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Title VII. Child Nutrition \4\                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
704............................  Special assistance                                           Aug. 22, 1996, except that new rounding rules will not    
                                                                                               affect Federal subsidy rates until the regular July 1,   
                                                                                               1997, inflation adjustment.                              
706............................  Summer food service program                                  Aug. 22, 1996, except that reduced subsidies and new      
                                                                                               rounding rules will not be effective until Jan. 1, 1997  
                                                                                               (for the summer of 1997).                                
708............................  Child and adult care food program                            Aug. 22, 1996, except that the new restructured system for
                                                                                               day care home subsidies and new rounding rules will not  
                                                                                               be effective until July 1, 1997, and interim regulations 
                                                                                               governing the restructured system are due by Jan. 1,     
                                                                                               1997.                                                    
723............................  School breakfast program authorization                       Aug. 22, 1996, except that termination of the requirement 
                                                                                               for school breakfast and summer food service program     
                                                                                               startup and expansion grants is effective Oct. 1, 1996.  
731............................  Nutrition education and training                             Aug. 22, 1996, except that conversion of funding for the  
                                                                                               nutrition education and training program from mandatory  
                                                                                               to discretionary appropriations is effective Oct. 1,     
                                                                                               1996.                                                    
741............................  Coordination of school lunch, school breakfast, and summer   Aug. 22, 1996, with the report due Nov. 1, 1997.          
                                  food service programs                                                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Title VIII. Food Stamps and Commodity Distribution \5\                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
804............................  Adjustment of the thrifty food plan                          Oct. 1, 1996.                                             
809............................  Deductions from income                                       Aug. 22, 1996, except that the ceiling on excess shelter  
                                                                                               expense deductions will rise on Jan. 1, 1997, Oct. 1,    
                                                                                               1998, and Oct. 1, 2000.                                  
810............................  Vehicle allowance                                            Oct. 1, 1996.                                             
824............................  Work requirement for able-bodied adults with dependents      Aug. 22, 1996, except that transition provisions stipulate
                                                                                               that months before recipients are notified of the new    
                                                                                               work requirement or 3 months after Aug. 22, 1996         
                                                                                               (whichever is earlier) will not count toward the         
                                                                                               requirement's time limit.                                
855............................  Study of the use of food stamps to purchase vitamins and     Aug. 22, 1996, with the study due by Dec. 15, 1998.       
                                  minerals                                                                                                              
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Title IX. Miscellaneous                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
901............................  Appropriation by State legislatures                          July 1, 1997, or earlier at State option for TANF block   
                                                                                               grants; Oct. 1, 1996, for Child Care and Development     
                                                                                               Block Grant (CCDBG) funds.                               
902............................  Sanctioning for testing positive for controlled substances   Aug. 22, 1996.                                            
903............................  Elimination of housing assistance with respect to fugitive   Aug. 22, 1996.                                            
                                  felons and probation and parole violators                                                                             
905............................  Establishing national goals to prevent teenage pregnancies   By Jan. 1, 1997, the Secretary of HHS must implement a    
                                                                                               strategy for preventing out-of-wedlock pregnancies; by   
                                                                                               June 30, 1998, she must report to Congress on progress in
                                                                                               meeting goals.                                           
906............................  Sense of the Senate regarding enforcement of statutory rape  By Jan. 1, 1997, the Attorney General must implement a    
                                  laws                                                         program that educates State and local law enforcement    
                                                                                               officials on the prevention and prosecution of statutory 
                                                                                               rape.                                                    
907............................  Provisions to encourage electronic benefit transfer systems  Aug. 22, 1996.                                            
908............................  Reduction of block grants to States for social services;     Oct. 1, 1996 for reduction in grants; Aug. 22, 1996, for  
                                  use of vouchers                                              authority to use funds for vouchers.                     
909............................  Rules relating to denial of earned income credit on basis    In general, applies to taxable years beginning after Dec. 
                                  of disqualified income                                       31, 1995; for individuals who before June 26, 1996, had  
                                                                                               in effect an earned income eligibility certificate for   
                                                                                               taxable year 1996, applies to taxable years beginning    
                                                                                               after Dec. 31, 1996.                                     
910............................  Modification of adjusted gross income definition for earned  Same as for section 909 above.                            
                                  income credit                                                                                                         
911............................  Fraud under means-tested welfare and public assistance       Aug. 22, 1996.                                            
                                  programs                                                                                                              
912............................  Abstinence education                                         Oct. 1, 1997.                                             
913............................  Change in reference                                          Jan. 1, 1997.                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Section numbers in parentheses are references to the Social Security Act.                                                                           
\2\ All provisions of this title are effective upon enactment (Aug. 22, 1996).                                                                          
\3\ With the exception of the following sections, all provisions of this title are effective Oct. 1, 1996.                                              
\4\ With the exception of the following sections, all provisions of this title are effective upon enactment (Aug. 22, 1996).                            
\5\ The Food Stamp Program's quality control system will not penalize States for errors resulting from changes in food stamp law effective on enactment 
  until at least 150 days after enactment, and States are expected to implement new rules when households apply or are recertified. With the exception  
  of the following sections, all provisions of this title are effective upon enactment (Aug. 22, 1996).                                                 

      

      
=======================================================================




                               SECTION 5.




                 CONGRESSIONAL BUDGET OFFICE ESTIMATES


=======================================================================



Hon. Jacob J. Lew
Page 2

cc: Hon. Bill Archer
   Chairman
   House Committee on Ways and Means

   Hon. Sam Gibbons
   Ranking Minority Member
   House Committee on Ways and Means

   Hon. William V. Roth, Jr.
   Chairman
   Senate Committee on Finance

   Hon. Daniel Patrick Moynihan
   Ranking Minority Member
   Senate Committee on Finance

   Hon. Pete V. Domenici
   Chairman
   Senate Committee on the Budget

   Hon. J. James Exon
   Ranking Minority Member
   Senate Committee on the Budget

   Hon. John R. Kasich
   Chairman
   House Committee on the Budget

   Hon. Martin Olav Sabo
   Ranking Minority Member
   House Committee on the Budget

   Hon. Nancy Landon Kassebaum
   Chairman
   Senate Committee on Labor and Human Resources
Hon. Jacob J. Lew
Page 3

   Hon. Edward M. Kennedy
   Ranking Minority Member
   Senate Committee on Labor and Human Resources

   Hon. William F. Goodling
   Chairman
   House Committee on Economic and Educational Opportunities

   Hon. William Clay
   Ranking Minority Member
   House Committee on Economic and Educational Opportunities

   Hon. Thomas J. Bliley, Jr.
   Chairman
   House Committee on Commerce

   Hon. John D. Dingell
   Ranking Minority Member
   House Committee on Commerce

   Hon. Richard G. Lugar
   Chairman
   Senate Committee on Agriculture, Nutrition, and Forestry

   Hon. Patrick J. Leahy
   Ranking Minority Member
   Senate Committee on Agriculture, Nutrition, and Forestry

   Hon. Pat Roberts
   Chairman
   House Committee on Agriculture

   Hon. E de la Garza
   Ranking Minority Member
   House Committee on Agriculture

       FEDERAL BUDGETARY IMPLICATIONS OF H.R. 3734, THE PERSONAL 
     RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996

    The Congressional Budget Office (CBO) has reviewed the 
conference report on H.R. 3734, the Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996. The bill would 
replace Federal payments under the current Aid to Families With 
Dependent Children Program with a block grant to States, 
restrict the eligibility of legal aliens for welfare benefits, 
modify the benefits and eligibility requirements in the Food 
Stamp and Child Nutrition Programs, change the operation and 
financing of the Federal and State child support enforcement 
system, increase funding for child care programs, and tighten 
the eligibility requirements for disabled children under the 
Supplemental Security Income Program.
    Although the estimate assumes that the bill will be enacted 
by September 1, 1996, its impact on direct spending and 
revenues in 1996 is estimated to be negligible. The bill would 
reduce Federal spending by $2.9 billion in 1997 and by $54.2 
billion over the 1997-2002 period, as well as increase revenues 
by $60 million and $394 million over these respective periods. 
Summary tables I and II present estimates of the bill's total 
effects by program and by title, respectively. The underlying 
assumptions and methodology are described below, and detailed 
tables for each title of the bill appear at the end.

      Title I: Temporary Assistance for Needy Families Block Grant

    Title I would alter the method by which the Federal 
Government shares in the cost of providing cash and training 
assistance to low-income families with children. It would 
combine several current entitlement programs--Aid to Families 
with Dependent Children (AFDC), Emergency Assistance, and the 
Job Opportunities and Basic Skills Training Program (JOBS)--
into a single block grant with a fixed funding level. Title I 
would also repeal current child care funding for low-income 
families. (Title VI establishes a new program to fund these 
activities.) Finally, it would extend an existing Medicaid 
benefit for families leaving public assistance and provide new 
funding for determining eligibility for Medicaid.
    In 1997, CBO projects that under current law the Federal 
Government would spend $15.9 billion on AFDC benefits, AFDC 
administration, AFDC emergency assistance and the JOBS Program, 
or $0.7 billion less than the Federal Government would spend 
under title I (excluding child care and Medicaid). By 2002, 
projected spending under current law ($18.3 billion) would 
exceed projected spending under title I (excluding child care 
and Medicaid) by $0.3 billion (see table 1).
    Effect of the block grant on cash and training 
assistance.--The new Temporary Assistance for Needy Families 
Block Grant (TANF) would replace Federal participation for AFDC 
benefit payments, AFDC administrative costs, AFDC emergency 
assistance benefits, and the JOBS Program. The bill would fix 
the base level of the block grant at $16.4 billion annually 
through 2002. Each State would be entitled to a portion of the 
grant based on its recent spending in the AFDC and JOBS 
Programs. States could operate under the current law AFDC and 
JOBS Programs until July 1, 1997, but would be subject to the 
financing limitations of the block grant as of October 1, 1996.
    A State could qualify to receive more than the basic block 
grant amount in four ways. First, a State that meets specified 
criteria related to its poverty level and population growth 
would receive a supplemental grant in 1998 equal to 2.5 percent 
of Federal 1994 payments to the State for AFDC, Emergency 
Assistance, and JOBS. In each successive year that the State 
meets the criteria, the supplemental grant would increase. 
Supplemental grants would be available from 1998 through 2001, 
and the total amount of additional funding for these 
supplemental grants would be capped at $800 million. A State 
that did not meet the qualifying criteria in 1998 would not be 
eligible to qualify in any later year. CBO estimates that 18 
States would receive supplemental grants totaling $87 million 
in 1998 growing to $278 million by 2001 (see table 1).
    Second, up to five States could receive bonuses of $20-$25 
million each year from 1999-2002 if the number of out-of-
wedlock births in the State for the prior 2 years decreased 
compared to the number of out-of-wedlock births in the 2-year 
period before that. A State would not be eligible for such a 
grant in a year that its abortion rate is higher than its 1995 
rate. CBO estimates that on average two States would qualify 
each year at a Federal cost of $50 million each fiscal year.
    Third, a State that meets criteria set by the Secretary of 
Health and Human Services (HHS) for high performing States 
could receive a bonus of up to 5 percent of its block grant 
each year. High performance bonuses are capped at $200 million 
each year for 1999-2003.
    Fourth, the bill would establish a fund (called the 
Contingency Fund for State Welfare Programs) of $2.0 billion 
for use in fiscal years 1997-2001 by States with high and 
increasing unemployment rates or growth in food stamp 
caseloads.\1\ CBO assumes that the contingency fund would 
continue in 2002 under the same terms. (The Balanced Budget and 
Emergency Deficit Control Act of 1985 requires that mandatory 
programs greater than $50 million are continued in the 
baseline.) A State could receive an annual maximum of 20 
percent of its block grant amount if it was an eligible State 
in each month of the year. States would be required to match 
Federal payments at the current-law Federal medical assistance 
percentage. CBO estimates that States would draw down about 
$100 million from the contingency fund in 1997 and would use a 
little over $2 billion from the fund over the 1998-2002 period.
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    \1\ A State that experiences an unemployment rate for the most 
recent quarter greater than or equal to 6.5 percent and 10 percent or 
more higher than the unemployment rate for either of the corresponding 
quarters in the 2 previous years would be eligible to draw from the 
contingency fund. Also, a State that experiences an increase in 
participation in the Food Stamp Program of at least 10 percent over the 
1994 or 1995 participation (adjusted for the impact of this bill had it 
been in effect in those years) would be eligible. A State would be 
eligible in any month it meets these criteria and in the following 
month.
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    The bill would authorize the Secretary of HHS to make loans 
to States to use for welfare programs. States could borrow up 
to 10 percent of their family assistance grant and would have 
to repay borrowed amounts, with interest, within 3 years. Any 
State could borrow from the loan fund in any year regardless of 
particular economic circumstances. CBO estimates the creation 
of the loan authority would not generate additional outlays. 
Although up to $1.7 billion would be made available to States 
for loans, CBO assumes that every State borrowing funds would 
repay its loans with interest. The Secretary has the authority 
to withhold any unpaid loan amount from future TANF block grant 
payments. Therefore, the program would involve no long-run loss 
to the Federal Government, and under the credit reform 
provisions of the Congressional Budget Act, it would have no 
cost.
    The bill would provide additional Federal funds for a study 
by the Census Bureau ($10 million per year), research, 
evaluations, and national studies ($15 million per year), and 
grants for Indian tribes that received JOBS funds in 1995 ($7.6 
million per year). Also, the bill would allow States that are 
operating demonstration projects under waivers to discontinue 
those projects. The States would not be required to pay the 
Federal Government for any accrued Federal costs of those 
waivers. CBO estimates this would cost the Federal Government 
$50 million in 1997. In addition, CBO has estimated that 
penalties of $50 million for failure to meet the bill's work 
participation requirements would be applied in each fiscal year 
1999-2002. Finally, the bill would raise the amounts of money 
available to territories for assistance programs and provide 
greater flexibility in how the money is spent. The new $116 
million cap on payments to the territories represents an 
increase of about $10 million over current-law amounts.
    The bill would maintain the current-law Medicaid 
transitional benefits for individuals who would otherwise lose 
coverage due to increased child support or due to increased 
earnings from employment. The sunset date for the work 
transition benefit was extended from 1998 to 2001. In general, 
the bill retains categorical eligibility for Medicaid families 
that meet the current eligibility criteria for AFDC despite 
changes in welfare eligibility resulting from the new block 
grant program. The bill provides up to $500 million over the 
1997-2000 period for additional administrative expenses 
associated with carrying out these eligibility determinations.
    Criteria for State participation in the block grant.--To 
participate in the block grant program, States would present an 
assistance plan to the Department of Health and Human Services 
and would ensure that block grant funds would be spent only on 
needy families with minor children. States would be required to 
continue to spend some of their own resources in order to 
receive their full block grant allotment. The Federal grant 
would be reduced $1 for every dollar that State spending fell 
below 80 percent of historical State spending levels (75 
percent of the historical level for any State that meets the 
bill's work participation requirements). In addition, States 
would have to satisfy other conditions. Notably, States would 
be prohibited from providing Federal dollars to most families 
who have received cash assistance for more than 5 years since 
the effective date of the block grant program (July 1, 1997, or 
earlier at State option). At their option, States could choose 
a shorter time limit and could grant hardship exemptions for up 
to 20 percent of all families. Although no family could 
encounter a 5-year time limit until October 1, 2001, the 
limit's effect on welfare participation could be noticed sooner 
if recipients shortened their stays on welfare or delayed 
childbearing in order to preserve access to the system in 
future years. CBO estimates that the full effect of such a 
limit would not be realized until 2004 or later. Eventually, 
under current demographic assumptions, this provision could 
reduce cash assistance rolls by 30 percent to 40 percent. The 
actual effect of the time limit on families is uncertain, 
however, because the bill would permit States and localities to 
provide cash assistance to such groups using their own 
resources. The inclusion of the time limit in the legislation 
does not affect the CBO estimate of Federal costs because it 
would not directly change the amount of block grant funds 
disbursed to the States.
    Work and training requirements under the block grant.--
Title I would require States to provide work and training 
activities for an increasing percentage of recipients of 
Temporary Assistance to Needy Families (TANF) or face penalties 
of up to 5 percent of the State's share of the block grant. 
States would face three separate requirements, each becoming 
increasingly difficult to satisfy over time.
    First, the bill requires that, in 1997, States have 25 
percent of certain families receiving cash assistance in work 
activities. The participation rates rise by 5 percentage points 
a year through 2002. Participants would be required to work 20 
hours a week through 1998, 25 hours in 1999, and 30 hours in 
2000 and after. Families with no adult recipient or with a 
recipient experiencing a sanction for nonparticipation (for up 
to 3 months) are not included in the participation calculation. 
Families in which the youngest child is less than 1 year old 
would be exempt for up to 1 year at State option.
    States would have to show on a monthly basis that 
individuals in 50 percent of all nonexempt families are 
participating in work activities in 2002. CBO estimates that 
this would require participation of 1.7 million families. By 
contrast, program data for 1994 indicate that, in an average 
month, approximately 450,000 individuals participated in the 
JOBS Program. (The bill limits the number of individuals in 
education and training programs that could be counted as 
participants, so many of these individuals would not qualify as 
participants under the new program.) Most States would be 
unlikely to satisfy this requirement for several reasons. The 
costs of administering such a large scale work and training 
program would be high, and Federal funding would be frozen at 
historic levels. CBO estimates that States would need to invest 
an additional $13 billion in 1997-2002 in order to administer 
programs that would satisfy the requirements. Because the 
payoff for such programs has been shown to be low in terms of 
reductions in the welfare caseload, States may be reluctant to 
commit their own funds to employment programs. Moreover, 
although States may succeed in reducing their caseloads through 
other measures, which would in turn free up Federal funds for 
training, the requirements would still be difficult to meet 
because the remaining caseload would likely consist of 
individuals who would be the most difficult and expensive to 
train.
    Second, while tracking the work requirement for all 
families, States simultaneously would track a separate 
guideline for the smaller number of nonexempt families with two 
parents participating in the AFDC-Unemployed Parent (AFDC-UP) 
Program. By 2002, the bill would require that 90 percent of 
such families have an adult participate in work-related 
activities at least 35 hours per week. In addition, if the 
family used Federal funds to pay for child care, the spouse 
would have to participate in work activities at least 20 hours 
per week. In 1994, States attempted to implement a requirement 
that 40 percent of AFDC-UP families participate, and roughly 40 
States failed the requirement.
    Finally, States would have to ensure that all parents who 
have received cash assistance for more than 2 years would 
engage in work activities. CBO estimates that approximately 70 
percent of all parents on the cash assistance rolls in 2002 
would have received such assistance for 2 years or more since 
the bill's effective date. The experience of the JOBS Program 
to date suggests that such a requirement is well outside the 
States' abilities to implement.
    In sum, each work requirement would represent a significant 
challenge to States. Given the costs and administrative 
complexities involved, CBO assumes that most States would 
simply accept penalties rather than implement the requirements. 
Although the bill would authorize penalties of up to 5 percent 
of the block grant amount, CBO assumes--consistent with current 
practice--that the Secretary of Health and Human Services would 
impose small penalties (less than one-half of 1 percent of the 
block grant) on noncomplying States.
    Effect of the block grant on the Food Stamp Program.--CBO 
estimates that enactment of the block grant for family support 
would result in families receiving lower average cash payments 
relative to current law and consequently, higher food stamp 
benefits. Under current rules, each dollar lost in cash would 
increase a participating family's food stamp benefits by about 
30 cents. CBO estimates the incomes of AFDC families would 
decline relative to current projections by $2.3 billion in 
2002, generating a food stamp cost in that year of nearly $700 
million. By 2002, the block grant amount is 10 percent lower 
than projections of Federal spending under current law on AFDC 
and related programs. For the purposes of determining food 
stamp costs, CBO assumes that by 2002 cash benefits funded by 
the block grant would be 10 percent lower than under current 
law. In addition, CBO assumes that by 2002 States--on average--
would spend 15 percent less of their own funds on cash benefits 
than they would spend under current law. Should States decide 
to spend more or less than this amount, the costs of the Food 
Stamp Program would be smaller or greater than the estimate.
    Effect of the block grant on the foster care program.--
Although the bill does not directly amend foster care 
maintenance payments, which would remain an open-ended 
entitlement with State expenditures matched by the Federal 
Government, the bill could affect foster care spending. By 
retaining the foster care benefits as a matched entitlement, 
the bill would create an incentive for States to shift AFDC 
children who are also eligible for foster care benefits into 
the foster care program. AFDC administrative data for 1993 
suggest that roughly 500,000 children (5 percent of all 
children on AFDC) fall into this category because they live in 
a household without a parent. CBO assumes a number of legal and 
financial barriers would prevent States from transferring a 
large share of such children and estimates States would collect 
an additional $10 million in foster care payments in 1999, 
rising to $45 million in 2002.
    Effect of the block grant on the Medicaid Program.--In 
general, the bill retains categorical eligibility for Medicaid 
families that meet the eligibility criteria for AFDC as they 
are in current law with some modifications. States must use 
AFDC income and resource standards and methodologies in effect 
on July 16, 1996, to determine Medicaid eligibility. As under 
current law, States have the option to lower income standards 
to May 1, 1988, levels or to increase income standards; 
however, these increases are limited to the annual increase in 
the Consumer Price Index (CPI). Unlike current law, States may 
increase resource standards (by no more than the annual 
increase in the CPI) and link eligibility to compliance with 
work requirements under TANF. Overall, CBO judges that there 
would be no significant budgetary effect of the block grant on 
the Medicaid Program.

                 Title II: Supplemental Security Income

    The bulk of the savings in title II would stem from 
imposing tighter eligibility criteria for children seeking 
disability benefits under the Supplemental Security Income 
(SSI) Program. title II would also make a variety of other 
changes. It would reduce the amount of the benefit in the first 
month for new SSI applicants, require the disbursement of large 
retroactive payments in installments rather than in a single 
lump, and offer payments to prison officials who help to 
identify ineligible SSI recipients in their institutions. Net 
savings, which reflect additional food stamp spending, are 
estimated to equal $2.0 billion in 2002 and $8.6 billion over 
the 1997-2002 period (see table 2). A small amount of the 
savings ($5 million in 1997, $10 million in 1998, and $85 
million over the 6-year period) occurs in the Old-Age, 
Survivors, and Disability Insurance Programs, and is excluded 
from the pay-as-you-go totals.
    Disabled children.--The SSI Program, run by the Social 
Security Administration (SSA), pays benefits to certain low-
income aged and disabled people. The bill would revamp the SSI 
Program for disabled children. Under current law, low-income 
children can qualify for the SSI Program and its Federal cash 
benefits of up to $470 a month in two ways. Their condition may 
match one of the medical listings (a catalog of specific 
impairments, with accompanying clinical findings), or they may 
be evaluated under an individualized functional assessment 
(IFA) that determines whether an unlisted impairment seriously 
limits a child from performing activities normal for his or her 
age. Both methods are spelled out in regulation. Until the 
Supreme Court's decision in the Zebley case in 1990, the 
medical listings were the sole path to eligibility for 
children. Adults, in contrast, could receive an assessment of 
their functional and vocational capacities even if they did not 
meet the listings. The court ruled that sole reliance on the 
listings did not satisfy the law's requirement to gauge whether 
children's disorders were of ``comparable severity'' to 
impairments that would disable adults.
    The bill would eliminate childhood IFAs and their statutory 
underpinning, the ``comparable severity'' rule, as a basis for 
receipt of benefits. Many children on the rolls as a result of 
an IFA (roughly a quarter of children now on SSI) would have 
their benefits terminated, and future awards based on an IFA 
would be barred. Thus, the program would be restricted to those 
who met or equaled the listings. The bill would also remove the 
reference to maladaptive behavior--behavior that is destructive 
to oneself, others, property, or animals--from the personal/
behavioral domain of the medical regulations, thereby barring 
its consideration as a basis for award.
    Even as it repeals the ``comparable severity'' language, 
the bill would create a new statutory definition of childhood 
disability. It States that a child would be considered disabled 
if he or she has ``a medically determinable physical or mental 
impairment which results in marked and severe functional 
limitations (and can be expected to last 12 months or lead to 
death).'' That language is intended to preserve SSI eligibility 
for some of the most severely impaired children who now qualify 
by way of an IFA because they do not happen to match one of the 
medical listings.
    CBO estimated the savings from these changes by judging how 
many child recipients would likely qualify under the old and 
new criteria. CBO relied extensively on SSA program data and on 
analyses conducted by the General Accounting Office and the 
Inspector General of the Department of Health and Human 
Services. Approximately 1 million children now collect SSI 
benefits, and CBO projects that the number would reach 1.4 
million in 2002 if policies were unchanged. CBO assumed that 
most children who qualify through an IFA would be rendered 
ineligible under the proposed criteria--specifically, those who 
fail to rate a ``marked'' or ``extreme'' impairment in at least 
two areas of functioning. CBO also assumes that the provisions 
on maladaptive behavior would bar a small percentage of 
children from eligibility for benefits. Overall, CBO judges 
that approximately 22 percent of children who would collect 
benefits under current law would be rendered ineligible.
    CBO estimates the savings in cash benefits relative to 
current law by multiplying the number of children assumed to 
lose benefits by the average benefit. That average benefit was 
about $430 a month in December 1995 and--because it is indexed 
to inflation--would grow to an estimated $528 in 2002. New 
awards would be affected immediately. Children already on the 
rolls would be reviewed under the new criteria within 1 year of 
enactment. Total savings in cash benefits would equal $0.1 
billion in 1997 and $2 billion in 2002.
    The proposed cutbacks in children's SSI benefits would 
affect spending in two other Federal programs. Food stamp 
outlays would automatically increase to replace a portion of 
the cash income lost by the children's families. The extra food 
stamp costs exceed $.2 billion a year after 1998. Under current 
law, eligibility for SSI benefits generally confers eligibility 
for Medicaid as well. Once the reviews of children currently on 
the SSI rolls are finished, CBO estimates savings in Medicaid 
of roughly $40 million to $60 million a year from the tighter 
SSI criteria. That amount is relatively small, because most of 
the children dropped from SSI would still qualify for Medicaid 
based on meeting AFDC criteria or because of their poverty 
status. No effects on the TANF Program are included in CBO's 
estimate. Under current law, about half of the disabled 
children losing SSI benefits would be likely to end up on the 
AFDC Program; but because that program would be abolished in 
title I and replaced by TANF, which is a fixed block grant to 
the States, no extra Federal spending would result.
    The bill would make several other changes to the SSI 
Program for disabled children. One would set the benefit at $30 
a month for children who are hospitalized and whose bill is 
partly or fully covered by private insurance. A similar 
provision already applies to SSI recipients who are 
hospitalized and whose care is covered by Medicaid. CBO assumes 
the proposal would trim benefits for about 10,000 children in a 
typical month, with savings of $55 to $70 million a year after 
1997. The bill would also make a number of changes in the 
responsibility of representative payees (people who administer 
benefits for children or other recipients who are incapable of 
managing funds). CBO does not estimate significant budgetary 
effects from any of those changes. The bill also mandates 
several studies of disability issues.
    SSA would face very heavy one-time costs for reviewing its 
current caseload of disabled children under the new, tighter 
criteria proposed in the bill. CBO estimates that SSA would 
have to collect detailed medical and functional information for 
300,000 to 400,000 disabled children on the rolls at enactment, 
at a total cost of about $300 million. In addition, under 
restrictions proposed in title IV, SSA would have to review the 
continued eligibility of about 1.4 million recipients who are 
recorded as aliens or whose citizenship is unknown. Most of the 
cost would be incurred in 1997 and early 1998. For that reason, 
the bill allows an adjustment to the discretionary spending 
caps in the Balanced Budget Act to cover SSA's one-time costs. 
Specifically, the caps will be increased by up to $150 million 
in 1997 and $100 million in 1998 if the Congress passes 
appropriations earmarked for these reviews. Because that total 
adjustment of $250 million hinges on future appropriation 
action, CBO does not include it as a cost in this bill.
    Prorated benefits in month of application.--More than 
800,000 people are newly awarded SSI benefits every year. Under 
current law, they eventually receive a prorated benefit for 
their month of application. A person who applied on the 15th of 
the month, for example, could receive 2 weeks of benefits for 
that month. (The typical applicant does not get that money 
immediately, because it may take several months for SSA to 
process his or her application.) The bill proposes instead to 
compute benefits beginning on the first day of the month 
following the date of application. CBO estimated the savings by 
multiplying the annual volume of awards by an assumed loss of 2 
weeks' benefits for the average person affected. The provision 
would affect only applications filed after enactment, and 
savings would equal $150 million a year or more when it is 
fully effective.
    Installment payments of retroactive benefits.--Another 
provision of the bill would change the method for disbursing 
large amounts of retroactive benefits. Under current law, 
retroactive benefits--which occasionally amount to thousands of 
dollars, if the period they cover is a long one--are paid all 
at once. Under the bill, any retroactive payment that exceeded 
12 times the maximum monthly benefit--about $5,600, in 1996 
dollars--would be paid in installments at 6-month intervals, 
with each installment equaling up to 12 times the maximum 
benefit. Exemptions would be granted to recipients suffering 
from terminal illnesses or other special hardships. The vast 
majority of recipients would still get their retroactive 
benefits in a single check, but a minority (chiefly those whose 
awards were decided after long appeals) would get them in two 
or three installments. The proposal would save money 
principally in the first year. Based on the relatively small 
number of people who get very large retroactive payments, CBO 
estimated that about $200 million of payments would shift from 
1997 into 1998. Savings after that would be much smaller.
    Enforcement of restrictions on prisoners' benefits.--
Current law sets strict limits on payment of SSI benefits to 
incarcerated people, and somewhat milder limits on such 
payments in the Old-Age, Survivors, and Disability Insurance 
(OASDI) Program. SSI recipients who are in prison for a full 
month--regardless of whether they are convicted--are to have 
their benefits suspended. OASDI recipients who have been 
convicted of an offense carrying a maximum sentence of 1 year 
or more are to have their benefits suspended. Those who are 
convicted of lesser crimes, and those who are in jail while 
awaiting trial, may still collect OASDI benefits. Currently, 
those provisions are enforced chiefly by an exchange of 
computerized data between the Social Security Administration 
and the Federal Bureau of Prisons, State prisons, and some 
county jails. According to SSA's Office of the Inspector 
General, agreements now cover roughly 73 percent of inmates--
all Federal and State prisoners but only about 15 percent of 
county prisoners. Those agreements are voluntary and involve no 
payments to the institutions.
    This bill proposes to compensate correctional institutions 
that provide data to SSA. It proposes to provide correctional 
institutions $400 if they report information to SSA that leads 
to identification of an ineligible SSI recipient within 30 days 
of incarceration, and $200 if they report within 30 to 90 days.
    Information on prisoners who collect benefits is poor. 
Inmates may know or suspect that their benefits are illegal and 
thus hide them, and may misreport such crucial identifying 
information as Social Security numbers. For its estimate, CBO 
assumes that between 4 and 5 percent of inmates are collecting 
OASDI or SSI when they enter prison. That figure appears in a 
Justice Department survey of prisoners in 1991 and in a recent 
report by SSA's Office of Inspector General. CBO assumes that 
the recipient population consists roughly half-and-half of 
OASDI and SSI recipients. At any one time, about 70 percent of 
prisoners are in State or Federal prisons and the rest in 
county jails, where spells of incarceration are much shorter 
and turnover rates are very high.
    The proposal would have two principal budgetary effects. 
First, the payments to prison officials would spark greater 
participation in matching agreements. CBO assumed that State 
prison officials--who now often let matching agreements lapse 
for several months at renewal--would renew them more promptly, 
that a majority of counties would sign up, and that data would 
be submitted with a shorter lag. From a budgetary standpoint, 
those changes would lead to savings in benefit payments and 
offsetting costs for the payments to penal institutions. The 
bill proposes that payments be made only to those institutions 
that assist in tagging ineligible SSI recipients. Nevertheless, 
in the course of matching Social Security numbers and other 
identifying information, SSA would find that some of the 
inmates collect OASDI. Therefore, benefit savings in both 
Programs--SSI and OASDI--would result. Second, the proposal 
would add to the workload of SSA. Even if data are submitted 
electronically, SSA must follow up manually when it appears 
that an inmate may be receiving benefits. In many cases, SSA 
may find that the Social Security number is inaccurate or the 
inmate has already left the jail, leading to little or no 
saving in benefits from that particular investigation.
    Because these provisions would first apply to prisoners 
whose periods of incarceration begin 7 months after enactment, 
CBO assumed that the provision would yield little benefit 
savings in fiscal year 1997. Thereafter, benefit savings would 
take another year or two to be fully realized as word spread 
among State and local correctional officials and as they became 
more attuned to the specific information (such as accurate 
Social Security numbers) they would need to provide. CBO 
assumes that SSA would start making payments (averaging $300) 
fairly soon to jurisdictions that already have matching 
agreements, and later to new jurisdictions that sign up. Over 
the 1997-2002 period, benefit savings are expected by CBO to 
equal $130 million and payments to jurisdictions to cost $30 
million, for a net savings of $100 million; the OASDI component 
of the benefit savings is $85 million. SSA's extra 
administrative costs--which, in contrast to those two items, 
would require Congressional appropriation--are estimated at $70 
million.

                  Title III: Child Support Enforcement

    Title III would change many aspects of the operation and 
financing of the Federal and State child support enforcement 
system. CBO estimates that relative to current law these 
changes would cost $25 million in fiscal year 1997 and $74 
million in 2002 (see table 3). The key provisions of title III 
would mandate the use of new enforcement techniques with a 
potential to increase collections, eliminate a current $50 
payment to welfare recipients for whom child support is 
collected, allow former public assistance recipients to keep a 
greater share of their child support collections, and authorize 
new spending on automated systems.
    New enforcement techniques.--Based on reports on the 
performance of various enforcement strategies at the State 
level, CBO estimates that child support collections received 
for families on cash assistance in 2002 would increase under 
the bill by roughly 18 percent over current projections (from 
$3.6 billion to $4.2 billion). Most of the improvement would 
result from the creation of a new-hire registry (designed to 
speed the receipt of earnings information on noncustodial 
parents) and provisions that would expedite the process by 
which States seize the assets of noncustodial parents who are 
delinquent in their child support payments. Some States have 
already applied the proposed enforcement techniques, thereby 
reducing the potential for improving collections further. CBO 
projects that the additional collections would result in 
savings of roughly $320 million in 2002 to the Federal 
Government through shared child support collections, as well as 
reduced spending in food stamps and Medicaid.
    Lost AFDC collections due to reduced cases funded by the 
block grant.-Similar to current law, the bill would require 
that States share with the Federal Government child support 
collected on behalf of families who receive cash assistance 
through the Temporary Assistance for Needy Families block 
grant. CBO assumes that by 2002, 20 percent of States would 
significantly reduce the number of families served under the 
block grant. CBO estimates that this reduction would reduce the 
Federal share of child support collections by $224 million in 
2002. States that reduce the number of families served under 
the block grant may still provide benefits to those families 
using their own resources.
    Elimination of the $50 passthrough.--Additional Federal 
savings would be generated by eliminating the current $50 
passthrough. Under current law, amounts up to the first $50 in 
monthly child support collected are paid to the family 
receiving cash assistance without affecting the level of the 
welfare benefit. Thus, families for whom noncustodial parents 
contribute child support get as much as $50 more a month than 
do otherwise identical families for whom such contributions are 
not made. Under current law, eight States pay families on 
public assistance on whose behalf the State receives child 
support payments a supplemental payment (``gap payment'') based 
on the amount of the support collected and a standard of need. 
The proposal would give these States the option of continuing 
to provide these additional benefits to families. CBO assumes 
States providing half of the supplemental payments would 
exercise the option. Eliminating the $50 child support 
passthrough beginning in 1997 while excluding gap payments from 
the new rules would save the Federal Government between $100 
million and $165 million annually.
    Distribution of additional child support to former AFDC 
recipients.--The provision would require States to share more 
child support collections with former recipients of public 
assistance, reducing Federal and State recoupment of prior 
benefit payments. When someone ceases to receive public 
assistance, States continue to collect and enforce the family's 
child support order. All amounts of child support collected on 
time are sent directly to the family. If a State collects past-
due child support, however, it may either send the amount to 
the family or use the collection to reimburse itself and the 
Federal Government for past AFDC payments. The proposal would 
require States to send a larger share of arrearage collections 
to families. The new distribution rules would phase in starting 
in 1998, and States would have the option of applying the new 
distribution rules earlier. CBO estimates that this provision 
would cost the Federal Government $51 million in 1998 and $150 
million in 2002.
    Hold States harmless for lower child support collections.--
A hold-harmless provision guarantees each State that its share 
of child support collections will not fall below the amount it 
retained in 1995. In general, CBO estimates that States would 
experience increases in child support collections as a result 
of this bill. The new distribution rule that allows former AFDC 
families to keep more support is the only provision that would 
reduce the States' share of support collections. However, the 
States' share of collections is based on the collections on 
behalf of families that receive assistance through the TANF 
block grant. A State that has significantly fewer families 
served under the block grant than were served under the AFDC 
Program may experience lower collections. CBO assumes that 20 
percent of States would make caseload reductions significant 
enough to trigger the hold-harmless provision, at a Federal 
cost of $29 million in 2002. States that reduce the number of 
families served under the block grant may still provide 
benefits to those families using their own resources.
    Optional modification of support orders.--Under current 
law, a State is required to review the child support orders of 
recipients of public assistance every 3 years. If a review 
shows a significant change in the financial circumstances of a 
parent, the child support order is adjusted accordingly. 
Evaluations of pilot programs testing similar review and 
modification procedures found that such reviews raised both the 
average amounts of support orders and the average payments 
received. This bill makes review and modification a State 
option unless the family requests such a review. CBO assumes 
that 40 percent fewer reviews would be performed, resulting in 
an administrative savings of $5 million in 1997 and a cost, 
reflecting lower collections due to lower amounts of support 
orders, of $20 million by 2002.
    Additional provisions with budgetary implications.--The 
bill would also increase Federal spending on several other 
activities including development, operation, and maintenance of 
automated data processing, technical assistance to States, 
reviews and audits, and grants to States for visitation. 
Federal spending for these other provisions would total $156 
million in fiscal year 2002 and $1.2 billion over the 1997-2002 
period.

                         Title IV: Noncitizens

    Title IV would limit the eligibility of legal aliens for 
public assistance programs. It would explicitly make most 
immigrants ineligible for SSI and food stamp benefits. 
Significant savings would also be realized in two other 
programs--Medicaid and the earned income credit. Overall, the 
provisions of title IV are estimated to reduce the deficit by 
$1.2 billion in 1997 and by $5.1 billion in 2002 (see table 4).
    Supplemental security income.--In general, legal aliens are 
now eligible for SSI and other benefits administered by the 
Federal Government. Few aliens, other than refugees, collect 
SSI during their first few years in the United States, because 
administrators must deem a portion of a sponsor's income to the 
alien during that period when determining the alien's 
eligibility. The bill would eliminate SSI benefits altogether 
for most legal aliens. Exceptions would be made for groups that 
together make up about one-quarter of aliens on the SSI rolls: 
refugees who have been in the country for less than 5 years, 
aliens who have a solid work history in the United States (as 
evidenced by 40 or more quarters of employment covered by 
Social Security), and veterans or active-duty members of the 
U.S. military. All other legal aliens now on SSI would be 
reviewed within 1 year and removed from the rolls.
    CBO bases its estimate of savings on administrative records 
for the SSI Program. Those data suggested that there were about 
785,000 noncitizen beneficiaries in December 1995, or 13 
percent of all recipients of Federal SSI payments in that 
month, and that their numbers might be expected to climb in the 
absence of a change in policy. Those records, though, are of 
uncertain quality. They rarely reflect changes in citizenship 
status (such as naturalization) that may have occurred since 
the recipient first began collecting benefits. It has not been 
important for government agencies to keep citizenship status up 
to date so long as they have verified that the recipient is 
legally eligible. That problem is thought to be common to all 
programs but particularly acute for SSI, where some 
beneficiaries identified as aliens have been on the rolls for 
many years. Recognizing this problem, CBO assumes that 15 
percent of SSI beneficiaries recorded as aliens are in fact 
naturalized citizens.
    CBO estimates the number of noncitizen recipients who would 
be removed from the SSI rolls by projecting the future caseload 
in the absence of policy change and subtracting the groups 
(chiefly certain refugees and Social Security recipients) 
exempted under the bill. CBO then assumes that some of the 
remainder will be spurred to become naturalized. The rest, 
estimated by CBO at approximately one-half million legal 
aliens, would be cut from the SSI rolls. Multiplying by the 
average benefits paid to such aliens--assumed to equal nearly 
$400 a month in 1997, with subsequent cost-of-living 
adjustments--yields annual Federal budgetary savings of between 
$2 billion and $3 billion 1 year after 1997.
    These estimates, and other CBO estimates concerning legal 
aliens, are rife with uncertainties. First, administrative data 
in all programs are of uncertain quality. Citizenship status is 
not recorded at all for about 8 percent of SSI recipients, 
and--as previously noted--some persons coded as aliens are 
certainly naturalized citizens by now. Second, it is hard to 
judge how many more noncitizens would react to the legislation 
by becoming citizens. At least 80 percent of legal aliens now 
on the SSI rolls are eligible to become citizens; the fact that 
they have not been naturalized may be attributable, in part, to 
the lack of a strong financial incentive. After all, legal 
immigrants are not now barred from most jobs, from eligibility 
for benefits, or from most other privileges except voting. 
Because the naturalization process takes time and effort, CBO 
assumes that only about one-third of those whose benefits would 
otherwise be eliminated will become citizens by the year 2000.
    Food stamps.--The bill proposes the same curbs on food 
stamp payments to legal aliens as on SSI. Therefore, aliens 
could not receive food stamps unless they fell in one of the 
exempted groups--chiefly refugees who have been here for less 
than 5 years or aliens with substantial work (defined as 40 
quarters) in the United States.
    CBO assumes that, under current policies, the number of 
legal aliens receiving food stamp benefits would climb 
gradually from about 1.8 million now to 2 million in 2002. 
Around 800,000 would fall in one of the exempt categories. The 
rest would lose benefits unless they became naturalized. Again, 
CBO assumed that some of the aliens targeted for the cutoff 
would be spurred to become citizens. Savings of about $0.6 
billion to $0.7 billion 1 year after 1997 would result.
    Medicaid.--Unlike SSI and food stamps, the bill does not 
call for a mass cutoff of aliens from the Medicaid Program. 
Instead, it calls for tight restrictions on the eligibility of 
future immigrants for Medicaid for at least their first 5 years 
in the United States, but it leaves the coverage of most aliens 
already here to the option of the States.
    The bill forbids States to provide regular Medicaid 
coverage to future entrants (except refugees) for their first 5 
years. New deeming requirements in all means-tested programs 
would bar most future immigrants with financial sponsors from 
Medicaid for even longer--until they work for 40 quarters or 
until they are naturalized. Medicaid coverage for aliens 
currently residing in the United States would be at the States' 
option. CBO assumes that States would continue to cover many of 
these immigrants, because they would otherwise lose Federal 
Medicaid matching dollars for their care. The bill preserves 
Medicaid coverage for emergency medical services for all legal 
immigrants.
    A number of legal immigrants currently residing in the 
United States would lose Medicaid under the bill because they 
have been eliminated from receiving SSI cash benefits and 
cannot qualify for Medicaid under any other eligibility 
category. However, CBO assumed that most disabled and about 
half of the aged would retain Medicaid under State medically 
needy programs. In total, CBO assumed that nearly 300,000 
aliens would lose their eligibility for Medicaid in 1998 (when 
the reviews of aliens on the SSI Program have been completed) 
and that the number would more than double by 2002. CBO 
estimated the resulting savings by multiplying the number of 
people losing benefits times the assumed average benefit times 
the Federal share. That per-capita Federal cost is assumed to 
be more than $5,000 in 2002 for an average aged or disabled 
alien, and between $1,000 and $2,000 for a child or a 
nondisabled adult. CBO reduced the resulting savings by one-
third, because the bill explicitly continues coverage for 
emergency medical care for legal aliens and because other 
services for aliens may be covered through increases in 
Medicaid's payments for uncompensated care. Total savings in 
Federal Medicaid costs are estimated at $0.1 billion in 1997 
and $1.5 billion in 2002.
    Other direct spending programs.--The foster care program, 
student loans for postsecondary students, and the child 
nutrition program would be exempt from any of the restrictions 
on benefits to legal aliens. title IV is silent on the 
eligibility for child nutrition programs of schoolchildren who 
are illegal aliens. However, another provision of the bill--
section 742 in title VII--specifically States that the school 
breakfast and school lunch programs shall continue to 
administered without regard to students' immigration or 
citizenship status. Therefore, CBO estimates no savings from 
restrictions on aliens' eligibility in any of these programs.
    Earned income credit.--The bill would deny eligibility for 
the earned income credit (EIC) to workers who are not 
authorized to be employed in the United States. In practice, 
that provision would require valid Social Security numbers 
(SSNs) to be filed for the primary and secondary taxpayers on 
returns that claim the EIC, and would permit the Internal 
Revenue Service to apply the streamlined rules it already uses 
for mathematical or clerical errors to claims that lack valid 
SSNs. A similar provision was contained in President Clinton's 
1997 budget proposal and in last fall's reconciliation bill. 
The Joint Committee on Taxation (JCT) estimates that the 
provision would reduce the deficit by approximately $0.3 
billion a year.

                       Title V: Child Protection

    Title V would extend the enhanced match for the purchase of 
computer equipment for foster care data collection systems. 
Under current law, the Federal match for these types of 
purchases is 75 percent through the end of fiscal year 1996 and 
will decrease to 50 percent beginning in fiscal year 1997. This 
provision would continue the 75-percent match for one more year 
through the end of fiscal year 1997. CBO estimates that this 
change would increase budget authority by $80 million in fiscal 
year 1997 and outlays by $66 million in 1997 and $14 million in 
1998 (see table 5). This estimate was developed in consultation 
with analysts at the Department of Health and Human Services 
and is based on States' estimates of their expenditures under 
current law and expectations of increased spending if the 
higher match rate were extended.
    title V would also appropriate $6 million a year for fiscal 
years 1996 through 2002 for a national random sample study of 
child welfare, increasing direct spending by $37 million over 
that period. The study would be conducted by the Secretary of 
Health and Human Services and would track abused or neglected 
children as they move through States' child welfare systems.

                          Title VI: Child Care

    Title VI would create a new mandatory block grant to States 
for the provision of child care to low-income people. 
Individual States would be entitled to the amount they received 
for AFDC Work-Related Child Care, Transitional Child Care, and 
At-Risk Child Care in 1994, 1995, or the average of 1992-94, 
whichever is greatest. States that maintain the higher of their 
1994 or 1995 spending on these programs would be able to draw 
down an additional amount at the Medicaid match rate. Further, 
the title would allow funds to be redistributed to States that 
have higher child care needs.
    The budget authority for this block grant, as Stated in the 
bill, would be $1.967 billion in fiscal year 1997 and would 
total $13.9 billion over the 1997-2002 period. CBO estimates 
that States would not draw down all of this money and that 
outlays for the 1997-2002 period would be $12.8 billion (see 
table 6). CBO assumes that the block grant would not be 
completely drawn down for several reasons. The block grant 
levels are over $4 billion, or nearly 50 percent, higher than 
what would be spent on the child care programs they are 
replacing. Discussions with State officials and national 
experts in the field, as well as an examination of how much 
States would be able to increase spending on working poor 
families, pointed to CBO's conclusion that States would not be 
able to use all of the child care money.
    The net impact of repealing current law child care programs 
(in title I) and creating a new block grant under this title 
would be to increase Federal outlays by $0.3 billion in 1997 
and $3.5 billion over the 1997-2002 period.

                  Title VII: Child Nutrition Programs

    CBO estimates that provisions in title VII that affect 
child nutrition programs would lower Federal outlays by $128 
million in fiscal year 1997, $670 million in fiscal year 2002, 
and $2.85 billion over the 1997-2002 period relative to current 
law (see table 7).
    Special assistance.--The bill would allow all schools that 
participate in the school lunch and breakfast programs under a 
provision that allows them to offer all meals free in exchange 
for collecting applications less frequently to participate for 
5 years at a time without a redetermination rather than 3 years 
at a time. Currently only schools that were participating at 
the time of the 1994 reauthorization of the programs can 
participate under these terms. CBO assumes that this change 
would make participation under such terms slightly more 
attractive to schools and would cost $1 million a year in each 
of fiscal years 1999 through 2002.
    Rounding rules.--The bill would also change the rounding 
rules for annual inflation adjustments in the reimbursement 
rates for meals served to children who pay full price in the 
school lunch and breakfast programs and the center component of 
the child and adult care food program. Under current law, the 
rates are rounded to the nearest quarter cent. Under the bill, 
the rates for paying children would be rounded down to the 
nearest whole cent. The change would be effective on July 1, 
1997. CBO estimates the provisions would lower Federal outlays 
for child nutrition programs by $1 million in 1997 and $15 
million in 2002.
    Summer food service program for children.--Section 706 
would reduce reimbursement rates for the summer food service 
program to $1.97 for lunches, $1.13 for breakfasts, and $0.46 
for supplements. These rates would be adjusted for inflation on 
January 1, 1997, and would first become effective in the summer 
of 1997. Rates would be rounded to the lower cent, rather than 
the nearest quarter cent, in the calculation of the annual 
adjustment for inflation. Under current law, CBO projects the 
summer 1997 rates would be $2.22 for lunches, $1.24 for 
breakfasts, and $0.58 for supplements. CBO estimates these 
provisions would save $19 million in 1997 and $39 million in 
2002.
    Child and adult care food program.--Section 708 would 
restructure the family day care home component of the child and 
adult care food program and would thereby save $80 million in 
1997 and $565 million in 2002. Currently, meals served in 
family day care homes all receive the same reimbursement rates: 
$1.575 for lunches, $0.8625 for breakfasts, and $0.470 for 
supplements, from July 1996 to June 1997. The bill would create 
two tiers of reimbursement rates. The first tier would apply to 
homes that are located in an area in which at least 50 percent 
of the children are from households whose incomes are below 130 
percent of poverty, or are operated by a provider whose 
household income is less than 130 percent of poverty. Rates for 
tier I homes would be the same as current law rates, except the 
rates would be rounded down each year to the lower cent, rather 
than to the nearest quarter cent. All other homes would receive 
a lower, tier II rate--$0.95 for lunch, $0.27 for breakfast, 
and $0.13 for supplements. These rates would be adjusted 
annually (beginning July 1, 1997) and rounded down to the lower 
cent. Homes in tier II would be able to claim the tier I rates 
for any children who are from families with incomes below 130 
percent of poverty. CBO estimates that 35 percent of meals 
would be reimbursed at the higher, tier I rates, and that 
somewhat fewer meals would be served in the program because of 
the reduction in rates for most meals. In addition, the bill 
would provide grants to States in 1997 for training and other 
assistance to sponsoring organizations and homes in 
implementing the new provisions.
    Section 708 would also limit to three the number of meals 
that can be reimbursed in a given day in eligible child care 
centers. CBO estimates savings of $10 million in 1997 and $20 
million in 2002 from this change.
    In total, CBO estimates savings of $90 million in 1997 and 
$585 million in 2002 from changes in the child and adult care 
food program.
    School breakfast program authorization.--Section 723 of the 
bill would eliminate funding for school breakfast startup 
grants under the Child Nutrition Act starting in fiscal year 
1997. Startup grants are currently funded at $5 million a year 
through fiscal year 1997, $6 million in fiscal year 1998, and 
$7 million in fiscal year 1999. Funds are to be used for 
assisting schools and other institutions in initiating and 
expanding school breakfast programs and summer food service 
programs. In addition, CBO estimates that repealing the money 
for startup grants would result in fewer meals served over the 
period. The savings from fewer meals would be $3 million in 
1997 and $22 million in 2002.
    Nutrition education and training.--Section 731 would shift 
funding for nutrition education and training to be a 
discretionary appropriation rather than mandatory spending. CBO 
estimates $10 million each year in direct spending savings 
starting in fiscal year 1997.
    Noncitizens served in child nutrition programs.--Section 
742 provides that if an individual is eligible to receive 
public education in a State, assistance under the National 
School Lunch Act and the Child Nutrition Act shall not be 
contingent on citizenship or immigration status. This section 
conflicts with a general provision in title IV of the bill 
which could eliminate eligibility for means-tested child 
nutrition programs for undocumented noncitizens. CBO estimates 
that there would be no savings from the provision of title IV 
because this provision would supersede it.

           Title VIII: Food Stamps and Commodity Distribution

    CBO estimates that changes to food stamps in title VIII of 
the bill would reduce Federal outlays by $1.8 billion in 1997, 
$5.0 billion in 2002, and $23.1 billion over the 1997-2002 
period relative to current law (see table 8). The following 
paragraphs describe the savings attributable to specific 
provisions.
    Treatment of children living at home.--Under current law, 
members of households who purchase food and prepare meals 
together must generally participate in the program as part of 
the same food stamp unit. In addition, certain people, such as 
spouses who live together, are required to participate in the 
same unit. The bill would change the definition of household by 
removing the exception in current law that allows persons age 
21 and under who are themselves parents or married, and who 
live with a parent, to participates a separate household. This 
change would lower food stamp benefits because income and 
resources of the household members who are not now in the food 
stamp unit would be counted. CBO estimates that the change 
would affect about 150,000 current food stamp households and 
would reduce food stamp outlays by $115 million in 1997 and 
$290 million in 2002.
    Adjustment of thrifty food plan.--Section 804 of the bill 
would reduce the maximum food stamp benefit relative to current 
law. Under current law, maximum benefits are set each October 
at 103 percent of the cost of the thrifty food plan--a specific 
low-cost diet for a family of four. For fiscal year 1996, 
maximum benefits are $397 a month for a family of four. The 
bill would set maximum benefits at 100 percent of the thrifty 
food plan beginning with the October 1996 adjustment, but would 
not allow the nominal maximum benefit to decline from fiscal 
year 1996 to fiscal year 1997. The change would lower average 
food stamp benefits (compared with current law) by about $3 per 
person a month in 1997. CBO estimates that food stamp outlays 
would decrease by $935 million in 1997 and $1.2 billion in 2002 
as a result of this change.
    Earnings of older students.--Under current law, earned 
income of household members who are elementary or secondary 
school students and are 21 years old or younger is disregarded 
in the consideration of income for food stamps. Section 807 
would lower the cutoff to age 17. CBO estimates that this 
change would lower spending for food stamps by $10 million in 
fiscal year 1997 and $15 million in 2002.
    Energy assistance.--Under this legislation, energy 
assistance from nonFederal sources would be counted as income 
in determining food stamp benefits; currently, no energy 
assistance is counted as income. A handful of States currently 
provide part of their AFDC or General Assistance benefit as a 
separate energy assistance payment, which is disregarded in the 
calculation of food stamp benefits. CBO estimates that a $1 
increase in countable income to a food stamp household results 
in about a 30-cent reduction in food stamp benefits. In the 9 
States that currently make separate energy assistance payments, 
the payments range from about $15 a month to $120 a month. CBO 
estimates that counting these State energy assistance payments 
as income would save $125 million in food stamp benefits in 
1997 and $180 million in 2002.
    Deductions from income.--Section 809 of the bill would set 
the standard deduction in most States at $134 for fiscal year 
1997 and later years. Under current law, the standard deduction 
is to be adjusted annually to reflect changes in the Consumer 
Price Index (CPI). CBO estimates that the level of the standard 
deduction would be $8 below current law in fiscal year 1997 and 
$30 below current law in 2002. The corresponding savings from 
the reduction in the standard deduction would be $345 million 
in 1997, rising to $1.5 billion in 2002. This amount 
corresponds to an average decrease in monthly benefits, 
relative to current law, of $1 per person in 1997 and about $4 
per person by 2002.
    The 1997 Agriculture Appropriations Act froze the standard 
deduction in food stamps for fiscal year 1997 at $134, the same 
level as is set by this bill. Because that bill passed both 
houses of Congress before the Personal Responsibility and Work 
Opportunity Reconciliation Act, CBO does not include any 
savings for fiscal year 1997 from the freeze of the standard 
deduction in its estimate of this bill.
    Section 809 would also retain the cap on the excess shelter 
expense deduction. In determining food stamp benefits, shelter 
costs are deducted to the extent that they exceed 50 percent of 
net income after all other deductions. Under current law the 
excess shelter deduction is capped at $247 through December 
1996, when the cap expires. This bill would extend the cap at 
$250 for the remainder of fiscal year 1997 and fiscal year 
1998, $275 for fiscal years 1999 and 2000, and $300 for each 
later fiscal year. CBO estimates savings of $350 million in 
fiscal year 1997 and $500 to $550 million in each later year 
from this change.
    The bill would allow States to require the use of a 
standard utility allowance for determining utility costs 
counted toward the shelter deduction, rather than allowing 
recipients to use actual utility costs, if higher, as under 
current law. In States that do not require the use of a 
standard utility allowance, households would be allowed to 
change between the standard utility allowance and actual costs 
only at recertification, rather than at one additional time 
during a certification period. CBO estimates that States 
representing half of total food stamp outlays would choose to 
adopt a mandatory standard utility allowance. These provisions 
would lower food stamp outlays by $35 million in 1997 and $85 
million in 2002.
    The bill also would require States to establish a standard 
homeless shelter deduction of $143 or less per month for 
homeless households that do not receive free shelter throughout 
the month. Currently, homeless households claim a standard 
shelter expense amount set by the State, or actual shelter 
expenses, if higher. CBO estimates that the provision would 
save $5 million a year by 2002.
    Vehicle allowance.--Section 810 would freeze the vehicle 
allowance at $4,650 for fiscal years beginning with fiscal year 
1997. Under current law, the fair market value of vehicles is 
counted as an asset in determining food stamp eligibility when 
the value is more than $4,600. This figure is scheduled to 
increase to an estimated $5,150 for fiscal year 1997 and to 
increase in each succeeding year for inflation. CBO estimates 
that freezing the vehicle allowance at $4,650 would reduce food 
stamp outlays by $45 million in 1997 and $245 million in 2002.
    Vendor payments for transitional housing counted as 
income.--Housing assistance payments made to a third party on 
behalf of a household that resides in transitional housing for 
the homeless are not now counted as income. Section 811 would 
delete this exclusion. CBO estimates savings of $10 million a 
year as a result of the change.
    Disqualification, comparable treatment for 
disqualification, permanent disqualification for participating 
in two or more States, and failure to comply with other welfare 
and public assistance programs.--Four sections of the bill 
would change the penalties associated with noncompliance with 
public assistance requirements. Section 815 would increase the 
penalties and revise sanctions for individuals and households 
that fail to comply with work rules. CBO estimates the longer 
periods of disqualification for people found to have not 
complied with work requirements would save $5 million a year.
    Section 819 would allow States to disqualify an individual 
from food stamps if the individual is disqualified from another 
public assistance program for failing to perform a required 
action under that program. For example, if an individual is 
disqualified from AFDC for failure to have a child immunized 
under a State's welfare reform initiative, the individual could 
also be disqualified from food stamps. CBO estimates that this 
provision would save $20 million a year from 1997 through 2001 
and $25 million in 2002.
    Section 820 would permanently disqualify from food stamps 
any individual who is found to have participated fraudulently 
in the Food Stamp Program simultaneously in two or more States. 
Under current law, an individual is disqualified from food 
stamps permanently only after the third violation and faces 
periods of ineligibility for the first and second violation. 
CBO estimates that the provision would save approximately $5 
million a year.
    Section 829 would prohibit food stamp benefits from 
increasing if benefits are reduced under another public 
assistance program for the failure to perform an action 
required under that program. In addition, the State agency 
could reduce the food stamp allotment by up to 25 percent. CBO 
estimates the provision would save $25 million a year.
    Employment and training.--The 1996 farm bill (Public Law 
104-127) provided funding for grants to States for food stamp 
employment and training at $75 million for each fiscal year 
through 2002. Section 817 would fund the program at higher 
levels in each fiscal year. CBO estimates costs of $2 million 
in fiscal year 1997 and $15 million in 2002 from the change.
    Food stamp eligibility.--Under current law, if a household 
has a member who is not eligible for food stamps on the basis 
of his or her citizenship status, the income of that person is 
prorated, and only a portion of it is counted toward the food 
stamp benefit. Section 818 would give States the option to 
count all of the ineligible person's income. CBO assumes that 
one-quarter of the States would elect this option and that food 
stamp spending would be lowered by $15 million in 1997 and $27 
million in 2002.
    Cooperation with child support agencies.--Two sections of 
the bill would address the relationship between the child 
support enforcement system and individuals who receive food 
stamps. Section 822 would allow States to require custodial 
parents to cooperate in child support enforcement as a 
condition for food stamp eligibility. Requiring custodial 
parents to participate in child support enforcement affects 
only custodial parents who receive food stamps but not AFDC 
because AFDC recipients are already required to comply with 
child support enforcement. Based on a recent study published by 
the Food and Consumer Service, CBO estimates that the Food 
Stamp Program would save money because some recipients would 
receive more income from child support, a few additional people 
would choose not to participate in the program, and some 
participants would have their benefits reduced for 
noncompliance. Because of the administrative costs of finding 
noncustodial parents and obtaining and enforcing child support 
orders, much of the food stamp savings would be offset by costs 
in the child support enforcement system. These costs are shared 
by States and the Federal Government. In 2000, when the 
provision would be fully implemented, CBO estimates that States 
with 25 percent of the food stamp caseload would opt to 
implement the provision, outlays for food stamps would be $20 
million lower, and Federal outlays for child support 
enforcement would be $15 million higher.
    Section 823 would allow States to eliminate food stamp 
eligibility for noncustodial parents who are delinquent in 
payment of child support. CBO estimates that States with 50 
percent of the caseload would choose to deny food stamp 
eligibility to individuals in arrears on child support 
payments. This change would eliminate 25,000 people from the 
program and save $30 million annually by 2002.
    Work requirement.--Section 824 would limit receipt of food 
stamp benefits to a period of 3 months in any 36-month period 
for able-bodied individuals who do not have dependent children 
and who are not working or participating in an appropriate 
training or work activity. Based on the Food Stamp Quality 
Control (QC) data, the Survey of Income and Program 
Participation (SIPP), and studies of caseload dynamics, CBO 
estimates that approximately 1.1 million people would 
potentially be subject to disqualification in an average month.
    The bill allows for a number of waivers and exemptions from 
the 3-month restriction. First, if the Secretary of Agriculture 
determines that an area has an unemployment rate greater than 
10 percent or has insufficient jobs, the area could receive a 
waiver from the provision. CBO estimates that 2 percent of 
people who would otherwise be disqualified because of the 
provision would live in areas under a waiver. Second, an 
individual could reestablish eligibility for another 3-month 
period after a month of working or participating in an 
allowable employment or training program. CBO estimates that 
about 30,000 people in an average month would be in a 
subsequent period of eligibility within the 36-month period. 
Furthermore, CBO assumes that States would dedicate their food 
stamp employment and training efforts toward people who would 
otherwise be disqualified and would serve over 140,000 
individuals in an average month. After these exclusions, the 
provision would remove an estimated 800,000 individuals from 
the rolls in an average month in fiscal year 1998 and up to 1 
million individuals in an average month once the provision is 
implemented fully, resulting in savings of $160 million in food 
stamp benefits in 1997 and $1.1 billion in 2002.
    Minimum allotment.--Food stamp households with one or two 
persons who are eligible for less than $10 a month receive a 
minimum allotment of $10. This minimum allotment is currently 
adjusted each October to reflect the change in the cost of the 
thrifty food plan, with the result rounded to the nearest $5. 
Under CBO's economic forecast, the minimum benefit would rise 
to $15 in 1998. Section 826 would remove the inflation 
adjustment and keep the minimum benefit at $10. CBO estimates 
that retaining a $10 minimum benefit would save $30 million in 
each of fiscal years 1998 to 2000 and $35 million in 2001 and 
2002.
    Benefits on recertification.--Current law allows food stamp 
households that fail to complete recertification requirements 
in the last month of a certification period to receive full 
benefits in the following month if they are certified eligible 
by the end of the first month of the subsequent certification 
period. Section 827 would prorate benefits for the first month 
of the new certification period based on the date on which the 
household is determined to be eligible. CBO estimates this 
change would save $25 million a year in 1997 through 2000 and 
$30 million in 2001 and 2002.
    Income, eligibility, and immigration status verification 
systems.--Section 840 would grant States a greater degree of 
flexibility in the types of verification systems they use, 
resulting in $5 million a year in estimated savings.
    Collection of overissuances.--Section 844 would amend the 
procedures for collecting claims and would save money in four 
ways. First, CBO estimates savings of $5 million a year from 
mandating States to use the Internal Revenue Service tax offset 
procedures. Second, allowing States to recoup benefits to 
collect overpayments resulting from errors by State agencies 
would save another $5 million a year. Third, allowing for 
garnishing of Federal pay in instances of food stamp 
overissuance would save $1 million a year once it is fully 
implemented but $5 million in fiscal years 1998 and 1999 
because the provision would affect a backlog of overissuances.
    Fourth, the bill would change claims retention rates to 
allow States to retain 35 percent of all claims collected from 
overissuances due to fraud and 20 percent for other types of 
collections, except for collections from claims resulting from 
State agency error. Under this policy the Federal Government 
would receive a larger portion of claims collections and States 
would retain less. This change would result in additional 
estimated savings to the Federal Government of about $15 
million in 1997 through 2001 and $20 million in 2002.
    Limitation of Federal match for optional information 
activities.--Section 847 would end the Federal match of 
administrative funds spent on informational activities. Based 
on information from the Food and Consumer Service, CBO 
estimates that $2 million a year would otherwise be spent on 
these activities.
    Work supplementation or support program.--Section 849 would 
allow States to use the amount of food stamp benefits that 
would otherwise be provided to a household to subsidize 
employers in hiring and employing public assistance recipients 
for up to 1 year for any given recipient. CBO estimates that 
the Federal Government would incur additional costs from this 
provision, because research has demonstrated that persons 
participating in grant diversion programs receive public 
assistance for longer periods of time. Based on the interest of 
States in work supplementation programs in the JOBS Program, 
CBO assumes that about 20,000 additional people would 
participate in a work supplementation program in any given 
month once the provision is implemented fully. CBO estimates 
that food stamp outlays would be higher by $30 million in 2000, 
when the programs would be fully implemented.
    Employment initiatives program.--Section 852 would allow 
States where half or more of the food stamp households in the 
summer of 1993 were also AFDC recipients to pay benefits in 
cash to households that also receive benefits from AFDC or 
Temporary Assistance for Needy Families and have a member who 
is employed. Based on recent studies of cash-out 
demonstrations, CBO estimates that issuing food stamps as cash 
saves about $1 a month relative to coupon issuance. 
Furthermore, based on QC data, CBO estimates that 10 States 
would be eligible to participate based on the proportion of 
their caseload that was also receiving AFDC benefits in the 
summer of 1993, and that these States would have about 300,000 
households eligible for cash benefits under the policy. CBO 
anticipates that States with half of the households eligible 
for cash benefits would choose to provide benefits in cash, and 
that total savings would be $2 million a year once the 
provision is phased in.
    Simplified Food Stamp Program. Section 854 would give 
States the option of simplifying Food Stamp Program rules, 
within certain limits, for families that receive assistance 
under AFDC or TANF. The bill stipulates that the Secretary of 
Agriculture could approve a State plan for a simplified program 
only if the State documents that the plan would not increase 
Federal costs. CBO cannot determine how many States would apply 
to use simplified rules or what the Secretary's criteria for 
approving such plans would be. Because there is no mechanism 
for States to reimburse the Federal Government if costs are 
higher than under current rules, and because there is a lag 
between when such costs occur and when corrective action is 
taken, CBO estimates that the provision would entail some 
costs. CBO estimates higher food stamp outlays of $5 million in 
fiscal year 1998 and $25 million in fiscal year 2002.
    Emergency Food Assistance Program.--The Emergency Food 
Assistance Program is currently subject to annual 
appropriation. Section 871 of the bill would create an 
entitlement to States for their portion of the program and 
would fund it at $100 million a year.
    Interactions among provisions.--The estimates of individual 
provisions shown in table 8 do not reflect the effects of other 
provisions in the title. If the bill were enacted, total 
savings would be less than the sum of the estimates of 
individual provisions. For example, savings attributed to lower 
maximum benefits, a lower standard deduction, and the 
reinStatement of the cap on the excess shelter deduction--which 
are estimated based on food stamp participation under current 
law--would not be achieved for people who would lose their 
benefits because of the work requirements. CBO estimates that 
the interactions among overlapping provisions in title VIII 
would reduce savings relative to the sum of the independent 
estimates by $20 million in 1997 and $166 million in 2002.

                        Title IX: Miscellaneous

    This title of the bill includes reductions in the Social 
Services Block Grant and the earned income credit to achieve 
total budget savings (including the revenue effect) of $0.6 
billion in 1997 and $3.9 billion during the 1997-2002 period 
(see table 9).
    Reduction in Social Services Block Grant.--Under title XX 
of the Social Security Act, funds in the form of a block grant 
are made available to States for them to provide a variety of 
social services to low-income families and individuals. Among 
the services covered are home-based services (such as 
homemaker, home health, and home maintenance), day care for 
children and adults, special services for the disabled, social 
support, prevention and intervention services, family planning, 
as well as many other services. The Social Services Block Grant 
has a permanent authorization of $2.8 billion. title IX would 
reduce this amount by 15 percent, resulting in outlay savings 
of $375 million in 1997 and $2.5 billion over 6 years.
    Earned Income Credit.--The earned income credit (EIC) is a 
refundable tax credit directed toward low-income workers. The 
refundable portion of the credit has estimated outlays of $18.4 
billion in 1996. Under current law, income tax filers with two 
or more children are eligible for an EIC of 40 percent of 
earnings in 1996 with a maximum credit of $3,556. The credit is 
phased out based on the maximum of earnings or adjusted gross 
income over the range from $11,610 to $28,495. The maximum 
credit for a return with one child is $2,152, and it is phased 
out at incomes between $11,610 and $25,078. Finally, a maximum 
credit of $323 is available for filers without children and is 
phased out over the $5,280-$9,500 range. title IX contains two 
changes to the EIC.
    Section 909 would require that the EIC be denied in cases 
where the tax filer had disqualified income. Under current law, 
tax filers with more than $2,350 in taxable investment income 
are disqualified from the use of the EIC. The bill would lower 
the limit to $2,200 and would expand the definition of 
investment income to include positive capital gains and passive 
income. This change, which would be effective for tax years 
beginning after December 31, 1995, would reduce outlays by $170 
million in 1997 and $947 million over the 1997-2002 period. The 
corresponding revenue increases are $26 million and $151 
million, respectively.
    Section 910 would modify the definition of adjusted gross 
income (AGI) for the calculation of the EIC. Certain losses--
such as from nonbusiness rent and royalties, capital losses, 
and other business or investment losses--would not be allowed 
in modified AGI for the calculation of the EIC. Outlays for the 
refundable component of the EIC would be reduced by $98 million 
in 1997 and $704 million over 6 years. Revenues would be higher 
by $15 million in 1997 and by $128 million over the 1997-2002 
period.
    Because of interactions between the various EIC provisions, 
including those in title IV and title IX, the total estimated 
effects of the changes to the EIC differs from the sum of the 
individual estimates over 6 years.
    Abstinence Education.--Subtitle D of title IX would amend 
the Social Security Act to authorize grants to States for the 
purpose of providing abstinence education, which is defined as 
an educational or motivational program which ``has as its 
exclusive purpose, teaching the social, psychological, and 
health gains to be realized by abstaining from sexual 
activity.'' The bill would provide $50 million in budget 
authority for these activities in each of the fiscal years 1998 
through 2002. The funds would be distributed among the States 
according to the proportion of children in each State. CBO 
estimates that outlays of $18 million in 1998 and $203 million 
through 2002 would result.

                         SUMMARY TABLE I.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY                        
                                                  RECONCILIATION ACT OF 1996; As passed by the Congress                                                 
                                                         Assumes enactment by September 1, 1996                                                         
                                                        [By fiscal year, in millions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                 7-year 
                                                          1995       1996       1997       1998       1999       2000       2001       2002      total  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Projected Direct Spending Under Current Law:                                                                                                            
  Family Support Payments \1\........................    $18,086    $18,371    $18,805    $19,307    $19,935    $20,557    $21,245    $21,937           
  Food Stamp Program \2\.............................     25,554     26,220     28,094     29,702     31,092     32,476     33,847     35,283           
  Supplemental Security Income.......................     24,510     24,017     27,904     30,210     32,576     37,995     34,515     40,348           
  Medicaid...........................................     89,070     95,786    105,081    115,438    126,366    138,154    151,512    166,444           
  Child Nutrition \3\................................      7,899      8,428      8,898      9,450     10,012     10,580     11,166     11,767           
  Old-Age, Survivors and Disability Insurance........    333,273    348,186    365,403    383,402    402,351    422,412    444,081    466,767           
  Foster Care \4\....................................      3,282      3,840      4,285      4,687      5,083      5,506      5,960      6,433           
  Social Services Block Grant........................      2,797      2,880      3,010      3,050      3,000      2,920      2,870      2,840           
  Earned Income Credit...............................     15,244     18,440     20,191     20,894     21,691     22,586     23,412     24,157           
  Maternal and Child Health..........................          0          0          0          0          0          0          0          0           
                                                      --------------------------------------------------------------------------------------------------
        Total........................................    519,715    546,168    581,671    616,140    652,106    693,186    728,608    775,976           
                                                      ==================================================================================================
Proposed Changes:                                                                                                                                       
  Family Support Payments \1\........................          0          *        875        900        907        777        471       -131      3,800
  Food Stamp Program \2\.............................          0          *     -2,098     -3,949     -4,139     -4,209     -4,349     -4,583    -23,330
  Supplemental Security Income.......................          0          *       -793     -3,526     -4,280     -4,824     -4,344     -4,958    -22,725
  Medicaid...........................................          0          0        -38       -514       -567       -581       -948     -1,433     -4,082
  Child Nutrition \3\................................          0          *       -128       -403       -494       -553       -605       -670     -2,853
  Old-Age, Survivors and Disability Insurance........          0          0         -5        -10        -15        -15        -20        -20        -85
  Foster Care \4\....................................          0          *         68         25         16         31         41         51        232
  Social Services Block Grant........................          0          0       -375       -420       -420       -420       -420       -420     -2,475
  Earned Income Credit...............................          0          0       -445       -456       -463       -480       -493       -515     -2,852
  Maternal and Child Health..........................          0          0          0         18         35         50         50         50        203
                                                      --------------------------------------------------------------------------------------------------
        Total........................................          0          *     -2,939     -8,335     -9,419    -10,224    -10,618    -12,630    -54,167
                                                      ==================================================================================================
Revenues:                                                                                                                                               
  Earned Income Credit...............................          0          *         60         61         62         65         68         78        394
Net Deficit Effect...................................          0          *     -2,999     -8,396     -9,481    -10,289    -10,686    -12,708    -54,561
Projected Direct Spending Under Proposal:                                                                                                               
  Family Support Payments \1\........................     18,086     18,371     19,680     20,207     20,842     21,334     21,716     21,806           
  Food Stamp Program \2\.............................     25,554     26,220     25,996     25,753     26,953     28,267     29,498     30,700           
  Supplemental Security Income.......................     24,510     24,017     27,111     26,684     28,296     33,171     30,171     35,390           
  Medicaid...........................................     89,070     95,786    105,043    114,924    125,799    137,573    150,564    165,011           
  Child Nutrition \3\................................      7,899      8,428      8,770      9,047      9,518     10,027     10,561     11,097           
  Old-Age, Survivors and Disability Insurance........    333,273    348,186    365,398    383,392    402,336    422,397    444,061    466,747           
  Foster Care \4\....................................      3,282      3,840      4,353      4,712      5,099      5,537      6,001      6,484           
  Social Services Block Grant........................      2,797      2,880      2,635      2,630      2,580      2,500      2,450      2,420           
  Earned Income Credit...............................     15,244     18,440     19,746     20,438     21,228     22,106     22,919     23,642           
  Maternal and Child Health..........................          0          0          0         18         35         50         50         50           
                                                      ==================================================================================================
        Total........................................    519,715    546,168    578,732    607,805    642,686    682,962    717,991    763,347           
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Details may not add to totals because of rounding.                                                                                               
* Denotes less than $500,000.                                                                                                                           
\1\ Under current law, Family Support Payments includes spending on Aid to Families With Dependent Children (AFDC), AFDC-related child care,            
  administrative costs for child support enforcement, net Federal savings from child support collections, and the Job Opportunities and Basic Skills    
  Training Program (JOBS). Under proposed law, Family Support Payments would include spending on the Temporary Assistance for Needy Families Block      
  Grant, administrative costs for child support enforcement, the Child Care Block Grant, and net Federal savings from child support collections.        
\2\ Food Stamps includes Nutrition Assistance for Puerto Rico under both current law and proposed law, and the Emergency Food Assistance Program under  
  proposed law.                                                                                                                                         
\3\ Child Nutrition Programs refer to direct spending authorized by the National School Lunch Act and the Child Nutrition Act.                          
\4\ Under current law, Foster Care includes Foster Care, Adoption Assistance, Independent Living, and Family Preservation and Support. Under proposed   
  law, Foster Care includes these programs plus the National Random Sample Study of Child Welfare.                                                      


                             SUMMARY TABLE II.--FEDERAL BUDGET EFFECTS OF H.R. 3734,                            
                   THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996                  
                                            As passed by the Congress                                           
                                     Assumes enactment by September 1, 1996                                     
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                                         7-year 
                               1996     1997       1998       1999       2000       2001       2002      total  
----------------------------------------------------------------------------------------------------------------
Direct Spending:                                                                                                
Title I: Temporary                                                                                              
 Assistance For Needy                                                                                           
 Families Block Grant                                                                                           
    Budget Authority........    $10      $-212    $-1,125      $-989      $-837    $-1,109    $-1,839    $-6,100
    Outlays.................      *       -569       -937       -819       -667     -1,054     -1,814     -5,859
Title II: Supplemental                                                                                          
 Security Income                                                                                                
    Budget Authority........      *       -408     -1,031     -1,525     -1,869     -1,729     -2,048     -8,610
    Outlays.................      *       -408     -1,031     -1,525     -1,869     -1,729     -2,048     -8,610
Title III: Child Support                                                                                        
 Enforcement                                                                                                    
    Budget Authority........     88        -21        144        168        183        110         74        746
    Outlays.................      *         25        148        172        184        110         74        712
Title IV: Restricting                                                                                           
 Welfare And Public Benefits                                                                                    
 For Aliens                                                                                                     
    Budget Authority........      *     -1,174     -3,947     -4,311     -4,662     -4,525     -5,036    -23,655
    Outlays.................      *     -1,174     -3,947     -4,311     -4,662     -4,525     -5,036    -23,655
Title V: Child Protection                                                                                       
    Budget Authority........      6         86          6          6          6          6          6        122
    Outlays.................      *         68         25          6          6          6          6        117
Title VI: Child Care                                                                                            
    Budget Authority........      *      1,967      2,067      2,167      2,367      2,567      2,717     13,852
    Outlays.................      *      1,635      1,975      2,082      2,227      2,377      2,482     12,778
Title VII: Child Nutrition                                                                                      
 Programs                                                                                                       
    Budget Authority........      *       -151       -449       -505       -563       -615       -680     -2,963
    Outlays.................      *       -128       -403       -494       -553       -605       -670     -2,853
Title VIII: Food Stamps And                                                                                     
 Commodity Distribution                                                                                         
    Budget Authority........      *     -1,792     -3,539     -3,918     -4,282     -4,580     -4,990    -23,103
    Outlays.................      *     -1,792     -3,539     -3,918     -4,282     -4,580     -4,990    -23,103
Title IX: Miscellaneous                                                                                         
    Budget Authority........      0       -641       -594       -597       -608       -618       -634     -3,692
    Outlays.................      0       -596       -626       -612       -608       -618       -634     -3,694
                             ===================================================================================
Total, Direct Spending                                                                                          
    Budget Authority........    104     -2,346     -8,468     -9,504    -10,265    -10,493    -12,430    -53,403
    Outlays.................      *     -2,939     -8,335     -9,420    -10,223    -10,618    -12,630   -54,167 
----------------------------------------------------------------------------------------------------------------
* Denotes less than $500.000.                                                                                   


               TABLE 1.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996               
                                 TITLE I--TEMPORARY ASSISTANCE FOR NEEDY FAMILIES BLOCK GRANT; As Passed by the Congress                                
                                                       Assumed to be enacted by September 1, 1996                                                       
                                                        [By fiscal year, in millions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         1996        1997        1998        1999        2000        2001        2002      7-year total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Spending:                                                                                                                                        
Repeal AFDC, Emergency Assistance, and JOBS                                                                                                             
  Family Support Payments                                                                                                                               
    Budget Authority................................           *     $-8,021    $-16,550    $-17,003    $-17,439    $-17,893    $-18,342        $-95,247
    Outlays.........................................           *      -7,925     -16,510     -16,973     -17,409     -17,863     -18,322         -95,001
Repeal of Child Care Programs \1\                                                                                                                       
  Family Support Payments                                                                                                                               
    Budget Authority................................           0      -1,405      -1,480      -1,540      -1,595      -1,655      -1,715          -9,390
    Outlays.........................................           0      -1,345      -1,475      -1,535      -1,590      -1,650      -1,710          -9,305
Authorize Temporary Family Assistance Block Grant                                                                                                       
 \1\                                                                                                                                                    
  Family Support Payments                                                                                                                               
    Budget Authority................................           *       8,368      16,389      16,389      16,389      16,389      16,389          90,314
    Outlays.........................................           *       8,300      16,389      16,389      16,389      16,389      16,389          90,246
Supplemental Grants related to Population Growth and                                                                                                    
 Poverty Level                                                                                                                                          
  Family Support Payments                                                                                                                               
    Budget Authority................................           0           0          87         174         261         278           0             800
    Outlays.........................................           0           0          87         174         261         278           0             800
  Food Stamp Program                                                                                                                                    
    Budget Authority................................           0           0          -5         -10         -15         -15           0             -45
    Outlays.........................................           0           0          -5         -10         -15         -15           0             -45
Grants to States that Reduce Out-of-Wedlock Births                                                                                                      
  Family Support Payments                                                                                                                               
    Budget Authority................................           0           0           0          50          50          50          50             200
    Outlays.........................................           0           0           0          50          50          50          50             200
Bonus to Reward High Performance States                                                                                                                 
  Family Support Payments                                                                                                                               
    Budget Authority................................           0           0           0         200         200         200         200             800
    Outlays.........................................           0           0           0         200         200         200         200             800
Contingency Fund \3\                                                                                                                                    
  Family Support Payments                                                                                                                               
    Budget Authority................................           0         107         210         313         393         473         565           2,061
    Outlays.........................................           0         107         210         313         393         473         565           2,061
  Food Stamp Program                                                                                                                                    
    Budget Authority................................           0          -5         -15         -20         -25         -30         -35            -130
    Outlays.........................................           0          -5         -15         -20         -25         -30         -35            -130
Loans to States for Welfare Programs                                                                                                                    
  Family Support Payments                                                                                                                               
    Budget Authority................................           0           0           0           0           0           0           0               0
    Outlays.........................................           0           0           0           0           0           0           0               0
Study by the Bureau of the Census                                                                                                                       
  Family Support Payments                                                                                                                               
    Budget Authority................................         $10          10          10          10          10          10          10              70
    Outlays.........................................           *           4          18          10          10          10          10              62
Research, Evaluations, and National Studies                                                                                                             
  Family Support Payments                                                                                                                               
    Budget Authority................................           0          15          15          15          15          15          15              90
    Outlays.........................................           0           3          15          15          15          15          15              78
Grants to Indian Tribes that received JOBS Funds in                                                                                                     
 1995                                                                                                                                                   
  Family Support Payments                                                                                                                               
    Budget Authority................................           0           8           8           8           8           8           8              46
    Outlays.........................................           0           6           8           8           8           8           8              44
Hold States Harmless for Cost-Neutrality Liabilities                                                                                                    
  Family Support Payments                                                                                                                               
    Budget Authority................................           0          50           0           0           0           0           0              50
    Outlays.........................................           0          50           0           0           0           0           0              50
Penalties for State Failure to Meet Work                                                                                                                
 Requirements                                                                                                                                           
  Family Support Payments                                                                                                                               
    Budget Authority................................           0           0           0         -50          50         -50         -50            -200
    Outlays.........................................           0           0           0         -50         -50         -50         -50            -200
Grants to Territories                                                                                                                                   
  Family Support Payments                                                                                                                               
    Budget Authority................................           0         116         116         116         116         116         116             696
    Outlays.........................................           0         116         116         116         116         116         116             696
Extension of Transitional Medicaid Benefits                                                                                                             
  Medicaid                                                                                                                                              
    Budget Authority................................           0           0           0         180         390         400         210           1,180
    Outlays.........................................           0           0           0         180         390         400         210           1,180
Increased Medicaid Administrative Payment                                                                                                               
  Medicaid                                                                                                                                              
    Budget Authority................................           0         500           0           0           0           0           0             500
    Outlays.........................................           0          75         135         135         135          20           0             500
Effect of the Temporary Assistance Block Grant on                                                                                                       
 the Food Stamp Program                                                                                                                                 
  Food Stamp Program                                                                                                                                    
    Budget Authority................................           0          45          90         170         430         560         695           1,990
    Outlays.........................................           0          45          90         170         430         560         695           1,990
Effect of the Temporary Assistance Block Grant on                                                                                                       
 the Foster Care Program                                                                                                                                
  Foster Care Program                                                                                                                                   
    Budget Authority................................           0           0           0          10          25          35          45             115
    Outlays.........................................           0           0           0          10          25          35          45             115
Effect of the Temporary Assistance Block Grant on                                                                                                       
 the Medicaid Program \4\                                                                                                                               
  Medicaid                                                                                                                                              
    Budget Authority................................           0           0           0           0           0           0           0               0
    Outlays.........................................           0           0           0           0           0           0           0               0
Total Direct Spending, Title I, By Account:                                                                                                             
  Family Support Payments                                                                                                                               
    Budget Authority................................          10        -752      -1,195      -1,319      -1,642      -2,059      -2,754          -9,710
    Outlays.........................................           0        -684      -1,142      -1,284      -1,607      -2,024      -2,729          -9,469
  Food Stamp Program                                                                                                                                    
    Budget Authority................................           0          40          70         140         390         515         660           1,815
    Outlays.........................................           0          40          70         140         390         515         660           1,815
  Foster Care Program                                                                                                                                   
    Budget Authority................................           0           0           0          10          25          35          45             115
    Outlays.........................................           0           0           0          10          25          35          45             115
  Medicaid                                                                                                                                              
    Budget Authority................................           0         500           0         180         390         400         210           1,680
    Outlays.........................................           0          75         135         315         525         420         210           1,680
Direct Spending total, All Accounts--Title I:                                                                                                           
    Budget Authority................................          10        -212      -1,125        -989        -837      -1,109      -1,839          -6,100
    Outlays.........................................           0        -569        -937        -819        -667      -1,054      -1,814         -5,859 
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Denotes less than $500,000.                                                                                                                           
\1\ Funds for existing child care programs are repealed by this title, but equal or greater funding for similar activities is restored in title VI.     
\2\ States have the option to begin to operate under the Temporary Assistance for Needy Families Block Grant any time between the enactment date and    
  July 1, 1997. A few States may opt to do so in FY 1996 creating small savings in the AFDC, Emergency Assistance, and JOBS Programs and small costs in 
  the TANF Program.                                                                                                                                     
\3\ The bill appropriates $2 billion for the contingency fund for use in years 1997-2001. The estimate shows costs of the contingency fund in 2002      
  because section 257(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985 requires that the baseline shall assume that mandatory     
  programs greater than $50 million dollars are continued.                                                                                              
\4\ The bill retains categorical eligibility for Medicaid for families that meet the eligibility criteria for Aid to Families with Dependent Children as
  they are in current law.                                                                                                                              


 TABLE 2.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION 
                                                   ACT OF 1996                                                  
                        TITLE II--SUPPLEMENTAL SECURITY INCOME; As passed by the Congress                       
                                   Assumed to be enacted by September 1, 1996                                   
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                                         7-year 
                               1996     1997       1998       1999       2000       2001       2002      total  
----------------------------------------------------------------------------------------------------------------
Direct Spending:                                                                                                
SSI Benefits to Certain                                                                                         
 Children:                                                                                                      
Supplemental Security                                                                                           
 Income:                                                                                                        
    Budget Authority........      *      $-125      $-925    $-1,450    $-1,800    $-1,675    $-2,000    $-7,975
    Outlays.................      *       -125       -925     -1,450     -1,800     -1,675     -2,000     -7,975
Family Support Payments:                                                                                        
    Budget Authority........      *        \1\        \1\        \1\        \1\        \1\        \1\        \1\
    Outlays.................      *        \1\        \1\        \1\        \1\        \1\        \1\        \1\
Food stamps \2\                                                                                                 
    Budget Authority........      *         20        130        210        240        265        290      1,155
    Outlays.................      *         20        130        210        240        265        290      1,155
Medicaid:                                                                                                       
    Budget Authority........      *         -5        -25        -40        -45        -55        -60       -230
    Outlays.................      *         -5        -25        -40        -45        -55        -60       -230
                             -----------------------------------------------------------------------------------
        Subtotal, provision:                                                                                    
    Budget Authority........      *       -110       -820     -1,280     -1,605     -1,465     -1,770     -7,050
    Outlays.................      *       -110       -820     -1,280     -1,605     -1,465     -1,770     -7,050
Reduction in SSI Benefits to                                                                                    
 Certain Hospitalized                                                                                           
 Children With Private                                                                                          
 Insurance:                                                                                                     
Supplemental Security                                                                                           
 Income:                                                                                                        
    Budget Authority........      0        -40        -55        -60        -70        -60        -65       -350
    Outlays.................      0        -40        -55        -60        -70        -60        -65       -350
Funding for Cost of Reviews:                                                                                    
 \2\                                                                                                            
Supplemental Security                                                                                           
 Income:                                                                                                        
    Budget Authority........      0        \3\        \3\          0          0          0          0          0
    Outlays.................      0        \3\        \3\          0          0          0          0          0
End Payment of Prorated                                                                                         
 Benefits for Month of                                                                                          
 Application:                                                                                                   
Supplemental Security                                                                                           
 Income;                                                                                                        
    Budget Authority........      *        -55       -130       -150       -160       -165       -175       -835
    Outlays.................      *        -55       -130       -150       -160       -165       -175       -835
Pay Large Retroactive                                                                                           
 Benefit Amounts in                                                                                             
 Installments:                                                                                                  
Supplemental Security                                                                                           
 Income:                                                                                                        
    Budget Authority........      0       -200        -15        -15        -15        -15        -15       -275
    Outlays.................      0       -200        -15        -15        -15        -15        -15       -275
Make Payments to Penal                                                                                          
 Institutions That Report                                                                                       
 Ineligible SSI Recipients:                                                                                     
Old-Age, Survivors and                                                                                          
 Disability Insurance--                                                                                         
 benefits saved: \4\                                                                                            
    Budget Authority........      0         -5        -10        -15        -15        -20        -20        -85
    Outlays.................      0         -5        -10        -15        -15        -20        -20        -85
Supplemental Security                                                                                           
 Income--benefits saved:                                                                                        
    Budget Authority........      0         -*         -5        -10        -10        -10        -10        -45
    Outlays.................      0         -*         -5        -10        -10        -10        -10        -45
Old-Age, Survivors and                                                                                          
 Disability Insurance--                                                                                         
 payments to prison                                                                                             
 officials:                                                                                                     
    Budget Authority........      0          0          0          0          0          0          0          0
    Outlays.................      0          0          0          0          0          0          0          0
Supplemental Security                                                                                           
 Income--payments to prison                                                                                     
 officials:                                                                                                     
    Budget Authority........      0          2          4          5          6          6          7         30
    Outlays.................      0          2          4          5          6          6          7         30
                             -----------------------------------------------------------------------------------
        Subtotal, provision:                                                                                    
    Budget Authority........      0         -3        -11        -20        -19        -24        -23       -100
    Outlays.................      0         -3        -11        -20        -19        -24        -23       -100
Total Direct Spending:                                                                                          
Supplemental Security                                                                                           
 Income:                                                                                                        
    Budget Authority........      *       -418     -1,126     -1,680     -2,049     -1,919     -2,258     -9,450
    Outlays.................      *       -418     -1,126     -1,680     -2,049     -1,919     -2,258     -9,450
Food Stamps: \2\                                                                                                
    Budget Authority........      *         20        130        210        240        265        290      1,155
    Outlays.................      *         20        130        210        240        265        290      1,155
Medicaid:                                                                                                       
    Budget Authority........      *         -5        -25        -40        -45        -55        -60       -230
    Outlays.................      *         -5        -25        -40        -45        -55        -60       -230
Family Support Payments:                                                                                        
    Budget Authority........      *        \1\        \1\        \1\        \1\        \1\        \1\        \1\
    Outlays.................      *        \1\        \1\        \1\        \1\        \1\        \1\        \1\
Old-Age, Survivors and                                                                                          
 Disability Insurance:                                                                                          
    Budget Authority........      0         -5        -10        -15        -15        -20        -20        -85
    Outlays.................      0         -5        -10        -15        -15        -20        -20        -85
                             ===================================================================================
        Total, All Accounts:                                                                                    
    Budget Authority........      *       -408     -1,031     -1,525     -1,869     -1,729     -2,048     -8,610
    Outlays.................      *       -408     -1,031     -1,525     -1,869     -1,729     -2,048    -8,610 
----------------------------------------------------------------------------------------------------------------
* Denotes less than $500,000.                                                                                   
\1\ Proposed to be block-granted elsewhere in the bill.                                                         
\2\ Includes interactions with other food stamp provisions of the bill.                                         
\3\ The bill proposes an adjustment to the discretionary spending caps of $150 million in 1997 and $100 million 
  in 1998 to cover the costs of reviewing 300,000 to 400,000 children on the SSI rolls under the new, tighter   
  criteria. The bill does not, however, directly appropriate that money. Its availability remains contingent on 
  future appropriation action. In addition to those one-time costs of $250 million or more, the bill would      
  require that most disabled children who qualify even under the tighter eligibility criteria be reviewed every 
  3 years to see if their medical condition has improved. That cost, which CBO estimates at about $100 million a
  year beginning in 1998, could be met by raising the caps on discretionary spending as permitted in P.L. 104-  
  121. The cap adjustment in that law, however, was designed to cover periodic reviews and not the heavy volume 
  of one-time reviews that would be mandated in 1997 by this legislation.                                       
\4\ The provision would encourage prison officials to exchange data with SSA by paying them up to $400 for      
  providing information that helps to identify each inmate who receives SSI and whose benefits should therefore 
  be suspended. In the course of checking that information, SSA would find that some inmates collect OASDI.     
  Therefore, although the language makes no mention of OASDI, savings in that program would result.             


               TABLE 3.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996               
                                             TITLE III--CHILD SUPPORT ENFORCEMENT; As Passed by the Congress                                            
                                                       Assumed to be enacted by September 1, 1996                                                       
                                                    [Outlays by fiscal year, in millions of dollars]                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                7-year  
                                                                1996     1997        1998        1999        2000        2001        2002        total  
--------------------------------------------------------------------------------------------------------------------------------------------------------
New Enforcement Techniques:                                                                                                                             
 State directory of new hires                                                                                                                           
    Family support payments...................................    0            0         $-1         $-4         $-6         $-9        $-10        $-30
    Food stamp program........................................    0            0          -1          -7         -12         -18         -21         -59
    Medicaid..................................................    0            0          -3         -11         -20         -31         -38        -102
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0            0          -5         -21         -38         -58         -70        -192
State laws providing expedited enforcement of child support:                                                                                            
    Family support payments...................................    0            0           0         -17         -35         -55         -77        -185
    Food stamp program........................................    0            0           0          -6         -13         -21         -30         -70
    Medicaid..................................................    0            0           0          -5         -11         -18         -26         -59
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0            0           0         -28         -59         -94        -133        -314
State laws concerning paternity:                                                                                                                        
    Family support payments...................................    0         $-16         -18         -20         -22         -24         -26        -127
    Food stamp program........................................    0           -3          -3          -4          -4          -4          -5         -23
    Medicaid..................................................    0           -2          -2          -2          -3          -3          -3         -15
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0          -21         -23         -26         -28         -31         -34        -164
Suspend Drivers' Licenses:                                                                                                                              
    Family support payments...................................    0           -4          -9         -14         -19         -20         -21         -88
    Food stamp program........................................    0           -2          -5          -8         -12         -12         -13         -52
    Medicaid..................................................    0           -1          -3          -5          -7          -8          -9         -35
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0           -8         -17         -27         -38         -41         -43        -175
Adoption of uniform state laws:                                                                                                                         
    Family support payments...................................    0           10           2          -7         -11         -15         -21         -41
    Food stamp program........................................    0            0          -1          -3          -4          -6          -9         -24
    Medicaid..................................................    0            0          -2          -3          -6          -8         -11         -30
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0           10          -1         -13         -21         -30         -41         -95
                                                                                                                                                        
        Subtotal, New Enforcement.............................    0          -19         -46        -115        -185        -254        -322        -940
Lost AFDC Collections due to Reduced Cases Funded by Block                                                                                              
 Grant Funds:                                                                                                                                           
    Family support payments...................................    0            0          29          63         142         200         224         658
    Food stamp program........................................    0            0           0           0           0           0           0           0
    Medicaid..................................................    0            0           0           0           0           0           0           0
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0            0          29          63         142         200         224         658
Eliminate $50 Passthrough and Exclude Gap Payments from                                                                                                 
 Distribution Rules at State Option:                                                                                                                    
    Family support payments...................................    0         -222        -236        -260        -285        -311        -336      -1,650
    Food stamp program........................................    0          114         122         139         147         164         171         858
    Medicaid..................................................    0            0           0           0           0           0           0           0
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0         -108        -114        -121        -139        -147        -165        -793
Distribute Child Support Arrears to Former AFDC Families                                                                                                
 First:                                                                                                                                                 
    Family support payments...................................    0            0          62          69          76         148         183         539
    Food stamp program........................................    0            0         -11         -12         -14         -27         -33         -96
    Medicaid..................................................    0            0           0           0           0           0           0           0
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0            0          51          57          63         122         150         442
Hold States Harmless for Lower Child Support Collections:                                                                                               
    Family support payments...................................    0            0          17          29          34          39          29         148
    Food stamp program........................................    0            0           0           0           0           0           0           0
    Medicaid..................................................    0            0           0           0           0           0           0           0
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0            0          17          29          34          39          29         148
Optional Modification of Support Orders:                                                                                                                
    Family support payments...................................    0           -5           0          10          15          15          20          55
    Food stamp program........................................    0            0           0           0           0           0           0           0
    Medicaid..................................................    0            0           0           0           0           0           0           0
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0           -5           0          10          15          15          20          55
                                                                                                                                                        
Other Provisions with Budgetary Implications:                                                                                                           
 Automated data processing development........................                                                                                          
    Family support payments...................................    *           83          91         129         129           8           0         440
    Food stamp program........................................    0            0           0           0           0           0           0           0
    Medicaid..................................................    0            0           0           0           0           0           0           0
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    *           83          91         129         129           8           0         440
 Automated data processing operation and maintenance:.........                                                                                          
    Family support payments...................................    0           12          55          52          52          46          40         257
    Food stamp program........................................    0            0           0           0           0           0           0           0
    Medicaid..................................................    0            0           0           0           0           0           0           0
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0           12          55          52          52          46          40         257
 Technical assistance to state programs:......................                                                                                          
    Family support payments...................................    *           48          51          50          48          47          45         290
    Food stamp program........................................    0            0           0           0           0           0           0           0
    Medicaid..................................................    0            0           0           0           0           0           0           0
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    *           48          51          50          48          47          45         290
 State obligation to provide services:........................                                                                                          
    Family support payments...................................    0            0           0           3          11          22          39          75
    Food stamp program........................................    0            0           0           0           0           0           0           0
    Medicaid..................................................    0            0           0           0           0           0           0           0
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0            0           0           3          11          22          39          75
 Federal and state reviews and audits:........................                                                                                          
    Family support payments...................................    0            3           3           3           3           3           3          20
    Food stamp program........................................    0            0           0           0           0           0           0           0
    Medicaid..................................................    0            0           0           0           0           0           0           0
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    0            3           3           3           3           3           3          20
 Grants to States for Visitation:.............................                                                                                          
    Family support payments...................................    *           10          10          10          10          10          10          60
    Food stamp program........................................    0            0           0           0           0           0           0           0
    Medicaid..................................................    0            0           0           0           0           0           0           0
                                                               -----------------------------------------------------------------------------------------
        Subtotal..............................................    *           10          10          10          10          10          10          60
        Subtotal, Other provisions............................    *          156         210         248         254         136         137       1,197
                                                               =========================================================================================
                                                                                                                                                        
Total, by account:                                                                                                                                      
    Family support payments...................................    *          -81          57          99         142         103         101         421
    Food stamp program........................................    0          109         100          99          88          76          62         533
    Medicaid..................................................    0           -3          -9         -27         -46         -68         -88        -242
                                                               =========================================================================================
        Total.................................................    *           25         148         172         184         110          74         712
                                                                                                                                                        
Family support payments: Budget Authority: **                                                                                                           
 Automated data processing development........................   42           42          91         129         129           8           0         440
 Technical assistance to state programs.......................   36           44          47          46          48          47          45         314
 Grants to States for Visitation..............................   10           10          10          10          10          10          10          70
 All other Provisions.........................................    0         -222         -95         -91         -45          38          45        -369
                                                               =========================================================================================
        Total.................................................   88         -127          53          95         142         103         101        455 
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Denotes less than $500,000.                                                                                                                           
** Budget Authority is generally equal to the Outlays shown in this table. Where this is not the case, Budget Authority is shown here.                  


               TABLE 4.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996               
                                 TITLE IV--RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS; As passed by the Congress                                
                                                       Assumed to be enacted by September 1, 1996                                                       
                                                        [By fiscal year, in millions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                7-year  
                                                                1996     1997        1998        1999        2000        2001        2002        total  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Spending:                                                                                                                                        
  Supplemental Security Income                                                                                                                          
    Budget Authority..........................................    *        $-375     $-2,400     $-2,600     $-2,775     $-2,425     $-2,700    $-13,275
    Outlays...................................................    *         -375      -2,400      -2,600      -2,775      -2,425      -2,700     -13,275
  Food Stamps \1\                                                                                                                                       
    Budget Authority..........................................    *         -470        -700        -660        -630        -610        -590      -3,660
    Outlays...................................................    *         -470        -700        -660        -630        -610        -590      -3,660
  Medicaid                                                                                                                                              
    Budget Authority..........................................    *         -105        -615        -815      -1,015      -1,245      -1,495      -5,290
    Outlays...................................................    *         -105        -615        -815      -1,015      -1,245      -1,495      -5,290
  Family support payments                                                                                                                               
    Budget Authority..........................................    0          \2\         \2\         \2\         \2\         \2\         \2\         \2\
    Outlays...................................................    0          \2\         \2\         \2\         \2\         \2\         \2\         \2\
  Child nutrition \3\                                                                                                                                   
    Budget Authority..........................................    0            0           0           0           0           0           0           0
    Outlays...................................................    0            0           0           0           0           0           0           0
  Earned income credit                                                                                                                                  
    Budget Authority..........................................    0         -224        -232        -236        -242        -245        -251      -1,430
    Outlays...................................................    0         -224        -232        -236        -242        -245        -251      -1,430
Total Direct Spending:                                                                                                                                  
    Budget Authority..........................................    0       -1,174      -3,947      -4,311      -4,662      -4,525      -5,036     -23,655
    Outlays...................................................    0       -1,174      -3,947      -4,311      -4,662      -4,525      -5,036     -23,655
Revenues:                                                                                                                                               
  Earned income credit                                            0           28          29          29          30          30          31         177
Deficit Effect................................................    *       -1,202      -3,976      -4,340      -4,692      -4,555      -5,067     -23,832
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The CBO estimate assumes that the proposed exemption for public health programs that provide immunizations will be interpreted to permit continued
  Medicaid funding for pediatric vaccines.                                                                                                              
* Denotes less than $500,000.                                                                                                                           
\1\ Includes interactions with other food stamp provisions of the bill.                                                                                 
\2\ Proposed to be block-granted elsewhere in the bill.                                                                                                 
\3\ Section 742 of the bill, in title VII, specifically states that benefits under the school breakfast and school lunch programs shall not be          
  contingent on students' immigration or citizenship status. Therefore, CBO estimates no savings in the child nutrition program from the general        
  restrictions contained in title IV on immigrants' eligibility for Federal benefits.                                                                   


 TABLE 5.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION 
                                                   ACT OF 1996                                                  
                              TITLE V--CHILD PROTECTION; As passed by the Congress                              
                                     Assumes enactment by September 1, 1996                                     
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                       1996   1997   1998   1999   2000   2001   2002  1996-2002
----------------------------------------------------------------------------------------------------------------
Direct Spending:                                                                                                
Extend Enhanced Match Rate for Computer Purchases                                                               
 for Foster Care Data Collection:                                                                               
    Budget Authority................................      0    $80      0      0      0      0      0      $80  
    Outlays.........................................      0     66    $14      0      0      0      0       80  
National Random Sample Study of Child Welfare:                                                                  
    Budget Authority................................     $6      6      6     $6     $6     $6      6       42  
    Outlays.........................................      *      2     11      6      6      6      6       37  
                                                     ===========================================================
Total Direct Spending:                                                                                          
Foster Care:                                                                                                    
    Budget Authority................................      6     86      6      6      6      6      6      122  
    Outlays.........................................      *     68     25      6      6      6      6      117  
----------------------------------------------------------------------------------------------------------------
* Denotes less than $500,000.                                                                             


 TABLE 6.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION 
                                                   ACT OF 1996                                                  
                                 TITLE VI--CHILD CARE; As passed by the Congress                                
                                     Assumes enactment by September 1, 1996                                     
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                               1996     1997       1998       1999       2000       2001       2002    1996-2002
----------------------------------------------------------------------------------------------------------------
Direct Spending:                                                                                                
 New Child Care Block Grant                                                                                     
    Budget Authority........      0     $1,967     $2,067     $2,167     $2,367     $2,567     $2,717    $13,852
    Outlays.................      0      1,635      1,975      2,082      2,227      2,377      2,482    12,778 
----------------------------------------------------------------------------------------------------------------
Note: For States to draw down the child care block grant remainder, this subtitle requires them to maintain the 
  greater of fiscal year 1994 or 1995 spending.                                                                 


 TABLE 7.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION 
                                                   ACT OF 1996                                                  
                         TITLE VII--CHILD NUTRITION PROGRAMS; As passed by the Congress                         
                                     Assumes enactment by September 1, 1996                                     
                                [Outlays by fiscal year, in millions of dollars]                                
----------------------------------------------------------------------------------------------------------------
                                                                                                         1996-  
           Section             1996     1997       1998       1999       2000       2001       2002       2002  
----------------------------------------------------------------------------------------------------------------
Direct Spending:                                                                                                
704 Special assistance                                                                                          
  Extension of payment period                                                                                   
    Budget Authority.........    0           *          *         $1         $1         $1         $1         $4
    Outlays..................    0           *          *          1          1          1          1          4
  Rounding rules for lunch,                                                                                     
 breakfast, and supplement                                                                                      
 rates                                                                                                          
    Budget Authority.........    0         $-2       $-15        -15        -15        -15        -15        -77
    Outlays..................    0          -1        -10        -15        -15        -15        -15        -71
706 Summer food service                                                                                         
 program for children                                                                                           
    Budget Authority.........    0         -24        -29        -29        -34        -34        -39       -189
    Outlays..................    0         -19        -29        -29        -34        -34        -39       -184
708 Child and adult care food                                                                                   
 program                                                                                                        
    Budget Authority.........    0        -105       -380       -430       -480       -535       -595     -2,525
    Outlays..................    0         -90       -340       -420       -470       -525       -585     -2,430
723 School breakfast program                                                                                    
 authorization                                                                                                  
    Budget Authority.........    0         -10        -15        -22        -25        -22        -22       -116
    Outlays..................    0          -8        -14        -21        -25        -22        -22       -112
731 Nutrition education and                                                                                     
 training programs                                                                                              
    Budget Authority.........    0         -10        -10        -10        -10        -10        -10        -60
    Outlays..................    0         -10        -10        -10        -10        -10        -10        -60
                              ==================================================================================
                                                                                                                
Total, Child Nutrition                                                                                          
 Programs:                                                                                                      
  Direct Spending                                                                                               
    Budget Authority.........    0        -151       -449       -505       -563       -615       -680     -2,963
    Outlays..................    0        -128       -403       -494       -553       -605       -670    -2,853 
----------------------------------------------------------------------------------------------------------------
* Denotes less than $500,000.                                                                                   
  Details may not add to totals because of rounding.                                                            


               TABLE 8.--FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996               
                                      TITLE VIII--FOOD STAMPS AND COMMODITY DISTRIBUTION; As passed by the Congress                                     
                                                         Assumes enactment by September 1, 1996                                                         
                                                    [Outlays by fiscal year, in millions of dollars]                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                 1996-  
                              Section                                 1996      1997       1998       1999       2000       2001       2002       2002  
--------------------------------------------------------------------------------------------------------------------------------------------------------
801 Definition of certification period............................        0          0          0          0          0          0          0          0
802 Definition of coupon..........................................        0          0          0          0          0          0          0          0
803 Treatment of children living at home..........................        0      $-115      $-245      $-255      $-265      $-280      $-290    $-1,450
804 Adjustment of thrifty food plan...............................        0       -935       -980     -1,025     -1,070     -1,115     -1,155     -6,280
805 Definition of homeless individual.............................        0         -*         -*         -*         -*         -*         -*         -*
806 State option for eligibility standards........................        0          0          0          0          0          0          0          0
807 Earnings of students..........................................        0        -10        -10        -10        -10        -15        -15        -70
808 Energy assistance.............................................        0       -125       -170       -175       -175       -180       -180     -1,005
809 Deductions from income:                                                                                                                             
   Standard deduction at $134 each year \1\.......................        0          0       -555       -770       -990     -1,220     -1,465     -5,000
   Homeless shelter allowance.....................................        0         -1         -1         -2         -3         -3         -5        -15
   Cap excess shelter deduction at $247 through 12/31/96, $250                                                                                          
   from 1/1/97 through FY98, $275 in FY99 and FY00, and $300 in                                                                                         
   each later fiscal year.........................................        0       -350       -570       -505       -565       -490       -550     -3,030
   State option for mandatory standard utility allowance and                                                                                            
   otherwise allow change between SUA and actual costs only at                                                                                          
   recertification................................................        0        -35        -70        -75        -80        -80        -85       -425
810 Vehicle Allowance at $4,650 FY97-2002.........................        0        -45       -140       -175       -200       -225       -245     -1,030
811 Vendor payments for transitional housing counted as income....        0        -10        -10        -10        -10        -10        -10        -60
812 Simplified calculation of income for the self-employed........        0          0          0          0          0          0          0          0
813 Doubled penalties for violating Food Stamp Program                                                                                                  
 requirements.....................................................        0         -*         -*         -*         -*         -*         -*         -*
814 Disqualification of convicted individuals.....................        0         -*         -*         -*         -*         -*         -*         -*
815 Disqualification..............................................        0         -5         -5         -5         -5         -5         -5        -30
816 Caretaker exemption...........................................        0          0          0          0          0          0          0          0
817 Employment and training.......................................        0          2          6          9         11         13         15         56
818 Food stamp eligibility........................................        0        -15        -21        -27        -27        -27        -27       -145
819 Comparable treatment for disqualification.....................        0        -20        -20        -20        -20        -20        -25       -125
820 Disqualification for receipt of multiple food stamp benefits..        0         -5         -5         -5         -5         -5         -5        -30
821 Disqualification of fleeing felons............................        0         -*         -*         -*         -*         -*         -*         -*
822 Cooperation with child support agencies:                                                                                                            
    Option to require custodial parent cooperation                                                                                                      
    Food Stamps...................................................        0         -5        -10        -15        -20        -20        -20        -90
    Family support payments.......................................        0          5         10         10         15         15         15         70
823 Disqualification relating to child support arrears............        0         -5        -15        -25        -25        -30        -30       -130
824 Work requirement..............................................        0       -160       -830       -960     -1,010     -1,050     -1,100     -5,110
825 Encourage electronic benefit transfer systems.................        0          *          *          *          *          *          *          *
826 Value of minimum allotment....................................        0          0        -30        -30        -30        -35        -35       -160
827 Benefits on recertification...................................        0        -25        -25        -25        -25        -30        -30       -160
828 Optional combined allotment for expedited households..........        0          0          0          0          0          0          0          0
829 Failure to comply with other means-tested public assistance                                                                                         
 programs.........................................................        0        -25        -25        -25        -25        -25        -25       -150
830 Allotments for households residing in centers.................        0          *          *          *          *          *          *          *
831 Condition precedent for approval of retail stores and                                                                                               
 wholesale food concerns..........................................        0          0          0          0          0          0          0          0
832 Authority to establish authorization periods..................        0          0          0          0          0          0          0          0
833 Information for verifying eligibility for authorization.......        0          0          0          0          0          0          0          0
834 Waiting period for stores that fail to meet authorization                                                                                           
 criteria.........................................................        0          0          0          0          0          0          0          0
835 Operation of food stamp offices...............................        0          0          0          0          0          0          0          0
836 State employee and training standards.........................        0          0          0          0          0          0          0          0
837 Exchange of law enforcement information.......................        0          0          0          0          0          0          0          0
838 Expedited coupon service......................................        0          0          0          0          0          0          0          0
839 Withdrawing fair hearing requests.............................        0          0          0          0          0          0          0          0
840 Income, eligibility, and immigration status verification                                                                                            
 systems..........................................................        0         -5         -5         -5         -5         -5         -5        -30
841 Investigations................................................        0          0          0          0          0          0          0          0
842 Disqualification of retailers who intentionally submit                                                                                              
 falsified applications...........................................        0          0          0          0          0          0          0          0
843 Disqualification of retailers who are disqualified under the                                                                                        
 WIC program......................................................        0          0          0          0          0          0          0          0
844 Collection of overissuances...................................        0        -25        -30        -30        -25        -25        -30       -165
845 Authority to suspend stores violating program requirements                                                                                          
 pending administrative and judicial review.......................        0          0          0          0          0          0          0          0
846 Expanded criminal forfeiture for violations...................        0        \2\        \2\        \2\        \2\        \2\        \2\        \2\
847 Limitation of Federal match...................................        0         -2         -2         -2         -2         -2         -2        -12
848 Standards for administration..................................        0          0          0          0          0          0          0          0
849 Work supplementation or support program.......................        0          5         15         20         30         30         30        130
850 Waiver authority..............................................        0          0          0          0          0          0          0          0
851 Response to waivers...........................................        0          0          0          0          0          0          0          0
852 Employment initiatives program................................        0         -1         -2         -2         -2         -2         -2        -11
853 Reauthorization...............................................        0          0          0          0          0          0          0          0
854 Simplified Food Stamp Program.................................        0          0          5         10         20         20         25         80
855 A study of the use of food stamps to purchase vitamins and                                                                                          
 minerals.........................................................        0          0          0          0          0          0          0          0
856 Deficit reduction.............................................        0          0          0          0          0          0          0          0
871 Emergency Food Assistance Program.............................        0        100        100        100        100        100        100        600
872 Food bank demonstration project...............................        0          0          0          0          0          0          0          0
873 Hunger prevention programs....................................        0          0          0          0          0          0          0          0
874 Report on entitlement commodity processing....................        0          0          0          0          0          0          0          0
891 Provisions to encourage electronic benefit systems \3\........        0          0          0          0          0          0          0          0
   Interactions among provisions..................................        0         20        101        111        136        141        166        674
Direct Spending:                                                                                                                                        
  Food stamp program                                                                                                                                    
    Budget Authority..............................................        0     -1,797     -3,549     -3,928     -4,297     -4,595     -5,005    -23,173
    Outlays.......................................................        0     -1,797     -3,549     -3,928     -4,297     -4,595     -5,005    -23,173
  Family support payments                                                                                                                               
    Budget Authority..............................................        0          5         10         10         15         15         15         70
    Outlays.......................................................        0          5         10         10         15         15         15         70
Total Direct Spending:                                                                                                                                  
    Budget Authority..............................................        0     -1,792     -3,539     -3,918     -4,282     -4,580     -4,990    -23,103
    Outlays.......................................................        0     -1,792     -3,539     -3,918     -4,282     -4,580     -4,990   -23,103 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Details may not add to totals because of rounding.                                                                                                      
* Denotes less than $500,000                                                                                                                            
\1\ No savings are shown in fiscal year 1997 for setting the standard deduction at $134 because the fiscal year 1997 Agriculture Appropriations Act,    
  which cleared the Congress before this bill cleared, contained a similar provision.                                                                   
\2\ Any proceeds from this provision would be used to reimburse law enforcement agencies or for retail compliance investigations. Thus, CBO estimates no
  net effect on the Federal budget, though funds could be received in 1 year and not spent until a later year.                                          
\3\ This provision is included elsewhere in the bill. If the exemption from Regulation ``e'' were not enacted, there likely would be costs to the       
  Federal Government. CBO estimates these costs would be small.                                                                                         


                     TABLE 9.--FEDERAL BUDGET EFFECTS OF THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996                    
                                                   TITLE IX--MISCELLANEOUS; As passed by the Congress                                                   
                                                         Assumes enactment by September 1, 1996                                                         
                                                        [By fiscal year, in millions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                              Section                               1996     1997       1998       1999       2000       2001       2002      1996-2002 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Spending and Revenues:                                                                                                                           
 908 Reduction in block grants to states for social services                                                                                            
   Social Services Block Grant                                                                                                                          
    Budget Authority..............................................    0       $-420      $-420      $-420      $-420      $-420      $-420       $-2,520
    Outlays.......................................................    0        -375       -420       -420       -420       -420       -420        -2,475
                                                                                                                                                        
 909 Denial of earned income credit on basis of disqualified                                                                                            
 income \1\                                                                                                                                             
    Budget Authority..............................................    0        -170       -168       -151       -146       -152       -160          -947
    Outlays.......................................................    0        -170       -168       -151       -146       -152       -160          -947
    Revenue.......................................................    0          26         27         27         23         23         25           151
    Net Deficit Effect............................................    0        -196       -195       -178       -169       -175       -185        -1,098
                                                                                                                                                        
 910 Modification of adjusted gross income definition for earned                                                                                        
 income credit \1\                                                                                                                                      
    Budget Authority..............................................    0         -98       -106       -112       -120       -129       -138          -704
    Outlays.......................................................    0         -98       -106       -112       -120       -129       -138          -704
    Revenue.......................................................    0          15         18         20         22         25         28           128
    Net Deficit Effect............................................    0        -113       -125       -133       -141       -154       -166          -832
                                                                                                                                                        
 911 Abstinence Education                                                                                                                               
    Budget Authority..............................................    0           0         50         50         50         50         50           250
    Outlays.......................................................    0           0         18         35         50         50         50           203
     Interactions among revenue provisions........................                                                                                      
    Budget Authority..............................................    0          47         50         36         28         33         34           229
    Outlays.......................................................    0          47         50         36         28         33         34           229
    Revenue.......................................................    0          -9        -13        -14        -10        -10         -6           -62
    Net Deficit Effect............................................    0          56         63         50         38         43         40           291
                                                                                                                                                        
Total, Miscellaneous--Title IX:                                                                                                                         
 Direct Spending                                                                                                                                        
  Social Services Block Grant                                                                                                                           
    Budget Authority..............................................    0        -420       -420       -420       -420       -420       -420        -2,520
    Outlays.......................................................    0        -375       -420       -420       -420       -420       -420        -2,475
  Earned Income Credit                                                                                                                                  
    Budget Authority..............................................    0        -221       -224       -227       -238       -248       -264        -1,422
    Outlays.......................................................    0        -221       -224       -227       -238       -248       -264        -1,422
  Maternal and Child Health Services Block Grant                                                                                                        
    Budget Authority..............................................    0           0         50         50         50         50         50           250
    Outlays.......................................................    0           0         18         35         50         50         50           203
                                                                   =====================================================================================
        Total, All Accounts:......................................                                                                                      
    Budget Authority..............................................    0        -641       -594       -597       -608       -618       -634        -3,692
    Outlays.......................................................    0        -596       -626       -612       -608       -618       -634        -3,694
                                                                                                                                                        
Revenues:                                                                                                                                               
    Revenues \1\..................................................    0          32         32         33         35         38         47          217 
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Estimates provided by the Joint Committee on Taxation. Components may not sum to totals because of rounding.