SUMMARY OF WELFARE REFORMS MADE BY PUBLIC LAW 104

GOVERNMENT PRINTING OFFICE

WASHINGTON

: 27–305 CC

COMMITTEE PRINT

104

ONGRESS

2d Session

WMCP:

1996

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

(ii)

COMMITTEE ON WAYS AND MEANS

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

BILL ARCHER, T

EXAS

, Chairman

HILLIP

D. M

OSELEY

, 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.

iii

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

(1)

SECTION 1.

HISTORICAL BACKGROUND

AND

NEED FOR REFORM

SECTION 1. HISTORICAL BACKGROUND AND NEED FOR

REFORM

VERVIEW

The Personal Responsibility and Work Opportunity Reconcili-

ation 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 pro-

vide States with the funds necessary to help families escape wel-

fare. 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 en-

courage 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 wel-

fare, 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 sev-

eral 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 enti-

tlement 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 re-

visions 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 legisla-

tion constitute the most far-reaching reform of the Nation’s welfare

system in several decades.

IGHLIGHTS OF THE

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 con-

cept. As a result, the Nation’s welfare system now provides millions

of families headed by able-bodied adults with a package of guaran-

teed benefits. These entitlement benefits include cash, medical

care, and food stamps. The combined value of this package of bene-

fits 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 in-

dividuals 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

Child Welfare and Child Abuse 38

Child Care 46

Employment and Training 154

Social Services 30

Food and Nutrition 11

Housing 27

Health 22

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:

Burke (1995);

Robinson & Forman (1994);

Forman (1994);

U.S. General Accounting Office

(1994);

Robinson (1994);

Vanhorenbeck & Foote (1994);

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 pre-

serving the function of welfare as a safety net for families experi-

encing temporary financial problems. Based on the view that the

permanent guarantee of benefits plays a major role in welfare de-

pendency, 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 limit-

ing the receipt of cash benefits from the block grant to 5 years (al-

though 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 ad-

dition, the law establishes strict work standards. When fully imple-

mented, 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 encour-

aging 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 Edu-

cational 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. Equal-

ly 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. Al-

though the concept of entitlement has been the focus of congres-

sional 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 In-

come 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 con-

tinue, 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 Assess-

ment’’ (IFA) process that purports to detect whether a child be-

haves in an age-inappropriate manner and therefore qualifies for

SSI. A recent U.S. General Accounting Office report (1995b) con-

cluded 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 be-

havior. As a result, the subjectivity of the process calls into ques-

tion the Social Security Administration’s ability to assure reason-

able 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 ben-

efits 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 Con-

gress was welfare benefits for noncitizens. The reforms of entitle-

ment 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 emer-

gency 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 non-

citizens 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 exempt-

ing 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 pro-

grams 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 non-

citizens 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 chil-

dren 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 disadvan-

tage. 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 per-

cent of teen mothers are or have been on welfare (Adams & Wil-

liams, 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; provid-

ing 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 provid-

ing $400 million in bonus payments to States that reduce their ille-

gitimacy 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 sys-

tem could produce as much as $34 billion more for children than

the amount now collected (Sorensen, 1995). The reformed child sup-

port program attacks this problem by pursuing five major goals:

automating many child support enforcement procedures; establish-

ing 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 sup-

port laws, all States share information through the Federal child

support office, mass processing of information is routine, and inter-

state cases are handled expeditiously.

PENDING

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 wel-

fare 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

Welfare Program

Year

Total

1997–2002

1996 1997 1998 1999 2000 2001 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

1,508,989

Source: Congressional Budget Office

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.

EFERENCES

Adams, G., & Williams, R.C. (1990). Targeting would-be long-term

recipients of AFDC (Department of Health and Human Serv-

ices Contract No. 100–84–0059). Princeton, NJ: Mathematica

Policy Research.

Burke, V. (1995, December 19). Cash and noncash benefits for per-

sons with limited income: Eligibility rules, recipient and ex-

penditure data, FYs 1992–1994 (96–159 EPW). Washington,

DC: Congressional Research Service.

Ellwood, D.T. (1986, January). Targeting ‘‘would-be’’ long-term re-

cipients 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). Wash-

ington, 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 se-

lected Federal child welfare and child abuse programs (Memo-

randum 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 employ-

ment and training programs: Overlapping programs can add

unnecessary administrative costs (GAO/HEHS–94–80). Wash-

ington, DC: Author.

U.S. General Accounting Office. (1995a, January 27). Supplemental

Security Income: Recent growth in rolls raises fundamental pro-

gram concerns (GAO/T–HEHS–95–67). Washington, DC: Au-

thor.

U.S. General Accounting Office. (1995b, March). Social Security:

New functional assessments for children raise eligibility ques-

tions (GAO/HEHS–95–66). Washington, DC: Author.

U.S. General Accounting Office. (1996). Supplemental Security In-

come: Noncitizen caseload continues to grow (GAO/T–HEHS–

96–149). Washington, DC: Author.

Vanhorenbeck, S. & Foote, B. (1994, November 22). Table of au-

thorizations and FY 1995 appropriations for housing programs

(Memorandum to the Committee on Ways and Means). Wash-

ington, 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 statis-

tics, 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 sta-

tistics, 1993. Monthly Vital Statistics Report, 44(3). Washing-

ton, 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

ITLE

I: B

LOCK

RANTS TO

TATES FOR

EMPORARY

SSISTANCE

FOR

EEDY

AMILIES

(TANF)

Creation of the cash welfare block grant

The Personal Responsibility and Work Opportunity Reconcili-

ation Act creates a cash welfare block grant called Temporary As-

sistance 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 mainte-

nance 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 Op-

portunities 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 ex-

penditures 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 pro-

grams 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 ‘‘mainte-

nance 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 lev-

els; (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 re-

ceive 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 achiev-

ing 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 under-

going recession, as shown by high and rising unemployment or ris-

ing food stamp caseloads, may be eligible to receive up to $2 billion

over 5 years in matching ‘‘contingency’’ funds (CBO estimates Fed-

eral 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 pro-

grams 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 reim-

bursement (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 Pro-

gram is ended by the new law. TANF block grant funds are guar-

anteed 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 fami-

lies, enforcing penalties against persons who fail to cooperate in es-

tablishing 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 deter-

mination 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 re-

quired 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 re-

cipients not working must participate in community service

employment with hours and tasks set by the State after receiv-

ing 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 participa-

tion 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 reduc-

ing 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 lev-

els). 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 partici-

pation rates (for no more than a total of 12 months for any sin-

gle family). At least one adult in 75 percent of two-parent fami-

lies 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 there-

after. States not meeting these work participation rates for sin-

gle-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 for-

bidden 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 (eli-

gibility 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; sub-

sidized 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 re-

quired number of work participants can qualify because they par-

ticipated 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 di-

rectly related to employment.

Special rules apply to two-parent families. An adult in these fam-

ilies 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 chil-

dren 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 posi-

tion when another person is on layoff from the same or any sub-

stantially equivalent job. States must establish and maintain a

grievance procedure for resolving complaints of alleged job displace-

ment.

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 sin-

gle parents with school-age children (especially older school-age

children) to participate in work activities. Congressional commit-

tees are to review the implementation of State work programs dur-

ing 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 Gov-

ernors’ 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 pri-

vate sector jobs and in reducing the overall caseload.

ROVIDING

HILD

ARE FOR

ECIPIENTS

ORK

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 bil-

lion 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 eli-

gibility. 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.)

OMBATING

-W

EDLOCK

IRTHS AND

ROMOTING

ATERNITY

STABLISHMENT

The new law gives States wide flexibility along with added funds

to combat the rising number of out-of-wedlock births, which in-

crease welfare use and long-term dependency. For example, unmar-

ried 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 prac-

tice 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 spe-

cifically, the legislation:

1. Creates a $90 billion TANF block grant for States to use to

‘‘prevent and reduce the incidence of out-of-wedlock preg-

nancies,’’ among other purposes;

2. Requires State plans to establish goals and take action to pre-

vent 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 eligi-

ble for a share of a new $1 billion ‘‘performance bonus’’ fund;

5. Provides $50 million in entitlement funding for abstinence edu-

cation 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 establish-

ment, and provides for the payment of child support by: (1) re-

quiring States to reduce cash welfare payments by at least 25

percent for families that include a parent who fails to cooper-

ate 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 per-

cent of communities have prevention programs;

11. Requires the Secretary of Health and Human Services to annu-

ally 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; encour-

ages States to adopt an effective strategy to combat teen preg-

nancy by addressing the issue of male responsibility, including

statutory rape culpability and prevention.

ROVIDING

AXIMUM

TATE

LEXIBILITY

To increase State flexibility in the use of Federal funds, States

are allowed to transfer up to 30 percent of their Temporary Assist-

ance for Needy Families block grant into the Child Care and Devel-

opment 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 trans-

ferred 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 be-

cause the State adopts a family cap.

To assist in recessions or other emergencies, States may: (1) re-

ceive matching grants from the $2 billion contingency fund de-

scribed 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 pe-

riod of up to 12 months.

States shall not be prohibited by the Federal Government from

testing recipients for use of controlled substances nor from sanc-

tioning 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 informa-

tion 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 increas-

ing State control over program operation will lessen Federal con-

trol, the law requires a reduction of 75 percent of the full-time posi-

tions at the Department of Health and Human Services that relate

to any direct spending program, or program funded through discre-

tionary 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 organi-

zations in the delivery of welfare services to the greatest extent

possible, States are specifically authorized to administer and pro-

vide family assistance services through contracts with charitable,

religious, or private organizations or through vouchers or certifi-

cates 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 bene-

fits 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 con-

cerning living arrangements and school.

ETTING

ATIONAL

RIORITIES

The new law gives States the widest possible latitude in develop-

ing innovative programs that will get families off welfare and into

jobs. Nonetheless, a small set of principles must be followed to en-

sure 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 trans-

ferred 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 en-

actment during their first 5 years in the United States (for de-

tails, 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 assist-

ance 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 prohib-

ited from providing assistance from the Temporary Family Assist-

ance 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 posses-

sion, 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.

NSURING

EDICAL

OVERAGE FOR

-I

NCOME

AMILIES

States are required to provide Medicaid coverage to:

1. Families that become ineligible for cash welfare assistance be-

cause of increased earnings from work (for 1 year—6 months

of full Medicaid, 6 months of subsidized Medicaid if family in-

come is less than 185 percent of the Federal poverty level);

2. Families that become ineligible for cash welfare assistance be-

cause of increased earnings from child support (for 4 months);

and

3. Families that would have been eligible for AFDC—and as a re-

sult 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 in-

crease 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 as-

sistance to many families that might not qualify for benefits under

States’ new TANF block grant programs. To encourage work, how-

ever, States may end medical coverage for parents who become in-

eligible 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.

NSURING

OMPLIANCE

ITH

ATIONAL

RIORITIES

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 pay-

ment, and it must repay the misspent amount using State

funds (if the State cannot prove that the misuse was uninten-

tional, 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 Ver-

ification System (IEVS) lose up to 2 percent of their block

grant;

4. States that fail to enforce penalties requested by the child sup-

port agency against persons who do not cooperate in establish-

ing 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 enforce-

ment 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 de-

ducted from their next block grant payment;

6. States that fail to maintain 75 percent of historic State spend-

ing 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 contin-

gency funds have the amount of the contingency funds sub-

tracted 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 ob-

tain 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 his-

toric 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 pen-

alties cannot exceed 25 percent of the block grant in any single

quarter. Penalties that exceed 25 percent are to be assessed in sub-

sequent 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.

REATMENT OF

AIVERS

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 con-

tinue 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 require-

ments. 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.

ATA

EPORTING AND

VALUATION

To help Congress determine whether the purposes of this legisla-

tion 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 col-

lection and reporting requirements by reporting data for their en-

tire caseload under the block grant or by use of statistical sam-

pling, 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 ex-

pand the ongoing Survey of Income and Program Participation

(SIPP) and to focus special data collection efforts on welfare fami-

lies. 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 im-

pede 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 be-

ginning 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 ineli-

gible 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 pro-

gram, 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 out-

comes 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 em-

ployee 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.

ITLE

II: S

UPPLEMENTAL

ECURITY

NCOME

Ensuring that prisoners and other criminals do not receive SSI ben-

efits

The new law provides for incentive payments from SSI Program

funds to State and local penal institutions for furnishing informa-

tion (date of confinement and certain other identifying information)

to the Social Security Administration (SSA) that results in suspen-

sion 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 report-

ing agreements under which incentive payments are made are ex-

empted from the Computer Matching and Privacy Protection Act of

1988. SSA is authorized to provide, on a reimbursable basis, infor-

mation obtained pursuant to SSI reporting agreements to any Fed-

eral or federally assisted cash, food, or medical assistance program

for eligibility purposes.

The Commissioner of the Social Security Administration is re-

quired 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 fa-

cilities. SSA also is required to provide Congress not later than Oc-

tober 1, 1998, with a list of institutions that are and are not pro-

viding information on SSI recipients to SSA.

The law denies eligibility for SSI to individuals fleeing prosecu-

tion, 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 indi-

vidual convicted in Federal or State court of having made a fraudu-

lent 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 chil-

dren 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 chil-

dren’s eligibility for SSI. The IFA is also the source of many com-

plaints 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 bene-

ficiaries 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 Commis-

sioner will redetermine eligibility of those currently receiving bene-

fits 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 redetermina-

tion, whichever is later.

At least once every 3 years, the Commissioner must conduct con-

tinuing 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 rep-

resentative payee will be found.

The eligibility of children qualifying for SSI benefits must be re-

determined 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 (effec-

tive with respect to payments made after the date of enactment)

to be paid into a dedicated savings account. Spending from this ac-

count must be for allowable expenses and must be monitored by

the Commissioner. Allowable expenses include personal needs as-

sistance, education or job skills training, special equipment, home

modifications, medical treatment, therapy or rehabilitation serv-

ices, 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 re-

spect 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 inter-

vals. 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 re-

duced 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 provi-

sion 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 docu-

mentation including a cost analysis, workload impact, and caseload

projections that will result from the new regulations) must be pro-

vided 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 provi-

sions of these amendments.

The act takes a number of steps to evaluate and improve the dis-

ability 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 mil-

lion 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 individ-

ual 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 ef-

fective 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).

ITLE

III: C

HILD

UPPORT

The act contains nearly 50 changes, many of them major, to cur-

rent 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 Oc-

tober 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 pay-

ments 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 proceed-

ings 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 speci-

fied 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 up-

dated, including the amount of each order and a record of pay-

ments and arrearages. In the case of orders that include withhold-

ing 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 pro-

grams. 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 sup-

port 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 cen-

tralized 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 num-

bers. 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 infor-

mation 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, wel-

fare, 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 Dis-

bursement 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 in-

formation from State new hire directories at least every 2 days and

report matches to State agencies within 2 days. All Federal agen-

cies must also report information, including wages, on all employ-

ees (except those involved in security activities who might be com-

promised) to the FPLS for use in matching against State child sup-

port 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 author-

ized purposes.

The Secretaries of HHS and Labor must work together to develop

a cost-effective means of accessing information in the various direc-

tories 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 li-

censes; 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 Con-

ference 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 revi-

sions to ensure that full faith and credit laws can be applied con-

sistently 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 with-

out the necessity of obtaining an order from any other administra-

tive or judicial tribunal. These actions include: ordering genetic

testing; issuing subpoenas; requiring public and private employers

and other entities to provide information on employment, com-

pensation, 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 admin-

istrative 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 withhold-

ing 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 ar-

rearages.

Paternity establishment

States are required to have laws that permit paternity establish-

ment until at least age 18 even in cases previously dismissed be-

cause a shorter statute of limitations was in effect. In contested pa-

ternity cases, except where barred by State laws or where there is

good cause not to cooperate, all parties must submit to genetic test-

ing at State expense; States may recoup costs from the father if pa-

ternity 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 issu-

ing an affidavit of voluntary paternity acknowledgment based on a

form developed by the Secretary. When the child’s parents are un-

married, 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 find-

ing of paternity unless rescinded within 60 days; thereafter, ac-

knowledgments can be challenged only on the basis of fraud, du-

ress, 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 pa-

ternity 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 ad-

judications 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 en-

courage the use of procedures for voluntary establishment of pater-

nity and child support.

Individuals who apply for public assistance must provide specific

identifying information about the noncustodial parent and must ap-

pear at interviews, hearings, and other legal proceedings. States

must have good cause and other exceptions from these require-

ments which take into account the best interests of the child. Ex-

ceptions 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 es-

tablishment rate; in addition to the current procedure of calculat-

ing the rate relative to the IV–D caseload, States may calculate the

rate relative to all out-of-wedlock births in the State. The manda-

tory 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 infor-

mation 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 pro-

gram, 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 cal-

culates 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 en-

acted before or during 1988 must be met by October 1, 1997; fund-

ing 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 di-

vided 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 infor-

mation 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 serv-

ices, 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 re-

views 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 institu-

tions are provided immunity from prosecution for providing infor-

mation to child support agencies; however, individuals who know-

ingly make unauthorized disclosures of financial records are subject

to civil actions and a maximum penalty of $1,000 for each unau-

thorized disclosure.

Enforcement of support orders

Child support enforcement for Federal employees, including retir-

ees 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 re-

sponding 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 offi-

cials. 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 lo-

cation 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 pro-

ceedings. 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 sup-

port. State law must permit a court or administrative process to

issue an order requiring individuals owing past-due support to ei-

ther pay the amount due, follow a plan for repayment, or partici-

pate in work activities. States must periodically report to credit bu-

reaus, after fulfilling due process requirements, the names of par-

ents owing past-due child support. States must also have proce-

dures 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 li-

censes of individuals owing past-due child support. In addition,

State child support agencies must enter into agreements with fi-

nancial 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 en-

cumber 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 ar-

rearages in excess of $5,000, the Secretary of HHS must request

that the State Department deny, revoke, restrict, or limit the indi-

vidual’s passport.

The Secretary of State, working with the Secretary of HHS, is

authorized to declare reciprocity with foreign countries for the pur-

poses 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 in-

clude 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 enforce-

able 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 super-

vised 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.

ITLE

IV: R

ESTRICTING

ELFARE AND

UBLIC

ENEFITS FOR

ONCITIZENS

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 ben-

efits.

Regarding Federal programs, the act contains three new restric-

tions 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 assist-

ance under the following federally funded programs: Temporary As-

sistance for Needy Families (TANF), which replaces AFDC; social

services block grants; and Medicaid (other than emergency serv-

ices). 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 cer-

tain 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 pur-

pose (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 de-

cide 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 eli-

gibility 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 naturaliza-

tion. Once an alien becomes a citizen, she becomes eligible for ben-

efits 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 resi-

dents, aliens paroled into the United States for at least 1 year, ref-

ugees, and aliens granted asylum or certain similar relief. The re-

strictions include a direct bar on eligibility for: (1) the Supple-

mental 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 Pro-

gram. The restrictions also include a State option to restrict the eli-

gibility 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 So-

cial Security Act; and (3) Medicaid, except that treatment for emer-

gency 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 re-

quirements. The first is a time-limited exception for humanitarian

entrants. Under this exception, benefits may not be restricted dur-

ing 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 re-

mains 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 enact-

ment. 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 enact-

ment.

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 serv-

ice 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 simi-

lar 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 com-

munity level; (ii) providing assistance without individual deter-

minations 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 Refu-

gee 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 deem-

ing) 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 Unit-

ed 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 de-

fined to include: (1) grants, contracts, loans, and licenses and (2)

retirement, welfare, health, disability, housing, food, unemploy-

ment, postsecondary education, and similar benefits. Excepted pro-

grams 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 com-

munity level; (ii) providing assistance without individual deter-

minations 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 In-

surance benefits under title II of the Social Security Act that are

protected by that title or by treaty or that are paid under applica-

tions 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 Na-

tional 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 In-

dian reservations under the Food Stamp Act.

Sponsor-to-alien deeming and affidavits of support.—The Immi-

gration 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. resi-

dents. 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 resi-

dent status have had affidavits of support filed on their behalf. De-

spite the frequency of their use, the pledges of support contained

in affidavits have not been regarded by the courts to be legally en-

forceable. Section 423 of the Personal Responsibility and Work Op-

portunity 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 govern-

ment 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 pro-

vided 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 deem-

ing requirements on sponsored aliens who have had one of the new,

enforceable affidavits filed for them. Generally, if a sponsor has ex-

ecuted 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 be-

comes a citizen. Nevertheless, sponsor-to-alien deeming may end

before the alien becomes a citizen if the alien meets the 40 qualify-

ing 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 in-

tended 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 Oppor-

tunity 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 pa-

roled 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, con-

tracts, grants, loans, and assistance, but State and local benefits do

not include those funded or provided in part by the Federal Gov-

ernment. 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 com-

munity level; (ii) providing assistance without individual deter-

minations 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. Not-

withstanding 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 eli-

gibility for State and local benefits of qualified aliens, non-

immigrant 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 hon-

orably discharged veterans, active duty service personnel (other

than those on active duty for training), and their spouses and un-

married dependent children. Finally, there is a 40 qualifying quar-

ter exception to State authority to deny State and local benefits

that is similar to the exception that applies to the State option re-

garding 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 subdivi-

sions to mirror Federal sponsor-to-alien deeming requirements in

their programs.

Verification and reporting

Under section 432 of the act, the Attorney General, in consulta-

tion 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 as-

sisted 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 infor-

mation 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 Commis-

sioner of Social Security; (3) States operating under agreements for

the payment of SSI State supplements through the Federal Gov-

ernment; (4) the Secretary of Housing and Urban Development;

and (5) public housing agencies operating under contracts for as-

sistance 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 im-

migration 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 en-

acted as Division C of H.R. 3610, Department of Defense Appro-

priations for fiscal year 1997, the Omnibus Consolidated Appro-

priations Act of 1997 Public Law 104–208, makes affidavits of sup-

port 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 cor-

responding 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 chari-

table organizations to provide a Federal public benefit without hav-

ing 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 ac-

cess to benefits, the immigration law classifies certain alien bat-

tered spouses and children as ‘‘qualified aliens,’’ delays the begin-

ning of the transition period for redetermination of food stamp eli-

gibility until April 1, 1997, and specifically prohibits payment of

Social Security benefits to aliens not lawfully present. It puts cer-

tain housing restrictions in statute.

ITLE

V: C

HILD

ROTECTION

The Personal Responsibility and Work Opportunity Reconcili-

ation 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 Con-

gress, the final conference agreement makes no significant changes

in current programs.

Grants to States for child welfare services will continue to be au-

thorized under title IV–B of the Social Security Act as a discre-

tionary 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 enti-

tlement 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 discre-

tionary 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 non-

profit 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 es-

tablishing 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 in-

tended to result in a comprehensive, nationwide system for collect-

ing 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 chil-

dren in foster care; and to learn why children enter foster care,

how long children stay in care, and what happens to children dur-

ing 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 Fed-

eral matching of 75 percent during fiscal years 1994–96 to help

States automate their data collection systems. To receive these en-

hanced funds, State systems must: meet AFCARS requirements;

provide for electronic data exchange within the State among relat-

ed 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 Wel-

fare 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 entitle-

ment 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 com-

ponent 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 av-

erage duration of each placement. The Secretary is directed to pre-

pare 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 re-

quiring that State plans provide that the State shall consider giv-

ing 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 provi-

sions 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 pur-

pose of the act (section 552); moreover, it lacked a strong enforce-

ment 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 Fed-

eral 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 other-

wise’’ (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 per-

cent for the third or subsequent violation. The total amount of pen-

alties 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.

ITLE

VI: C

HILD

ARE

The Personal Responsibility and Work Opportunity Reconcili-

ation 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 activi-

ties 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 fami-

lies).

This consolidation eliminates conflicting provisions among pro-

grams, including income eligibility standards, time limits on the re-

ceipt of assistance, and work requirements. Under the new system,

Federal funds will follow the parent whether the parent is receiv-

ing public cash assistance while participating in a work-related ac-

tivity 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 dis-

ruptions, 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 ad-

ministered by the Department of Health and Human Services

(HHS).

Goals

The new law establishes five goals for the expanded CCDBG, in-

cluding: 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 assist-

ance; 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 for-

mula, which is based on the number of children in low-income fam-

ilies and State per capita income. Territories will continue to re-

ceive 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 provi-

sion that required States to use CCDBG funds to supplement, rath-

er 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 re-

allocate 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 en-

titlement 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 bil-

lion 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 stat-

ed 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 al-

located 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 re-

main available for expenditure by States with no fiscal year limita-

tion.

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 mainte-

nance-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 fis-

cal 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 chil-

dren under age 13.

Use of funds for certain populations

Of their total entitlement funds, States must use at least 70 per-

cent 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 ac-

tivities, 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 agen-

cy for administration of Federal funds received for child care. How-

ever, 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 state-

wide 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 re-

ceived 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 administra-

tive costs, and that the following activities should not be considered

administrative costs: eligibility determination and redetermination,

preparation and participation in judicial hearings, child care place-

ment, 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 com-

plaints about providers remain unchanged, including the require-

ment that parents be offered the option of receiving child care as-

sistance 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 in-

clude individuals caring for their great grandchild or sibling (if the

sibling provider lives in a separate residence). The prior law re-

quirement that relative care givers be registered is deleted; rel-

atives 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 require-

ments, 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 pro-

vided within the State, and requires State plans to include a de-

tailed description of these requirements and how they are effec-

tively enforced. This provision shall not be construed to require

that licensing requirements be applied to specific types of provid-

ers. 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 licens-

ing 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 sub-

sidized child care providers comply with applicable health and safe-

ty 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 qual-

ity or availability of child care, or any other activity considered ap-

propriate 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 elimi-

nates the requirement that payment rates must consider the vari-

ations 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 en-

sure 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 com-

prehensive 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 re-

ferral 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 serv-

ices.

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 com-

bination of these steps. Prior law required the Secretary to with-

hold any future payments to a State until the compliance failure

was corrected.

Data collection

Under the former CCDBG, States were required to submit an-

nual 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 as-

sistance to HHS every quarter, and aggregate data twice a year.

The law further requires the Secretary to submit a report to Con-

gress once every 2 years.

Specifically, States must collect the following information on each

family unit receiving assistance, to be included in quarterly re-

ports: 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 includ-

ing 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 num-

ber of child care providers that receive funding under this program,

separately identified by type; the monthly cost of child care serv-

ices, and the portion that is subsidized by this program, identified

by type; the number of payments made by the State through vouch-

ers, 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 num-

ber 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 entitle-

ment, 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 organi-

zations, 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 construc-

tion 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 re-

quest after a determination that adequate facilities are not other-

wise 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 serv-

ices 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 ef-

fective upon enactment.

ITLE

VII: C

HILD

UTRITION

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, con-

form 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 sub-

sidies 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 Na-

tional 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 applica-

tions for free and reduced-price meals less frequently than once a

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 pay-

ments for a fourth meal/snack each day will reduce some payments to day care centers. (See

below.)

Day care centers typically serve more than 40 children; homes generally have 4–7 children.

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 in-

stitutions, and child care centers; (3) ends a requirement for ad-

vance payments to participating child care institutions; (4) elimi-

nates special summer food service program rules for National

Youth Sports Program sponsors; (5) makes funding for the nutri-

tion education and training program a ‘‘discretionary’’ appropria-

tion, 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 dis-

qualified 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 ris-

ing 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.

Federal payments for homes.—Federal subsidy rates for meals/

snacks served to children in eligible day care homes are not cur-

rently differentiated by the family income of the child, unlike pay-

ments to day care centers (and schools).

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. How-

ever, 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 in-

come above 185 percent of the Federal poverty guidelines (the in-

come 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.

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

Although each payment rate is rounded down, the bases used for the next adjustment will

be the unrounded rates for the previous 12 months.

A 3-percent adjustment will not be large enough to affect initial subsidy rates for breakfasts

and snacks.

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 re-

duced-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 rel-

atively minor differences: beginning with the July 1997 annual in-

flation 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.

The

CBO estimates that about 35 percent of meals/snacks served by

day care homes will be subsidized at tier I rates.

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.

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.

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 bur-

den 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 infor-

mation and makes the appropriate eligibility determination in ac-

cordance 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.

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.

In determining homes’ tier I or II status, the most current avail-

able data (Census, enrollment, provider income) must be used, and

a determination that a home is located in a tier I area will gen-

erally 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 pro-

hibits 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 as-

sist 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 nec-

essary 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 en-

rolled in a specific month or other period; (2) placing a home in a

Federal reimbursement category based on its percentage of chil-

dren with household income below 185 percent of the poverty

guidelines; or (3) any other procedures judged appropriate. In addi-

tion, States are required to provide school enrollment data nec-

essary 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.

The grants are to be used to: (1) assist sponsors (and

other appropriate organizations) in securing and providing train-

ing, materials, automated data processing, and other aid for spon-

sors’ staff; and (2) provide training and other implementation as-

sistance to participating homes. States may retain no more than 30

percent of their grant for their use.

Study.—The Agriculture Department, in conjunction with the

Department of Health and Human Services, is required to under-

take a comprehensive study of the participation and nutrition ef-

fects of the amendments restructuring day care home reimburse-

ments, 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 Agri-

culture Department to issue interim regulations related to the re-

structuring of subsidies for day care homes, provision of data nec-

essary to implement the new system, and changes to rules govern-

ing 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 sub-

sidy rates for meals and snacks served by child and adult care cen-

ters 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 re-

sult 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 pay-

ments 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 Agri-

culture Department has a responsibility to act to ‘‘expand’’ child

care food services, and States must take affirmative action to ex-

pand 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 informa-

tion 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 agen-

cies must provide child care institutions with specific WIC mate-

rials, 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 tech-

nical 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 mon-

itoring 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 sum-

mer 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 spon-

sors 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 Fed-

eral subsidies (effective January 1, 1997, for the summer of 1997),

the summer food service program amendments are effective on Au-

gust 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 nu-

trition 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 Janu-

ary 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 ad-

justment, 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 adjust-

ments will be based on the unrounded rates for the previous 12-

month period.

Additional meals/snacks.—Payments to summer camps and in-

stitutions 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 require-

ments than other summer sponsors. The new act removes these

special provisions for NYSP sponsors.

‘‘Offer versus serve.’’—The new law authorizes school food au-

thorities participating as summer program sponsors to permit chil-

dren attending a site on school premises operated by the authority

to refuse 1 or more items of a meal without affecting reimburse-

ment 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 serv-

ice program and provide ‘‘additional’’ technical assistance to sum-

mer program sponsors that are having difficulty maintaining com-

pliance with nutrition requirements. The new act eliminates these

provisions of law.

State agencies must establish and implement an ongoing train-

ing and technical assistance program for private nonprofit spon-

sors. 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 institu-

tions 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 ad-

vance payment to nonschool providers. It also replaces a require-

ment that service institutions’ contracts with food service manage-

ment companies must require that bacteria levels conform to stand-

ards applied by the local health authority with a more general re-

quirement 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

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.

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 De-

partment to use $5 million a year through fiscal year 1997, $6 mil-

lion in 1998, and $7 million in each subsequent year to fund a pro-

gram of competitively bid grants to State education agencies for the

purpose of initiating or expanding the school breakfast and sum-

mer 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 pro-

vides that individuals eligible to receive free public education bene-

fits under State or local law will not be made ineligible for benefits

under the school lunch and breakfast programs on the basis of citi-

zenship, 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 sub-

stantive amendment affecting the school lunch and breakfast pro-

grams. 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).

The new law includes a number of administrative amend-

ments dropping or revising overly prescriptive provisions of law

governing school meal programs. More specifically, the new act re-

moves:

1. A requirement that the Agriculture Department establish ‘‘ad-

ministrative 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 applica-

tions describe ‘‘management goals’’ to be achieved, a timetable

for implementation, and the process to be used for monitoring

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 reason-

able approach’’ to meeting Federal nutrition standards for school meals.

progress in implementing the waiver (including cost implica-

tions); (2) the Agriculture Department state in writing the ex-

pected outcome of any approved waiver; (3) the Agriculture De-

partment’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 evaluat-

ing how the waiver contributed to improved services (and that

States submit a summary of these);

5. A requirement that the Agriculture Department provide ‘‘addi-

tional’’ technical assistance to schools that are having difficulty

maintaining compliance with nutrition requirements; and

6. A requirement that the Agriculture Department and State edu-

cation 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 agree-

ments 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 consist-

ency with the Dietary Guidelines for Americans with a require-

ment that schools serve meals that are consistent with the Die-

tary 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 allow-

ances (in the case of breakfasts);

3. It provides that school food authorities may not be required to

submit free and reduced-price ‘‘policy statements’’ to State edu-

cation 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 suc-

cessive 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 al-

lowed 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 administra-

tive expenses when a State fails to agree to participate in a

study or survey under the National School Lunch or Child Nu-

trition 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 dis-

tribution 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 person-

nel 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 chil-

dren (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 proce-

dures. In addition, effective on enactment, the new law contains a

number of administrative amendments removing or revising Fed-

eral 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, includ-

ing public service announcements in English and other appro-

priate languages;

2. A requirement for a biennial report from the Agriculture De-

partment on the characteristics of WIC participants, participa-

tion by migrants, and other matters;

None of the amendments affecting procurement practices are to affect contracts for infant

formula in effect on August 22, 1996.

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 partici-

pation 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, in-

cluding 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 deliv-

ery 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);

and

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 con-

tainment’’ procedures, inform States of the benefits of cost con-

tainment 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 appli-

cants 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) author-

ity 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 spe-

cific list of special counselling services and programs and re-

placing them with a general directive to coordinate WIC oper-

ations 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 un-

derserved 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 mate-

rials in languages other than English from a mandate to an op-

tion;

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 require-

ment 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, In-

fant, and Fetal Nutrition rather than the Secretary of Agri-

culture, 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 appro-

priated) 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 nu-

trition 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 edu-

cation and training funds may be spent. The bill replaces the fol-

lowing 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 lin-

guistic and cultural backgrounds to practice sound eating hab-

its;

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.

3. Developing means of providing nutrition education in ‘‘lan-

guage-appropriate’’ materials through afterschool programs;

4. Training related to healthy and nutritious meals;

5. Creating instructional programming on the ‘‘Food Guide Pyra-

mid’’ (including language-appropriate materials);

6. Funding aspects of the ‘‘Strategic Plan for Nutrition Edu-

cation;’’

7. Encouraging public service advertisements to promote healthy

eating habits for children (including language-appropriate ma-

terials and advertisements);

8. Coordinating and promoting nutrition education and training

activities in local school districts;

9. Contracting with public and private nonprofit education insti-

tutions 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 pro-

grams.

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 require-

ments 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 op-

tional and authorizes ‘‘such sums as are necessary’’ for fiscal

years 1997 and 1998.

Coordination

Finally, the new act requires the Agriculture Department to de-

velop 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 ad-

ministrators in developing these proposed changes and submit to

Congress a report on them by November 1, 1997.

ITLE

VIII: F

OOD

TAMPS AND

OMMODITY

ISTRIBUTION

Overview

Subtitle A of title VIII of the Personal Responsibility and Work

Opportunity Reconciliation Act contains major and extensive revi-

sions to the Food Stamp Program, the most substantial changes

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).

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.

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 require-

ments, controls future spending increases, expands penalties for

rules violations and controls over food stamp trafficking, and en-

courages the electronic delivery of benefits. It also authorizes food

stamp appropriations through fiscal year 2002, without specific dol-

lar limits on appropriations or spending. Separately, title IV of the

act bars food stamp eligibility for most legally present aliens (ille-

gal 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 emer-

gency 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 purchas-

ing commodities for the new combined emergency food assistance

program—drawn from food stamp appropriations.

Congressional Budget Office (CBO) estimates of the act’s spend-

ing 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.

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 ap-

propriations: $600 million (through 2002) for the new combined

emergency food assistance program. And savings are further less-

ened 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.

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 com-

bination of both.

In doing so, States may operate a simplified pro-

gram statewide or in regions of the State and may standardize food

In carrying out this cost-neutrality requirement, States may not be required to collect infor-

mation on households not in their simplified programs, and the Agriculture Department may

approve alternative (nonfiscal-year) accounting periods.

stamp ‘‘deductions.’’ However, they must comply with the following

Federal food stamp rules:

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 re-

sources 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 eli-

gibility 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 Pro-

gram 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 re-

quired information;

8. The requirement to report illegally resident aliens to the INS;

and

9. Requirements to ensure that households are not receiving du-

plicate 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 por-

tion of a year), it must notify the State within 30 days.

Within

90 days, the State must then submit, for Federal approval, a cor-

rective 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.

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 de-

scription of how they will carry out their Food Stamp Program

‘‘quality control’’ system obligations (these remain in place for opt-

ing 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,

State plans must include the guidelines used in carrying out this new disqualification rule.

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 pro-

gram.

If an individual is disqualified for failure to perform an action re-

quired 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 im-

posed under a TANF program’s rules, States may use TANF rules

and procedures to impose the food stamp disqualification.

Indi-

viduals 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.

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 re-

quired action. In addition, States are permitted to reduce a house-

hold’s food stamp allotment by up to 25 percent in these cases, and,

if the allotment reduction is for failure to perform an action re-

quired 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 partici-

pants, test innovative welfare reform strategies, or allow great-

er 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 per-

cent, for more than 5 percent of the households subject to the

project/demonstration, the project cannot include more than 15

The 5-percent rule does not include those whose benefits would be reduced because of a fail-

ure to comply with work or other conduct-related requirements.

Certain projects allowing this are permitted. See the discussion of new work rules.

percent of the State’s food stamp population and is limited to

5 years (unless an extension is approved).

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 in-

creasing shelter expense deductions to households with either

no out-of-pocket shelter expenses or shelter expenses that rep-

resent 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 con-

ducted if they are inconsistent with certain Food Stamp Act re-

quirements: (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 in-

come eligibility limit (130 percent of the Federal poverty guide-

lines) 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;

(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 recipi-

ents; (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 (in-

cluding 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.

Moreover, the new law requires that, not later than 60 days after

receiving a demonstration/pilot project waiver request, the Agri-

culture Department must (1) approve the request, (2) deny it and

explain any modifications needed for approval, (3) deny it and ex-

plain the grounds for denial, or (4) ask for clarification of the re-

quest. If a response is not forthcoming in 60 days, the waiver is

considered approved; if a waiver is denied, the Agriculture Depart-

ment 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 expe-

dited 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 allot-

ment 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 over-

issuance collection rules that generally restrict State agencies’ col-

lection efforts with provisions requiring them to collect any over-

issued benefits by reducing future benefits, withholding unemploy-

ment compensation, recovering from Federal pay or income tax re-

funds, or any other means—unless the State agency demonstrates

that all of the means available are not cost effective. Benefit reduc-

tion collections (absent an intentional program violation) are lim-

ited to the greater of 10 percent of the monthly allotment or $10

a month. State agencies may collect overissued benefits in accord-

ance 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 per-

cent, respectively.

Child support.—The amendments in the act give States the op-

tion 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 pater-

nity and obtaining support for themselves and the child. Coopera-

tion is not required if the State finds there is good cause for the

failure (in accordance with Federal standards that take into ac-

count 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 disquali-

fied if they fail to cooperate with the State child support enforce-

ment agency in establishing paternity and providing support for

the child. The Agriculture and Health and Human Services Depart-

ments 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 pay-

ment, 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 certifi-

cation 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 re-

moved include requirements that States must:

1. Allow households contacting a food stamp office in person dur-

ing office hours to make an oral/written request for aid and re-

ceive and file an application on the same day;

2. Use a simplified, uniform, federally designed application, un-

less 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 house-

holds with transportation or similar difficulties;

6. Assist households in obtaining verification and completing ap-

plications;

7. Not require additional verification of currently verified infor-

mation (unless there is reason to believe that the information

is inaccurate, incomplete, or inconsistent);

8. Not deny an application solely because a nonhousehold mem-

ber 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 house-

holds 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 of-

fices 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 re-

cipients; 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 in-

formation.

Other administrative rules.—Amendments made to administra-

tive 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 determina-

tions 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 hear-

ing);

3. Make it a State option to use the Federal ‘‘income and eligi-

bility 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 recipi-

ent 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 proce-

dures by which States may submit for approval a method for deter-

mining reasonable estimates of the cost of producing self-employ-

ment 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 remain-

der of the household in which the alien lives (as opposed to count-

ing 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 ac-

tions 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 in-

tensive training of those certifying farm households and training

and assistance to organizations offering outreach services and eligi-

bility screening).

Work and training

New work requirement.—The new act adds a new work require-

ment for able-bodied adult food stamp recipients without depend-

ents.

The requirement.—No covered individual (see below for exemp-

tions) 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 Pro-

gram, or a program of employment and training operated or super-

vised by a State or political subdivision that meets standards ap-

proved 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 require-

ments of a work program (as defined above) for 80 or more hours

(as determined by the State agency); or (3) participates in and com-

plies with a workfare program. After having met this 30-day work/

training requirement, the individual can remain eligible for a con-

secutive period of 3 months without working at least 20 hours a

week or participating in an employment/training or workfare pro-

gram. 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 con-

secutive 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 sin-

gle 3-month period in any 36 months. Individuals regaining eligi-

bility also can remain eligible for food stamps as long as they con-

tinue 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 Depart-

ment 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 em-

ployment. The basis for any waiver must be reported to Congress.

Receipt of food stamp benefits while exempt (including participa-

tion 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 ear-

lier 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 pen-

alties.—In addition to establishing the new work requirement for

adults without dependents, the legislation expands on prior work/

training requirements and sets mandatory minimum disqualifica-

tion periods related to these and the prior requirements.

The new act adds work-related eligibility conditions making indi-

viduals 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 with-

out good cause reduce work effort and (after the reduction) are

working less than 30 hours a week. It also provides that all indi-

viduals (not just heads of household) will be ineligible if they volun-

tarily 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 mini-

mum 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 ful-

fill 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) perma-

nently, 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 pro-

grams.—The new act changes the Federal rules governing State-

operated employment and training programs for food stamp recipi-

ents. 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 ‘‘State-

wide 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 compo-

nents of State programs;

4. Drops provisions requiring that employment/training compo-

nents 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 ex-

empt 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 pro-

grams; 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 train-

ing 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’’ (deter-

mined by the Agriculture Department) that gives consideration to

each State’s population of persons subject to the new work require-

ment (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 estab-

lishes an option for States to operate work supplementation or sup-

port programs under which the value of public assistance benefits,

including food stamps, are provided to employers who hire recipi-

ents 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, with-

in 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 house-

hold 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 pro-

gram because of increased earnings, and a household eligible to re-

ceive its allotment in cash may choose food stamps instead. States

opting for these cash payments are required to increase food stamp

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 Con-

gressional Budget Office attributes the 1997 Federal outlay savings for this freeze (some $345

million) to the appropriations act.

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 shel-

ter expense deduction ceilings for Alaska, Hawaii, and outlying areas.

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 per-

cent of cost of the plan. However, benefits will not drop below cur-

rent levels due to this change. Basic benefits will continue to be in-

dexed annually for food-price inflation measured by the cost of the

Thrifty Food Plan. This change is effective October 1, 1996, and co-

incides 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 cal-

culated, their counted monthly income is reduced by several ‘‘de-

ductions,’’ 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 de-

ductions (applied to households without elderly or disabled mem-

bers) 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 out-

lying areas).

It also repeals the scheduled end of the limit on

shelter expense deductions, replacing it with an increase in the ex-

isting 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.

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 earn-

ings) 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

Requirements for longer (including permanent) disqualification are retained; e.g., perma-

nent 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, ammuni-

tion, or explosives.

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/re-

placement 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 begin-

ning in October 1996. The new act raises it to $4,650 (effective Oc-

tober 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 house-

hold—removing an exception for children living with their parents

who are themselves married or have children.

Student earnings.—The new legislation requires that the earn-

ings of secondary school students be counted for food stamp pur-

poses 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 re-

quires 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 eli-

gibility 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 pe-

riod 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.

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.

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 provi-

sion making individuals ineligible while they are fleeing to avoid

prosecution, custody, or confinement for a felony or attempted fel-

ony (or violating a condition of probation or parole).

Criminal forfeiture rules.—The new law establishes ‘‘criminal for-

feiture’’ rules for those involved in food stamp trafficking. In impos-

ing sentence on those convicted of trafficking, courts are required

to order that the person forfeit property to the United States. Prop-

erty subject to forfeiture includes all property (real and personal)

used in a transaction (or attempted transaction) to commit (or fa-

cilitate the commission of) a trafficking violation other than a mis-

demeanor. 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 inves-

tigative and prosecutorial costs and, by the Agriculture Depart-

ment, for retailer/wholesaler monitoring activities.

Retailer/wholesaler disqualification related to the WIC Pro-

gram.—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 sub-

ject to separate food stamp administrative or judicial review provi-

sions.

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 dis-

qualification determination, pending administrative and judicial re-

view. If the disqualification is reversed through administrative/ju-

dicial 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 con-

cerns’ authorization to accept and redeem food stamp benefits will

be valid.

Waiting periods.—The law provides that retailers and whole-

salers 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 sub-

mit an application to accept and redeem food stamp benefits that

contains false information about a substantive matter—for a rea-

sonable 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 documenta-

tion from other sources in order to verify the accuracy of the infor-

mation provided.

Evidence for retailer/wholesaler violations.—The new act re-

quires that Federal regulations provide criteria for the finding of

retailer/wholesaler violations on the basis of evidence that may in-

clude 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 con-

cerns (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 Depart-

ment 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 con-

sumers using cards to electronically access their accounts) will not

apply to any EBT system distributing needs-tested benefits estab-

lished 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 consider-

ation for these services, on the condition or requirement that the

customer obtain some additional point-of-sale service from the com-

pany 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 ap-

plies the ‘‘antitying’’ restrictions of the Bank Holding Act amend-

ments 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 com-

pared to coupon-based systems in any given year;

2. Adds a requirement that regulations regarding the replace-

ment 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 appro-

priate—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 en-

forcement officials;

7. Adds requirements that Federal EBT standards include meas-

ures 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 termi-

nates any Federal cost sharing for ‘‘recruitment activities’’ that are

part of any State-option informational (outreach) efforts.

Exchange of law enforcement information.—The legislation re-

quires State food stamp agencies to make available to law enforce-

ment 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 flee-

ing to avoid prosecution, custody, or confinement for a felony, is

violating a condition of parole or probation, or has information nec-

essary 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 Agri-

culture 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 pro-

gram to distribute federally donated commodities that combines the

preexisting emergency food assistance program, the commodity dis-

tribution program for soup kitchens, and the commodity distribu-

tion program for food banks. States will receive Federal commod-

ities 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 re-

quired to be spent for purchasing commodities for this new, com-

bined emergency food assistance program. Funding for administra-

tive and distribution costs continues to be authorized, not required.

ITLE

IX: M

ISCELLANEOUS

The Personal Responsibility and Work Opportunity Reconcili-

ation 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 applica-

ble to the expenditure of the States’ own resources (i.e., appro-

priated 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 con-

trolled 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 mis-

demeanor), or who is violating a condition of probation or pa-

role, 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 offi-

cer, upon request by the officer, with the current address, So-

cial 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 recipi-

ent is a fugitive felon (or in the case of New Jersey, a person

fleeing because of a high misdemeanor) or a probation or pa-

role violator or that the person has information that is nec-

essary for the officer to conduct his official duties. The location

or apprehension of the recipient must be within the officer’s of-

ficial 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 re-

fuses or is unable to pay child support contribute to the child

support owed;

5. The law requires the Secretary of HHS to establish and imple-

ment 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 Con-

gress by June 30, 1998, on progress made toward meeting

these two goals;

6. State and local jurisdictions are encouraged to aggressively en-

force 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 elec-

tronic 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 num-

ber be treated by the Internal Revenue Service as a mathe-

matical 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 in-

come 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 phas-

ing 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 bene-

fits from public or assisted housing (and food stamps and

AFDC or TANF) may not be increased in response to the in-

come 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 absti-

nence. 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

This section was prepared by the Congressional Research Service.

SECTION 3. STATE-BY-STATE ALLOCATION OF GRANTS

FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES

AND CHILD CARE

NTRODUCTION

The Personal Responsibility and Work Opportunity Reconcili-

ation Act of 1996 ends Aid to Families With Dependent Children

(AFDC) and related programs and replaces them with a new pro-

gram 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 bil-

lion in entitlement child care funds for the States and Indian tribes

over the 6-year period fiscal year 1997 through fiscal year 2002.

EMPORARY

SSISTANCE FOR

EEDY

AMILIES

TANF replaces AFDC, State and local administration of AFDC

and related programs, Emergency Assistance, and the Job Opportu-

nities and Basic Skills (JOBS) program. States must end these pro-

grams 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 per-

cent federally funded, but would be reduced if a State failed to

meet a fiscal maintenance of effort requirement. The family assist-

ance 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 fis-

cal 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 tem-

porary 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 as-

sistance payments. Under current law, these collections are de-

ducted 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 pay-

ments for developing automated management information sys-

tems), 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 in-

cludes a deduction for the Federal share of child support enforce-

ment collections. Reporting of the net Federal share of AFDC ex-

penditures was necessary because, under prior law, AFDC pay-

ments to the States were reduced for a share of child support en-

forcement collections for families receiving AFDC (above the $50

passed through to the families). TANF grant allotments are not re-

duced for the Federal share of child support enforcement collec-

tions, though title IV–D continues the requirement that States

remit to the Federal Government a share of child support enforce-

ment 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 expend-

iture 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 com-

puting 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 adminis-

tration, 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 ve-

toed by President Clinton. At that time, only the first three quar-

ters 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—Ala-

bama, Arkansas, Louisiana, Mississippi, and Texas because these

States met the very low Federal expenditure per poor person cri-

terion in 1994, and Alaska, Arizona, Colorado, Idaho, Nevada, and

Utah because these States met the very high population growth cri-

terion 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 fis-

cal 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 esti-

mates 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 pop-

ulation 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 expendi-

tures 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 insuf-

ficient to pay the full supplemental amounts, grants would be pro-

portionately reduced for each qualifying State so that the $800 mil-

lion 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 de-

velop a formula for measuring State performance under the pro-

gram. 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 re-

ducing 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 bo-

nuses for the 5 years are set at $1 billion.

Contingency fund

TANF provides additional matching grants for States that expe-

rience 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, Emer-

gency 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 case-

load would have been, according to the Secretary of Agri-

culture, 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 deter-

mine whether a State qualifies for contingency funds is available

from the Department of Labor, which issues weekly extended bene-

fit 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 fis-

cal year 1994 caseload data to determine what the caseload would

have been had the amendments made by the Personal Responsibil-

ity and Work Opportunity Reconciliation Act of 1996 been in effect

during that year.

The amount of contingency funds for a State is the Federal Medi-

cal 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 expendi-

tures 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 spend-

ing 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 quali-

fies, 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 contin-

gency money, its subsequent year s family assistance grant would

be reduced by the amount of contingency funds it received.

HILD

ARE

Under the reformed Child Care and Development Block Grant

(CCDBG), the Federal Government provides States with both dis-

cretionary and entitlement funding for child care. Over the 6 years,

fiscal year 1997 through fiscal year 2002, a maximum of $19.9 bil-

lion 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 pro-

vided 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 author-

ized 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 alloca-

tions 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.

ISCRETIONARY

UNDING

Discretionary funds are allocated to the States based on the for-

mula 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 North-

ern 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 discre-

tionary child care funds. For the 50 States, the District of Colum-

bia, and Puerto Rico, the estimates are from DHHS and reflect the

State shares based on preliminary fiscal year 1996 allocation. Ter-

ritory 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.

ANDATORY

UNDING

States are also entitled to mandatory funding under the CCDBG.

These grants would replace the prior law title IV–A child care pro-

grams 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 ex-

penditures in the prior law title IV–A programs. These recent ex-

penditures 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 annu-

ally. 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, which-

ever 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]

State

Family assist-

ance grant

State

Family assist-

ance 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]

State

Year

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 ................................... 0000

Colorado ..................................... 3,268 6,617 10,051 10,108

Connecticut ................................0000

Delaware ....................................0000

District of Columbia .................. 0000

Florida ........................................ 14,547 29,457 44,740 44,997

Georgia ....................................... 8,978 18,181 27,614 27,773

Hawaii ........................................0000

Idaho .......................................... 842 1,706 2,591 2,606

Illinois ........................................0000

Indiana ....................................... 0000

Iowa ............................................ 0000

Kansas .......................................0000

Kentucky ..................................... 0000

Louisiana .................................... 4,100 8,303 12,611 12,684

Maine .........................................0000

Maryland ....................................0000

Massachusetts ........................... 0000

Michigan ....................................0000

Minnesota ................................... 0000

Mississippi ................................. 2,176 4,406 6,692 6,731

Missouri ...................................... 0000

Montana ..................................... 1,131 2,289 3,477 3,497

Nebraska .................................... 0000

Nevada ....................................... 899 1,821 2,765 2,781

New Hampshire ..........................0000

New Jersey .................................. 0000

New Mexico ................................ 3,246 6,573 9,983 10,041

New York .................................... 0000

North Carolina ............................ 8,696 17,609 26,745 26,899

North Dakota .............................. 0000

Ohio ............................................ 0000

Oklahoma ................................... 0000

Oregon ........................................ 0000

Pennsylvania ..............................0000

Rhode Island .............................. 0000

South Carolina ........................... 2,596 5,257 7,984 8,030

South Dakota ............................. 0000

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

TABLE 4.—ESTIMATED GRANTS TO STATES WITH HIGH POPULATION GROWTH AND/OR

LOW WELFARE GRANTS PER POOR PERSON,—Continued

FISCAL YEARS 1998–2001

[$ in thousands]

State

Year

1998 1999 2000 2001

Vermont ...................................... 0000

Virginia ....................................... 4,381 8,873 13,476 13,553

Washington ................................ 0000

West Virginia .............................. 0000

Wisconsin ................................... 0000

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

State

Year

Total

1997–2002

1997 1998 1999 2000 2001 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

TABLE 5.—TOTAL FUNDING UNDER THE CHILD CARE AND DEVELOPMENT BLOCK GRANT, FISCAL YEARS 1997–2002—Continued

State

Year

Total

1997–2002

1997 1998 1999 2000 2001 2002

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

................................................................................. 24,956 24,956 24,956 24,956 24,956 24,956 149,735

Guam

.......................................................................................... 2,404 2,404 2,404 2,404 2,404 2,404 14,425

Virgin Islands

............................................................................. 1,687 1,687 1,687 1,687 1,687 1,687 10,121

Northern Marianas

...................................................................... 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.

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

TABLE 6.—STATE ANNUAL ALLOTMENTS OF DISCRETIONARY CHILD CARE FUNDS,—

Continued

FISCAL YEARS 1997–2002

[$ in thousands]

State Allotment Percent

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, Dis-

trict 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 Chil-

dren 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]

State

Guaranteed

child care

funds

State

Guaranteed

child care

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 Depart-

ment of Health and Human Services.

TABLE 8.—STATE ESTIMATED ALLOTMENTS UNDER THE ENTITLEMENT CHILD CARE MATCHING GRANTS, FISCAL YEARS 1997–2002

State

Year

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)

..................................................................... 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 oper-

ating its block grant program; however, the pen-

alty 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.).

SECTION 4.—SUMMARY OF EFFECTIVE DATES BY TITLE—Continued

Section Provision Effective date

103a(409) ........................................................................ Penalties For failure to repay loans and for failure to main-

tain 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 no-

tice of adverse action; specifies time allowed for

appeals (administrative and Federal) and for ad-

ministrative 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 Con-

gress 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 illegit-

imacy: 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 pov-

erty 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 su-

persede 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 Is-

lands, American Samoa)

For increase in funding ceilings, Oct. 1, 1996; for

the 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

Security Act

Oct. 1, 1996.

104 .................................................................................. Services provided by charitable, religious, or private

organizations

July 1, 1997 (earlier if State opts for TANF sooner).

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 re-

quirements (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 Se-

curity 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 Security card

Commissioner of Social Security must report to

Congress by Aug. 22, 1997.

112 .................................................................................. Modification of JOLI program July 1, 1997.

113 .................................................................................. Secretarial submission of technical and conforming

amendments

Secretary must submit proposal by Nov. 20, 1996.

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 tran-

sition rules apply for States opting to begin their

block grant programs earlier.

116c ................................................................................ Termination of individual entitlement to AFDC Oct. 1, 1996.

100

SECTION 4.—SUMMARY OF EFFECTIVE DATES BY TITLE—Continued

Section Provision Effective date

Title II. Supplemental Security Income (SSI)

201 .................................................................................. Denial of SSI benefits for 10 years to individuals

found to have fraudulently misrepresented resi-

dence in order to obtain benefits simultaneously

in two or more States

Aug. 22, 1996.

202 .................................................................................. Denial of SSI benefits for fugitive felons and proba-

tion and parole violators

Aug. 22, 1996.

203 .................................................................................. Financial incentives for State or local penal institu-

tions to provide SSA information on prisoners re-

ceiving benefits

Applies to individuals whose period of confinement

in an institution commences on or after Mar. 1,

1997.

Study of other potential improvements in the collec-

tion of information regarding public inmates

Aug. 22, 1996; results of the study are due Aug.

22, 1997.

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

references to maladaptive behavior and dis-

continuance of the individualized functional as-

sessment

Applies to new and pending applications on or

after Aug. 22, 1996. Current beneficiaries must

be notified by Jan. 1, 1997, and redetermina-

tions are to be completed by Aug. 22, 1997.

Current beneficiaries found ineligible upon rede-

termination 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 effec-

tive date of the regulations.

Authorization of additional funding Aug. 22, 1996.

101

212 .................................................................................. Eligibility redeterminations and continuing disability

reviews

Applies to benefits for the months beginning on or

after Aug. 22, 1996.

213 .................................................................................. Requirement to establish an account Applies to payments made after Aug. 22, 1996.

214 .................................................................................. Reduction in cash benefits payable to institutional-

ized individuals whose medical costs are covered

by private insurance

Applies to benefits beginning in Dec. 1996.

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 ceased to receive welfare

Oct. 1, 1997.

302 .................................................................................. Distribution of arrear ages that accrued before the

family received welfare

Oct. 1, 2000.

302 .................................................................................. Study by Secretary on new rules of child support

distribution

Oct. 1, 1998.

302 .................................................................................. General effective date for distribution rules and

‘‘gap’’ payments

Oct. 1, 1996, or earlier at State option.

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 sys-

tem in place may continue their system until

Oct. 1, 1998).

313 .................................................................................. Comparison of new hire information in State Case

Registry and other sources and sending informa-

tion to the National Directory of New Hires

May 1, 1998.

102

SECTION 4.—SUMMARY OF EFFECTIVE DATES BY TITLE—Continued

Section Provision Effective date

314 .................................................................................. Orders not subject to withholding must automati-

cally be subject to withholding if arrearages

occur

Oct. 1, 1996.

316 .................................................................................. Expansion of Federal Parent Locator Service to in-

clude Federal Case Registry of Orders

Oct. 1, 1998.

316 .................................................................................. Expansion of Federal Parent Locator Service to in-

clude the National Directory of New Hires

Oct. 1, 1997.

321 .................................................................................. Adoption of Uniform Interstate Family Support Act

(UIFSA)

Jan. 1, 1998.

322 .................................................................................. Improvements to full faith and credit for child sup-

port orders

Aug. 22, 1996.

324 .................................................................................. Secretary promulgate forms to be used in interstate

cases for use in withholding income, imposing

liens, and issuing administering subpoenas

Oct. 1, 1996.

324 .................................................................................. States must use the forms promulgated by the Sec-

retary for income withholding, liens and admin-

istrative subpoenas

Mar. 1, 1997.

341 .................................................................................. Secretary’s report on a new incentive system of

child support financing

Mar. 1, 1997.

341 .................................................................................. Implementation of revised incentive system Oct. 1, 1999.

341 .................................................................................. State option for calculation of paternity establish-

ment percentage

Aug. 22, 1996.

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 require-

ments in effect on or before the enactment of

the Family Support Act of 1988

Oct. 1, 1997

344 .................................................................................. Completion of automated data processing enacted

on or before Aug. 22, 1996

Oct. 1, 2000.

345 .................................................................................. Technical assistance Aug. 22, 1996.

103

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 ar-

rearages

Oct. 1, 1997.

362 .................................................................................. Reforms of Child Support Collections for Federal

Employees (including military personnel)

Feb. 22, 1997.

363 .................................................................................. Enforcement of child support obligations of military

personnel

Aug. 22, 1996.

366 .................................................................................. Definition of support order Aug. 22, 1996.

370 .................................................................................. Denial of passports for nonpayment of child sup-

port

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 sup-

port order

General effective date is Aug. 22, 1996, but if pen-

sion plan needs to be amended, first plan year

after Jan. 1, 1997.

391 .................................................................................. Grants to States for access and visitation programs Aug. 22, 1996.

104

SECTION 4.—SUMMARY OF EFFECTIVE DATES BY TITLE—Continued

Section Provision Effective date

395 .................................................................................. General effective date Provisions of this act that require amendment of

State laws under section 466 of the Social Secu-

rity Act, or revision of State plans under section

454, are effective on Oct. 1, 1996; all other pro-

visions (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 amend-

ment or Aug. 22, 2001.

Title IV. Restricting Welfare and Public Benefits for Aliens

401 .................................................................................. Illegal aliens and nonimmigrants ineligible for most

Federal benefits

Aug. 22, 1996.

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, Medic-

aid, and social services to legal noncitizens

State option after Aug. 22, 1996 (other than for fu-

ture entrants during their first 5 years—see

below), but current recipients remain eligible

until Jan. 1, 1997.

105

403 .................................................................................. 5-year limited eligibility for most Federal welfare

benefits for future entrants

Changes affect noncitizens arriving after Aug. 22,

1996, for the individual’s first 5 years in the

U.S.

404 .................................................................................. Agencies must inform the public and notify recipi-

ents affected by eligibility changes

After Aug. 22, 1996 (current recipients of SSI must

be notified by Mar. 1, 1997).

411 .................................................................................. Illegal aliens ineligible for most State benefits

(with State ‘‘opt-out’’)

Aug. 22, 1996.

412 .................................................................................. State authority to limit eligibility for most State

welfare benefits for legal noncitizens

State option after Aug. 22, 1996, but current re-

cipients remain eligible until Jan. 1, 1997.

421 .................................................................................. Deeming of sponsor’s income in determining non-

citizen eligibility for most Federal benefits

Changes apply only to individuals arriving under

revised sponsorship agreements (see below).

422 .................................................................................. State authority to expand deeming to apply to most

State programs

Changes apply only to individuals arriving under

revised sponsorship agreements (see below).

423 .................................................................................. Requirements for revised sponsorship agreements

(affidavits of support)

Attorney General must formulate revised affidavits

within 90 days of Aug. 22, 1996; the revised af-

fidavits 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 pro-

mulgate regulations requiring verification of eli-

gibility for Federal benefits; States that admin-

ister programs providing Federal public benefits

have 24 months following the promulgation of

regulations to have verification systems in ef-

fect.

435 .................................................................................. No counting of quarters of work during which an

alien received welfare benefits

Begins Jan. 1, 1997.

106

SECTION 4.—SUMMARY OF EFFECTIVE DATES BY TITLE—Continued

Section Provision Effective date

Title V. Child Protection

Title VI. Child Care

603a ................................................................................ Authorization of appropriations and entitlement au-

thority

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 submit-

ted no later than Dec. 31, 1997).

Title VII. Child Nutrition

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 re-

structured system are due by Jan. 1, 1997.

723 .................................................................................. School breakfast program authorization Aug. 22, 1996, except that termination of the re-

quirement for school breakfast and summer food

service program startup and expansion grants is

effective Oct. 1, 1996.

107

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 food service programs

Aug. 22, 1996, with the report due Nov. 1, 1997.

Title VIII. Food Stamps and Commodity Distribution

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 de-

pendents

Aug. 22, 1996, except that transition provisions

stipulate that months before recipients are noti-

fied 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 vita-

mins and minerals

Aug. 22, 1996, with the study due by Dec. 15,

1998.

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 sub-

stances

Aug. 22, 1996.

903 .................................................................................. Elimination of housing assistance with respect to

fugitive felons and probation and parole viola-

tors

Aug. 22, 1996.

108

SECTION 4.—SUMMARY OF EFFECTIVE DATES BY TITLE—Continued

Section Provision Effective date

905 .................................................................................. Establishing national goals to prevent teenage

pregnancies

By Jan. 1, 1997, the Secretary of HHS must imple-

ment 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 stat-

utory rape laws

By Jan. 1, 1997, the Attorney General must imple-

ment a 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 serv-

ices; use of vouchers

Oct. 1, 1996 for reduction in grants; Aug. 22, 1996,

for authority to use funds for vouchers.

909 .................................................................................. Rules relating to denial of earned income credit on

basis of disqualified income

In general, applies to taxable years beginning after

Dec. 31, 1995; for individuals who before June

26, 1996, had in effect an earned income eligi-

bility certificate for taxable year 1996, applies to

taxable years beginning after Dec. 31, 1996.

910 .................................................................................. Modification of adjusted gross income definition for

earned income credit

Same as for section 909 above.

911 .................................................................................. Fraud under means-tested welfare and public as-

sistance programs

Aug. 22, 1996.

912 .................................................................................. Abstinence education Oct. 1, 1997.

913 .................................................................................. Change in reference Jan. 1, 1997.

Section numbers in parentheses are references to the Social Security Act.

All provisions of this title are effective upon enactment (Aug. 22, 1996).

With the exception of the following sections, all provisions of this title are effective Oct. 1, 1996.

With the exception of the following sections, all provisions of this title are effective upon enactment (Aug. 22, 1996).

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).

109

SECTION 5.

CONGRESSIONAL BUDGET OFFICE

ESTIMATES

110

111

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

112

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

113

FEDERAL BUDGETARY IMPLICATIONS OF H.R. 3734, THE

PERSONAL RESPONSIBILITY AND WORK OPPOR-

TUNITY RECONCILIATION ACT OF 1996

The Congressional Budget Office (CBO) has reviewed the con-

ference report on H.R. 3734, the Personal Responsibility and Work

Opportunity Reconciliation Act of 1996. The bill would replace Fed-

eral payments under the current Aid to Families With Dependent

Children Program with a block grant to States, restrict the eligi-

bility 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 de-

scribed below, and detailed tables for each title of the bill appear

at the end.

ITLE

I: T

EMPORARY

SSISTANCE FOR

EEDY

AMILIES

LOCK

RANT

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 en-

titlement 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 exist-

ing Medicaid benefit for families leaving public assistance and pro-

vide new funding for determining eligibility for Medicaid.

In 1997, CBO projects that under current law the Federal Gov-

ernment would spend $15.9 billion on AFDC benefits, AFDC ad-

ministration, 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, pro-

jected spending under current law ($18.3 billion) would exceed pro-

jected 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

114

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 contin-

gency fund. Also, a State that experiences an increase in participation in the Food Stamp Pro-

gram 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.

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 re-

lated 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 addi-

tional 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 esti-

mates 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 mil-

lion 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 abor-

tion rate is higher than its 1995 rate. CBO estimates that on aver-

age 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 re-

ceive 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.

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 maxi-

mum 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.

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

115

borrow from the loan fund in any year regardless of particular eco-

nomic circumstances. CBO estimates the creation of the loan au-

thority 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 inter-

est. 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 ac-

crued 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 fis-

cal 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 employ-

ment. 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 fami-

lies 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 ad-

dition, 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

116

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. Eventu-

ally, 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 assist-

ance 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 op-

tion.

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 participa-

tion of 1.7 million families. By contrast, program data for 1994 in-

dicate that, in an average month, approximately 450,000 individ-

uals 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 pro-

gram would be high, and Federal funding would be frozen at his-

toric levels. CBO estimates that States would need to invest an ad-

ditional $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

117

smaller number of nonexempt families with two parents participat-

ing 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 complex-

ities 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 pen-

alties (less than one-half of 1 percent of the block grant) on non-

complying States.

Effect of the block grant on the Food Stamp Program.—CBO esti-

mates 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 participat-

ing family’s food stamp benefits by about 30 cents. CBO estimates

the incomes of AFDC families would decline relative to current pro-

jections 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 cur-

rent law on AFDC and related programs. For the purposes of deter-

mining 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 av-

erage—would spend 15 percent less of their own funds on cash ben-

efits than they would spend under current law. Should States de-

cide 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 expend-

itures matched by the Federal Government, the bill could affect fos-

ter 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 with-

out a parent. CBO assumes a number of legal and financial bar-

118

riers would prevent States from transferring a large share of such

children and estimates States would collect an additional $10 mil-

lion 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 re-

source 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 cur-

rent 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.

ITLE

II: S

UPPLEMENTAL

ECURITY

NCOME

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 install-

ments rather than in a single lump, and offer payments to prison

officials who help to identify ineligible SSI recipients in their insti-

tutions. 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 Insur-

ance 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 dis-

abled 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 clini-

cal 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 nor-

mal 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 un-

derpinning, the ‘‘comparable severity’’ rule, as a basis for receipt of

benefits. Many children on the rolls as a result of an IFA (roughly

119

a quarter of children now on SSI) would have their benefits termi-

nated, 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 re-

sults in marked and severe functional limitations (and can be ex-

pected to last 12 months or lead to death).’’ That language is in-

tended to preserve SSI eligibility for some of the most severely im-

paired 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 anal-

yses conducted by the General Accounting Office and the Inspector

General of the Department of Health and Human Services. Ap-

proximately 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 ‘‘ex-

treme’’ 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 re-

viewed 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 ben-

efits generally confers eligibility for Medicaid as well. Once the re-

views of children currently on the SSI rolls are finished, CBO esti-

mates 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 chil-

dren losing SSI benefits would be likely to end up on the AFDC

120

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 cov-

ered 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 mil-

lion 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 incapa-

ble of managing funds). CBO does not estimate significant budg-

etary effects from any of those changes. The bill also mandates sev-

eral studies of disability issues.

SSA would face very heavy one-time costs for reviewing its cur-

rent 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 mil-

lion 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 discre-

tionary 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 ac-

tion, 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 ex-

ample, could receive 2 weeks of benefits for that month. (The typi-

cal 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 as-

sumed 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 install-

ments at 6-month intervals, with each installment equaling up to

121

12 times the maximum benefit. Exemptions would be granted to re-

cipients suffering from terminal illnesses or other special hard-

ships. The vast majority of recipients would still get their retro-

active 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 prin-

cipally 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, Sur-

vivors, 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 sen-

tence 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 be-

tween 4 and 5 percent of inmates are collecting OASDI or SSI

when they enter prison. That figure appears in a Justice Depart-

ment survey of prisoners in 1991 and in a recent report by SSA’s

Office of Inspector General. CBO assumes that the recipient popu-

lation consists roughly half-and-half of OASDI and SSI recipients.

At any one time, about 70 percent of prisoners are in State or Fed-

eral prisons and the rest in county jails, where spells of incarcer-

ation 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 pay-

ments to penal institutions. The bill proposes that payments be

made only to those institutions that assist in tagging ineligible SSI

122

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 pro-

posal would add to the workload of SSA. Even if data are submit-

ted 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 pe-

riods of incarceration begin 7 months after enactment, CBO as-

sumed 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 cor-

rectional 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 pay-

ments (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 compo-

nent of the benefit savings is $85 million. SSA’s extra administra-

tive costs—which, in contrast to those two items, would require

Congressional appropriation—are estimated at $70 million.

ITLE

III: C

HILD

UPPORT

NFORCEMENT

Title III would change many aspects of the operation and financ-

ing 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 collec-

tions, eliminate a current $50 payment to welfare recipients for

whom child support is collected, allow former public assistance re-

cipients 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 perform-

ance of various enforcement strategies at the State level, CBO esti-

mates that child support collections received for families on cash

assistance in 2002 would increase under the bill by roughly 18 per-

cent 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 proc-

ess 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 re-

ducing 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.

123

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 be-

half 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 collec-

tions 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 re-

ceives child support payments a supplemental payment (‘‘gap pay-

ment’’) based on the amount of the support collected and a stand-

ard of need. The proposal would give these States the option of con-

tinuing to provide these additional benefits to families. CBO as-

sumes 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 recipi-

ents.—The provision would require States to share more child sup-

port collections with former recipients of public assistance, reduc-

ing Federal and State recoupment of prior benefit payments. When

someone ceases to receive public assistance, States continue to col-

lect 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 pro-

posal would require States to send a larger share of arrearage col-

lections 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 in-

creases 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

124

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 signifi-

cant enough to trigger the hold-harmless provision, at a Federal

cost of $29 million in 2002. States that reduce the number of fami-

lies 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 ad-

ministrative 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 in-

cluding 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 bil-

lion over the 1997–2002 period.

ITLE

IV: N

ONCITIZENS

Title IV would limit the eligibility of legal aliens for public assist-

ance 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 re-

viewed 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

125

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 natu-

ralization) that may have occurred since the recipient first began

collecting benefits. It has not been important for government agen-

cies to keep citizenship status up to date so long as they have veri-

fied 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 per-

cent 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. Mul-

tiplying 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 re-

corded at all for about 8 percent of SSI recipients, and—as pre-

viously noted—some persons coded as aliens are certainly natural-

ized 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 as-

sumes that only about one-third of those whose benefits would oth-

erwise 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 re-

ceive 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 citi-

zens. Savings of about $0.6 billion to $0.7 billion 1 year after 1997

would result.

126

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 deem-

ing requirements in all means-tested programs would bar most fu-

ture immigrants with financial sponsors from Medicaid for even

longer—until they work for 40 quarters or until they are natural-

ized. 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 as-

sumed that most disabled and about half of the aged would retain

Medicaid under State medically needy programs. In total, CBO as-

sumed 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 dou-

ble 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 as-

sumed to be more than $5,000 in 2002 for an average aged or dis-

abled alien, and between $1,000 and $2,000 for a child or a non-

disabled adult. CBO reduced the resulting savings by one-third, be-

cause 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 uncompen-

sated 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, stu-

dent loans for postsecondary students, and the child nutrition pro-

gram 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 citizen-

ship 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 pri-

mary and secondary taxpayers on returns that claim the EIC, and

would permit the Internal Revenue Service to apply the stream-

lined rules it already uses for mathematical or clerical errors to

127

claims that lack valid SSNs. A similar provision was contained in

President Clinton’s 1997 budget proposal and in last fall’s reconcili-

ation bill. The Joint Committee on Taxation (JCT) estimates that

the provision would reduce the deficit by approximately $0.3 billion

a year.

ITLE

V: C

HILD

ROTECTION

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 con-

tinue 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 esti-

mate was developed in consultation with analysts at the Depart-

ment of Health and Human Services and is based on States’ esti-

mates 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.

ITLE

VI: C

HILD

ARE

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-Re-

lated 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 as-

sumes 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

128

increase Federal outlays by $0.3 billion in 1997 and $3.5 billion

over the 1997–2002 period.

ITLE

VII: C

HILD

UTRITION

ROGRAMS

CBO estimates that provisions in title VII that affect child nutri-

tion 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 partici-

pate 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 reau-

thorization 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 pro-

visions 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 supple-

ments. 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 infla-

tion. Under current law, CBO projects the summer 1997 rates

would be $2.22 for lunches, $1.24 for breakfasts, and $0.58 for sup-

plements. CBO estimates these provisions would save $19 million

in 1997 and $39 million in 2002.

Child and adult care food program.—Section 708 would restruc-

ture 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 reim-

bursement rates. The first tier would apply to homes that are lo-

cated 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,

129

$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 reduc-

tion in rates for most meals. In addition, the bill would provide

grants to States in 1997 for training and other assistance to spon-

soring organizations and homes in implementing the new provi-

sions.

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 pro-

gram.

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 fund-

ing for nutrition education and training to be a discretionary ap-

propriation 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 pro-

vides 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 immi-

gration 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 esti-

mates that there would be no savings from the provision of title IV

because this provision would supersede it.

ITLE

VIII: F

OOD

TAMPS AND

OMMODITY

ISTRIBUTION

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 bil-

lion 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, mem-

bers 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

130

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 them-

selves parents or married, and who live with a parent, to partici-

pates 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 es-

timates 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 re-

duce 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 maxi-

mum 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 stu-

dents and are 21 years old or younger is disregarded in the consid-

eration of income for food stamps. Section 807 would lower the cut-

off to age 17. CBO estimates that this change would lower spend-

ing for food stamps by $10 million in fiscal year 1997 and $15 mil-

lion in 2002.

Energy assistance.—Under this legislation, energy assistance

from nonFederal sources would be counted as income in determin-

ing 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 assist-

ance payment, which is disregarded in the calculation of food

stamp benefits. CBO estimates that a $1 increase in countable in-

come to a food stamp household results in about a 30-cent reduc-

tion 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 ad-

justed 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 de-

crease in monthly benefits, relative to current law, of $1 per person

in 1997 and about $4 per person by 2002.

131

The 1997 Agriculture Appropriations Act froze the standard de-

duction 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 Con-

gress 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 ex-

pense deduction. In determining food stamp benefits, shelter costs

are deducted to the extent that they exceed 50 percent of net in-

come after all other deductions. Under current law the excess shel-

ter deduction is capped at $247 through December 1996, when the

cap expires. This bill would extend the cap at $250 for the remain-

der 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 util-

ity allowance for determining utility costs counted toward the shel-

ter 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 al-

lowed to change between the standard utility allowance and actual

costs only at recertification, rather than at one additional time dur-

ing 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 home-

less 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 allow-

ance 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 esti-

mated $5,150 for fiscal year 1997 and to increase in each succeed-

ing year for inflation. CBO estimates that freezing the vehicle al-

lowance 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 exclu-

sion. CBO estimates savings of $10 million a year as a result of the

change.

Disqualification, comparable treatment for disqualification, per-

manent disqualification for participating in two or more States, and

failure to comply with other welfare and public assistance pro-

grams.—Four sections of the bill would change the penalties associ-

ated with noncompliance with public assistance requirements. Sec-

132

tion 815 would increase the penalties and revise sanctions for indi-

viduals 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 as-

sistance 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 wel-

fare 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 perma-

nently only after the third violation and faces periods of ineligibil-

ity for the first and second violation. CBO estimates that the provi-

sion 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 employ-

ment 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. Sec-

tion 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 low-

ered 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 enforce-

ment 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 enforce-

ment 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 partici-

pants would have their benefits reduced for noncompliance. Be-

133

cause 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 enforce-

ment system. These costs are shared by States and the Federal

Government. In 2000, when the provision would be fully imple-

mented, 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 aver-

age month.

The bill allows for a number of waivers and exemptions from the

3-month restriction. First, if the Secretary of Agriculture deter-

mines that an area has an unemployment rate greater than 10 per-

cent 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 eligi-

bility for another 3-month period after a month of working or par-

ticipating 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 aver-

age month in fiscal year 1998 and up to 1 million individuals in

an average month once the provision is implemented fully, result-

ing 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 mini-

mum allotment of $10. This minimum allotment is currently ad-

justed 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 mini-

mum benefit would save $30 million in each of fiscal years 1998

to 2000 and $35 million in 2001 and 2002.

134

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 eligi-

ble. 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 proce-

dures 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 mil-

lion a year. Third, allowing for garnishing of Federal pay in in-

stances 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 collec-

tions, 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 hir-

ing 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 pro-

grams 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 sum-

mer of 1993 were also AFDC recipients to pay benefits in cash to

135

households that also receive benefits from AFDC or Temporary As-

sistance 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 esti-

mates 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 deter-

mine 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 Govern-

ment 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 As-

sistance Program is currently subject to annual appropriation. Sec-

tion 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 pro-

visions shown in table 8 do not reflect the effects of other provi-

sions in the title. If the bill were enacted, total savings would be

less than the sum of the estimates of individual provisions. For ex-

ample, 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 par-

ticipation 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 independ-

ent estimates by $20 million in 1997 and $166 million in 2002.

ITLE

IX: M

ISCELLANEOUS

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 serv-

136

ices for the disabled, social support, prevention and intervention

services, family planning, as well as many other services. The So-

cial 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 re-

fundable tax credit directed toward low-income workers. The re-

fundable 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 avail-

able 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 disquali-

fied from the use of the EIC. The bill would lower the limit to

$2,200 and would expand the definition of investment income to in-

clude 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, in-

cluding those in title IV and title IX, the total estimated effects of

the changes to the EIC differs from the sum of the individual esti-

mates 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, teach-

ing the social, psychological, and health gains to be realized by ab-

staining 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.

137

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]

1995 1996 1997 1998 1999 2000 2001 2002

7-year

total

Projected Direct Spending Under Current Law:

Family Support Payments

............................................................................................................................................ $18,086 $18,371 $18,805 $19,307 $19,935 $20,557 $21,245 $21,937

Food Stamp Program

................................................................................................................................................... 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

............................................................................................................................................................. 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

.................................................................................................................................................................. 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

............................................................................................................................................ 0 * 875 900 907 777 471 ¥131 3,800

Food Stamp Program

................................................................................................................................................... 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

Child Nutrition

Old-Age, Survivors and Disability Insurance ................................................................................................................. 0 0 ¥5 ¥10 ¥15 ¥15 ¥20 ¥20 ¥85

Foster Care

.................................................................................................................................................................. 0 * 68 25 16 31 41 51 232

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

138

SUMMARY TABLE I.—FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY—Continued

RECONCILIATION ACT OF 1996; As passed by the Congress

Assumes enactment by September 1, 1996

[By fiscal year, in millions of dollars]

1995 1996 1997 1998 1999 2000 2001 2002

7-year

total

Projected Direct Spending Under Proposal:

Family Support Payments

............................................................................................................................................ 18,086 18,371 19,680 20,207 20,842 21,334 21,716 21,806

Food Stamp Program

Child Nutrition

Foster Care

.................................................................................................................................................................. 3,282 3,840 4,353 4,712 5,099 5,537 6,001 6,484

Maternal and Child Health ............................................................................................................................................ 0 0 0 18 35 50 50 50

Note.—Details may not add to totals because of rounding.

* Denotes less than $500,000.

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 collec-

tions, 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 sup-

port enforcement, the Child Care Block Grant, and net Federal savings from child support collections.

Food Stamps includes Nutrition Assistance for Puerto Rico under both current law and proposed law, and the Emergency Food Assistance Program under proposed law.

Child Nutrition Programs refer to direct spending authorized by the National School Lunch Act and the Child Nutrition Act.

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.

139

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]

1996 1997 1998 1999 2000 2001 2002

7-year

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 Secu-

rity 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 En-

forcement

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 Pro-

grams

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.

140

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

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

Family Support Payments

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

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

Family Support Payments

Budget Authority ................................................................................................................................................... 0 107 210 313 393 473 565 2,061

Food Stamp Program

141

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

Grants to Territories

Family Support Payments

Budget Authority ................................................................................................................................................... 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

142

TABLE 1.—FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996—Continued

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

Budget Authority ................................................................................................................................................... 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

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

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

Direct Spending total, All Accounts—Title I:

Budget Authority ................................................................................................................................................... 10 ¥212 ¥1,125 ¥989 ¥837 ¥1,109 ¥1,839 ¥6,100

* Denotes less than $500,000.

Funds for existing child care programs are repealed by this title, but equal or greater funding for similar activities is restored in title VI.

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.

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.

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.

143

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]

1996 1997 1998 1999 2000 2001 2002

7-year

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 .................... *

1111111

Outlays ................................... *

1111111

Food stamps

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 Cer-

tain 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:

Supplemental Security Income:

Budget Authority .................... 0

00000

Outlays ................................... 0

00000

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 Institu-

tions That Report Ineligible SSI

Recipients:

Old-Age, Survivors and Disability

Insurance—benefits saved:

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

144

TABLE 2.—FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY

RECONCILIATION ACT OF 1996—Continued

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]

1996 1997 1998 1999 2000 2001 2002

7-year

total

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:

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 .................... *

1111111

Outlays ................................... *

1111111

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.

Proposed to be block-granted elsewhere in the bill.

Includes interactions with other food stamp provisions of the bill.

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, di-

rectly 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 man-

dated in 1997 by this legislation.

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.

145

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]

1996 1997 1998 1999 2000 2001 2002

7-year

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 en-

forcement 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 Enforce-

ment ......................... 0 ¥19 ¥46 ¥115 ¥185 ¥254 ¥322 ¥940

Lost AFDC Collections due to Re-

duced 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 Ex-

clude Gap Payments from Dis-

tribution 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

146

TABLE 3.—FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY

RECONCILIATION ACT OF 1996—Continued

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]

1996 1997 1998 1999 2000 2001 2002

7-year

total

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 devel-

opment.

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 oper-

ation 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 pro-

grams:.

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 serv-

ices:.

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

147

TABLE 3.—FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY

RECONCILIATION ACT OF 1996—Continued

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]

1996 1997 1998 1999 2000 2001 2002

7-year

total

Subtotal, Other provi-

sions ......................... * 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 devel-

opment ........................................ 42 42 91 129 129 8 0 440

Technical assistance to state pro-

grams ......................................... 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.

148

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]

1996 1997 1998 1999 2000 2001 2002

7-year

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

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

2222222

Outlays ......................................................................................................................................... 0

2222222

Child nutrition

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.

Includes interactions with other food stamp provisions of the bill.

Proposed to be block-granted elsewhere in the bill.

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.

149

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 Fos-

ter 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.

150

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.

151

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]

Section 1996 1997 1998 1999 2000 2001 2002

1996–

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, break-

fast, 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 pro-

gram

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 au-

thorization

Budget Authority .................... 0 ¥10 ¥15 ¥22 ¥25 ¥22 ¥22 ¥116

Outlays ................................... 0 ¥8 ¥14 ¥21 ¥25 ¥22 ¥22 ¥112

731 Nutrition education and train-

ing 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.

152

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]

Section 1996 1997 1998 1999 2000 2001 2002

1996–

2002

801 Definition of certification pe-

riod ............................................. 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 individ-

ual .............................................. 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

............................. 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 transi-

tional housing counted as in-

come ........................................... 0 ¥10 ¥10 ¥10 ¥10 ¥10 ¥10 ¥60

812 Simplified calculation of in-

come for the self-employed ....... 0 0 0 0 0 0 0 0

813 Doubled penalties for violating

Food Stamp Program require-

ments ......................................... 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 dis-

qualification ............................... 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 fel-

ons .............................................. 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

153

TABLE 8.—FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY

RECONCILIATION ACT OF 1996—Continued

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]

Section 1996 1997 1998 1999 2000 2001 2002

1996–

2002

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 re-

siding in centers ........................ 0 * * * * * * *

831 Condition precedent for ap-

proval of retail stores and

wholesale food concerns ............ 0 0 0 0 0 0 0 0

832 Authority to establish author-

ization periods ............................ 0 0 0 0 0 0 0 0

833 Information for verifying eligi-

bility for authorization ............... 0 0 0 0 0 0 0 0

834 Waiting period for stores that

fail to meet authorization cri-

teria ............................................ 0 0 0 0 0 0 0 0

835 Operation of food stamp of-

fices ............................................ 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 re-

quests ......................................... 0 0 0 0 0 0 0 0

840 Income, eligibility, and immi-

gration status verification sys-

tems ........................................... 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 fal-

sified 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 ju-

dicial review ............................... 0 0 0 0 0 0 0 0

846 Expanded criminal forfeiture

for violations .............................. 0

2222222

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 sup-

port 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 pro-

gram ........................................... 0 ¥1 ¥2 ¥2 ¥2 ¥2 ¥2 ¥11

853 Reauthorization ....................... 0 0 0 0 0 0 0 0

154

TABLE 8.—FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY

RECONCILIATION ACT OF 1996—Continued

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]

Section 1996 1997 1998 1999 2000 2001 2002

1996–

2002

854 Simplified Food Stamp Pro-

gram ........................................... 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 com-

modity processing ...................... 0 0 0 0 0 0 0 0

891 Provisions to encourage elec-

tronic benefit systems

............. 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

No savings are shown in fiscal year 1997 for setting the standard deduction at $134 because the fiscal year 1997 Agriculture Ap-

propriations Act, which cleared the Congress before this bill cleared, contained a similar provision.

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.

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.

155

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 in-

come

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

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

156

TABLE 9.—FEDERAL BUDGET EFFECTS OF THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996—Continued

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

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

............................................................................... 0 32 32 33 35 38 47 217

Estimates provided by the Joint Committee on Taxation. Components may not sum to totals because of rounding.