# Welfare Reauthorization: A Side-By-Side Comparison of Current Law and Pending Welfare Reauthorization Proposals

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## Record

- **Collection:** Congressional research report
- **Document type:** CRS Report
- **Published:** December 5, 2005
- **Citation:** RL33157

## Text

Order Code RL33157

CRS Report for Congress
Received through the CRS Web

Welfare Reauthorization:
A Side-By-Side Comparison of
Current Law and Pending Welfare
Reauthorization Proposals

Updated December 5, 2005

-name redacted-, -name redacted-, -name redacted-, -name redactedSpecialists in Social Legislation
Domestic Social Policy Division

Congressional Research Service ˜ The Library of Congress

Welfare Reauthorization:
A Side-By-Side Comparison of Current Law
and Pending Welfare Reauthorization Proposals
Summary
The 109th Congress is considering legislation to reauthorize and amend
programs that were created or revised in the 1996 welfare reform law. Early in 2005,
the Senate Committees on Finance and Health, Education, Labor, and Pensions
(HELP) reported their welfare reauthorization legislation (respectively, S. 667 and
S. 525). These bills have yet to see floor action and remain pending in the Senate.
The House passed welfare reauthorization as part of its spending budget
reconciliation bill (the House-passed version of S. 1932). The Senate-passed
spending reconciliation bill does not include welfare reauthorization provisions.
Both the Senate Finance Committee bill and the House reconciliation bill would
reauthorize through FY2010 and revise the block grant of Temporary Assistance for
Needy Families (TANF). They both revise TANF work participation standards
aimed to require more families on the welfare rolls to work or participate in job
preparation activities. The Senate committee bill would allow a broad range of
activities engaged in by recipients to count toward meeting these standards, while the
House bill would narrow the focus of activities to work or “workfare” outside of a
four-month period. Both the Senate committee and House reconciliation bills also
would establish $200 million per year in grants to promote “healthy” marriages.
Both the Senate committee and House reconciliation bills would extend and
increase funding for mandatory child care, though the size of the funding increase is
a major difference between the two proposals — $6 billion over five years in the
Senate committee bill and $0.5 billion over five years in the House bill. Both would
also reauthorize the Child Care and Development Block Grant (CCDBG), increasing
its authorization to $3.1 billion by FY2010, and would revise CCDBG rules,
including those related to making school-readiness a program goal and increasing the
percentage of funds to improve the quality of child care.
Both the Senate committee and House reconciliation bills would revise the
Child Support Enforcement program to provide financing options for states to pay
more collected child support to families on TANF or who have left the rolls.
(Generally, federal and state governments keep child support collected for TANF
families as reimbursement for their welfare costs.) The Senate committee bill would
provide partial federal funding for child support passed through to families — up to
$400 per month for one child and $600 per month for two or more children. The
House bill would provide partial federal funding to states that increase the amount
of passed-through child support. The House reconciliation bill also would reduce
federal funding to the states to operate their child support programs. Both Senate
committee and House bills would also establish “responsible fatherhood” programs
to fund activities to increase the participation of noncustodial parents in their
children’s lives. The Senate committee bill would provide $50 million per year in
mandatory funding (and authorize another $26 million per year); the House
reconciliation bill would authorize (but not provide funding) for up to $20 million
per year. This report will be updated as needed.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Summary of Similarities and Differences in the Bills . . . . . . . . . . . . . . . . . . . . . . 2
Temporary Assistance for Needy Families Block Grant . . . . . . . . . . . . . . . . 3
TANF Funding Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Uses of Grants and Program Requirements . . . . . . . . . . . . . . . . . . . . . . 5
Work Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Marriage Promotion Grants and Family Formation Issues . . . . . . . . . . 8
Child Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Discretionary Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Mandatory Appropriation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Authority to Transfer TANF Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Use of Funds for Direct Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Option to Use Excess Funds for Increasing Payment Rates . . . . . . . . 10
Quality Set-Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Definition of “Quality Activities” . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
State Plan Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Data Collection and Reporting Requirements . . . . . . . . . . . . . . . . . . . 11
Waivers in Response to Gulf Hurricanes . . . . . . . . . . . . . . . . . . . . . . . 11
Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Responsible Fatherhood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Child Support Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Enforcement Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
S. 667 and House Budget Reconciliation Bill:
Major Provisions Related to Child Support Enforcement . . . . . . 15
Other Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Detailed Comparison of Senate Committee Bills
and the House Budget Reconciliation Bill . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Temporary Assistance for Needy Families (TANF) Block Grant . . . . . . . . 21
Findings and Goals and Purposes of TANF . . . . . . . . . . . . . . . . . . . . . 21
TANF Financing Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Use of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Work Participation Requirements and Standards . . . . . . . . . . . . . . . . 33
Other Requirements with Respect to Families
Receiving Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Marriage Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
State Plans, Data Reporting, Research (Other than
Marriage Promotion) and Other Provisions . . . . . . . . . . . . . . . . . 60
Child Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Overview, Goals and Administration . . . . . . . . . . . . . . . . . . . . . . . . . 74
Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Application and plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Use of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

Activities to improve the quality of child care . . . . . . . . . . . . . . . . . . . 82
Report by the HHS Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Reports and audits from States to HHS . . . . . . . . . . . . . . . . . . . . . . . . 85
Other Child Care Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Responsible Fatherhood Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Responsible Fatherhood Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Summary of the Responsible Fatherhood Program . . . . . . . . . . . . . . . 88
Prohibitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Child Support Enforcement (CSE) Program . . . . . . . . . . . . . . . . . . . . . . . . 94
Assignment and Distribution of Child Support for
TANF and Former TANF Families . . . . . . . . . . . . . . . . . . . . . . . 94
Enforcement Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Financing Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Other Child Support Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Child Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Child welfare waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Other Child Welfare Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Transitional Medical Assistance (TMA) . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Extension of Program Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Revision of TMA rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Supplemental Security Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Review of Disability Determinations . . . . . . . . . . . . . . . . . . . . . . . . . 121
SSI Eligibility for Asylees, Refugees, and
Certain Other Noncitizens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Payment of Lump-Sum Benefit Installments under SSI . . . . . . . . . . 121
Abstinence Education State Grant Program . . . . . . . . . . . . . . . . . . . . . . . . 121
Extension of Program Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Social Services Block Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Program Integration Waivers (“Superwaiver”) . . . . . . . . . . . . . . . . . . . . . 122
Authority for Program Integration Waivers . . . . . . . . . . . . . . . . . . . . 122
Covered Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
General Requirements that Cannot Be Waived . . . . . . . . . . . . . . . . . 124
Program-Specific Requirements that Cannot Be Waived . . . . . . . . . 125
Application and Approval Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Cost Neutrality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Evaluation Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

List of Tables
Table 1. Welfare Reauthorization Provisions Included in
Senate Committee Bills and House Budget Reconciliation Bill . . . . . . . . . . 2
Table 2. Comparison of Current Law with S. 667/525
and the House Budget Reconciliation Bill Welfare Provisions . . . . . . . . . . 21
Acknowledgments
This report benefitted from the contribution of Scott Szymendera of the
Domestic Social Policy Division.

Welfare Reauthorization: A Side-By-Side
Comparison of Current Law, and Pending
Welfare Reauthorization Proposals
Introduction
The 109th Congress is considering legislation to reauthorize and amend
programs that were created or revised in the 1996 welfare reform law.1 Early in the
109th Congress, the Senate Finance and Health, Education, Labor, and Pensions
Committees approved and reported their welfare reauthorization legislation
(respectively, S. 667 and S. 525). Neither bill has yet seen action in the full Senate.
In the House, a welfare reauthorization proposal (H.R. 240), introduced by the House
Republican Leadership, has also failed to reach the floor.
On November 18, 2005, the House passed its budget reconciliation bill (S.
1932), which includes welfare reauthorization legislation similar to that which passed
the House in 2002 and 2003. (The House-passed version of S. 1932 is H.R. 4241 as
amended and approved by the House.) Welfare reauthorization legislation was not
included in the Senate-passed reconciliation bill.
This report compares the welfare reauthorization policies proposed in the Senate
committee bills with those included in the House-passed budget reconciliation bill.
It is not a comparison of welfare provisions in the House and Senate reconciliation
bills. (Such a comparison, which displays House-passed welfare provisions with
corresponding “No Provision” entries for the Senate-passed version of reconciliation,
is available from the Congressional Research Service upon request.)
The original funding authority for the block grant of Temporary Assistance for
Needy Families (TANF), the Child Care and Development Block Grant (CCDBG),
abstinence education, and transitional medical assistance (TMA) under Medicaid
expired on September 30, 2002. Funding and program authority for TANF,
mandatory child care, abstinence education, and TMA have been continued by
special temporary extension legislation since then, with the latest extension set to
expire on December 31, 2005. CCDBG discretionary funding has been provided,
absent authorization, in annual appropriation bills. Also included in “welfare
reauthorization” legislation have been initiatives to create a responsible fatherhood
grant program, revise the Child Support Enforcement program, amend child welfare

1

For a discussion of issues in reauthorizing welfare programs, see CRS Issue Brief IB10140
Welfare Reauthorization, Overview of the Issues, by (name redacted), et al. Updated regularly.

CRS-2
programs, and make some changes to Supplemental Security Income, as well as
create new “superwaiver” authority.

Summary of Similarities and Differences in the Bills
Most of the welfare reauthorization provisions approved early in 2005 have
counterparts in the House budget reconciliation bill. There are notable exceptions.
S. 667 (the Finance Committee bill) would extend the abstinence education state
grant program and revise and extend TMA through FY2010, whereas the House
budget reconciliation bill includes none of those provisions. Further, the House
reconciliation bill, unlike the Senate committee bills or the earlier House Republican
Leadership welfare reauthorization bill (H.R. 240), includes some additional
provisions that would reduce spending, including proposals to reduce federal
matching funds for state Child Support Enforcement programs and to revise foster
care and adoption assistance eligibility rules to negate a court ruling that expanded
eligibility for these programs in certain states.
Table 1 summarizes what provisions are included in the Senate committee bills
and the House reconciliation bill. Note that when provisions are included in both,
they still may differ significantly in their details. These differences are the subject
of the remainder of this report.

Table 1. Welfare Reauthorization Provisions Included
in Senate Committee Bills and House Budget Reconciliation Bill

Provision

Senate-Committee
Approved Legislation

House Budget
Reconciliation Bill

Extend TANF funding
through FY2005

Yes — S. 667.

Yes.

Revise TANF Work
Requirements

Yes — S. 667.

Yes.

Establish “Marriage
Promotion Grants” within
TANF

Yes — S. 667.

Yes.

Increase Mandatory Child
Care Funding

Yes — S. 667 increases
mandatory child care
funding by $6 billion over
five years.

Yes — $0.5 billion
increase over five years.

Reauthorize and amend
the Child Care and
Development Block Grant

Yes — S. 525.

Yes.

Establish “Responsible
Fatherhood” programs.

Yes — S. 667.

Yes.

CRS-3

Provision

Senate-Committee
Approved Legislation

House Budget
Reconciliation Bill

Increase amount of child
support passed-through to
families receiving TANF.

Yes — S. 667.

Yes.

Reduce the federal share
of funding for state child
support programs.

No.

Yes.

Extend and revise child
welfare demonstration
authority

Yes — S. 667.

Yes.

Revise eligibility rules for
foster care and adoption
assistance.

No.

Yes.

Extend abstinence
education state grants
through FY2010.

Yes — S. 667.

No.

Extend transitional
medical assistance (TMA)
for families that leave
welfare for work.

Yes — S. 667.

No.

Program integration
waivers (“Superwaiver”)

Yes — S. 667.

Yes.

Source: Congressional Research Service (CRS).

Temporary Assistance for Needy Families Block Grant
The Senate-committee and House welfare reauthorization proposals have many
similarities, with both extending basic TANF funding at current levels through
FY2010 and incorporating President Bush’s proposal to provide categorical
“marriage promotion” grants.2 Both bills also raise TANF work participation
standards, though the two differ in terms of how much more work would be required
and what activities count toward the participation standards.
TANF Funding Provisions. Both the Senate-committee and House bills
have very similar funding provisions, although they do differ in some details. The

2

The House budget reconciliation bill is organized by Titles reflecting each House
committee’s legislative change. TANF changes are found both in Title II, from the
Education and Workforce Committee, and Title VIII of the bill, from the Ways and Means
Committee. The two committees share jurisdiction over the TANF work requirements. In
most respects, the committees reported identical legislative language amending TANF work
requirements. The difference in the two committee’s proposals — reflecting a new
requirement that parents visit schools in the Education and Workforce provisions — is noted
in Table 2.

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major differences between the two proposals are in the contingency fund and
bonuses.
Basic Funding. The 1996 welfare reform law (P.L. 104-193) entitled states
to a basic TANF block grant equal to peak expenditures in the pre-1996 welfare
programs during the FY1992 to FY1995 period. It also established a maintenance
of effort (MOE) requirement that states continue to spend at least 75% (80% if a state
failed TANF work participation requirements) of what they spent in these programs
in FY1994. Cash welfare caseloads were at their peak in the mid-1990s; both the
basic TANF grant and the MOE are legislatively fixed: they did not change when
cash welfare caseloads declined in the mid- and late-1990s, nor did they increase
when caseloads in some states increased during the recent economic slump. Neither
the basic TANF block grant nor the MOE has been adjusted for inflation.
Both the Senate-committee and House proposals would continue both the basic
block grant and the MOE at their current funding levels (without inflation or caseload
adjustment) through FY2010.
Supplemental Grants. During the consideration of legislation that led to the
1996 welfare law, fixed funding based on historical expenditures was thought to
disadvantage two groups of states: (1) those that experience relatively high
population growth; and (2) those that had historically low grant levels relative to
poverty in the state. Therefore, additional funding in the form of supplemental grants
was provided to states that met criteria of high population growth and/or low historic
grants per poor person. Supplemental grants have been provided to 17 states:
Alabama, Alaska, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Louisiana,
Mississippi, Montana, New Mexico, Nevada, North Carolina, Tennessee, Texas, and
Utah.
Currently, supplemental grants total $319 million per year. Both the Senate and
House proposals would continue supplemental grants for the same 17 states at the
current funding level through FY2009 (unlike other grants, which expire in
FY2010).
Contingency Funds. The fixed basic grant under TANF also led to concerns
of inadequate funding during economic downturns. TANF includes a contingency
fund, which is designed to provide extra matching grants to states that meet criteria
of economic need (based on unemployment rates and food stamp caseloads) and have
state expenditures in excess of their FY1994 level.
The two bills differ substantially in their proposed revisions to the TANF
contingency fund. The House budget reconciliation bill would continue the fund
under existing rules, with some relatively minor modifications: allowing some
additional state spending to count toward meeting the FY1994 funding level
threshold and modifications to increase grants for states that qualify for funds for
only part of the year.
The Senate Finance Committee proposal fully revamps the contingency fund.
It would eliminate the requirement that states increase expenditures from their own
funds above the regular TANF MOE level and would eliminate the matching

CRS-5
requirements. Instead, it requires that unspent TANF balances be below a certain
threshold to qualify for contingency funds. The Senate committee proposal would
base contingency grants on a portion of the estimated cost of increased cash
assistance caseloads. It also would revise the criteria of economic need for a state.
Bonus Funds. Current TANF law provides “bonus funds” to states that rank
high on a set of outcomes that seek to measure whether they are achieving the block
grant’s goals. It has a “High Performance Bonus” of $200 million per year for states
that rank high in achieving employment and certain other outcomes, as well as a
second $100 million per year bonus paid to the five states with the greatest reduction
in out-of-wedlock birth ratios that also have a decline in abortions.
The Senate Finance Committee bill scales back bonuses, by eliminating the
$100 million per year bonus for reductions in out-of-wedlock births, and reducing
and refocusing the “High Performance Bonus” on employment outcomes. Funding
reductions are used to “pay for” grants to promote healthy marriages and responsible
fatherhood initiatives (see a discussion of these initiatives, below). The House
budget reconciliation bill eliminates both TANF bonuses, in part to pay for grants to
promote healthy marriage and in part achieving budget reductions.
Uses of Grants and Program Requirements. Federal TANF grants and
MOE funds can be used for a wide range of benefits, services, and activities to assist
low-income families with children and to further TANF goals of reducing
out-of-wedlock births and promoting two-parent families. TANF grants can also be
transferred to other block grant programs: up to 30% of the grant can be transferred
to the Child Care and Development Fund (CCDF) and to the Social Services Block
Grant. The limit on transfers to SSBG alone is set at 4.25% (though annual
appropriations have restored the SSBG transfer limit to its original limit of 10% set
in the 1996 welfare law). Within the overall 30% limit, federal TANF funds may
also be used as the state match for federal reverse commuter grants if the program
benefits welfare families.
Both bills would set the SSBG transfer limit permanently at 10%. The House
budget reconciliation bill would raise the overall transfer limit to 50%; the Senate
Finance Committee proposal would retain the current 30% transfer limit.
Both bills include provisions to ease some rules regarding use of TANF funds.
Both House and Senate committee bills would:
!

Allow states to use carryover TANF funds for any TANF benefit and
service. Current law restricts the use of carryover funds for the
provision of “assistance.”

!

Narrow the definition of “assistance” to exclude all child care and
transportation aid. TANF funds spent on assistance trigger certain
program requirements, such as work requirements, time limits,
assignment of child support payments, and data reporting. Under
current regulations, child care and transportation aid for nonworking
families is counted as assistance and triggers these requirements.
The bills would eliminate such aid from the definition of

CRS-6
“assistance,” freeing from these requirements nonworking families
that receive only child care or transportation aid.
Work Requirements. Both the Senate Finance Committee bill and the House
budget reconciliation bill incorporate the Bush Administration’s “universal
engagement” proposal, which requires states to develop a self-sufficiency plan for all
TANF adult recipients to monitor progress toward that plan. The House budget
reconciliation bill also requires states to end benefits (“full family sanction”) for
families that fail to comply with work participation rules.
Both the Senate Finance Committee bill and House budget reconciliation bill
would substantially revise TANF work participation standards. Both bills would
raise work participation standards that states must meet from the current law’s
standard of 50% to 70%, raise the required hours of working to receive full credit and
provide partial credit for participating families that do not meet the full credit
standard, and revise the list of activities that recipients may participate in for states
to receive credit toward TANF standards. However, the bills differ in how they do
these three things.
Participation Standards. Current law requires states to have a specified
percentage of their families with an adult recipient (or minor head of household)
participating in creditable work activities. The current participation standard is 50%.
States are subject to an additional participation rate standard for two-parent families,
currently 90%. The participation rate standards may be reduced for caseload
reductions (not attributable to policy changes) that occurred since enactment of
welfare reform (FY1995). This “caseload reduction credit” has had a large effect on
participation standards, reducing the standard considerably from its statutory rate.
In FY2003, the standard was reduced to 0% for 20 states.
Both the Senate Finance Committee bill and the House budget reconciliation bill
would raise the work participation standard for all families to 70% by FY2010, and
eliminate the separate standard for two-parent families. Both bills would also change
the credits that reduce these standards from their statutory rate (i.e., reduce the 70%
standard to a lower rate), but they do so in different ways. The House bill would
retain, but revise, the current law caseload reduction credit so that caseload change
would be measured from a more recent year (rather than the pre-welfare reform
caseload level of 1995). Ultimately, caseload reduction would be measured based
on the most recent four years. The House bill also includes a provision to give an
additional credit to states that achieved a caseload reduction of 60% or more from
FY1995 to FY2001.
The Senate Finance Committee bill retains the current caseload reduction credit
for FY2006 and FY2007, but beginning in FY2008 would replace the caseload
reduction credit with a credit for employed welfare leavers. The bill would also cap
all credits against the participation standard, so that the minimum effective standard
would be 10% in FY2006, 20% in FY2007, 30% in FY2008, 40% in FY2009, and
50% in FY2010. There is no such minimum effective standard in the House bill.
Hours Standards. Current law requires that a family be considered
participating only if it participates for a minimum number of hours per week in a

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month. Under current law, 20 hours are required for single parents with a pre-school
child (under the age of 6), and 30 hours are required for other families. Higher hours
are set for the purposes of the two-parent work participation rate.
Both the Senate Finance Committee bill and the House budget reconciliation bill
raise the hours standards. The House bill incorporates a 40-hour workweek standard
for full credit, but would also provide “partial” credit for families with at least 24
hours of participation. No special lower-hour standard would be provided for single
parents with preschoolers.
The Senate Finance Committee bill also raises the hours standard for full credit,
but to a lesser extent than proposed in the House bill. Single parents with a
pre-school child would be given full credit for participation at 24 hours per week, and
other single-parent families would be given full credit at 34 hours per week. Partial
credit for single parent families would be provided at 20 hours per week. Higher
hours requirements would apply to two-parent families.
Creditable Activities. Current law lists 12 activities that may be counted
toward TANF work participation standards. The bulk of countable participation is
in a subset of “core” activities focused on work, time-limited job search (countable
for six weeks in a fiscal year, 12 weeks if criteria of economic need are met),
time-limited vocational educational training (12 months in a lifetime), and
community service and work experience. In meeting the general 30-hour-per-week
standard, hours in educational activities are countable only for families who are also
participating in at least 20 hours per week of “core” activities. Post-secondary
education, other than that considered “vocational educational training,” does not
count toward current law federal TANF work participation standards.
The House budget reconciliation bill and the Senate Finance Committee bill
differ significantly on the types of activities that are countable as core activities
toward the participation standards. The House bill narrows the list of core activities
by eliminating job search and vocational education. Instead, the bill would give
states almost total discretion to define activities that would be countable for three
months in a 24-month period (four months to complete training), but once those
months are exhausted, the only activities that would count toward the “core” work
participation standards are work, on-the-job training, community service, or work
experience. Moreover, since job search and vocational education would be countable
as sole or primary activities only during the three (or four) months that the state
would have discretion, any weeks of participation in job search reduce the number
of weeks that vocational education counts toward the participation standards.
On the other hand, the Senate Finance Committee bill retains the current law list
of core activities. It too provides states additional discretion by permitting states to
count an expanded list of activities for three months in a 24-month period (longer for
rehabilitative activities). However, this additional discretion is provided in addition
to, rather than instead of, six weeks of job search and 12 months of vocational
educational training, which are retained as “core” activities.
Both the House budget reconciliation bill and the Senate Finance Committee bill
would give states additional discretion in defining activities countable once a family

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has met the “core” work requirement (generally, 24 hours per week in core activities).
The House bill would allow states to define activities for families with at least 24
hours in core activities; the Senate Finance Committee bill would allow states to
count an expanded set of activities for single-parent families with at least 24 hours
per week in core activities.
The Senate Finance Committee proposal includes some additional options for
counting participation in activities toward TANF work standards. It would allow
states to have up to 10% of their caseload enrolled in a special program of two- or
four-year undergraduate education or vocational educational training. This program
is modeled after the “Parents as Scholars” program that has operated in Maine using
TANF MOE funds. It also allows for participation in rehabilitative activities for
disabled persons (including treatment of drug and alcohol abuse) if they combine
rehabilitation with at least 10 hours of “core” activities and if the state develops a
collaborative relationship between agencies and entities providing rehabilitative
services and the state TANF agency. Additionally, the Senate Finance Committee
bill allows caring for a disabled family member to count as a work activity under
certain circumstances.
Marriage Promotion Grants and Family Formation Issues. Current
law allows states to use TANF funds for any activity “reasonably calculated” to
achieve a TANF purpose. One of the statutory purposes of TANF is to end
dependency of needy parents on government benefits, and one of the stated means
to end such dependency is “marriage.” Another of the statutory purposes of TANF
is to promote the formation and maintenance of two-parent families. “Promoting
marriage” is a currently allowable use of TANF funds.
Both the Senate Finance Committee and House budget reconciliation bills
would carve out special “marriage promotion grants” from existing TANF funding.
Both bills include $100 million in competitively awarded matching funds for states,
territories, and tribes for marriage promotion activities. The bills would allow states
to use other federal TANF funds or state funds as the match for these new marriage
promotion grants.
Both bills also would provide an additional $100 million for research and
demonstrations. The House budget reconciliation bill would require that these funds
be used “primarily” for marriage promotion; the Senate Finance Committee bill
would require that 80% of these funds be used for marriage promotion.
Marriage promotion activities listed in both bills are: public advertising
campaigns on the value of marriage and skills needed to increase marital stability and
health; education in high schools on the value of marriage; marriage education and
marriage and relationship skills programs for nonmarried parents or expectant
parents; pre-marital education on marriage for engaged couples; marriage
enhancement and marriage skills training for married couples; divorce education
programs; and marriage mentoring programs. Programs to reduce the disincentives
to marriage in need-based programs could be funded from these grants only if offered
in conjunction with other marriage activities.

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Both bills have requirements that grantees of marriage promotion grants
consider domestic violence issues and that participation in marriage promotion
activities be voluntary. The Senate committee bill also includes a prohibition (not
in the House bill) against states sanctioning families receiving TANF assistance for
not participating in marriage promotion activities.

Child Care
While the House budget reconciliation legislation consolidates a package of
provisions embodying “child care reauthorization” in a single bill3, at this point, on
the Senate side, reauthorization provisions remain divided between the two bills, S.
667 and S. 525 (The Caring for Children Act of 2005). The Finance Committeepassed bill (S. 667) contains the proposed mandatory funding appropriation for Child
Care and Development Block Grant (CCDBG) programs, while the HELP
Committee-passed bill (S. 525) includes proposed discretionary funding
authorization, and all provisions relating to the reauthorization of the CCDBG Act.
Therefore, in the child care section of Table 2, most provisions in the Senate column
are drawn from S. 525, with the notable exception of the mandatory (or
“entitlement”) funding provision, which falls under the Finance Committee’s
jurisdiction, and is therefore included in S. 667. A summary of provisions included
in both the House bill and Senate committee legislation follows, with more detail
found in Table 2.
Discretionary Authorization. The discretionary portion of child care
funding is authorized by the Child Care and Development Block Grant Act (as
amended in 1996). Under current law, discretionary CCDBG funding is authorized
at $1 billion annually. However, actual appropriation levels, determined during the
annual appropriations process, have exceeded the authorized level (e.g., FY2005 =
$2.1 billion). Both the House budget reconciliation bill and S. 525 propose to
authorize discretionary funding at $2.3 billion in FY2006, rising by $200 million
each year, up to $3.1 billion in FY2010.
Mandatory Appropriation. Mandatory funding for the CCDBG was
preappropriated in Section 418 of the Social Security Act for FY1997-2002, as part
of the welfare law of 1996 (P.L. 104-193). A series of temporary extensions have
continued that funding at the FY2002 rate of $2.717 billion since the close of
FY2002. (The most recent extension runs through December 31, 2005.)
The House budget reconciliation bill proposes to increase mandatory child care
funding by $500 million over five years (FY2006- FY2010), appropriating $2.917
billion for FY2006, $2.767 billion for FY2007, $2.817 billion for FY2008, $2.867
billion for FY2009, and $2.917 billion for FY2010. (This reflects half of the $1
billion increase that had earlier been proposed in H.R. 240.) The Senate committee
bill, S. 667, proposes to increase mandatory funding by $6 billion over five years

3

Child care provisions submitted to the House Budget Committee by the Committee on
Ways and Means (i.e. the mandatory child care funding provisions) are found in title VIII
of the budget reconciliation bill whereas provisions recommended by the Committee on
Education and the Workforce (i.e. amendments to the CCDBG Act) are found in Title II.

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(FY2006-FY2010), appropriating $3.617 billion for FY2006; $3.717 billion for
FY2007; $3.917 billion for FY2008; $4.017 billion for FY2009; and $4.317 billion
for FY2010. Puerto Rico would receive $75 million of the $6 billion, whereas under
current law (as well as the House bill), Puerto Rico receives no mandatory child care
funding.
Authority to Transfer TANF Funds. Under current law, states have the
authority to transfer up to 30% of their annual TANF block grant to the CCDBG
(only 20% if they choose to transfer 10% to the Social Services Block Grant). S. 667
would maintain current law, whereas the House bill would allow states to transfer up
to 50% of their annual TANF grants to the CCDBG.
Use of Funds for Direct Services. Current law includes no provision
requiring a given percentage of funds appropriated under the CCDBG Act to be spent
on direct services. S. 525 would require that after the reservation of set-asides, at
least 70% of the funds remaining be used to fund direct services (as defined by the
state). The House bill has no comparable provision.
Option to Use Excess Funds for Increasing Payment Rates. S. 525
would allow states that receive funding above their FY2005 levels to use a portion
of the excess to support payment rate increases for providers and to establish tiered
payment rates. On a related note, the bill (S. 525) would also add to the statute
stricter requirements to set payment rates in accordance with biennial market rate
surveys.
Quality Set-Aside. Current law requires that at least 4% of each state’s total
CCDBG expenditures (from all sources — e.g., mandatory, discretionary, matching
funds) be used for quality activities, described as providing comprehensive consumer
education to parents and the public, activities that increase parental choice, and
activities designed to improve the quality and availability of child care in the state.
Both the House budget reconciliation bill and the HELP Committee’s S. 525
would raise the percentage of CCDBG funds that must be spent for quality activities
to a minimum of 6%.
Definition of “Quality Activities”. Both bills provide greater detail than
current law in terms of defining what is classified as a “quality activity.” In each,
categories of activities are outlined to include school readiness activities (including
activities to enhance early literacy); training and professional development for staff;
and initiatives or programs to promote or increase retention of qualified staff. The
categories reflect a new emphasis on school readiness as a goal of the CCDBG. The
Senate committee bill (S. 525) also specifies that quality funds could be spent on
evaluating and assessing the quality of programs, and their effectiveness in improving
overall school preparedness. While S. 525 clearly states that quality funds must be
spent for any of the six listed purposes, the House bill provides three broad
categories, similar in topic to those in S. 525, with a fourth, more general category
of “other activities as approved by the state.”
Eligibility. Federal law currently requires that children eligible for services
under the CCDBG must have family income that does not exceed 85% of the state

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median (for a family of that size). However, states have the discretion to adopt
income eligibility limits below this federal maximum. Both the House budget
reconciliation bill and S. 525 propose to eliminate the federal maximum of 85% of
state median income (SMI) from the CCDBG law, replacing it with a provision
allowing states to set income eligibility levels (with no federal ceiling), with priorities
based on need.
State Plan Requirements. Under current CCDBG law, states are required
to submit plans every two years, certifying that their CCDBG programs include
specified elements addressing areas such as parental choice, parental access,
consumer education, licensing, and health and safety requirements.
Both the House budget reconciliation bill and the HELP Committee’s S. 525
would amend current law to require that additional elements be certified in their state
plans. Areas that would be modified or added relate to providing consumer
education information; describing or demonstrating state coordination of child care
services with other early childhood education programs; certifying compliance with
the quality set-aside percentage requirement; and addressing special needs child care.
Unlike the House bill, S. 525 includes provisions requiring that in their state
plans, states demonstrate that the process for redetermining eligibility occur no more
frequently than every six months (with limited exceptions), and also that the state
plan describe any training requirements in effect for child care providers. The Senate
committee bill would also put into statute the requirement that the provider payment
rates, described in the state plan, be set in accordance with a statistically valid and
reliable biennial survey of market rates (without reducing the number of families
served). State plans would also be required to include the results of those surveys
and to contain a description of how the state will provide for timely payment to
providers. Results of the survey would also be required to be made available to the
public no later than 30 days after the survey’s completion.
Data Collection and Reporting Requirements. Current law specifies a
set of data reporting requirements for states to collect in the administration of their
CCDBG programs. States collect data on a monthly basis and submit to the
Department of Health and Human Services (HHS) disaggregated data on a quarterly
basis. An aggregate report is required to be submitted to HHS on an annual basis.
S. 525 would retain the quarterly reporting in current law, but would amend the
list of data elements that states would be required to collect on a monthly basis. (See
Table 2 for details.) It would also eliminate the separate annual report, instead
requiring that the fourth quarterly report include information on the annual number
and type of child care providers and the method of payment they receive. S. 667
would also extend CCDBG reporting to TANF-funded child care. The House bill
would retain current law, containing none of these provisions.
Waivers in Response to Gulf Hurricanes. The House budget
reconciliation bill would provide the Secretary of HHS with the authority to waive
or modify certain CCDBG provisions for states affected by Hurricanes Katrina and
Rita. Provisions that could be waived include those relating to the federal income
eligibility limits, the work requirements, states’ use of quality funds, and any

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provision that prevents children designated as evacuees from receiving priority
services over any children not already receiving CCDBG services. No similar
provisions are included in S. 525.
Other Provisions. Titles II and III of S. 525 propose provisions that stand
apart from CCDBG law or Section 418 of the Social Security Act. Title II of the bill
contains provisions to enhance security at child care centers in federal facilities, and
Title III would establish a small business child care grant program, through which
competitive grants would be awarded to states for establishment and operation of
employer-operated child care programs. The House budget reconciliation bill
includes no similar provisions.

Responsible Fatherhood
To improve the long-term outlook for children in single-parent families, federal,
state, and local governments, along with public and private organizations, are
supporting programs and activities that promote the financial and personal
responsibility of noncustodial fathers to their children and increase the participation
of fathers in the lives of their children. These programs have come to be known as
“responsible fatherhood” programs. Most fatherhood programs include media
campaigns that emphasize the importance of emotional, physical, psychological, and
financial connections of fathers to their children. Most fatherhood programs also
include parenting education; responsible decision-making; mediation services for
both parents; providing an understanding of the CSE program; conflict resolution,
coping with stress, and problem-solving skills; peer support; and job-training
opportunities (skills development, interviewing skills, job search, job-retention skills,
job-advancement skills, etc.).
Sources of federal funding for fatherhood programs include TANF block grant
funds, TANF state Maintenance-of-Effort (MOE) funding, welfare-to-work funds,
Child Support Enforcement (CSE) funds, and Social Services Block Grant (Title XX)
funds. Even so, the federal government does not currently earmark a specific amount
of funding exclusively for responsible fatherhood programs.
Beginning with the 106th Congress, both the House and Senate have introduced
a number of bills that contain responsible fatherhood provisions, but so far none of
the bills have been passed by both Houses of Congress. In the 109th Congress, both
S. 667 and the House budget reconciliation bill would include funding for
responsible fatherhood grant programs.
S. 667 as approved by the Senate Finance Committee would establish five
components for the responsible fatherhood program for FY2006 through FY2010.
It would (1) appropriate $20 million for a grant program for up to 10 programs; (2)
appropriate $30 million for grants for eligible entities (local government, local public
agency, community-based or nonprofit organization, or private entity, including any
charitable or faith-based organizations, or Indian tribe or tribal organization) to
conduct demonstration programs; (3) authorize $5 million for a nationally recognized
nonprofit fatherhood promotion organization to develop and promote a responsible
fatherhood media campaign and establish a national clearinghouse to help states and
communities in their efforts to promote both marriage and responsible fatherhood;

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(4) authorize a $20 million block grant for states to conduct responsible fatherhood
media campaigns (authorize $1 million of the $20 million for an evaluation); and (5)
authorize $1 million for a nationally recognized nonprofit research and education
fatherhood organization to establish a national resource center for responsible
fatherhood.
The House Budget Reconciliation proposal as approved by the Committee on
Ways and Means would establish four components for the responsible fatherhood
program for FY2006 through FY2010. It would (1) authorize competitive grants for
responsible fatherhood projects to public and nonprofit community entities, including
religious organizations, and to Indian tribes and tribal organizations, for
demonstration service projects and activities designed to test the effectiveness of
various approaches to accomplish the four specified responsible fatherhood program
objectives — eligible entities would be allowed to apply for either full service grants
or limited purpose grants of $25,000 or less per fiscal year; (2) authorize funding for
two multicity, multistate fatherhood demonstration projects to be developed and
conducted by a national nonprofit fatherhood promotion organization; (3) authorize
funding for an evaluation of the competitive grant projects and the multicity,
multistate demonstration projects; and (4) authorize the Secretary of HHS by grant,
contract, or cooperative agreement to carry out projects and activities of national
significance relating to fatherhood promotion — such projects or activities could
include collection and dissemination of information, media campaigns, technical
assistance to public and private entities, and research. The bill would authorize $20
million for each of the years FY2006 through FY2010, and stipulates that no more
15% of the annual appropriations can be used for the multicity, multistate
demonstrations, the evaluations, and the projects of national significance.
The Committee on Education and the Workforce shared jurisdiction with the
Committee on Ways and Means with respect to fatherhood programs. The
Committee on Education and the Workforce’s fatherhood program is identical to that
of the Committee on Ways and Means except that it would include five components
rather than four and stipulate that no more than 35% of the $20 million annual
authorization could be used for the multicity, multistate demonstrations, the
economic incentives demonstrations, the evaluations, and the projections of national
significance. In addition to the four components in the Ways and Means Committee
proposal, the Committee on Education and the Workforce’s proposal would authorize
the HHS Secretary to make grants available for FY2006 through FY2010 for two to
five demonstration projects that test the use of economic incentives combined with
a comprehensive approach to addressing employment barriers to encourage
noncustodial parents to enter the workforce and to contribute financially and
emotionally to their children. The fatherhood demonstration projects would be
developed and conducted by a national nonprofit fatherhood promotion organization
that meets the qualifications specified in the bill. The bill would stipulate that out
of the set-aside monies, at least $5 million is to be allocated for the economic
incentive demonstration project. (Note: All of the responsible fatherhood provisions
in both House Committee bills are included in the House-passed budget
reconciliation bill.)

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Child Support Enforcement
The CSE program, Part D of Title IV of the Social Security Act, was enacted in
January 1975 (P.L. 93-647). The CSE program is administered by the Office of
Child Support Enforcement (OCSE) in the Department of HHS, and funded by
general revenues. All 50 states, the District of Columbia, Guam, Puerto Rico, and
the Virgin Islands operate CSE programs and are entitled to federal matching funds.
The following families automatically qualify for CSE services (free of charge):
families receiving TANF benefits (Title IV-A), foster care payments (Title IV-E), or
Medicaid coverage (Title XIX). Collections on behalf of families receiving TANF
benefits are used to reimburse state and federal governments for TANF payments
made to the family. Other families must apply for CSE services, and states must
charge an application fee that cannot exceed $25. Child support collected on behalf
of nonwelfare families goes to the family (usually through the state disbursement
unit).
Services. The CSE program provides seven major services on behalf of
children: (1) parent location, (2) paternity establishment, (3) establishment of child
support orders, (4) review and modification of support orders, (5) collection of
support payments, (6) distribution of support payments, and (7) establishment and
enforcement of medical support.
Enforcement Techniques. Collection methods used by CSE agencies
include income withholding, intercept of federal and state income tax refunds,
intercept of unemployment compensation, liens against property, security bonds, and
reporting child support obligations to credit bureaus. All jurisdictions also have civil
or criminal contempt-of-court procedures and criminal nonsupport laws. Building
on legislation (P.L. 102-521) enacted in 1992, P.L. 105-187, the Deadbeat Parents
Punishment Act of 1998, established two new federal criminal offenses (subject to
a two-year maximum prison term) with respect to noncustodial parents who
repeatedly fail to financially support children who reside with custodial parents in
another state or who flee across state lines to avoid supporting them.
P.L. 104-193 required states to implement expedited procedures that allow
them to secure assets to satisfy an arrearage by intercepting or seizing periodic or
lump sum payments (such as unemployment and workers’ compensation), lottery
winnings, awards, judgements, or settlements, and assets of the debtor parent held by
public or private retirement funds, and financial institutions. It required states to
implement procedures under which the state would have authority to withhold,
suspend, or restrict use of driver’s licenses, professional and occupational licenses,
and recreational and sporting licenses of persons who owe past-due support or who
fail to comply with subpoenas or warrants relating to paternity or child support
proceedings. It also required states to conduct quarterly data matches with financial
institutions in the state in order to identify and seize the financial resources of debtor
noncustodial parents. P.L. 104-193 authorized the Secretary of State to deny, revoke,
or restrict passports of debtor parents. P.L. 104-193 also required states to enact and
implement the Uniform Interstate Family Support Act (UIFSA), and expand full faith
and credit procedures. P.L. 104-193 also clarified which court has jurisdiction in
cases involving multiple child support orders.

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Financing. The federal government currently reimburses each state 66% of
the cost of administering its CSE program. It also refunds states 90% of the
laboratory costs of establishing paternity. In addition, the federal government pays
states an incentive payment to encourage them to operate effective programs. P.L.
104-193 required the HHS Secretary in consultation with the state CSE directors to
develop a new cost-neutral system of incentive payments to states. P.L. 105-200, the
Child Support Performance and Incentive Act of 1998, established a new cost-neutral
incentive payment system. The statutory limit of CSE incentive payments for
FY2005 is $446 million.
S. 667 and House Budget Reconciliation Bill: Major Provisions
Related to Child Support Enforcement. Over the years, the CSE program has
evolved into a multifaceted program. While cost-recovery still remains an important
function of the program, other aspects of the program include service delivery and
promotion of self-sufficiency and parental responsibility.
The CSE program has helped strengthen families by securing financial support
for children from their noncustodial parent on a consistent and continuing basis and
by helping some families to remain self-sufficient and off public assistance by
providing the requisite CSE services. Child support payments now are generally
recognized as a very important income source for single-parent families. On average
child support constitutes 17% of family income for households that receive it (2001
data). Among poor families who receive it, child support constitutes about 30% of
family income (2001 data).
Both S. 667 and the House budget reconciliation bill would seek to improve the
CSE program and raise collections so as to increase the economic independence of
former welfare families and provide a stable source of income for all single-parent
families with a noncustodial parent. Although both bills share identical objectives
with respect to simplifying CSE assignment and distribution rules and strengthening
the “family-first” policies started in the1996 welfare reform law, the approaches used
differ. Both bills would revise some CSE enforcement tools and add others. This
section of the report does not discuss all of the CSE provisions included in S. 667
and the House bill. For a description of all of the CSE provisions in S. 667 as
reported by the Senate Finance Committee and the House budget reconciliation bill,
see Table 2 in the last section of this report.
The Congressional Budget Office (CBO) estimates that the Senate Finance
Committee-reported bill would increase federal outlays in the CSE program by $628
million over the period FY2006-FY2010, whereas the House budget reconciliation
bill would reduce federal outlays in the CSE program by $4.899 billion over the
period FY2006-FY2010. The following two CSE provisions in the House bill
comprise most of the budget reductions (i.e., savings): a phased-in reduction of the
matching rate for administrative expenses from 66% to 50%, which saves $3.8
billion over the five-year period; and an elimination of the federal match when states
spend CSE incentive payments (i.e., reinvest CSE incentive payments back into the
program), saving $1.6 billion over the five-year period.
Assignment of Child Support Rights. As a condition of receiving TANF
benefits, a family must assign their child support rights to the state. Assignment rules

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determine who has legal claim on the child support payments owed by the
noncustodial parent. The child support assignment covers any child support that
accrues while the family receives TANF benefits as well as any child support that
accrued before the family started receiving TANF benefits. Assigned child support
collections are not paid to families, but rather this revenue is kept by states and the
federal government as partial reimbursement for welfare benefits. Nonwelfare
families who apply for CSE services do not assign their child support rights to the
state and thereby receive all of the child support collected on their behalf.
An extremely important feature of the assignment process is the date on which
an assignment was entered. If the assignment was entered on or before September
30, 1997, then pre-assistance and during-assistance arrearages are “permanently
assigned” to the state. If the assignment was entered on or after October 1, 1997,
then only the arrearages which accumulate while the family receives assistance are
“permanently assigned.” The family’s pre-assistance arrearages are “temporarily
assigned” and the right to those arrearages goes back to the family when it leaves
TANF (unless the arrearages are collected through the federal income tax refund
offset program).
Under S. 667 as reported by the Senate Finance Committee, the child support
assignment would only cover any child support that accrues while the family receives
TANF benefits. This would mean that any child support arrearages that accrued
before the family started receiving TANF benefits would not have to be assigned to
the state (even temporarily) and thereby any child support collected on behalf of the
former-TANF family for pre-assistance arrearages would go to the family. The
House bill includes a similar provision.
Distribution of Child Support. Distribution rules determine the order in
which child support collections are paid in accordance with the assignment rules. In
other words, the distribution rules determine which claim is paid first when a child
support collection occurs. The order of payment of the child support collection is of
tremendous importance because in many cases past-due child support (i.e.,
arrearages) are never fully paid.
TANF Families. While the family receives TANF benefits, the state is
permitted to retain any current support and any assigned arrearages it collects up to
the cumulative amount of TANF benefits which has been paid to the family. The
1996 welfare law (P.L. 104-193) repealed the $50 required pass through and gave
states the choice to decide how much, if any, of the state share (some, all, none) of
child support payments collected on behalf of TANF families to send the family.
States also decide whether to treat child support payments as income to the family.
While states have discretion over their share of child support collections, P.L.
104-193 required states to pay the federal government the federal government’s share
of child support collections collected on behalf of TANF families. This means that
the state, and not the federal government, bears the entire cost of any child support
passed through to (and disregarded by) families. As of August 2004, 18 states were
continuing the $50 (or higher in one state) pass-through and disregard policy that had
been in effect pre-1996.

CRS-17
Both bills would provide incentives (in the form of federal cost sharing) to states
to direct more of the child support collected on behalf of TANF families to the
families themselves (often referred to as a “family-first” policy), as opposed to using
such collections to reimburse state and federal coffers for welfare benefits paid to the
families. However, the approaches of the bills differ with respect to the amount of
federal cost-sharing provided and whether to help states pay for the current cost of
their CSE pass-through and disregard policies or to encourage states to establish such
policies or increase the pass-through and disregard already in place.
Under S. 667 as reported by the Senate Finance Committee, the federal
government would share in the costs of the entire amount of pass-through and
disregard policies used by states. S. 667 would allow states to pay up to $400 per
month in child support collected on behalf of a TANF (or foster care) family ($600
per month to a family with two or more children) to the family and would not require
the state to pay the federal government the federal share of those payments. In order
for the federal government to share in the cost of the child support pass-through, the
state would be required to disregard (i.e., not count) the child support collection paid
to the family in determining the family’s TANF benefit.
Unlike S. 667, the House bill is intended to provide states with an incentive to
increase their pass-through and disregard policies. The House budget reconciliation
bill would allow states to increase the amount of collected child support they pay to
families receiving TANF benefits and would not require the state to pay the federal
government the federal share of the increased payments. The subsidized child
support pass-through payments would be the amount above any payments the state
was making on December 31, 2001. The House bill would limit the federal
government’s cost-sharing of the new pass-through payments to the greater of $100
per month or $50 per month more than the state previously was sharing with the
family. In order for the federal government to share in the cost of an increase in the
child support pass-through, the state would be required to disregard (i.e., not count)
the child support collection paid to the family in determining the family’s TANF
benefit.
Former TANF Families. Pursuant to the 1996 welfare reform law (P.L.
104-193), beginning on October 1, 2000, states must distribute to former TANF
families the following child support collections first before the state and the federal
government are reimbursed (the “family-first” policy): (1) all current child support,
(2) any child support arrearages that accrue after the family leaves TANF (these
arrearages are called never-assigned arrearages), plus (3) any arrearages that accrued
before the family began receiving TANF benefits. (Any child support arrearages that
accrue during the time the family is on TANF belong to the state and federal
government.)
One of the goals of the 1996 welfare reform law with regard to CSE distribution
provisions was to create a distribution priority that favored families once they leave
the TANF rolls. Thus, generally speaking, under current law, child support that
accrues before and after a family receives TANF goes to the family, whereas child
support that accrues while the family is receiving TANF goes to the state. This
additional family income is expected to reduce dependence on public assistance by
both promoting exit from TANF and preventing entry and re-entry to TANF.

CRS-18
S. 667 as reported by the Senate Finance Committee would give states the
option of distributing to former TANF families the full amount of child support
collected on their behalf (i.e., both current support and all child support arrearages
— including arrearages collected through the federal income tax refund offset
program). S. 667 would simplify the CSE distribution process and eliminate the
special treatment of child support arrearages collected through the federal income tax
refund offset program. Under S. 667 the federal government would share with the
states the costs of paying child support arrearages to the family first.
Similarly, the House bill would give states the option of distributing to former
TANF families the full amount of child support collected on their behalf. Under the
House bill, the federal government would share with the states the costs of paying
child support arrearages accrued while the family received TANF as well as costs
associated with passing through to the family child support collected through the
federal income tax refund offset program, if the state chose the “family-first” option.
Expansion of Collection/Enforcement Tools. Both bills would include
identical or similar provisions with respect to (1) lowering the threshold amount for
denial of a passport to a noncustodial parent who owes past-due child support; (2)
easing the collection of child support from veterans’ benefits; (3) allowing states to
use the federal income tax refund offset program to collect past-due child support for
persons not on TANF who are no longer minors; (4) authorizing the HHS Secretary
to compare information of noncustodial parents who owe past-due child support with
information maintained by insurers concerning insurance payments and to furnish
any information resulting from a match to CSE agencies so they can pursue child
support arrearages; and (5) allowing an assisting state to establish a child support
interstate case based on another state’s request for assistance (thereby enabling an
assisting state to use the CSE statewide automated data processing and information
retrieval system for interstate cases).
Additional provisions that would expand and/or enhance the ability of states to
collect child support payments are contained in S. 667 as reported by the Senate
Finance Committee. They include (1) authorizing the HHS Secretary to act on behalf
of states to seize financial assets (held by a multi-state financial institution) of
noncustodial parents who owe child support; (2) facilitating the collection of child
support from Social Security benefits; (3) requiring that medical support for a child
be provided by either or both parents; and (4) requiring the CSE agency to notify
health care plan administrators under certain circumstances when a child loses health
care coverage.
Other Provisions. Both bills include provisions that would (1) require states
to review and if appropriate adjust child support orders of TANF families every three
years; (2) require the HHS Secretary to submit a report to Congress on the procedures
states use to locate custodial parents for whom child support has been collected but
not yet distributed; (3) establish a minimum funding level for technical assistance;
(4) establish a minimum funding level for the Federal Parent Locator Service; and (5)
designate Indian tribes and tribal organizations as persons authorized to have access
to information in the Federal Parent Locator Service.

CRS-19
S. 667 includes provisions that would (1) increase funding for the CSE access
and visitation program; (2) require states to adopt a later version of the Uniform
Interstate Family Support Act (UIFSA) so as to facilitate the collection of child
support payments in interstate cases; and (3) allow the state of Texas to continue to
operate its CSE program for automatic monitoring and enforcement of court orders
on behalf of nonwelfare families without applying for a federal waiver.
The House budget reconciliation bill includes provision that would (1) establish
a $25 annual fee for individuals who have never been on TANF but receive CSE
services and who received at least $500 in any given year; (2) gradually reduce the
general CSE federal rate of 66% to 50% (over the period FY2007-FY2010); and (3)
eliminate the federal match on CSE incentive payments that states, in compliance
with federal law, reinvest back into the CSE program.

Other Programs
In addition to reauthorizing and modifying the programs discussed above, the
Senate welfare reauthorization bill (S. 667) and the House budget reconciliation bill
would modify some other programs:

4

!

Transitional Medical Assistance (TMA), which is a program that
extends at least six and up to 12 additional months of Medicaid
coverage for families leaving welfare for work. Authority for the
TMA program is scheduled to expire on December 31, 2005 at
which time, absent congressional action, four months of Medicaid
coverage to such families would be provided. S. 667 would extend
12-month TMA through the end of FY2010 and provide state
options to reduce required beneficiary reporting of income to
continue to receive TMA after six months and allow for up to 24
months of TMA. The House reconciliation bill would not extend
TMA beyond December 31, 2005.4

!

State abstinence education grants. The program providing grants
to states for abstinence-only education is scheduled to expire on
December 31, 2005. S. 667 would extend this program through
FY2010. The House budget reconciliation bill would not include an
extension of this program.

!

Child welfare programs. Both S. 667 and the House budget
reconciliation bills would extend the authority for states to operate
child welfare “waiver” programs through FY2010. The House bill
would add additional instructions to HHS regarding waiver approval
policies and availability of waiver reports. The Senate committee bill
would allow Indian tribes to receive direct federal funding to operate
foster care and adoption assistance programs and would also permit
Puerto Rico to receive limited additional federal foster care funds.

For a discussion of the TMA program and issues, see CRS Report RL31698, Transitional
Medical Assistance (TMA) Under Medicaid, by (name redacted).

CRS-20

!

The House budget reconciliation bill includes two provisions
intended to reduce federal outlays for foster care and adoption
assistance: 1) it seeks to nullify a court rule (known as the Rosales
case) that expands eligibility for foster care in certain states; and 2)
it limits the period of time partial federal reimbursement of foster
care costs can be provided for children who are placed with relatives
who are not licensed to provide foster care, and it requires states
seeking this partial federal matching on behalf of children who are
at “imminent risk” of removal from their homes to redetermine the
status of these children as “candidates” for foster care every six
months.
Supplemental Security Income (SSI). Both S. 667 and the House
budget reconciliation bill would require that a certain percentage of
disability determinations by state disability agencies be reviewed by
the federal government. S. 667 would also extend the period of SSI
eligibility for refugees and asylees from seven to nine years. The
House bill attempts to achieve budget reductions by requiring that
certain back payments be paid in installments over time, rather than
in one lump sum.

Detailed Comparison of Senate Committee Bills
and the House Budget Reconciliation Bill
Table 2 provides a detailed comparison of welfare and related provisions in the
two Senate committee bills (S. 667 and S. 525) and the House budget reconciliation
bill. For the Senate proposals, the table notes both the bill and section numbers.
The House budget reconciliation bill is organized by Titles reflecting each House
committee’s legislative changes. The welfare and related proposals are found both
in Title II, from the Education and Workforce Committee, and Title VIII of the bill,
from the Ways and Means Committee. In most respects, the committees reported
identical legislative language. In those cases, Table 2 provides both section
references for identical provisions. In cases where the two committees reported
different provisions, the table separately indicates the Education and the Workforce
and Ways and Means provisions.
The House budget reconciliation bill is an omnibus bill that includes many
provisions unrelated to welfare reform programs. Those provisions are not discussed
in this report and not shown on the table. Further, S. 667 makes a number of changes
to the earned income and child tax credits. The tax provisions of S. 667 are also not
addressed in this report or shown on the table.

CRS-21

Table 2. Comparison of Current Law with S. 667/525 and the House Budget Reconciliation Bill Welfare Provisions
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill

Temporary Assistance for Needy Families (TANF) Block Grant
Findings and Goals and Purposes of TANF
Findings

P.L. 104-193, the Personal Responsibility and No provision.
Work Opportunity Reconciliation Act of 1996
(PRWORA), made a series of findings related
to marriage, responsible parenthood, trends in
welfare receipt and the relationship between
welfare receipt and nonmarital parenthood, and
trends in and negative consequences of
nonmarital and teen births. [Section 101 of
PRWORA]

TANF Goals and
Purposes

The purpose of TANF is to increase state
flexibility in operating a program designed to:
(1) assist needy families so that children may
live in their homes or those of relatives; (2) end
dependence of needy parents on government
benefits; (3) reduce out-of-wedlock
pregnancies; and (4) encourage the formation

Revises goal no. 4 to “encourage the
formation and maintenance of healthy twoparent married families, and encourage
responsible fatherhood.” [New language in
italics] [Section 103(d) of S. 667]

Makes a series of findings related to: (1) the
success of the 1996 law in moving families
from welfare to work and reducing child
poverty; (2) progress made by the nation in
reducing teen pregnancy and births, slowing
increases in nonmarital births, and improving
child support collections and paternity
establishment; (3) the flexibility provided by
the 1996 law for states to develop innovative
programs; (4) further progress to be made in
promoting work, strengthening families, and
enhancing state flexibility to build on the
success of welfare reform; and (5) establishing
the sense of Congress that increasing success
in moving families from welfare to work and
promoting healthy marriage and other means
of improving child well-being are important
government interests and the policies in
federal TANF law (as amended by this bill)
are intended to serve those ends. [Section
8204]
The overall purpose of TANF is to improve
child well-being by increasing state flexibility
in operating a program designed to: (1)
provide assistance and services to needy
families so that children may live in their
homes or those of relatives, (2) end
dependence of needy families on government

CRS-22
Current law
and maintenance of two-parent families.
[Section 401 of the Social Security Act (SSA)]

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill
benefits and reduce poverty; (3) reduce outof-wedlock pregnancies; and (4) encourage
the formation and maintenance of healthy,
two-parent married families, and encourage
responsible fatherhood. [New language in
italics] [Section 8101]

TANF Financing Provisions
State Family
Assistance
Grants

Provides capped grants (entitlements to states
and territories). Nationally, annual family
assistance grants total $16.567 billion for the
states, the District of Columbia (D.C.), and the
territories. Each jurisdiction’s annual grant
equals the same share of the national total as in
FY2002. [(Section 403(a)(1) of the SSA]

Retains basic block grants, and extends them Same as S. 667. [Section 8102(b)]
through FY2010 at current funding levels.
Appropriates $16.567 billion annually for
family assistance grants to the states, D.C.,
and the territories. Provides that the annual
grant of each jurisdiction shall equal its
FY2002 proportion of the national grant
total. [Section 102(a) of S. 667]

Also provides matching grants for the territories Extends funding for matching grants to the Same as S. 667. [Section 8102(c)]
[Section 1108(b) of the SSA].
territories through FY2010. [Section 102(b)
of S. 667]
Supplemental
Grant for
Population
Increases in
Certain States

Supplemental grants for (17) states with low Extends supplemental grants for FY2006 Same as S. 667. [Section 8104]
historic federal grants per poor person and/or through FY2009, at current funding levels
high population growth. Grants grew each ($319 million). [Section 104 of S. 667]
year, from $79 million in FY1998 to $319
million in FY2001. Grants frozen at $319
million since FY2001. [Section 403(a)(3) of
SSA]

Bonus to Reward
Employment
Achievement

High-performance bonus of $200 million per Replaces the high-performance bonus with Eliminates the high-performance bonus.
year on average. [Section 403(a)(4) of the a bonus to reward employment achievement. [Section 8105]
SSA]
Employment achievement bonuses would
total $50 million for each of FY2006
through FY2008, and $100 for each of
FY2009 through FY2011. [Section 105 of
S. 667]

CRS-23
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

Maximum bonus for a state equals 5% of its Maximum bonus for a state equals 5% of its
family assistance grant.
family assistance grant. [Section 105 of S.
667]
Bonus based on achievement of TANF goals,
with formula developed by the Department of
Health and Human Services (HHS) in
consultation with the National Governors
Association and the American Public Human
Services Association. For FY1999-FY2001
performance, formula consisted of three workrelated measures (job entry, job retention, and
earnings gain). For FY2002 and later years,
formula adds family formation outcomes, child
care affordability, and coverage by food stamps
and Medicaid/SCHIP. [Section 403(a)(4) of the
SSA]

Bonus to be based on absolute and relative
progress toward the goal of workforce
attachment and advancement. [Section 105
of S. 667]f

Makes tribes eligible for the bonus, setting
aside 2% of total employment achievement
bonus dollars for them, and directs the
Secretary to consult with them regarding
criteria for their awards. [Section 105 of S.
667]
Reduces FY2005 high-performance bonus
amount to $0. [Section 702 of S. 667]
For FY2006 and FY2007, employment
achievement bonus may be based on three
components of the repealed highperformance bonus — job entry rate, job
retention rate, and earnings gain rate.
[Section 105 of S. 667]

House Budget Reconciliation Bill

CRS-24
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill

Bonus to Reward
Reductions in
Out-of-wedlock
Births

Appropriated $100 million yearly for bonuses
to the five states with the largest percentage
decline (over recent two years) in the out-ofwedlock birth ratio. To qualify, states had to
reduce their abortion rate to below that of
FY1995. [Section 403(a)(2) of the SSA]

Repeals the bonus and uses the $100 million
per year to fund grants for marriage
promotion activities (see Matching Grants
for Marriage Promotion, below). [Section
103(b) of S. 667]

Repeals the bonus beginning in FY2006, and
uses the $100 million per year to fund grants
for marriage promotion activities. [Section
8103(b)]

Contingency
Fund

Capped matching grants (maximum $2 billion)
provided in case of recession. To qualify for
contingency dollars, states must be “needy” and
must spend under the TANF program a sum of
their own dollars equal to their pre-TANF
spending. [Section 403(b) of the SSA]

Appropriates such sums as are needed for
contingency fund grants, up to $2 billion
over five years, FY2006-FY2010. To
qualify for contingency grants, a state must
be “needy,” have sufficiently low TANF
balances, and have an increase in its
assistance caseload of over 5%.

Appropriates such sums as needed for
contingency fund grants, up to $2 billion over
five years, FY2006-FY2010. To qualify for
contingency grants, states must be “needy”
and must spend under the TANF program a
sum of their own dollars equal to their preTANF spending.

Needy State
Eligibility
Criteria

The law provides two needy state triggers: ( 1)
an unemployment rate for a three-month period
that is at least 6.5% and is 10% or more above
the rate for the corresponding period in either of
the two preceding calendar years; or (2) a food
stamp caseload increase of 10% over the
FY1994-FY1995 level (adjusted for the impact
of immigrant and food stamp constraints in the
1996 welfare law). [Section 403(b)(5) of the
SSA]

To trigger on as needy, a state must (1) have
an increase (due in large measure to
economic conditions) of 5% in the monthly
average unduplicated number of families
receiving assistance under its TANF
program in the most recently concluded
three-month period with data, compared
with the corresponding period in either of
the two most recent preceding fiscal years,
and (2) meet one of three other conditions.
They are: (a) for the most recent threemonth period with data, the average rate of
seasonally adjusted total unemployment
must be at least 1.5 percentage points or
50% higher than in the corresponding period
in either of the two most recent preceding
fiscal years; (b) for the most recent 13 weeks
with data, the average rate of insured
unemployment must be at least one

Retains current law needy state triggers, but
revises the food stamp trigger, requiring that
the FY1994-FY1995 caseload base be
readjusted for policy changes made after
passage of 1996 welfare law. [Section
8106(c)]

CRS-25
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill

percentage point higher than in the
corresponding period in either of the two
most recent fiscal years; or, (c) for the most
recently concluded three-months with
national data, the monthly average number
of food stamp recipient households, as of the
last day of each month, must exceed by at
least 15% the corresponding caseload
number in the comparable period in either of
the two most recent preceding fiscal years,
provided the HHS Secretary and the
Secretary of Agriculture agree that the
increased caseload was due, in large
measure, to economic conditions rather than
to policy change. A state that initially
qualifies as needy because of its TANF
caseload plus its food stamp caseload would
continue to be considered needy as long as
the state met the original qualifying
conditions. A state that initially qualified as
needy because of its TANF caseload plus its
total or insured unemployment rate would
not trigger off until its unemployment rate
fell below the original qualifying level
(disregarding seasonal variations in the case
of the insured unemployment rate). [Section
106(b) of S. 667]
Financial
Eligibility
Requirements

Before drawing contingency grants, a state must
expend within the TANF program 100% of
what it spent on TANF predecessor programs in
FY1994. Both TANF spending and FY1994
base spending exclude child care expenditures.
States then must provide matching funds to

Eliminates the requirements that a state
spend 100% of what it spent in FY1994 and
provide matching funds. Instead, requires
that unspent balances be 30% or less of
cumulative TANF grants to be eligible for
contingency funds. [Section 106(b) of S.

Retains current law requirements that states
expend 100% of what they spent on TANF
predecessor programs in FY1994 and provide
matching funds. Allows states to count
spending in separate state maintenance of
effort programs toward these spending

CRS-26
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

draw down contingency grants (see 667]
Contingency Grant Amounts, below). [Section
403(b)(5) and Section 409(a)(10) of the SSA]
Contingency
Fund Grant
Amounts

Payments are capped at 20% of a state’s basic
TANF grant. A maximum advance grant of
one-twelfth of its total maximum grant is
allowed in a given month. [Section 403(b)(3)]
A state’s annual contingency fund grant amount
is the Medicaid matching rate times
expenditures it made in excess of 100% of
FY1994 expenditures. This annual amount is
prorated for the number of months the state is
eligible for continency grants. If a state
received advance grants that are greater than the
annual amount for which it is entitled, the state
must remit any excess back to the federal
Treasury. [Section 403(b)(6)]

Tribal Eligibility
for Contingency
Funds

A state’s total contingency grant could not
exceed 10% of its family assistance grant.
The contingency fund grant equals the
state’s federal Medicaid matching rate times
the benefit cost of an increase in the TANF
family caseload above 5% in the most
recently concluded three-month period with
data, compared with the corresponding
period in either of the two most recent
preceding fiscal years. (The remaining cost
of the increased caseload would have to be
paid with state funds or other federal TANF
funds.) [Section 106(a) of S. 667]

House Budget Reconciliation Bill
requirements. State child care spending also
would count toward this requirement, but
would also be added to base FY1994
spending. [Section 8106(d) and 8106(e)]
Retains current law’s 20% maximum grant,
advance grant, and annual grant based on the
Medicaid matching rate times expenditures
made in excess of 100% of the FY1994 level.
Eliminates the proration of the annual grant
for part-year eligibility for contingency funds.
[Section 8106(d)]

No provision. Tribes are not eligible for Sets aside $25 million of the contingency No provision (retains current law).
contingency fund.
fund appropriation for grants to Indian tribes
with approved tribal TANF plans. The
Secretary of HHS, in consultation with
tribes, shall determine the criteria for access
to the fund. [Section 106(a) of S. 667]

Additional Grants
Social Service
Capitalization

No provision.

Authorizes appropriation of $40 million for No provision.
each of FY2006-FY2010 for grants to
entities for the purpose of capitalizing and
developing the role of sustainable social
services needed for success in moving
TANF recipients to work.
Requires

CRS-27
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill

applicants to describe their strategy for
developing a program that generates its own
source of on-going revenue while assisting
TANF recipients. Administrative costs
could not exceed 15% (except for
computerization and information technology
needed for tracking or monitoring required
by TANF), but none of the other statutory
rules regarding use of TANF funds would
apply. Requires evaluation and report to
Congress. [Section 119(a) of S. 667]
Car Ownership
Grants

No provision.

Authorizes appropriation of $25 million for No provision.
each of FY2006-FY2010 for grants for lowincome car ownership. Purposes: to
improve employment opportunities of lowincome families and provide incentives to
states, Indian tribes, localities, and nonprofit
groups to develop and administer programs
that promote car ownership by low-income
families. No more than 5% of the funds
could be used for administrative costs of the
Secretary in carrying out this program.
Requires evaluation. [Section 119(b) of S.
667]

Transitional
Jobs/business
Links Grants

No provision.

Authorizes appropriations of $200 million No provision.
for each of FY2006-FY2010 for business
links and transitional jobs programs. Grants
are to be awarded jointly by the Secretaries
of HHS and Labor to fund programs to
promote “business linkages” and the
“transitional jobs.” Business linkages are
programs designed to improve the wages of

CRS-28
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)
eligible individuals by improving jobs skills
in partnership with employers and providing
supports and services at or near the worksite.
Eligible grantees are private organizations,
local workforce investment boards, states,
localities, Indian tribes, and employers.
Individuals eligible to be served by these
programs are TANF recipients, former
recipients, individuals with a disability, or
noncustodial parents having difficulty in
paying child support obligations who also
have limited proficiency in the English
language or other barriers to employment.
“Transitional jobs” programs combine
subsidized, time-limited, wage-paying
supported work in the public or nonprofit
sectors with skill development and activities
to remove barriers to employment. Eligible
grantees are private organizations, local
workforce investment boards, states,
localities, and Indian tribes. Individuals
eligible to be served by these programs are
TANF recipients, former recipients,
individuals with a disability, or noncustodial
parents having difficulty in paying child
support obligations who also have limited
proficiency in the English language or other
barriers to employment.

House Budget Reconciliation Bill

CRS-29
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill

Requires a minimum of 40% of funds
appropriated to be used for business linkages
and also a minimum of 40% to be used for
transitional jobs. Benefits and services
provided under these programs are not
considered assistance. The bill also requires
an evaluation, and sets aside $3 million for
the Secretaries to produce assessments of
these programs. [Section 119(c) of S. 667]
Authorizes $20 million per year for FY2006 No provision.
through FY2010 for competitive matching
grants (at a 75% federal matching rate) to
states, Indian tribes, and tribal organizations
for the development and dissemination of
best practices for addressing domestic
violence; implementing voluntary skills
programs, including caseworker training,
technical assistance, and voluntary services
for victims of domestic violence; programs
of relationship and financial management
skills; and broad-based income support as a
means to reduce domestic violence.
Grantees must consult with organizations
with demonstrated expertise in providing aid
to victims of domestic violence. Requires
the Secretary of HHS to evaluate activities
under this grant. [Section 114(e) of S. 667]

Domestic
Violence
Prevention
Grants

No provision.

Repeal of
Federal Loan
Fund

Provides a $1.7 billion revolving and interest- Repeals the loan fund. [Section 108]
bearing federal loan fund for state welfare
programs. [Section 406 of the SSA]

Maintenance of
Effort

Establishes a maintenance-of-effort (MOE) Continues MOE requirement through Same as S. 667. [Section 8111]
requirement that states spend at least 75% of FY2010, but raises the MOE percentage to

Repeals the loan fund effective October 1,
2006. [Section 8108]

CRS-30
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill

what was spent from state funding in FY1994 80% if the state failed TANF work
on programs replaced by TANF. Nationally, participation standards of the preceding
this sum is $10.4 billion. (MOE rises to 80% if fiscal year. [Section 111(a) of S. 667]
state fails a work participation standard; see
above.) [Section 409(a)(7) of the SSA]
Defines state expenditures to reduce out-ofwedlock births and promote marriage and
responsible fatherhood (including spending
on behalf of non-needy families) as
countable toward required MOE state
spending. Subjects this spending to two
requirements applicable to MOE funds: (1)
for activities not a part of the pre-1996
welfare program, expenditures must be
above FY1995 levels to be countable toward
the MOE; and (2) expenditures used to
compensate for federal penalties are not
countable toward the MOE. [Section 103(d)
of S. 667]

Defines all state expenditures to reduce outof-wedlock births and promote marriage and
responsible fatherhood (including spending on
behalf of non-needy families) as countable
toward required MOE state spending.
[Section 8103(c)]

TANF funds used as the state match for
marriage promotion grants shall not be
considered state spending countable toward
the MOE requirement. [Section 103(b) of S.
667].

Provides that spending (as the state match)
from federal marriage promotion grants shall
not be treated as state spending toward MOE
requirements. [Section 8111(b)]

Use of Funds
General Rules

States may use funds in any manner reasonably No provision (maintains current law).
calculated to accomplish the TANF purpose.
[Section 404 of the SSA]

Same as S. 667. (No provision, retains current
law.)

States may use funds in any manner that they No provision (maintains current law).
were authorized to use pre-TANF funds.
[Section 404 of the SSA]

States may use funds for any purposes or
activities for which (rather than any manner
that) they were authorized to use pre-TANF

CRS-31
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill
funds. [Section 8107(a)]

A state may treat a family that has resided in Strikes provision permitting different Same as S. 667. [Section 8107(b)]
the state for fewer than 12 months under the treatment of families migrating into the state
welfare rules of the state where they formerly — found unconstitutional. [Section 107(a)
lived. [Section 404 of the SSA]
of S. 667]
Increases the overall ceiling on transfers to
50%. [Section 107(c)] Sets limit on SSBG
transfers at 10% for FY2006 and each year
thereafter. [Section 8107(d)]

Transfer of
Funds

States may transfer up to 30% of TANF funds
to the Child Care and Development Block
Grant (CCDBG) and the Title XX Social
Services Block Grant (SSBG). Specifies that a
maximum of 4.25% of total transfers may go to
SSBG, effective in FY2001 (but year-by-year
Congress has restored the original 10% limit).
Also allows states to use TANF funds, within
the overall 30% transfer limit, as matching
funds for the job access transportation program
for TANF recipients, ex-recipients, and persons
at risk of becoming income-eligible for TANF.
[Section 404 of the SSA]

Retains overall transfer limit at 30%. Sets
limit on SSBG transfers at 10% (original
limit in 1996 law). [Section 107(b) of S.
667]

Carryover of
Funds

Amounts may be spent without fiscal year limit
for “assistance” (chiefly ongoing cash aid). For
other benefits and services (“nonassistance”)
amounts must be obligated in the year of award
and spent in the following year. [Section 404
of the SSA]

Allows use of carryover funds from TANF Same as S. 667. [Section 8107(e)]
grants for any benefit or service without
fiscal year limitation. Permits a state or
tribe to designate some TANF funds as a
contingency reserve. [Section 107(c) of S.
667]

Use of Funds for
Education

States may use funds for educational activities
(to promote a TANF goal or because these
activities were allowed under pre-1996 law).
However, only three educational activities may
be counted toward state work participation
rates: high school attendance, education
directly related to work (both for high school
dropouts only) and vocational educational

Allows states to use TANF funds to No provision.
establish an undergraduate two- or four-year
postsecondary degree program sometimes
known as Parents as Scholars (PAS) or a
vocational educational program. Following
services could be provided in these
undergraduate programs: child care,
transportation, payment for books and

CRS-32
Current law
training. Unless it is defined by the state as
vocational educational training, postsecondary
education is not a countable work activity.
[Section 407(d) of the SSA]

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill

supplies, other services provided under
policies determined by the state to ensure
coordination and lack of duplication.
Participants who are also TANF cash
assistance recipients in these educational
programs could be counted toward state
work participation standards. See Countable
Activities. [Section 107(d) of S. 667]

Direct Funding
and
Administration
by Indian Tribes

Allows Indian tribes to administer their own Continues the authority for tribes to operate Same as S. 667. [Section 8114(a)]
family assistance (TANF) programs. Earmarks TANF programs through FY2010. [Section
some TANF funds — amount equal to federal 113(a) of S. 667]
pre-TANF payments received by state
attributable to Indians — for administration by
tribes at their option. Sums used for tribal
family assistance programs are deducted from
state TANF grants. [Section 412(a) of the SSA]

Tribal Work
Programs

Appropriates $7.6 million annually for work Provides $12.6 million annually for NEW Extends the authority and funding for NEW
and training activities (now known as Native programs through FY2010. [Section 113(a) programs at current levels ($7.6 million
annually) through FY2010. [Section 8114(b)]
Employment Works (NEW)) to tribes that of S. 667]
operated a pre-TANF work and training
program. [Section 412(b) of the SSA]
Tribes operating NEW programs may
incorporate these services into a plan under
the Indian Employment, Training and
Related Services Demonstration Act of
1992. This permits the tribe to use a single
plan, budget, and reporting format for
services incorporated into the plan. [Section
113(c) of S. 667]

CRS-33
Current law
Tribal Capacity
Grants

No provision.

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill

Appropriates $80 million for the period No provision.
FY2006-FY2010 for a tribal TANF
improvement fund. The fund could be used
to provide technical assistance to tribes,
award competitive grants to tribes, and
conduct research to improve knowledge
about tribal family assistance plans.
[Section 113(b) of S. 667]

Work Participation Requirements and Standards
Universal
Engagement and
Family Selfsufficiency Plan
Requirements

State plan must require that a parent or
caretaker engage in work (as defined by the
state) after, at most, 24 months of assistance.
[Section 402(a)(1)(ii) of the SSA]. Note: This
requirement is not enforced by a specific
penalty. (States may, but need not, establish an
individual responsibility plan for each family in
consultation with the recipient.) [Section
408(b)(2) of the SSA]

Repeals the 24-month work trigger. Same as S. 667.
Requires state plans to outline how they 8109(a)]
intend to require parents and caretakers to
engage in work or alternative sufficiency
activities, as defined by the state — while
observing the ban on penalizing work refusal
by a single parent of a preschool child who
is unable to obtain needed child care for
specified reasons — and to require families
to engage in activities in accordance with
family self-sufficiency plans. [Section
110(a) of S. 667]

States must make an initial assessment of the
skills, prior work experience, and employability
of each recipient 18 or older or those who have
not completed high school within 30 days.
[Section 408(b)(1) of the SSA]

Requires states to make an initial screening
and assessment, in a manner they deem
appropriate, of the skills, work experience,
education, work readiness, work barriers and
employability of each adult or minor child
head of household recipient who has attained
age 18 or who has not completed high
school and to assess, in a manner they deem
appropriate, the work support and other
assistance and family support services for
which families are eligible and the well-

[Section 2011; Section

Requires states, in a manner they deem
appropriate, to assess the skills, work
experience, and employability of each workeligible person (see definition below) and
requires states to develop a family selfsufficiency plan for each family with such a
person. Plans must be established within 60
days of opening a case (within 12 months for
families enrolled on October 1, 2005).
[Sections 2011(b) and 8109(b)]

CRS-34
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)
being of the family’s children and, where
appropriate, activities or resources to
improve their well-being. Requires states, in
a manner they deem appropriate, to establish
a self-sufficiency plan for each family.

Required plan contents: activities
designed to assist the family to achieve their
maximum degree of self-sufficiency;
requirement that the recipient participate in
activities in accordance with the plan;
supportive services that the state intends to
provide; steps to promote child well-being
and, when appropriate, adolescent wellbeing; information about work support
assistance for which the family may be
eligible (such as food stamps, medicaid,
SCHIP, federal or state funded child care —
including that provided under the Child Care
and Development Block Grant and the
Social Services Block Grant, EITC, lowincome home energy assistance, WIC, WIA
program, and housing assistance). The state
must monitor the participation of adults and
minor child household heads in the selfsufficiency plans and regularly review the
family’s progress, using methods it deems
appropriate, and revise the plan when
appropriate. Before imposing a sanction
against a recipient for failure to comply with
a TANF rule or a requirement of the selfsufficiency plan, the state must, to the extent

House Budget Reconciliation Bill

CRS-35
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill

that it deems appropriate, review the plan
and make a good-faith effort (defined by the
state) to consult with the family. States
must comply with self-sufficiency plan
requirements within one year after
enactment (for families then receiving
TANF). For families not enrolled on the
date of enactment, the deadline for selfsufficiency plans is the later of 60 days after
the family first receives assistance on the
basis of its most recent application, or one
year after enactment. Provides that nothing
in the self-sufficiency plan provisions shall
be construed to establish a private right or
cause of action against a state for failure to
comply with the provisions or to limit
claims that might be available under other
federal or state laws.
Requires the
Government Accountability Office to submit
a report to the Ways and Means and Finance
Committees evaluating the implementation
of the universal engagement provisions of
the bill. [Section 110(a) of S. 667]
Imposes a penalty on states for failure to
establish self-sufficiency plans by revising
the penalty provision for failure to meet
TANF work participation standards.
Provides failure to comply with selfsufficiency requirements and/or achieve
work participation standards would result in
a penalty of up to a 5% reduction in the
TANF grant for the first violation (more for
subsequent violations), based on the degree

Imposes a penalty on state for failure to
establish self-sufficiency plan by revising the
penalty provision for failure to achieve work
participation standard. Provides failure to
comply with self-sufficiency requirements
and/or achieve work participation standards
would result in a penalty of up to a 5%
reduction in the TANF grant for the first
violation (more for subsequent violations).
(The bill does not contain the “substantial

CRS-36
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill

of substantial noncompliance.
The noncompliance” language of S. 667.)
Secretary is directed to take various factors [Sections 2011(b) 8109(b)] See Penalty for
into account in setting the penalty. These Failing Participation Rate, below.
factors include the number or percentage of
families for whom a self-sufficiency plan is
not established in a timely fashion, duration
of delays, whether the failures are isolated
and nonrecurring, and the existence of
systems to ensure establishment and
monitoring of plans. Penalty may be
reduced if the failure is due to circumstances
that caused the state to meet the criteria for
contingency funds or is due to extraordinary
circumstances such as a natural disaster or
regional recession. Requires Secretary, in a
written report to Congress, to justify any
waiver or penalty reduction due to
extraordinary circumstances.
[Section
110(a) of S. 667]
Sanctions
Against
Individuals for
Work Refusal

If person in a family receiving TANF assistance No provision (maintains current law).
refuses to engage in required work, the state
shall reduce aid to the family pro rata (or more,
at state option) with respect to the period of
work refusal, or shall discontinue aid, subject to
good cause and other exceptions that the state
may establish. [Section 407(e) of the SSA]

If a person in a family receiving TANF
assistance fails to engage in required activities
and the family does not otherwise engage in
activities in accordance with its selfsufficiency plan, the state must impose a
penalty as follows: (a) If the failure is partial
or does not last longer than one month, the
state must reduce assistance to the family pro
rata (or more, at state option) with respect to
any period of failure during the month, or
shall end all assistance to the family, subject
to good cause exceptions that the state may
establish; (b) If the failure is total and persists
for at least two consecutive months, the state

CRS-37
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill
must end all cash payments to the family,
including state-funded MOE payments, for at
least one month and thereafter until the person
participates, subject to good cause exceptions
that the state may establish. Exception: If a
state constitution or a state statute enacted
before 1966 obligated local government to
provide assistance to needy parents and
children, the state has one year to comply with
this requirement. [Sections 2012(f) and
8110(e)]

Exception: a state may not penalize a single No provision (retains current law).
parent caring for a child under age 6 for refusal
to work if the parent has a demonstrated
inability to obtain needed child care that is
appropriate, suitable, and affordable. [Section
407(e) of the SSA]
Work
Participation
Standards

A state must engage a specified percentage of
families containing adult or teen parent
recipients in creditable work activities. Since
FY2002, the participation standard has been
50% for all families (and since FY1999 it has
been 90% for the two-parent component of the
caseload). [Section 407(a) of the SSA]

A state must engage a specified percentage
of families containing adult or minor heads
of households in the assistance unit in
creditable activities. Participation standards
are
50% in FY2006
55% in FY2007
60% in FY2008
65% in FY2009
70% in FY2010.
[Section 109(b) of S. 667]

Same as S. 667.

A state must engage a specified percentage of
families with a work-eligible person in direct
work or alternative self-sufficiency activities
chosen by the state. Participation standards
are same as S. 667. A work-eligible person is
defined as a household head who is in the
assistance unit, or would be in the unit if not
sanctioned. [Sections 2012(b) and 8110(a)]

CRS-38
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill

Required participation rates may be reduced by Required participation rates may be reduced Required participation rates may be reduced
a caseload reduction credit (see below).
by caseload reduction or employment by caseload reduction and “superachiever”
credits, but a cap is placed on these credits. credits (see below).
Employment credits (or caseload reduction
credits or a combination of the two) may not
reduce participation standards below:
10% in FY2006
20% in FY2007
30% in FY2008
40% in FY2009
50% in FY2010.
[Section 109(c) of S. 667]
Effective October 1, 2002, eliminates the Effective October 1, 2005, eliminates the
separate standard for two-parent families. separate standard for two-parent families.
Also forgives states penalized for failing the [Sections 2012(a) and 8110(a)]
two-parent standard in FY2002-FY2004.
[Section 109(a) of S. 667]
Caseload
Reduction Credit

Work participation standards are reduced by a
caseload reduction credit: for each percent
decline in the caseload from the FY1995 level
(not attributable to policy changes), the work
participation standard is reduced by one
percentage point. [Section 407(3) of the SSA]

Retains current law caseload reduction credit
for FY2006 and FY2007 (subject to the
limits shown above). Effective October 1,
2007, replaces the caseload reduction credit
with an employment credit (subject to limits
shown above). [Section 109(d) of S. 667]

Measures caseload reduction from a moving
base year (rather than from FY1995) and
shortens the measuring interval. Also changes
the eligibility criteria base year from FY1995
to the new moving base. For FY2006, the
credit is based on the percent decline in the
caseload from FY1996 (not due to changes in
eligibility criteria from FY1996); for FY2007,
the base year is FY1998; for FY2008,
FY2001. For FY2009 and every year
thereafter, the measuring interval is three
years. [Sections 2012(c) and 8110(b)]

No provision.

Establishes a “superachiever” caseload
reduction credit for a state with a reduction in

CRS-39
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill
FY2001 of at least 60% (for any reason) from
FY1995 level. Places a cap on this credit (20
percentage points for FY2008, lesser amounts
for earlier years). [Sections 2012(d) and
8110(c)]

Employment
Credit

No provision.

E s t a b l i s h e s a p e r c e n t a g e p o i n t No provision.
“employment” credit against the work
participation standard (subject to limits
described above). Essentially, the credit
equals a multiple of the percentage of TANF
families in a month who leave ongoing cash
assistance with a job. It is calculated by
dividing (a) twice the quarterly average
unduplicated number of families with an
adult or minor head of household recipient
who leaves welfare and was employed in the
following quarter; by (b) the average
monthly number of families with an adult or
minor head of household recipient who
received assistance during a recent fourquarter period. At state option, calculations
could include in the numerator: (1) twice
the quarterly average number of families
that received non-recurring short-term
benefits rather than ongoing cash and who
earned at least $1,000 in the quarter after
receiving the benefit, and (2) twice the
quarterly average number of families that
included an adult who received substantial
child care or transportation assistance and
earned at least $1,000 in the quarter. If both
these options were taken, the denominator
would be increased by twice the number of

CRS-40
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)
families that received non-recurring shortterm benefits during the year and by twice
the quarterly average number of families
with an adult who received substantial child
care or transportation assistance.
In
consultation with directors of state TANF
programs, the Secretary is to define
substantial child care or transportation
assistance, specifying a threshold for each
type of aid — a dollar value or a time
duration. The definition must take account
of large one-time transition payments.
[Section 109(d) of S. 667]
Gives extra credit — as 1.5 families — to a
family whose earnings during the preceding
fiscal year equaled at least 33% of the state’s
average wage. [Section 109(d) of S. 667]
Authorizes and requires the HHS Secretary
to use information in the National Directory
of New Hires to calculate state employment
credits. If the TANF leaver’s employer is
not required to report new hires, the
Secretary must use quarterly wage
information submitted by the state. To
calculate employment credits for families
who received non-recurring short term
benefits and for those who received
substantial child care and transportation
assistance, the Secretary is to use other
required data. By August 31 of each year,
the HHS Secretary must notify each state of

House Budget Reconciliation Bill

CRS-41
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)
the amount of the employment credit that
will be used in calculating participation rates
for the immediately succeeding fiscal year.
[Section 109(d) of S. 667]
Sets October 1, 2007 as the effective date for
replacement of the caseload reduction credit
by the employment credit, but permits states
to have a one-year delay. If a state makes
this choice, its adjusted work participation
standard for FY2008 shall be determined by
using both the caseload reduction credit and
the employment credit (one-half credit for
each). [Section 109(d) of S. 667]

House Budget Reconciliation Bill

CRS-42
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

House Budget Reconciliation Bill

Study of the
Employment
Credit

No provision.

Requires the Secretary of HHS to conduct a No provision.
study of the design of the employment credit
and report to the Senate Finance Committee
and House Ways and Means Committee by
September 30, 2009. [Section 109(d)]

Calculation of
Participation
Rates

The monthly participation rate, expressed as a
percentage, equals (a) the number of all
recipient families in which an individual is
engaged in work activities for the month,
divided by (b) the number of recipient families
with an adult recipient or minor head of
household. The annual participation rate,
which is compared against the participation
standard, is the average of the monthly
participation rates. [SSA, Section 407(b)(1)]

Similar to current law, except that states are
given partial, full, or extra credit for families
depending on the average number of hours
per week in which they engage in activities.
(See Hours, below).

Infant Exemption
from the Work
Participation
Rate

States may exempt the parent of a child under
age 1 from work and exclude them from the
calculation of work participation rates.
Exclusion is limited to 12 months in a lifetime.
[SSA, Section 407(b)(5)]

Permits states to exclude all families with Similar to S. 667, but does not include the 12infants (not just single parent families) from month in a lifetime limit on this exclusion.
work participation calculations on a case-by- [Sections 2012(b) and 8110(a)]
case basis. Limits this exclusion to 12
months in a lifetime. [Section 109(e) of S.
667]

Excluding
Families in Their
First Month of
Assistance from
the Work
Participation
Rate

No provision.

Permits states to exclude a new group from Similar to S. 667, but does not specify that the
work participation calculations — families exclusion is to be made on a case-by-case
in first month of assistance. Determination basis. [Sections 2012(b) and 8110(a)]
is made on a case-by-case basis. [Section
109(e) of S. 667]

Participation rates equal the share of hours
spent in creditable activities out of a potential
total of 160 hours monthly per counted family.
Monthly participation rate, expressed as a
percentage, is (a) the total number of
countable hours, divided by (b) 160 times the
number of counted families for the month.
[Sections 2012(b) and 8110(a)]

CRS-43
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

Treatment of
Sanctioned
Families in the
Work
Participation
Rate

States may exclude from the work participation No provision, retains current law.
rate calculation families subject to sanctions for
refusal to comply with work requirements.
Exclusion is limited to three months in a 12month period. [Section 407(b)(1) of the SSA]

Penalty for
Failing
Participation
Rate

Participation rates are enforced by a penalty on
states: loss of 5% of the state’s basic grant for
first year of violation (higher penalty for repeat
violations). Penalty must be based on the
degree of noncompliance and may be reduced
if the noncompliance is due to circumstances
that made the state needy under the contingency
fund definition or due to extraordinary
circumstances such as a natural disaster or
regional recession. State must replace the
amount of federal penalty funds with its own
funds. [Section 409(a)(3) of SSA] In addition,
the state’s MOE spending requirement rises
from 75% to 80% of its historic level.

House Budget Reconciliation Bill
Same as S. 667. [Sections 2012(b) and
8110(a)]

Provides that penalty (beginning for No provision, retains current law.
FY2007) must be based on the degree of
substantial noncompliance. Directs the
Secretary to take into account factors such as
the degree to which the state missed the
participation rate, the change in the number
of persons engaged in work since the prior
year, and the number of consecutive years in
which the state failed to achieve the work
rate. Penalty may be reduced if the failure is
due to circumstances that caused the state to
meet the criteria for contingency funds or is
due to extraordinary circumstances such as
a natural disaster or regional recession.
Requires Secretary, in a written report to
Congress, to justify any waiver or penalty
r e d u c tion due to ex t r a o r d i n a r y
circumstances. [Section 110(a) of S. 667]

CRS-44
Current law

Senate Committee Bills (S. 667 or S. 525
as reported from committee)

States that fail to meet work participation
standards may file a corrective compliance plan
with the Secretary of HHS. The corrective
compliance plan outlines what the states will do
to correct or discontinue its failure to meet the
standards. The Secretary may not impose the
penalty if the state corrects the violation of the
work standards. [Section 409(c) of the SSA]

If the Secretary a

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3ARL33157. Public record. Not legal advice.