Implementation of Section 403(a)(2) of Social Security Act Bonus To Reward Decrease in Illegitimacy

SUMMARY: The Administration for Children and Families proposes to issue

regulations describing how we will award a bonus to those States that

experience the largest decreases in out-of-wedlock childbearing and

also reduce their abortion rates. The total amount of the bonus will be

$100 million in each of fiscal years 1999 through 2002, and the award

for each eligible State in a given year will be $25 million or less.

This incentive provision is a part of the new welfare reform block

grant program enacted in 1996--the Temporary Assistance for Needy

Families, or TANF, program.

DATES: You must submit comments by May 1, 1998. We will not consider

comments received after this date in developing the final rule.

ADDRESSES: You may mail or hand-deliver comments to the Administration

for Children and Families, Office of Planning, Research and Evaluation,

370 L'Enfant Promenade, S.W., 7th Floor West, Washington, D.C. 20447.

You may also transmit comments electronically via the Internet. To

transmit comments electronically, or download an electronic version of

the proposed rule, you should access the ACF Welfare Reform Home Page

at http://www.acf.dhhs.gov/news/welfare and follow the instructions

provided.

We will make all comments available for public inspection at the

Office of Planning, Research and Evaluation, 7th Floor West, 901 D

Street, SW, Washington, DC 20447, from Monday through Friday between

the hours of 9 a.m. and 4 p.m.

We will only accept written comments. In addition, all your

comments should:

be specific;

address only issues raised by the proposed rule, not the

law itself;

where appropriate, propose alternatives;

explain reasons for any objections or recommended changes;

and

reference the specific section of the proposed rule that

you are addressing.

We will not acknowledge the comments. However, we will review and

consider all comments that are germane and received during the comment

period.

FOR FURTHER INFORMATION CONTACT: Kelleen Kaye, (202) 401-6634, or Ken

Maniha, (202) 401-5372.

Deaf and hearing-impaired individuals may call the Federal Dual

Party Relay Service at 1-800-877-8339 between 8:00 a.m. and 7:00 p.m.

Eastern time.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. The Personal Responsibility and Work Opportunity Reconciliation

Act

II. Summary of the Bonus Provision

A. Legislative History

B. The Bonus Award

III. Regulatory Framework

A. Consultations

B. Related Regulations Under Development

C. Statutory Context

D. Regulatory Reform

E. Departmental Activities Related to Out-of-Wedlock Births

IV. Section-by-Section Discussion of the NPRM

V. Regulatory Impact Analyses

A. Executive Order 12866

B. Regulatory Flexibility Analysis

C. Paperwork Reduction Act

D. Unfunded Mandates Reform Act of 1995

I. The Personal Responsibility and Work Opportunity Reconciliation

Act

On August 22, 1996, President Clinton signed ``The Personal

Responsibility and Work Opportunity Reconciliation Act of 1996''--or

PRWORA--into law. The first title of this new law (Pub. L. 104-193)

establishes a comprehensive welfare reform program designed to change

the nation's welfare system dramatically. The new program is called

Temporary Assistance for Needy Families, or TANF, in recognition of its

focus on moving recipients into work and time-limited assistance.

PRWORA repeals the existing welfare program known as Aid to

Families with Dependent Children (AFDC), which provided cash assistance

to needy families on an entitlement basis. It also repeals the related

programs known as the Job Opportunities and Basic Skills Training

program (JOBS) and Emergency Assistance (EA).

The new TANF program went into effect on July 1, 1997, except in

States that elected to submit a complete plan and implement the program

at an earlier date.

This landmark welfare reform legislation dramatically affects not

only needy families, but also intergovernmental relationships. It

challenges Federal, State, Tribal and local governments to foster

positive changes in the culture of the welfare system and to take more

responsibility for program results and outcomes.

This new legislation also gives States the authority to use Federal

welfare funds ``in any manner that is reasonably calculated to

accomplish the purpose'' of the new program. It provides them broad

flexibility to set eligibility rules and decide what benefits are most

appropriate, and it offers States an opportunity to try new, far-

reaching ideas so they can respond more effectively to the needs of

families within their own unique environments.

II. Summary of the Bonus Provision

A. Legislative History

One of the greatest concerns of Congress in passing the PRWORA was

the negative effect of out-of-wedlock births. This concern is reflected

in the Congressional findings at section 101 of PRWORA. Here, Congress

describes the need to address issues relating to marriage, the

stability of families, and the promotion of responsible fatherhood and

motherhood. It cites: the increasing number of children receiving

public assistance; the increasing number of out-of-wedlock births; the

negative consequences of an out-of-wedlock birth to the mother, the

child, the family, and society; and the negative consequences of

raising children in single-parent homes.

Section 101 concludes:

Therefore, in light of this demonstration of the crisis in our

Nation, it is the sense of the Congress that prevention of out-of-

wedlock pregnancy and reduction in out-of-wedlock birth are very

important Government interests and the policy contained in Part A of

title IV of the Social Security Act (as amended by section 103(a) of

this Act) is intended to address the crisis.

Congressional concern is also reflected in the goals of the TANF

program and the provision entitled Bonus to Reward Decrease in

Illegitimacy. One purpose of the TANF program, as stated in section

401(a)(3) of the Social Security Act, is to ``prevent and reduce the

incidence of out-of-wedlock pregnancies and establish annual numerical

goals for preventing and reducing the incidence of these pregnancies.''

In enacting this separate bonus provision to reward decreases in

out-of-wedlock childbearing, Congress intended to provide greater

impetus to State efforts in this area and encourage State creativity in

developing effective solutions.

[[Page 10265]]

B. The Bonus Award

This rulemaking addresses the provision in the new law to reward

States for high performance through the ``Bonus to Reward Decrease in

Illegitimacy.'' (See section 403(a)(2) of the Social Security Act (the

Act)).

In this Notice of Proposed Rulemaking, the ``Bonus'' refers to the

Bonus to Reward Decrease in Illegitimacy and the ``ratio'' refers to

the ratio of out-of-wedlock births to total births.

As specified in section 403(a)(2) of the Act, we will award a total

of $100 million annually, in each of fiscal years 1999 through 2002.

The amount of the bonus for each eligible State in a given year will be

$25 million or less. For the purposes of this award, States include the

50 States of the United States, the District of Columbia, the

Commonwealth of Puerto Rico, the United States Virgin Islands, Guam and

American Samoa, (as provided in section 419(a)(5)). However, the

criteria for determining eligibility and size of the bonus for Guam,

American Samoa and the Virgin Islands are different than the criteria

for the remaining States, as specified in section 403(a)(2).

We would base the bonus award on birth and abortion data for the

State population as a whole, not on data for TANF or other more limited

populations.

Briefly, we propose to award the bonus as follows:

We would calculate the ratio of out-of-wedlock births to

total births for each State for the most recent two-year period for

which data are available and for the prior two-year period. To compute

these ratios, we would use the vital statistics data reported annually

by States to the National Center for Health Statistics.

For States other than Guam, American Samoa or the Virgin

Islands, we would identify the five States that had the largest

proportionate decrease in their ratios between the most recent two-year

period for which data are available and the prior two-year period.

These States would be potentially eligible.

For Guam, American Samoa and the Virgin Islands, we would

identify which had a comparable decrease in their ratios (i.e., a

decrease at least as large as the smallest decrease among the other

qualifying States). These additional States would also be potentially

eligible. We call to your attention that bonus funds for Puerto Rico,

Guam, American Samoa, and the Virgin Islands are not subject to the

mandatory ceilings in section 1108(c)(4) of the Act.

We would notify the potentially eligible States that, to

be considered for the bonus, they need to submit data on the number of

abortions.

We would determine which of the potentially eligible

States also experienced a decrease in their rate of abortions for the

most recent calendar year compared to 1995, the base year specified in

the Act. These States would receive a bonus award.

III. Regulatory Framework

A. Consultations

In the spirit of both regulatory reform and PRWORA, we implemented

a broad and far-reaching consultation strategy prior to the drafting of

all proposed regulations for the TANF program. We discussed major

issues related to this rulemaking with outside parties at numerous

meetings.

We held two types of consultations. First, we raised issues related

to this bonus award in the general TANF consultation meetings with

representatives of State and local government; non-profit, advocacy,

and community organizations; foundations; and others. Second, we held

consultations with technical, statistical and substantive experts

focused specifically on these bonus provisions. We spoke with a number

of different audiences including representatives of the National

Association for Public Health Statistics and Information Systems

(NAPHSIS); the Maternal and Child Health Technical Advisory Group

(coordinated by the American Public Welfare Association primarily to

advise the Health Care Financing Administration of the Department of

Health and Human Services on policy matters); and other interested

agencies and organizations (e.g., the Alan Guttmacher Institute, the

NOW Legal Defense Fund, and Catholic Charities USA).

The purpose of these discussions was to gain a variety of

informational perspectives about the potential benefits and pitfalls of

alternative regulatory approaches. We solicited both written and oral

comments, and we worked to ensure that concerns raised during this

process were shared with both the staff working on individual

regulatory issues and key policy makers.

These consultations were very useful in helping us identify key

issues and evaluate policy options. However, we would like to emphasize

that we are issuing these regulations as a proposed rule. Thus, all

interested parties have the opportunity to voice their concerns and to

react to specific policy proposals. We will review comments we receive

during the comment period and will take them into consideration before

issuing a final rule.

B. Related Regulations Under Development

The NPRM to address the work, accountability, and data collection

and reporting provisions of the new TANF program was published on

November 20, 1997.

Over the next several months, we expect to issue other related

proposed rules. The upcoming NPRMs will cover high performance bonuses,

Tribal work and TANF programs, and child poverty rates.

C. Statutory Context

These proposed rules reflect PRWORA, as enacted, and amended by the

Balanced Budget Act of 1997 (Pub.L. 105-33). This latter legislation

included some technical changes and an adjustment to the formula if

Guam, the Virgin Islands, or American Samoa is eligible for a bonus.

D. Regulatory Reform

In its latest Document Drafting Handbook, the Office of the Federal

Register supports the efforts of the National Performance Review and

encourages Federal agencies to produce more reader-friendly

regulations. In drafting this proposed rule, we have paid close

attention to this guidance. Individuals who are familiar with prior

welfare regulations should notice that this package incorporates a

distinctly different, more readable style.

E. Departmental Activities Related to Out-of-Wedlock Births

The Department has undertaken several initiatives in recognizing

the importance of reducing out-of-wedlock childbearing. These include

activities focused on the total population, as well as the teen

population. In 1995, the Department published the Report to Congress on

Out-of-Wedlock Childbearing. This volume provides an extensive

compilation of many statistics on issues related to out-of-wedlock

childbearing, as well as a literature review on the causes,

consequences, and strategies to reduce childbearing outside of

marriage. In that same year, the Department published ``Beginning too

Soon: Adolescent Sexual Behavior, Pregnancy and Parenthood,'' a report

prepared by Child Trends, Inc.

Recently, the Department has developed the National Strategy to

Prevent Teen Pregnancy, as required in section 905 of PRWORA. This

strategy targets both girls and boys, and it contains both program and

research

[[Page 10266]]

initiatives. Section 905 of PRWORA also required that the Department

assure that at least 25 percent of communities in this country have

teen pregnancy prevention programs in place. The National strategy

sends the strongest possible message to all teens that postponing

sexual activity, staying in school, and preparing for work are the

right things to do. It strengthens ongoing efforts across the nation by

increasing opportunities through welfare reform; supporting promising

approaches; building partnerships; improving data collection, research,

and evaluation; and disseminating information on innovative and

effective practices.

The Department is also administering the State Abstinence Education

Program as authorized by section 912 of the PRWORA. This program

authorizes $50 million per year beginning in FY 1998. By July 1997,

every State had applied for this money to build on their State efforts

to prevent teen pregnancy.

IV. Section-By-Section Discussion of the NPRM

What Does This Part Cover? (Sec. 283.1)

This section of the proposed rule provides a summary of the content

of part 283. Part 283 covers how we would determine which States

qualify for the bonus award, what data we would use to make this

determination, and how we would determine the amount of the award.

What Definitions Apply to This Part? (Sec. 283.2)

Section 283.2 proposes definitions of the terms used in part 283.

Some of these definitions assign a one-word term to represent a

frequently used phrase. For example, ``Bonus'' is defined to mean the

Bonus to Reward Decrease in Illegitimacy authorized under section

403(a)(2) of the Act.

We also define key technical terms used in calculating the bonus

award for clarity and precision. For example, we define the ``most

recent calendar year for which abortion data are available'' as the

year that is two calendar years prior to the current calendar year. We

also propose to define abortions to include both medically and

surgically induced pregnancy terminations. This is consistent with the

way data are collected in most States.

You will note that we use the term ``we'' throughout the regulation

and preamble. The term ``we'' means the Secretary of the Department of

Health and Human Services or any of the following individuals or

agencies acting on her behalf: the Assistant Secretary for Children and

Families, the Regional Administrators for Children and Families, the

Department of Health and Human Services, and the Administration for

Children and Families.

What Steps Will We Follow To Award the Bonus? (Sec. 283.3)

This section of the proposed rule describes the process we propose

to follow for identifying which States would be eligible for the bonus

and what the amount of the bonus would be. This process is based on the

definition of ``eligible State'' in section 403(a)(2)(C)(i)(I)(aa).

This definition indicates that a State must have a qualifying decrease

in its ratio and also experience a decrease in its abortion rate. We

propose to award the bonus based on decreases in ratios and abortion

rates throughout the State. We would not award the bonus based on

limited populations, e.g., teens or public assistance recipients.

Competition for the bonus is voluntary, and this rule places no

mandates on States with respect to data collection. Also, where

possible, this NPRM proposes to use existing data sources or data that

are the least burdensome to collect and report.

In determining eligibility for the bonus, we first would consider

States other than Guam, American Samoa, and the Virgin Islands. Among

these States, we propose to identify which five States have the largest

decrease in their ratios. We would then determine whether Guam,

American Samoa and the Virgin Islands have decreases in their ratios at

least as large as the smallest decrease among the other qualifying

States. If so, they too would be potentially eligible for the bonus. We

would not consider any other States for bonus eligibility, regardless

of whether these potentially eligible States ultimately qualify for the

bonus or not.

When calculating decreases in the ratios, we would use the vital

statistics data for total births and out-of-wedlock births that States

submit to the National Center for Health Statistics (NCHS). Vital

statistics data include information on virtually all births occurring

in the United States and are already reported by State health

departments to NCHS through the Vital Statistics Cooperative Program

(VSCP). Hospitals and other facilities report this information to the

State health departments on a standard birth certificate, following

closely the format and content of the U.S. Standard Certificate of Live

Birth. The States process all of their birth records and send their

files to NCHS in electronic form in a standard format. The mother of

the child or other informant provides the demographic information on

the birth certificate, such as race, ethnicity, age, and her marital

status at the time of birth.

We chose vital statistics data to measure births because we viewed

them as the most reliable and standard data available across States.

Also, using vital statistics data from NCHS would allow us to measure

the same years for all States and would give States a reasonable and

standard time frame in which to submit the data. This is particularly

important for birth data because we would rank States on their decrease

in the ratio.

We also determined that obtaining these data directly from NCHS

rather than from the individual States would avoid a duplicate

information collection activity and would be less burdensome for the

States and for us. In most cases, States would not need to provide any

new data or information related to births beyond what they already

submit to NCHS.

As specified in section 403(a)(2) of the Act, once we have

identified the potentially eligible States with the largest decreases

in their ratios, we would notify those States that, to be considered

for eligibility for the bonus award, they must submit the necessary

data on the number of abortions for both 1995 and the most recent year.

We concluded that there is no need for all States to submit data on

abortions, based on the definition of ``eligible State'' in section

403(a)(2)(C)(i)(I)(aa). A State cannot qualify for the bonus unless it

is potentially eligible based on its decrease in the ratio. Even if

some potentially eligible States later become ineligible based on their

abortion data, all States who were previously ineligible based on their

birth data would remain ineligible. We see no purpose in requesting

abortion data from States that are not potentially eligible. Requesting

data from only the potentially eligible States would be less burdensome

for States and for us.

Each of the potentially eligible States that submits abortion data

and also experiences a decrease in its abortion rate relative to 1995

would be eligible to receive the bonus. If a State does not submit the

necessary abortion data or has not experienced a decrease in its

abortion rate, it would be ineligible.

We want to call attention to the fact that, as specified in section

403(a)(2)(C)(i)(I)(bb) of the Act, the comparison year for the abortion

rate will be 1995 for every bonus year. Any State that is potentially

eligible for the bonus and does not submit the 1995 abortion data along

with the other

[[Page 10267]]

required information within two months of notification by ACF would be

ineligible for the bonus that year.

It is important to note that, based on the definition of ``eligible

State'' in section 403(a)(2)(C)(i)(I)(aa), we propose to rank States

only on the basis of their ratios. States do not compete with respect

to their abortion rates. Once a State is ranked on decreases in the

ratio and determined to be potentially eligible, changes in its

abortion rate would affect only its own eligibility. A State's abortion

rate has no affect on the eligibility of any other State. Thus, while

abortion data affects whether an individual State receives the bonus,

competition among States for the bonus depends primarily on the birth

data.

Section 403(a)(2)(B) of the Act specifies that the total amount of

the bonus in each year shall be $100 million. The amount of the bonus

awarded to each State will depend on the number of eligible States, and

whether Guam, American Samoa or the Virgin Islands are among the

eligible States. In no case will the amount of a State's bonus be more

than $25 million.

If a State Wants To Be Considered for Bonus Eligibility, What Birth

Data Must It Submit? (Sec. 283.4)

This section of the proposed rule describes in more detail what

data a State must have submitted to NCHS for each year in the

calculation period as a first step in qualifying for the bonus. As

specified in section 403(a)(2)(C)(I)(i)(aa) of the Act, the calculation

period for each bonus year covers four years, i.e., the most recent two

calendar years for which NCHS has final data and the prior two calendar

years. Consider the hypothetical example where bonus eligibility is

being determined in July of 1999 and the most recent year for which

NCHS has final data for all States is 1997. In this example, the

calculation period would be calendar years 1997, 1996, 1995, and 1994.

If a State did not change its method for determining marital status

at any time during the calculation period, it would not need to submit

any additional information beyond the information submitted to the NCHS

as part of the vital statistics program. States must have submitted

these vital statistics files for each year in the calculation period.

Among other elements, these files must contain the number of total

births and out-of-wedlock births that occurred in the State. NCHS would

use these data to tabulate the number of total and out-of-wedlock

births occurring to residents of each State.

While the determination of marital status at the time of birth is

fairly standard across States, there is some variation. Most States use

a direct question on marital status, while a few infer marital status

based on various pieces of information.

Section 403(a)(2)(C)(i)(II)(aa) of the Act requires us to disregard

changes in data due to changed reporting methods. Accordingly, we

propose in paragraph (b) of this section that, if a State changed its

method of determining marital status during the calculation period, the

State must provide additional information to NCHS in order to

demonstrate the effect of that change. The information that States must

provide includes the years(s) of the change and data resulting from a

replication of the prior methodology, i.e., data showing what the

numbers of out-of-wedlock births would have been if such a change had

not occurred. Examples of such changes include replacing an inferential

procedure with a direct question on marital status, or changing the

data from which marital status is inferred.

In providing the information on the prior methodology, the State

must replicate as closely as possible the method for determining

marital status in the previous year. The State must submit this

alternative calculation of the number of out-of-wedlock births for

years in which the determination of marital status is different from

that in the prior year. The State would also have to submit

documentation to NCHS describing the change in determination of marital

status and how it made the alternative calculation.

Consider the following hypothetical example of determining bonus

eligibility in 1999:

A State changes from an inferential procedure to a direct question

on marital status in 1996 and then leaves its procedure unchanged. This

State would need to submit vital statistics data on total and out-of

wedlock births for each year in the calculation period. This State

would also need to submit an alternative measure showing what the

number of out-of-wedlock births would have been in 1996, using the

earlier inferential procedure. The State would not need to submit

alternative measures for any other years in the calculation period.

NCHS would use the information for 1996 to calculate an adjustment

factor for other relevant years in the calculation period. For FY 2000

and subsequent bonus years, the State would not need to submit any data

beyond the basic vital statistics files, as long as it made no further

change in its procedures.

This alternative calculation of the number of births and

documentation is necessary only if a State chooses to be considered for

the bonus. It is not required as part of the Vital Statistics

Cooperative Program.

We propose in paragraph (c) of this section that, for changes that

occurred prior to 1998 or prior to final rule publication, the State

has one year after final rule publication to submit the required

information. For changes that occur during or after 1998 and after

final rule publication, a State must submit the information with its

vital statistics data for that year. This policy would help ensure that

timely information is available when we determine bonus eligibility.

How Will We Use These Birth Data To Determine Bonus Eligibility?

(Sec. 283.5)

This section of the proposed rule explains how we would identify

which States have the largest decrease in their ratios. We would do

this by using data provided by NCHS on total births and out-of-wedlock

births for each State. In States that changed their methods of

determining marital status, NCHS would have adjusted the number of out-

of-wedlock births to disregard the effect of those methodology changes.

This adjustment would be based on information provided by the States.

In paragraph (b) we propose to use the NCHS data to calculate the

ratio for each State that has submitted the required data. As specified

in the Act, this ratio would equal the number of out-of-wedlock births

during the most recent two years divided by the number of total births

for the same period. We would also calculate this ratio for the prior

two-year period. Both ratios would be calculated to three decimal

points.

We would then calculate the proportionate change in the ratios.

This proportionate change would equal the ratio from the most recent

two-year period, minus the ratio for the previous two-year period, all

divided by the ratio from the previous two-year period. A negative

result would indicate a decrease in the ratio. A positive result would

indicate an increase in the ratio, and mean the State was not eligible

for a bonus. We would calculate these ratios to three decimal places.

We also considered measuring the absolute change in the ratio. The

absolute change would equal the ratio from the most recent period minus

the ratio from the prior period.

We believe the proportionate change is a better measure than the

absolute change because it would allow States starting with high and

low ratios to compete more fairly. This is because a

[[Page 10268]]

State starting with a low ratio could have more difficulty achieving a

given absolute decrease in ratios compared to a State starting with a

high ratio. For example, a State starting with a ratio of .100 would

need to cut its ratio in half to achieve an absolute decrease of .050

points. On the other hand, a State starting with a ratio of .500 would

need to cut its ratio by only a tenth to achieve the same absolute

decrease. Using the proportionate change in ratios rather than the

absolute change in ratios helps to mitigate this potential difficulty

by measuring the change relative to the State's ratio in the base

period.

In paragraph (c) we propose to rank States with respect to the

proportionate change between their two ratios. For States other than

Guam, American Samoa and the Virgin Islands, we would identify the five

States with the largest decrease in their ratios. These States would be

potentially eligible. The number of such States potentially eligible

for the bonus would be fewer than five if fewer than five States show

decreases in their ratios.

If a tie exists that would result in more than five such States

being potentially eligible, we would calculate the percentage change to

enough decimal places to eliminate the tie.

We would then determine whether Guam, American Samoa and the Virgin

Islands have a comparable decrease in their ratios (i.e., a decrease at

least as large as the smallest decrease among qualifying States other

than Guam, American Samoa and the Virgin Islands). These identified

States would be potentially eligible for the bonus.

If a State Wants To Be Considered for Bonus Eligibility, What Data on

Abortions Must It Submit? (Sec. 283.6)

This section of the proposed rule describes the data a State also

must submit on abortions in order to qualify for the bonus. As noted

above, only those States that are potentially eligible based on their

ratios would need to submit abortion data in each year. Other States

cannot be eligible and, therefore, do not need to submit abortion

numbers.

Under the proposed definitions at Sec. 283.2, the term ``abortion''

includes both medically and surgically induced pregnancy terminations.

In most cases, States already collect these data.

To be considered for the bonus, we propose, in paragraph (a), that

States must submit to ACF data and information on the number of

abortions for calendar year 1995 within two months of notification by

ACF that they are potentially eligible. Under section 403(a)(2) of the

Act, their data must count all abortions; it cannot be based on sub-

populations, such as recipients of public assistance or Medicaid.

In paragraph (b), we propose that the potentially eligible States

must also submit documentation demonstrating when they obtained their

1995 data on abortions. An eligible State must have obtained its 1995

abortion data by the end of 1997, or within 60 days of final rule

publication, whichever is later. Prompt collection of these data should

help to improve the reliability of the abortion data submitted for

1995.

For comparison and calculation purposes, in paragraph (c) we

propose that potentially eligible States also must submit data on the

number of abortions for the most recent year for which abortion data

are available. We define the term ``most recent year for which abortion

data are available'' in Sec. 283.2(e) to mean the year that is two

calendar years prior to the current calendar year. For example, if we

are determining bonus eligibility in calendar year 1999, the State

would need to submit abortion data for calendar year 1995 and calendar

year 1997. We define the period this way in order to measure the same

year for all States. Based on information received during the

consultation phase, we concluded that two years was a reasonable time

frame in which to obtain the data. A time frame of longer than two

years would not result in timely data, and a time frame shorter than

two years could be difficult for some States to meet.

The information the State must submit for 1995 and the most recent

year is either the number of all abortions performed within the State,

or the number of all abortions performed within the State on in-State

residents. We would accept either measure. However, we prefer the

second measure because the population of in-State residents is more

relevant for the intent of this provision. We assume that State

policies to reduce out-of-wedlock childbearing will affect in-State

residents most directly. We received numerous comments during our

external consultation that the measure should be based on in-State

residents, if possible.

We understand, however, that some States collect data only on total

abortions that occurred within the State and do not separately identify

abortions provided to in-State or out-of-State residents. While such

States could begin to collect the data on a State-resident basis in the

future, their 1995 data would not be collected on this basis. We

investigated whether a State could adjust its 1995 data to make it

comparable to future data based on in-State residents. After extensive

consultation, we concluded this would not be technically feasible.

Therefore, this proposed rule offers potentially eligible States

the option to measure either total abortions that occurred within the

State or abortions only among in-State residents that occurred within

the State. However, the State must use the same definition to measure

abortions in later years as it chooses for 1995. For example, if a

State submitted data on total abortions performed in the State in 1995,

it also must submit data on total abortions performed in the State in

1999.

While a State would be ineligible for the bonus if it changed its

number of reported abortions in this respect, it could change its

reporting in other respects and still be potentially eligible. For

example, a State could change its procedures for contacting abortion

providers. This flexibility would allow States to improve their

abortion reporting systems without making them ineligible for the

bonus.

Under this proposed rule, States would also have flexibility to

choose the source of the abortion data they submit. This flexibility

would allow States that do not already have their own reporting system

in place to compete for the bonus using data from other sources.

While the States would have some flexibility to change their

abortion reporting over time, the State would have to adjust for

effects of these changes. In paragraph (d), as provided in section

403(a)(2)(C)(i)(II)(bb) of the Act, we propose that States must adjust

the measure (the number of abortions) so as to exclude increases or

decreases that result from changes in data reporting relative to 1995,

i.e., changes in the source of the data or the methodology. We propose

also that the Governor, or his or her designee, must certify that the

State has made the appropriate adjustments.

These abortion reporting restrictions, including the need to adjust

for changes in data reporting and the need to define the population

consistently over time, apply only to the number of abortions reported

to ACF for purposes of this bonus. Therefore, the number of abortions

reported for purposes of the bonus might or might not equal the number

of abortions reported in public health statistics.

This proposed rule does not specify what methodology States must

use to adjust for changes in data collection. After extensive

consultation, we do not believe it is feasible to design a single

methodology that would address all possible changes in data reporting.

In addition, based on comments from our

[[Page 10269]]

external consultation, we understand that some State privacy laws

restrict the types of abortion provider information that can be

reported. We considered more specific reporting requirements as a way

of ensuring a more uniform methodology, but they appeared to conflict

with these State confidentiality laws.

Our aim in this section of the NPRM is to obtain from States the

best quality and most standard abortion data possible. We believe this

is necessary for the fair and equitable distribution of these bonus

awards. We also believe, however, that this proposed rule provides

States with important flexibility that would make it technically

feasible for States to submit the necessary data if they choose to

compete for the bonus. We believe that this flexibility would better

incorporate State program knowledge and expertise in measuring

abortions.

This flexibility could introduce variation in measurement of

abortions across States for purposes of the bonus and could raise

concern about fair competition for the bonus. However, these concerns

are greatly mitigated by the fact that States are not competing with

each other on their abortion rates. As noted above, a State's abortion

rate affects its own qualification only, not the qualification of any

other State. Furthermore, the disqualification of any State, based on

its abortion data, does not result in additional States becoming

eligible.

A State cannot be eligible for the bonus unless it submits the

necessary abortion data. However, as competition for the bonus is

voluntary, this provision places no requirement on States to submit

these data.

How Will We Use These Data on Abortions To Determine Bonus Eligibility?

(Sec. 283.7)

This section of the proposed rule describes how we would use the

abortion data to identify which States are eligible for the bonus. To

be eligible, a State must meet all the requirements noted above and

must demonstrate a decrease in its abortion rate as described below.

In paragraph (a), we propose to use the abortion data that States

provide to calculate a rate of abortions. This rate would equal the

number of abortions in a State for the most recent year, divided by the

number of total resident births for the same year as reported by NCHS.

This statistic is also known as the ``abortion to live birth ratio.''

It is a standard statistic used to measure abortions and incorporates

the same denominator as the ratio. We would calculate the rate to three

decimal places.

In paragraph (b), we propose to compare this rate for the most

recent year to the rate for 1995, calculated in the same way, and to

identify which of the potentially eligible States experienced decreases

in their abortion rates relative to 1995. Only those States

experiencing decreases relative to 1995 would be eligible for the

bonus. We would always compare a State's abortion rate to its 1995

rate, as specified in section 403(a)(2)(C)(i)(I)(bb) of the Act.

What Will Be the Amount of the Bonus? (Sec. 283.8)

This section of the proposed rule explains how we would determine

the amount of the bonus for eligible States. These amounts are

specified in section 403(a)(2)(B) of the Act. For Guam, American Samoa

or the Virgin Islands, the award would be 25 percent of their mandatory

ceiling amount as defined in section 1108 of the Act. Any bonuses paid

to the these States would be subtracted from the total award of $100

million, and the remainder would be divided among the other qualifying

States up to a maximum award of $25 million. If Guam, American Samoa

and the Virgin Islands were not among the qualifying States, the bonus

for each State would be $20 million if five States qualified and $25

million if fewer States qualified. If Guam, American Samoa or the

Virgin Islands were among the qualifying States, the award for each

State would be some lesser amount. The bonus amount for any State will

never exceed $25 million per year.

What Do Eligible States Need To Know To Access the Bonus Funds?

(Sec. 283.9)

This section of the proposed rule provides additional details on

how we would pay the bonus and how States may use the bonus award. We

propose in paragraph (a) to pay the award to the Executive Office of

the Governor. We believe that the Governor, as Chief Executive Officer

of the State, is responsible not only for the TANF block grant program

but for the well-being of all citizens of the State, including efforts

related to reducing out-of-wedlock childbearing for the population as a

whole.

Since a bonus is part of a State's Family Assistance Grant, a State

may use these funds only for purposes listed in sections 404 (use of

funds) and 408 (prohibitions; requirements) of the Act. These sections

of the law, including their constraints and limitations, apply to all

funds received under section 403 of the Act.

V. Regulatory Impact Analyses

A. Executive Order 12866

Executive Order 12866 requires that regulations be drafted to

ensure that they are consistent with the priorities and principles set

forth in the Executive Order. The Department has determined that this

proposed rule is consistent with these priorities and principles. This

proposed rulemaking implements statutory authority based on broad

consultation and coordination.

The Executive Order encourages agencies, as appropriate, to provide

the public with meaningful participation in the regulatory process. As

described elsewhere in the preamble, ACF consulted with State and local

officials, their representative organizations, and a broad range of

technical and interest group representatives.

We discuss the input received during the consultation process in

the ``Supplementary Information'' section of the preamble and in the

section-by-section discussion of the proposed rule. To a considerable

degree, this NPRM reflects the information provided by, and the

recommendations of, the groups with whom we consulted.

B. Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5 U.S.C. Ch. 6) requires the

Federal government to anticipate and reduce the impact of rules and

paperwork requirements on small businesses and other small entities.

Small entities are defined in the Act to include small businesses,

small non-profit organizations, and small governmental agencies. This

rule will affect only States. Therefore, the Secretary certifies that

this rule will not have a significant impact on small entities.

C. Paperwork Reduction Act

This rule does not contain information collection activities that

are subject to review and approval by the Office of Management and

Budget. The birth data on which we will base the computation of the

bonus are currently available from the NCHS. Therefore, no new data

collection is required to measure out-of-wedlock birth ratios. The

abortion data would be solicited for up to eight States only, and,

therefore, does not meet the criteria for OMB review and approval.

D. Unfunded Mandates Reform Act of 1995

Section 202 of the Unfunded Mandates Reform Act of 1995 requires

that a covered agency prepare a budgetary impact statement before

promulgating a rule that includes any

[[Page 10270]]

Federal mandate that may result in the expenditure by State, local, and

Tribal governments, in the aggregate, or by the private sector, of $100

million or more in any one year.

We have determined that this proposed rule would not impose a

mandate that will result in the expenditure by State, local, and Tribal

governments, in the aggregate, or by the private sector, of more than

$100 million in any one year. Accordingly, we have not prepared a

budgetary impact statement, specifically addressed the regulatory

alternatives considered, or prepared a plan for informing and advising

any significantly or uniquely impacted small government.

List of Subjects in 45 CFR Part 283

Health statistics, Family planning, Maternal and child health,

Public assistance programs.

Dated: September 19, 1997.

Olivia A. Golden,

Principal Deputy Assistant Secretary for Children and Families.

Approved: November 24, 1997.

Donna E. Shalala,

Secretary, Department of Health and Human Services.

For the reasons set forth in the preamble, we propose to add part

283 to chapter II of title 45 of the CFR to read as follows:

PART 283--IMPLEMENTATION OF SECTION 403(a)(2) OF THE SOCIAL

SECURITY ACT, BONUS TO REWARD DECREASE IN ILLEGITIMACY

Sec.

283.1 What does this part cover?

283.2 What definitions apply to this part?

283.3 What steps will we follow to award the bonus?

283.4 If a State wants to be considered for bonus eligibility, what

birth data must it submit?

283.5 How will we use these birth data to determine bonus

eligibility?

283.6 If a State wants to be considered for bonus eligibility, what

data on abortions must it submit?

283.7 How will we use these data on abortions to determine bonus

eligibility?

283.8 What will be the amount of the bonus?

283.9 What do eligible States need to know to access the bonus

funds?

Authority: 42 U.S.C. 603.

Sec. 283.1 What does this part cover?

This part explains how States may be considered for the Bonus to

Reward Decrease in Illegitimacy as authorized by section 403(a)(2) of

the Social Security Act. It describes the data on which we will base

the bonus, how we will make the award, and how we will determine the

amount of the award.

Sec. 283.2 What definitions apply to this part?

The following definitions apply to this part:

Abortions means induced pregnancy terminations, including both

medically and surgically induced pregnancy terminations.

Act means the Social Security Act.

Bonus refers to the Bonus to Reward Decrease in Illegitimacy, as

set forth in section 403(a)(2) of the Social Security Act.

Calculation period refers to the four calendar years used for

determining the decrease in the out-of-wedlock birth ratios for a bonus

year. (The years included in the calculation period change from year to

year.)

Most recent two-year period for which birth data are available

means the most recent two calendar years for which the National Center

for Health Statistics has obtained final birth data by State.

Most recent year for which abortion data are available means the

year that is two calendar years prior to the current calendar year.

(For example, for eligibility determinations made during calendar year

1999, the most recent year for which abortion data are available would

be calendar year 1997.)

NCHS means the National Center for Health Statistics, in the

Centers for Disease Control and Prevention, U.S. Department of Health

and Human Services.

Number of out-of-wedlock births for the State means the final

number of births occurring outside of marriage to residents of the

State, as reported in NCHS vital statistics data.

Number of total births for the State means the final total number

of births to residents of the State, as reported in NCHS vital

statistics data.

Rate of abortions means the number of abortions reported by the

State in the most recent year for which abortion data are available

divided by the State's total number of resident births reported in

vital statistics for that same year. (This measure is also more

traditionally known as the ``abortion to live birth ratio.'')

Ratio refers to the ratio of out-of-wedlock births to total births,

as defined in Sec. 283.5(b).

State means the 50 States of the United States, the District of

Columbia, the Commonwealth of Puerto Rico, the United States Virgin

Islands, Guam, and American Samoa, as provided in section 419(a)(5) of

the Act.

Vital statistics data means the data reported by State health

departments to NCHS, through the Vital Statistics Cooperative Program

(VSCP).

Sec. 283.3 What steps will we follow to award the bonus?

(a) For each of the fiscal years 1999 through 2002 we will:

(1) Calculate the ratios for the most recent two years for which

data are available, and for the prior two years, as described in

Sec. 283.5. We will do this for every State that submits the necessary

vital statistics data to NCHS, as described in Sec. 283.4.

(2) Calculate the proportionate change between these two ratios, as

described in Sec. 283.5.

(3) Identify as potentially eligible those States that have

qualifying decreases in their ratios, using the methodology described

in Sec. 283.5. We will identify fewer than five States if fewer than

five States experience decreases in their ratios. We will identify more

than five States if Guam, American Samoa or the Virgin Islands, in

addition to five other States, have qualifying decreases in their out-

of-wedlock birth ratios.

(4) Notify these potentially eligible States that we will consider

them for the bonus if they submit data on abortions as stated in

Sec. 283.6.

(5) Identify which of the potentially eligible States that

submitted the required data on abortions have experienced decreases in

their rates of abortion relative to 1995, as described in Sec. 283.7.

These States will receive the bonus.

(b) We will determine the amount of the grant for each eligible

State, based on the number of eligible States, and whether Guam,

American Samoa or the Virgin Islands are eligible. No State will

receive a bonus award greater than $25 million in any year.

Sec. 283.4 If a State wants to be considered for bonus eligibility,

what birth data must it submit?

(a) To be considered for a bonus, the State must have submitted

data on out-of-wedlock births as follows:

(1) The State must have submitted to NCHS final vital statistics

data files for all births occurring in the State. These files must

show, among other elements, the number of total births and the number

of out-of-wedlock births occurring in the State. These data must

conform to the Vital Statistics Cooperative Program contract for all

years in the calculation period. This contract specifies, among other

things, the guidelines and time-lines for submitting vital statistics

data files.

(2) The State must have submitted these data for the most recent

two years for which NCHS reports final data, as well as for the

previous two years.

(b) If a State has changed its method of determining marital status

for the

[[Page 10271]]

purposes of these data, the State also must have met the following

requirements:

(1) The State has identified all years for which the method of

determining marital status is different from that used for the previous

year.

(2) For those years identified under paragraph (b)(1) of this

section, the State has replicated as closely as possible the previous

year's method for determining marital status at time of birth, and the

State has reported to NCHS the resulting alternative number of out-of-

wedlock births.

(3) The State has also submitted to NCHS documentation on what the

changes in determination of marital status were for those years and how

it determined the alternative number of out-of-wedlock births for the

State.

(4) For methodology changes that occurred prior to 1998 or final

rule publication, the State must have submitted the information

described in paragraphs (b)(1), (2) and (3) of this section within 1

year of final rule publication. For such changes occurring during or

after 1998 and after final rule publication, the State must have

submitted such information according to the same deadline that applies

to its vital statistics data for that year.

Deadline for Information on Changes in Data Reporting

--------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------

If Change in Data Collection Prior to 1998 Prior to final rule During 1998, after final After 1998, after final

Occurred: rule rule

Then Deadline for Information on Within 1 year of final rule Within 1 year of final rule NCHS deadlines NCHS deadlines

Alternative Data is:

--------------------------------------------------------------------------------------------------------------------------------------------------------

Sec. 283.5 How will we use these birth data to determine bonus

eligibility?

(a) We will use the number of out-of-wedlock births and total

births among women living in each State provided by NCHS as follows.

(1) If a State has not changed its method of determining marital

status, these numbers will be based directly on their vital statistics

data files.

(2) For years when the determination of marital status has been

changed during the calculation period, NCHS will provide the number of

out-of-wedlock births from vital statistics as well as an adjustment

factor to disregard the effects of this change.

(b) We will use these data provided by NCHS to calculate the

decrease in the ratios for each State, as follows:

(1) We will calculate the ratio as the number of out-of-wedlock

births for the State during the most recent two-year period for which

NCHS has final birth data divided by the number of total births for the

State during the same period. We will calculate, to three decimal

places, the ratio for each State that submits the necessary data on

total and out-of-wedlock births described in Sec. 283.4.

(2) We will calculate the ratio for the previous two-year period

using the same methodology.

(3) We will calculate the proportionate change in the ratio as the

ratio of out-of-wedlock births total births for the most recent two-

year period minus the ratio of out-of-wedlock births to total births

from the prior two-year period, all divided by the ratio of out-of

wedlock births to total births for the prior two-year period. A

negative number will indicate a decrease in the ratio and a positive

number will indicate an increase in the ratio.

(c) We will identify which States have a decrease in their ratios

large enough to make them potentially eligible for the bonus, as

follows:

(1) For States other than Guam, American Samoa and the Virgin

Islands, we will use this calculated change to rank the States and

identify which five States have the largest decrease in their ratios.

Only States among the top five will be potentially eligible for the

bonus. We will identify fewer than five such States as potentially

eligible if fewer than five experience decreases in their ratios. We

will not include Guam, American Samoa and the Virgin Islands in this

ranking.

(2) If we identify more than five States due to a tie in the

decrease, we will recalculate the ratio and the decrease in the ratio

to as many decimal places as necessary to eliminate the tie. We will

identify no more than five States.

(3) For Guam, American Samoa and the Virgin Islands, we will use

the calculated change in the ratio to identify which of these States

experienced a decrease at least as large as the smallest qualifying

decrease identified in paragraph (c)(1) of this section. These

identified States will be potentially eligible for the bonus also.

(4) We will notify the potentially eligible States, as identified

under paragraphs (a) through (c) of this section that they must submit

the information on abortion rates specified under Sec. 283.6 if they

want to be considered for the bonus.

Sec. 283.6 If a State wants to be considered for bonus eligibility,

what data on abortions must it submit?

(a) To be considered further for bonus eligibility, each

potentially eligible State, as identified under Sec. 283.5, must then

submit to ACF data and information on the number of abortions for

calendar year 1995 within two months of this notification. This number

must measure either of the following:

(1) For calendar year 1995, the total number of abortions performed

by all providers within the State; or

(2) For calendar year 1995, the total number of abortions that were

performed by all providers within the State on the total population of

State residents only. This is the preferred measure.

(b) States must have obtained these data on abortions for calendar

year 1995 by the end of calendar year 1997, or within 60 days of

publication of the final rule on the bonus, whichever is later. Within

two months of notification by ACF of potential eligibility, the State

must submit records documenting when it obtained the abortion data for

calendar year 1995.

(c) The State also must submit data on the number of abortions for

the most recent year for which abortion data are available, as defined

in Sec. 283.2. In measuring the number of abortions, the State must use

the same definition, either under paragraph (a)(1) or (a)(2) of this

section, for both 1995 and the most recent year.

(d) The State must adjust the number of abortions reported to ACF

in any year to exclude increases or decreases due to changes in data

collection or methodology relative to the number of abortions reported

to ACF for 1995. The Governor, or his or her designee, must certify to

ACF that such adjustments have been made.

Sec. 283.7 How will we use these data on abortions to determine bonus

eligibility?

(a) For those States that have met all the requirements under

Secs. 283.1 through 283.6, we will calculate the rate of abortions for

calendar year 1995 and for the most recent year for which abortion data

are available. These rates will equal the number of abortions reported

by the State to ACF for the applicable year, divided by total births

[[Page 10272]]

among women living in the State reported by NCHS for the same year. We

will calculate the rates to three decimal places.

(b) If ACF determines that the State's rate of abortions for the

most recent year for which abortion data are available is less than the

rate for 1995, and, if the State has met all the requirements listed

elsewhere under this part, the State will receive the bonus.

Sec. 283.8 What will be the amount of the bonus?

(a) If, for a bonus year, none of the eligible States is Guam,

American Samoa or the Virgin Islands, then the amount of the grant

shall be:

(1) $20 million if there are five eligible States; or

(2) $25 million if there are fewer than five eligible States.

(b) If for a bonus year, Guam, the Virgin Islands, or American

Samoa is an eligible State, then the amount of the grant shall be:

(1) In the case of such a State, 25 percent of the mandatory

ceiling amount as defined in section 1108 of the Act; and

(2) In the case of any other State the amount of the grant shall be

$100 million, minus the total amount of any bonuses paid to Guam, the

Virgin Islands, and American Samoa, and divided by the number of

eligible States other than such territories, not to exceed $25 million.

Sec. 283.9 What do eligible States need to know to access the bonus

funds?

(a) We will pay the bonus to the Executive Office of the Governor

of the eligible State.

(b)(1) States must use the bonus to carry out the purposes of the

Temporary Assistance for Needy Families Block Grant in section 404 of

the Social Security Act.

(2) These funds are also subject to the limitations in, and

requirements of, sections 404 and 408 of the Act.

[FR Doc. 98-5179 Filed 2-27-98; 8:45 am]

BILLING CODE 4184-01-P