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Recently Enacted Laws Impacting the Child Support Enforcement (IV-D) Program

DCL-94-64

Published: November 30, 1994
Information About:
State/Local Child Support Agencies
Topics:
Case Management, Enforcement
Types:
Policy, Dear Colleague Letters (DCL), Statutes/Legislation
Tags:
Bankruptcy, Credit Reporting

TO ALL STATE IV-D DIRECTORS

RE: Recently Enacted Laws Impacting the Child Support Enforcement (IV-D) Program

Dear Colleague:

This is to inform you of recently-enacted Federal legislation which will impact State IV-D programs. Enclosed are copies of the laws.

Full Faith and Credit for Child Support Orders Act (P.L. 103-383):

The Full Faith and Credit for Child Support Orders Act amends chapter 115 of title 28 of the United States Code by adding a new section 1738B - Full faith and credit for child support orders. This law requires each State to enforce, according to its terms, a child support order issued by a court (defined to also include an administrative authority) of another State, if (1) the other State's court had subject matter jurisdiction to hear the matter and enter an order, and (2) had personal jurisdiction over the parties. The issuing court retains continuing, exclusive jurisdiction unless the court of another State has made a modification of the support order.

A court of a State can modify the support order of another State's court only if the court seeking to make the modification has jurisdiction to make the modification and the court of the issuing State no longer has continuing, exclusive jurisdiction of the order because the child and other parties to the case are no longer residents of the State or the parties have filed written permission for the court seeking the modification to make the modification and assume continuing, exclusive jurisdiction. The issuing State's court retains authority to enforce the prior order with respect to the arrearages that accrued prior to the modification.

In addition, the new law specifies that the forum State's law applies in a proceeding to establish, modify, or enforce a support order, except that the law of the State of the court that issued the order applies when interpreting the order, and that the longer statute of limitations of either the forum State or the State of the court that issued the order applies, when enforcing a support order. The Full Faith and Credit for Child Support Orders Act is effective October 20, 1994, the date of enactment.

Bankruptcy Reform Act of 1994 (P.L. 103-394):

The Bankruptcy Reform Act of 1994 amends title 11 of the United State Code. Included in the new law's several provisions is section 304 of P.L. 103-394 which protects child support and alimony from being discharged in bankruptcy.

Section-304(b) of the law amends 11 U.S.C. 362(b)(2), which addresses exceptions to automatic stay. It revises section 362(b)(2) to include, as exceptions to the automatic stay, the commencement or continuation of an action or proceeding for establishment of paternity or establishment or modification of an order for alimony, maintenance, or support, as well as the collection of alimony, maintenance, or support from property that is not property of the bankruptcy estate.

Section 304(c) of the law amends 11 U.S.C. 507(a), which addresses the priorities for collecting claims from debtors covered under Bankruptcy Act protections. The law specifies, as number seven in the priority list, allowed claims for debts to a spouse, former spouse, or child of the debtor, for alimony, maintenance, or support of such spouse or child, in connection with a separation agreement, divorce decree, or other order of a court of record, or administrative authority determination, or property settlement agreement, but not to the extent that the debt is assigned to another entity, voluntarily, by operation of law, or otherwise; or includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance, or support.

Section 304(d) of the law amends 11 U.S.C. 522(œ)(1), which addresses avoiding the fixing of a lien which would impair the debtor's interest in a property when the lien would impair an exemption to which the debtor is entitled. It establishes an exception for a judicial lien that secures a debt to a spouse, former spouse, or child of the debtor, for alimony, maintenance, or support of such spouse or child, in connection with a separation agreement, divorce decree, or other order of a court of record, or administrative authority determination, or property settlement agreement, but not to the extent that the debt is assigned to another entity, voluntarily, by operation of law, or otherwise; or includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance, or support.

Section 304(e) of the law amends 11 U.S.C. 523(a), which addresses exceptions to discharge of debts in bankruptcy. It adds a new section 523(a)(15) that specifies that a discharge of debt by an individual debtor does not include any debt assumed or incurred by the debtor in the course of a separation or divorce or in connection with a separation agreement, divorce decree, or other order of a court of record, or administrative authority determination, or property settlement agreement, unless either the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary for the maintenance or support of the debtor, or a dependent of the debtor, or for the operation of the business of a debtor, or discharging such debt would result in a benefit to the debtor that would outweigh the detrimental consequences to a spouse, former spouse, or child of the debtor.

Section 304(f) of the law amends 11 U.S.C. 547(c), which addresses protection against trustee avoidance. It specifies that the trustee may not avoid a transfer to the extent the transfer was a bona fide payment of a debt to a spouse, former spouse, or child of the debtor, for alimony, maintenance, or support of such spouse or child, in connection with a separation agreement, divorce decree, or other order of a court of record, or administrative authority determination, or property settlement agreement, but not to the extent that the debt is assigned to another entity, voluntarily, by operation of law, or otherwise; or includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance, or support.

Section 304(g) of the law specifies that child support creditors, or their representatives, are permitted to appear or intervene without charge, and without meeting any special local court rule requirements for attorney appearances, in any bankruptcy proceeding in any bankruptcy court or district court, if such representatives file a form in such court that contains information detailing the child support debt, its status, and other characteristics.

Section 304 of P.L. 103-394 is effective October 22, 1994, the date of enactment.

Small Business Administration Reauthorization and Amendments Act of 1994 (P.L. 103-403):

The Small Business Administration Reauthorization and Amendments Act of 1994 amends the Small Business Act and the Small Business Investment Act of 1958. Section 612 of the law amends section 4 of the Small Business Act (15 U.S.C. 633) by adding a new subsection (4)(f) that requires each recipient of financial assistance, whether direct loan or loan guarantee, under the Small Business Act shall certify that the recipient is not more than 60 days delinquent in paying child support, whether under a court or administrative child support order or repayment agreement between the recipient and custodial parent or State child support enforcement agency.

This provision is effective for financial assistance provided after regulations have been promulgated. The statute requires that regulations by the Small Business Administration be promulgated within six months of October 22, 1994, the date of enactment.

Social Security Act Amendments of 1994 (P.L. 103-432):

The Social Security Act Amendments of 1994 amend the Social Security Act (the Act) and related acts to make miscellaneous and technical amendments, including three provisions in the title IV-D program.

First, section 212 of the law amends section 466(a)(7) of the Act to require IV-D agencies to periodically report to consumer reporting agencies (as defined in section 603(œ) of the Fair Credit Reporting Act) the name of any parent who owes overdue support that is at least two months delinquent and the amount of overdue support. Section 212 also deleted the provision allowing the State to charge for providing such information to consumer reporting agencies. Additionally, the section specifies that IV-D agencies need not make this information available to: (1) a consumer reporting agency that the State determines is unable to timely and systematically make accurate use of the information; or (2) to an entity that cannot furnish evidence satisfactory to the State that the entity is a consumer reporting agency. This provision is effective October 1, 1995.

Second, section 213 of the law amends section 452(g)(2)(A) of the Act, regarding the Paternity Establishment Percentage (PEP) formula. As amended, the PEP is the ratio, expressed as a percentage, which is obtained by dividing the total number of children receiving services under the State IV-D program who have been born out of wedlock and whose paternity has been established or acknowledged by the total number of children receiving services under the State IV-D program who have been born out of wedlock as of the end of the previous fiscal year.

As provided through changes previously made by P.L. 103-66 (OBRA '93), each State must meet one of five PEP benchmarks to be considered to be in substantial compliance:

(1) PEP of 75 percent;

(2) If prior fiscal year's PEP was at least 50 percent, but less than 75 percent, an improvement of three percentage points over prior fiscal year's PEP;

(3) If prior fiscal year's PEP was at least 45 percent, but less than 50 percent, an improvement of four percentage points over prior fiscal year's PEP;

(4) If prior fiscal year's PEP was at least 40 percent, but less than 45 percent, an improvement of five percentage points over prior fiscal year's PEP;

(5) If prior fiscal year's PEP was less than 40 percent, an improvement of six percentage points over prior fiscal year's PEP.

We have enclosed a copy of the text of section 452(g) of the Act as it now reads, based upon revisions by P.L. 103-66, and further amended by section 213 of P.L. 103-432.

We will issue additional guidance and instructions concerning data collection requirements.

Third, section 214 of the law amends section 463 of the Act by adding a new subsection 463(f) which requires the Secretary of Health and Human Services to enter into an agreement with the u.s. Attorney General for the Office of Juvenile Justice and Delinquency Prevention in the Department of Justice to have access to the Federal Parent Locator Service, with no fee charged, to locate any parent or child for enforcing any Federal or State law with respect to: (1) unlawful taking or restraint of a child, or (2) making or enforcing a child custody determination. This provision is effective October 1, 1995.

Sincerely,

David Gray Ross
Deputy Director
Office of Child Support Enforcement


Public Law 103-383: Full Faith and Credit for Child Support Orders Act

AN ACT

To provide that a State court may not modify an order of another State court requiring the payment of child support unless the recipient of child support payments resides in the State in which the modification is sought or consents to the seeking of the modification in that court.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the "Full Faith and Credit for Child Support Orders Act".

SEC. 2. FINDINGS AND PURPOSES.

(a) FINDINGS.--The Congress finds that-- (1) there is a large and growing number of child support cases annually involving disputes between parents who reside in different States; (2) the laws by which the courts of different jurisdictions determine their authority to establish child support orders are not uniform; (3) those laws, along with the limits imposed by the Federal system on the authority of each State to take certain actions outside its own boundaries-- (A) encourage noncustodial parents to relocate outside the States where their children and the custodial parents reside to avoid the jurisdiction of the courts of such States, resulting in an increase in the amount of interstate travel and communication required to establish and collect on child support orders and a burden on custodial parents that is expensive, time consuming, and disruptive of occupations and commercial activity; (B) contribute to the pressing problem of relatively low levels of child support payments in interstate cases and to inequities in child support payments levels that are based solely on the noncustodial parent's choice of residence; (C) encourage a disregard of court orders resulting in massive arrearages nationwide; (D) allow noncustodial parents to avoid the payment of regularly scheduled child support payments for extensive periods of time, resulting in substantial hardship for the children for whom support is due and for their custodians; and (E) lead to the excessive relitigation of cases and to the establishment of conflicting orders by the courts of various jurisdictions, resulting in confusion, waste of judicial resources, disrespect for the courts, and a diminution of public confidence in the rule of law; and (4) among the results of the conditions described in this subsection are-- (A) the failure of the courts of the States to give full faith and credit to the Judicial proceedings of the other States; (B) the deprivation of rights of liberty and property without due process of law; (C) burdens on commerce among the States; and (D) harm to the welfare of children and their parents and other custodians.

(b) STATEMENT OF POLICY.--In view of the findings made in subsection (a), it is necessary to establish national standards under which the courts of the various States shall determine their jurisdiction to issue a child support order and the effect to be given by each State to child support orders issued by the courts of other States.

(c) PURPOSES.--The purposes of this Act are-- (1) to facilitate the enforcement of child support orders among the States; (2) to discourage continuing interstate controversies over child support in the interest of greater financial stability and secure family relationships for the child; and (3) to avoid jurisdictional competition and conflict among State courts in the establishment of child support orders.

SEC. 3. FULL FAITH AND CREDIT FOR CHILD SUPPORT ORDERS.

(a) IN GENERAL.--Chapter 115 of title 28, United States Code, is amended by inserting after section 1738A the following new section:

"S 1738B. Full faith and credit for child support orders

"(a) GENERAL RULE.--The appropriate authorities of each State-- "(1) shall enforce according to its terms a child support order made consistently with this section by a court of another State; and "(2) shall not seek or make a modification of such an order except in accordance with subsection (e).

"(b) DEFINITIONS.--In this section: " 'child' means-- "(A) a person under 18 years of age; and "(B) a person 18 or more years of age with respect to whom a child support order has been issued pursuant to the laws of a State. " 'child's State' means the State in which a child resides. " 'child support' means a payment of money, continuing support, or arrearages or the provision of a benefit (including payment of health insurance, child care, and educational expenses) for the support of a child. " 'child support order'-- "(A) means a judgment, decree, or order of a court requiring the payment of child support in periodic amounts or in a lump sum; and "(B) includes-- "(i) a permanent or temporary order; and "(ii) an initial order or a modification of an order. " 'contestant' means-- "(A) a person (including a parent) who-- "(i) claims a right to receive child support; "(ii) is a party to a proceeding that may result in the issuance of a child support order; or "(iii) is under a child support order; and "(B) a State or political subdivision of a State to which the right to obtain child support has been assigned. " 'court' means a court or administrative agency of a State that is authorized by State law to establish the amount of child support payable by a contestant or make a modification of a child support order. " 'modification' means a change in a child support order that affects the amount, scope, or duration of the order and modifies, replaces, supersedes, or otherwise is made subsequent to the child support order. " 'State' means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the territories and possessions of the United States, and Indian country (as defined in section 1151 of title 18).

"(c) REQUIREMENTS OF CHILD SUPPORT ORDERS.--A child support order made is made consistently with this section if-- "(1) a court that makes the order, pursuant to the laws of the State in which the court is located-- "(A) has subject matter jurisdiction to hear the matter and enter such an order; and "(B) has personal jurisdiction over the contestants; and "(2) reasonable notice and opportunity to be heard is given to the contestants.

"(d) CONTINUING JURISDICTION.--A court of a State that has made a child support order consistently with this section has continuing, exclusive jurisdiction over the order if the State is the child's State or the residence of any contestant unless the court of another State, acting in accordance with subsection (e), has made a modification of the order.

"(e) AUTHORITY TO MODIFY ORDERS.--A court of a State may make a modification of a child support order with respect to a child that is made by a court of another State if-- "(1) the court has jurisdiction to make such a child support order; and "(2)(A) the court of the other State no longer has continuing, exclusive jurisdiction of the child support order because that State no longer is the child's State or the residence of any contestant; or "(B) each contestant has filed written consent to that court's making the modification and assuming continuing, exclusive jurisdiction over the order.

"(f) ENFORCEMENT OF PRIOR ORDERS.--A court of a State that no longer has continuing, exclusive jurisdiction of a child support order may enforce the order with respect to nonmodifiable obligations and unsatisfied obligations that accrued before the date on which a modification of the order is made under subsection (e).

"(g) CHOICE OF LAW.--

"(1) IN GENERAL.--In a proceeding to establish, modify, or enforce a child support order, the forum State's law shall apply except as provided in paragraphs (2) and (3).

"(2) LAW OF STATE OF ISSUANCE OF ORDER.--In interpreting a child support order, a court shall apply the law of the State of the court that issued the order. "(3) PERIOD OF LIMITATION.--In an action to enforce a child support order, a court shall apply the statute of limitation of the forum State or the State of the court that issued the order, whichever statute provides the longer period of limitation.".

(b) TECHNICAL AMENDMENT.--The chapter analysis for chapter 115 of title 28, United States Code, is amended by inserting after the item relating to section 1738A the following new item:

"1738B. Full faith and credit for child support orders.". Public Law 103-394: Bankruptcy Reform Act of 1994

SEC. 304. PROTECTION OF CHILD SUPPORT AND ALIMONY.

(a) DEFINITION.--Section 101 of title 11, United States Code, is amended by inserting after paragraph (12) the following: "(12A) 'debt for child support' means a debt of a kind specified in section 523(a)(5) of this title for maintenance or support of a child of the debtor;".

(b) RELIEF FROM AUTOMATIC STAY.--Section 362(b)(2) of title 11, United States Code, is amended to read as follows: "(2) under subsection (a) of this section-- "(A) of the commencement or continuation of an action or proceeding for-- "(i) the establishment of paternity; or "(ii) the establishment or modification of an order for alimony, maintenance, or support; or "(B) of the collection of alimony, maintenance, or support from property that is not property of the estate;".

(c) PRIORITY OF CLAIMS.--Section 507(a) of title 11, United States Code, is amended-- (1) in paragraph (8) by striking "(8) Eighth" and inserting "(9) Ninth", (2) in paragraph (7) by striking "(7) Seventh" and inserting "(8) Eighth", and (3) by inserting after paragraph (6) the following: "(7) Seventh, allowed claims for debts to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement, but not to the extent that such debt-- "(A) is assigned to another entity, voluntarily, by operation of law, or otherwise; or "(B) includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance or support.".

(d) PROTECTION OF LIENS.--Section 522(f)(1)(A) of title 11, United States Code, as amended by section 303, is amended by inserting after "lien" the following: "' other than a judicial lien that secures a debt-- "(i) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement; and "(ii) to the extent that such debt-- "(I) is not assigned to another entity, voluntarily, by operation of law, or otherwise; and "(II) includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance or support.".

(e) EXCEPTION TO DISCHARGE.--Section 523 of title 11, United States Code, as amended by section 221, is amended by adding at the end the following: "(15) not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, a determination made in accordance with State or territorial law by a governmental unit unless--

"(A) the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor and, if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or "(B) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor;", and (2) in subsection (c)(l) by striking "or (6)" each place it appears and inserting "(6), or (15)".

(f) PROTECTION AGAINST TRUSTEE AVOIDANCE.--Section 547(c) of title 11, United States Code, is amended-- (1) in paragraph (6) by striking "or" at the end, (2) by redesignating paragraph (7) as paragraph (8), and (3) by inserting after paragraph (6) the following: "(7) to the extent such transfer was a bona fide payment of a debt to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement, but not to the extent that such debt--

"(A) is assigned to another entity, voluntarily, by operation of law, or otherwise; or "(B) includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance or support; or".

(g) APPEARANCE BEFORE COURT.--Child support creditors or their representatives shall be permitted to appear and intervene without charge, and without meeting any special local court rule requirement for attorney appearances, in any bankruptcy case or proceeding in any bankruptcy court or district court of the United States if such creditors or representatives file a form in such court that contains information detailing the child support debt, its status, and other characteristics. (h) CONFORMING AMENDMENTS.--Title 11 of the United States Code is amended--

(1) in section 502(i) by striking "507(a)(7)" and inserting "507(a)(8)",

(2) in section 503(b)(l)(B)(i) by striking "507(a)(7)" and inserting "507(a)(8)",

(3) in section 523(a)(1)(A) by striking "507(a)(7)" and inserting "507(a)(8)", (4) in section 724(b)(2) by striking "or 507(a)(6)" and inserting "507(a) (6), or 507(a) (7)", (5) in section 726(b) by striking" or (7)" and inserting", (7), or (8)", (6) in section 1123(a)(1) by striking "507(a)(7)" and inserting "507(a)(8)", (7) in section 1129(a)(9)-- (i) in subparagraph (B) by striking "or 507(a)(6)" and inserting", 507(a)(6), or 507(a)(7)", and (ii) in subparagraph (C) by striking "507(a)(7)" and inserting "507(a)(8)". Public Law 103-403: Small Business Administration Reauthorization and Amendments Act of 1994

SEC. 612. CERTIFICATION OF COMPLIANCE WITH CHILD SUPPORT OBLIGATIONS.

Section 4 of the Small Business Act (15 U.S.C. 633), as amended by section 611, is amended by adding at the end the following new subsection:

"(f) CERTIFICATION OF COMPLIANCE WITH CHILD SUPPORT OBLIGATIONS.---

"(1) IN GENERAL.--For financial assistance approved after the promulgation of final regulations to implement this section, each recipient of financial assistance under this Act, including a recipient of a direct loan or a loan guarantee, shall certify that the recipient is not more than 60 days delinquent under the terms of any-- "(A) administrative order; "(B) court order; or "(C) repayment agreement entered into between the recipient and the custodial parent or State agency providing child support enforcement services, that requires the recipient to pay child support, as such term is defined in section 462(b) of the Social Security Act. "(2) ENFORCEMENT.--Not later than 6 months after the date of enactment of this subsection, the Administration shall promulgate such regulations as may be necessary to enforce compliance with the requirements of this subsection.".

Public Law 103-432: Social Security Act Amendments of 1994

!!SUBTITLE B--CHILD SUPPORT ENFORCEMENT!!

!!Sec. 212. REPORTS TO CREDIT BUREAUS ON PERSONS DELINQUENT IN CHILD SUPPORT PAYMENTS.!!

(a) IN GENERAL.--Section 466(a)(7) (42 U.S.C. 666(a)(7)) is amended-- (1) by striking "Procedures" and all that follows through "request of such agency" and inserting "Procedures which require the State to periodically report to consumer reporting agencies (as defined in section 603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f))) the name of any parent who owes overdue support and is at least 2 months delinquent in the payment of such support and the amount of such delinquency; and (2) by striking "(C) a fee" and all that follows through "by the State" and inserting "(C) such information shall not be made available to (i) a consumer reporting agency which the State determines does not have sufficient capability to systematically and timely make accurate use of such information, or (ii) an entity which has not furnished evidence satisfactory to the State that the entity is a consumer reporting agency".

(b) EFFECTIVE DATE.--The amendments made by subsection (a) shall take effect on October 1, 1995.

!!SEC. 213. TECHNICAL AMENDMENTS TO PROVISION ON STATE PATERNITY ESTABLISHMENT PROGRAMS.!!

Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)), as amended by section 13721(a) of OBRA-1993, is amended-- (1) in clause (i), by striking "during the fiscal year"; (2) in subclause (I) of clause (ii), by striking "as ofthe end of the fiscal year" and inserting "in the fiscal year or, at the option of the State, as of the end of such year"; (3) in subclause (II) of clause (ii), by striking "or (E) as of the end of the fiscal year" and inserting "in the fiscal year or, at the option of the State, as of the end of such year"; (4) in clause (iii), by striking "during the fiscal year"; and

(5) in the matter following clause (iii)-- (A) by striking "who were born out of wedlock during the immediately preceding fiscal year" and inserting "born out of wedlock"; (B) by striking "such preceding fiscal year" both places it appears and inserting "the preceding fiscal year"; and

(c) by striking "or E" the second place it appears.

!!SEC. 214. AGREEMENT TO ASSIST IN LOCATING MISSING CHILDREN UNDERTHE PARENT LOCATOR SERVICE.!! (a) IN GENERAL.--Section 463 (42 U.S.C. 663) is amended by adding at the end the following new subsection:

"(f) The Secretary shall enter into an agreement with the Attorney General of the United States, under which the services of the Parent Locator Service established under section 453 shall be made available to the Office of Juvenile Justice and Delinquency Prevention upon its request to locate any parent or child on behalf of such Office for the purpose of-- "(1) enforcing ny State or Federal law with respect to the unlawful taking or restraint of a child, or "(2) making or enforcing a child custody determination.

The Parent Locator Service shall charge no fees for services requested pursuant to this subsection.".

(b) CONFORMING AMENDMENT.--Section 463(c) (42 U.S.C. 663(c)) is amended by striking "(a), (b), or (e)" and inserting "(a), (b), (e), or (f)".

(c) EFFECTIVE DATE.--The amendments made by this section shall take effect on October 1, 1995. SECTION 452(g) OF THE SOCIAL SECURITY ACT, AS REVISED BY P.L. 103-66 AND P.L. 103-432

(1) A State's program under this part shall be found, for purposes of section 403(h), not to have complied substantially with the requirements of this part unless, for any fiscal year beginning on or after October 1, 1994, its paternity establishment percentage for such fiscal year is based on reliable data and (rounded to the nearest whole percentage point) equals or exceeds--

(A) 75 percent;

(B) for a State with a paternity establishment percentage of not less than 50 percent but less than 75 percent for such fiscal year, the paternity establishment percentage of the State for the immediately preceding fiscal year plus 3 percentage points;

(C) for a State with a paternity establishment percentage of not less than 45 percent but less than 50 percent for such fiscal year, the paternity establishment percentage of the State for the immediately preceding fiscal year plus 4 percentage points;

(D) for a State with a paternity establishment percentage of not less than 40 percent but less than 45 percent for such fiscal year, the paternity establishment percentage of the State for the immediately preceding fiscal year plus 5 percentage points; or

(E) for a State with a paternity percentage of less than 40 percent for such fiscal year, the paternity establishment percentage of the State for the immediately preceding fiscal year plus 6 percentage points.

(2) For purposes of this section--

(A) the term "paternity establishment percentage" means, with respect to a State (or all States, as the case may be) for a fiscal year, the ratio (expressed as a percentage) that the total number of children--

(i) who have been born out of wedlock,

(ii)(I) except as provided in the last sentence of this paragraph, with respect to whom aid is being paid under the State's plan approved under part A or E in the fiscal year or, at the option of the State, as of the end of such year, or (II) with respect to whom services are being provided under the State's plan approved under this part in the fiscal year or, at the option of the State, as of the end of such year pursuant to an application submitted under section 454(6), and

(iii) the paternity of whom has been established or acknowledged,

bears to the total number of children born out of wedlock and (except as provided in such last sentence) with respect to whom aid was being paid under the State's plan approved under part A or E as of the end of the preceding fiscal year, or with respect to whom services were being provided under the State's plan approved under this part as of the end of the preceding fiscal year pursuant to an application submitted under section 454(6), and (B) the term 'reliable date' means the most recent data available which are found by the Secretary to be reliable for purposes of this section.

For purposes of subparagraph (A), the total number of children shall not include any child who is a dependent child by reason of the death of a parent unless paternity is established for such child or any child with respect to whom an applicant or recipient is found to have good cause for refusing to cooperate under 402(a)(26) or any child with respect to whom the State agency administering the plan under part E determines (as provided in section 454(4)(B) that it is against the best interests of such child to do so.

(3)(A) The requirements of this subsection are in addition to and shall not supplant any other requirement (that is not inconsistent with such requirements) established in regulations by the Secretary for the purpose of determining (for purposes of section 403(6)) whether the program of a State operated under this plan shall be treated as complying substantially with the requirements of this part.

(B) The Secretary may modify the requirements of this subsection to take into account such additional variables as the Secretary identifies (including the percentage of children born out-of-wedlock) in a State) that affect the ability of a State to meet the requirements of this subsection.

(C) The Secretary shall submit an annual report to the Congress that sets forth the data upon which the paternity establishment percentages for States for a fiscal year are based, lists any additional variables the Secretary has identified under subparagraph (A), and describe State performance in establishing paternity.