GRANTS TO STATES.

SEC. 5502. GRANTS TO STATES. (a) Bonus for Decrease in Illegitimacy Modified to Take Account of Certain Territories.— (1) In general.—Section 403(a)(2)(B) (42 U.S.C. 603(a)(2)(B)) is amended to read as follows: “(B) Amount of grant.— “(i) In general.—If, for a bonus year, none of the eligible States is Guam, the Virgin Islands, or American Samoa, then the amount of the grant shall be— “(I) $20,000,000 if there are 5 eligible States; or “(II) $25,000,000 if there are fewer than 5 eligible States. “(ii) Amount if certain territories are eligible.—If, for a bonus year, Guam, the Virgin Islands, or American Samoa is an eligible State, then the amount of the grant shall be— “(I) in the case of such a territory, 25 percent of the mandatory ceiling amount (as defined in section 1108(c)(4)) with respect to the territory; and111 STAT. 607 “(II) in the case of a State that is not such a territory— “(aa) if there are 5 eligible States other than such territories, $20,000,000, minus ⅕ of the total amount of the grants payable under this paragraph to such territories for the bonus year; or “(bb) if there are fewer than 5 such eligible States, $25,000,000, or such lesser amount as may be necessary to ensure that the total amount of grants payable under this paragraph for the bonus year does not exceed $100,000,000.”. (2) Certain territories to be ignored in ranking other states.—Section 403(a)(2)(C)(i)(I)(aa) (42 U.S.C. 603(a)(2)(C)(i)(I)(aa)) is amended by adding at the end the following: “In the case of a State that is not a territory specified in subparagraph (B), the comparative magnitude of the decrease for the State shall be determined without regard to the magnitude of the corresponding decrease for any such territory.”. (b) Computation of Bonus Based on Ratios of Out-of-Wedlock Births to All Births Instead of Numbers of Out-of-Wedlock Births.—Section 403(a)(2) (42 U.S.C. 603(a)(2)) is amended— (1) in the paragraph heading, by inserting “ratio” before the period; (2) in subparagraph (A), by striking all that follows “bonus year” and inserting a period; and (3) in subparagraph (C)— (A) in clause (i)— (i) in subclause (I)(aa)— (I) by striking “number of out-of-wedlock births that occurred in the State during” and inserting “illegitimacy ratio of the State for”; and (II) by striking “number of such births that occurred during” and inserting “illegitimacy ratio of the State for”, and (ii) in subclause (II)(aa)— (I) by striking “number of out-of-wedlock births that occurred in” each place such term appears and inserting “illegitimacy ratio of”; and (II) by striking “calculate the number of out-of-wedlock births” and inserting “calculate the illegitimacy ratio”; and (B) by adding at the end the following: “(iii) Illegitimacy ratio.—The term ‘illegitimacy ratio’ means, with respect to a State and a period— “(I) the number of out-of-wedlock births to mothers residing in the State that occurred during the period; divided by “(II) the number of births to mothers residing in the State that occurred during the period.”. (c) Use of Calendar Year Data Instead of Fiscal Year Data in Calculating Bonus for Decrease In Illegitimacy Ratio.—Section 403(a)(2)(C) (42 U.S.C. 603(a)(2)(C)) is amended— (1) in clause (i)— (A) in subclause (I)(bb)—111 STAT. 608 (i) by striking “the fiscal year” and inserting “the calendar year for which the most recent data are available”; and (ii) by striking “fiscal year 1995” and inserting “calendar year 1995”; (B) in subclause (II), by striking “fiscal” each place such term appears and inserting “calendar”; and (2) in clause (ii), by striking “fiscal years” and inserting “calendar years”. (d) Correction of Heading.—Section 403(a)(3)(C)(ii) (42 U.S.C. 603(a)(3)(C)(ii)) is amended in the heading by striking “1997” and inserting “1998”. (e) Clarification of Contingency Fund Provision.—Section 403(b) (42 U.S.C. 603(b)) is amended— (1) in paragraph (6), by striking “(5)” and inserting “(4)”; (2) by striking paragraph (4) and redesignating paragraphs (5) and (6) as paragraphs (4) and (5), respectively; and (3) by inserting after paragraph (5) the following: “(6) Annual reconciliation.— “(A) In general.—Notwithstanding paragraph (3), if the Secretary makes a payment to a State under this subsection in a fiscal year, then the State shall remit to the Secretary, within 1 year after the end of the first subsequent period of 3 consecutive months for which the State is not a needy State, an amount equal to the amount (if any) by which— “(i) the total amount paid to the State under paragraph (3) of this subsection in the fiscal year; exceeds “(ii) the product of— “(I) the Federal medical assistance percentage for the State (as defined in section 1905(b), as such section was in effect on September 30, 1995); “(II) the State’s reimbursable expenditures for the fiscal year; and “(III) ½ times the number of months during the fiscal year for which the Secretary made a payment to the State under such paragraph (3). “(B) Definitions.—As used in subparagraph (A): “(i) Reimbursable expenditures.—The term ‘reimbursable expenditures’ means, with respect to a State and a fiscal year, the amount (if any) by which— “(I) countable State expenditures for the fiscal year; exceeds “(II) historic State expenditures (as defined in section 409(a)(7)(B)(iii)), excluding any amount expended by the State for child care under subsection (g) or (i) of section 402 (as in effect during fiscal year 1994) for fiscal year 1994. “(ii) Countable state expenditures.—The term ‘countable expenditures’ means, with respect to a State and a fiscal year— “(I) the qualified State expenditures (as defined in section 409(a)(7)(B)(i) (other than the expenditures described in subclause (I)(bb) of such section)) under the State program funded under this part for the fiscal year; plus111 STAT. 609 “(II) any amount paid to the State under paragraph (3) during the fiscal year that is expended by the State under the State program funded under this part.”. (f) Administration of Contingency Fund Transferred to the Secretary of HHS.—Section 403(b)(7) (42 U.S.C. 603(b)(7)) is amended to read as follows: “(7) State defined.—As used in this subsection, the term ‘State’ means each of the 50 States and the District of Columbia.”.