SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Adoption Equality Act of 1998''.

SEC. 2. PROMOTION OF ADOPTION OF CHILDREN WITH SPECIAL NEEDS.

    (a) In General.--Section 473(a) of the Social Security Act (42 
U.S.C. 673(a)) is amended by striking paragraph (2) and inserting the 
following:
    ``(2)(A) For purposes of paragraph (1)(B)(ii), a child meets the 
requirements of this paragraph if such child--
            ``(i) prior to termination of parental rights and the 
        initiation of adoption proceedings was in the care of a public 
        or licensed private child care agency or Indian tribal 
        organization either pursuant to a voluntary placement agreement 
        (provided the child was in care for not more than 180 days) or 
        as a result of a judicial determination to the effect that 
        continuation in the home would be contrary to the safety and 
        welfare of such child, or was residing in a foster family home 
        or child care institution with the child's minor parent (either 
        pursuant to such a voluntary placement agreement or as a result 
        of such a judicial determination); and
            ``(ii) has been determined by the State pursuant to 
        subsection (c) to be a child with special needs, which needs 
        shall be considered by the State, together with the 
        circumstances of the adopting parents, in determining the 
        amount of any payments to be made to the adopting parents.
    ``(B) Notwithstanding any other provision of law, and except as 
provided in paragraph (7), a child who is not a citizen or resident of 
the United States and who meets the requirements of subparagraph (A) 
shall be treated as meeting the requirements of this paragraph for 
purposes of paragraph (1)(B)(ii).
    ``(C) A child who meets the requirements of subparagraph (A), who 
was determined eligible for adoption assistance payments under this 
part with respect to a prior adoption (or who would have been 
determined eligible for such payments had the Adoption and Safe 
Families Act of 1997 been in effect at the time that such determination 
would have been made), and who is available for adoption because the 
prior adoption has been dissolved and the parental rights of the 
adoptive parents have been terminated or because the child's adoptive 
parents have died, shall be treated as meeting the requirements of this 
paragraph for purposes of paragraph (1)(B)(ii).''.
    (b) Exception.--Section 473(a) of the Social Security Act (42 
U.S.C. 673(a)) is amended by adding at the end the following:
    ``(7)(A) Notwithstanding any other provision of this subsection, no 
payment may be made to parents with respect to any child that--
            ``(i) would be considered a child with special needs under 
        subsection (c);
            ``(ii) is not a citizen or resident of the United States; 
        and
            ``(iii) was adopted outside of the United States or was 
        brought into the United States for the purpose of being 
        adopted.
    ``(B) Subparagraph (A) shall not be construed as prohibiting 
payments under this part for a child described in subparagraph (A) that 
is placed in foster care subsequent to the failure, as determined by 
the State, of the initial adoption of such child by the parents 
described in such subparagraph.''.
    (c) Requirement for Use of State Savings.--Section 473(a) of the 
Social Security Act (42 U.S.C. 673(a)), as amended by subsection (b), 
is amended by adding at the end the following:
    ``(8) A State shall spend an amount equal to the amount of savings 
(if any) in State expenditures under this part resulting from the 
application of paragraph (2) on and after the effective date of the 
amendment to such paragraph made by section 2(a) of the Adoption 
Equality Act of 1998 to provide to children or families any service 
(including post-adoption services) that may be provided under this part 
or part B.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on October 1, 1998.

SEC. 3. REDUCTIONS IN PAYMENTS FOR ADMINISTRATIVE COSTS.

    (a) In General.--Section 1903 of the Social Security Act (42 U.S.C. 
1396b) is amended--
            (1) in subsection (a)(7), by striking ``section 
        1919(g)(3)(B)'' and inserting ``subsection (x) and section 
        1919(g)(3)(C)''; and
            (2) by adding at the end the following:
    ``(x) Adjustments to Payments for Administrative Costs.--
            ``(1) Reductions in payments for administrative costs based 
        on determinations of amounts attributable to benefiting 
        programs.--
                    ``(A) In general.--Subject to paragraph (2), 
                effective for each of fiscal years 1999 through 2002, 
                the Secretary shall reduce, for each such fiscal year, 
                the amount paid under subsection (a)(7) to each State 
                by an amount equal to the amount determined for the 
                medicaid program under section 16(k)(2)(B) of the Food 
                Stamp Act of 1977 (7 U.S.C. 2025(k)(2)(B)). The 
                Secretary shall, to the extent practicable, make the 
                reductions required by this paragraph on a quarterly 
                basis.
                    ``(B) Application.--If the Secretary does not make 
                the determinations required by section 16(k)(2)(B) of 
                the Food Stamp Act of 1977 (7 U.S.C. 2025(k)(2)(B)) by 
                September 30, 1999--
                            ``(i) during the fiscal year in which the 
                        determinations are made, the Secretary shall 
                        reduce the amount paid under subsection (a)(7) 
                        to each State by an amount equal to the sum of 
                        the amounts determined for the medicaid program 
                        under section 16(k)(2)(B) of the Food Stamp Act 
                        of 1977 for fiscal year 1999 through the fiscal 
                        year during which the determinations are made; 
                        and
                            ``(ii) for each subsequent fiscal year 
                        through fiscal year 2002, subparagraph (A) 
                        applies.
                    ``(C) Application of appeal of determinations.--The 
                provisions of section 16(k)(4) of the Food Stamp Act of 
                1977 (7 U.S.C. 20205(k)(4)) apply to reductions in 
                payments under this subsection in the same manner as 
                they apply to reductions under section 16(k) of that 
                Act.
            ``(2) Bonus payment for program alignment.--
                    ``(A) In general.--
                            ``(i) Amount.--In addition to any other 
                        payment made under this title to a State for a 
                        fiscal year, the Secretary shall pay to each 
                        State that satisfies the requirements of clause 
                        (ii) a portion of the amount by which--
                                    ``(I) any decrease in Federal 
                                outlays for amounts paid under 
                                subsection (a)(7) with respect to the 
                                State for the fiscal year as a result 
                                of the application of paragraph (1), as 
                                determined by the Congressional Budget 
                                Office, exceeds
                                    ``(II) any increase in Federal 
                                outlays with respect to the State for 
                                the fiscal year as a result of the 
                                application of section 473(a), as 
                                amended by section 2 of the Adoption 
                                Equality Act of 1998, as determined by 
                                the Congressional Budget Office.
                            ``(ii) Requirements.--A State satisfies the 
                        requirements of this clause if the Secretary 
                        determines that--
                                    ``(I) the State's income and 
                                resource eligibility rules under 
                                section 1931, taking into account the 
                                income standards and methodologies 
                                applied by the State, are not more 
                                restrictive than the income and 
                                resource eligibility rules applied by 
                                the State for the temporary assistance 
                                to needy families program funded under 
                                part A of title IV (other than for a 
                                welfare-to-work program funded under 
                                section 403(a)(5)); and
                                    ``(II) the State assures the 
                                Secretary that families applying for 
                                assistance under the temporary 
                                assistance to needy families program 
                                funded under part A of title IV (other 
                                than families applying solely for 
                                assistance under a welfare-to-work 
                                program funded under section 403(a)(5)) 
                                may apply for medical assistance under 
                                the State plan under this title without 
having to submit a separate application for such medical assistance.
                    ``(B) Construction.--Nothing in subparagraph (A) 
                shall be construed as--
                            ``(i) affecting the application of section 
                        1931;
                            ``(ii) affecting any application 
                        requirements established under this title or by 
                        regulation promulgated under the authority of 
                        this title, including the requirements 
                        established under section 1902(a)(8); or
                            ``(iii) conditioning the right of an 
                        individual to apply for medical assistance 
                        under the State plan under this title upon an 
                        application for assistance under any State 
                        program funded under part A of title IV.
            ``(3) Allocation of administrative costs.--
                    ``(A) In general.--No funds or expenditures 
                described in subparagraph (B) may be used to pay for 
                costs--
                            ``(i) eligible for reimbursement under 
                        subsection (a)(7) (or costs that would have 
                        been eligible for reimbursement but for this 
                        subsection); and
                            ``(ii) allocated for reimbursement to the 
                        medicaid program under a plan submitted by a 
                        State to the Secretary to allocate 
                        administrative costs for public assistance 
                        programs.
                    ``(B) Funds and expenditures.--Subparagraph (A) 
                applies to--
                            ``(i) funds made available to carry out 
                        part A of title IV or title XX;
                            ``(ii) expenditures made as qualified State 
                        expenditures (as defined in section 
                        409(a)(7)(B));
                            ``(iii) any other Federal funds (except 
                        funds provided under subsection (a)(7)); and
                            ``(iv) any other State funds that are--
                                    ``(I) expended as a condition of 
                                receiving Federal funds; or
                                    ``(II) used to match Federal funds 
                                under a Federal program other than the 
                                medicaid program.''.
    (b) Copies of Report on Review of Methodology Used To Make Certain 
Determinations.--Section 502(b)(2) of the Agricultural Research, 
Extension, and Education Reform Act of 1998 (Public Law 105-185; 112 
Stat. 523) is amended by inserting ``, the Committee on Commerce of the 
House of Representatives, the Committee on Finance of the Senate,'' 
after ``Representatives''.
Adoption Equality Act of 1998 - Amends title IV part E (Federal Payments for Foster Care and Adoption Assistance) of the Social Security Act (SSA) to revise adoption assistance eligibility guidelines for children with special needs. 
(Sec. 2) Makes eligible for such assistance only children with special needs who before termination of parental rights and the initiation of adoption proceedings were:  (1) in the care of a public or licensed private child care agency or Indian tribal organization, either pursuant to a voluntary placement agreement (provided the child was in care for not more than 180 days), or as a result of a judicial determination to the effect that continuation in the home would be contrary to the child's safety and welfare; or (2) residing in a foster family home or child care institution with the child's minor parent.  Requires a State to consider such special needs, together with the circumstances of the adopting parents, in determining the amount of Federal adoption subsidies paid to them. 
Prohibits assistance with respect to any child who is not a U.S. citizen or resident and who was adopted outside the United States or was brought into it for adoption purposes. 
(Sec. 3) Prescribes guidelines under which the Secretary of Health and Human Services shall reduce, for specified fiscal years, Federal payments to the States for administrative costs based on determinations of amounts attributable to the Medicaid program under the Food Stamp Act of 1977. 
Requires the Secretary to make a bonus payment to any State:  (1) whose income and eligibility rules are not more restrictive than the income and resource eligibility rules applied by the State for the temporary assistance to needy families (TANF) program funded under SSA title IV part A; and (2) which assures the Secretary that families applying for TANF may apply for Medicaid under SSA title XIX.
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