(a) In general Subject to subsections (d) and (e) of this section, an amount collected on behalf of a family as support by a State pursuant to a plan approved under this part shall be distributed as follows:
(1) Families receiving assistance In the case of a family receiving assistance from the State, the State shall
(A) pay to the Federal Government the Federal share of the amount so collected; and
(B) retain, or distribute to the family, the State share of the amount so collected.
In no event shall the total of the amounts paid to the Federal Government and retained by the State exceed the total of the amounts that have been paid to the family as assistance by the State.
(2) Families that formerly received assistance In the case of a family that formerly received assistance from the State:
(A) Current support payments
To the extent that the amount so collected does not exceed the amount required to be paid to the family for the month in which collected, the State shall distribute the amount so collected to the family.
(B) Payments of arrearages To the extent that the amount so collected exceeds the amount required to be paid to the family for the month in which collected, the State shall distribute the amount so collected as follows:
(i) Distribution of arrearages that accrued after the family ceased to receive assistance
(I) Pre-October 1997 Except as provided in subclause (II), the provisions of this section as in effect and applied on the day before August 22, 1996 (other than subsection (b)(1) (as so in effect)), shall apply with respect to the distribution of support arrearages that
(aa) accrued after the family ceased to receive assistance, and
(bb) are collected before October 1, 1997.
(II) Post-September 1997 With respect to the amount so collected on or after October 1, 1997 (or before such date, at the option of the State)
(aa) In general The State shall first distribute the amount so collected (other than any amount described in clause (iv)) to the family to the extent necessary to satisfy any support arrearages with respect to the family that accrued after the family ceased to receive assistance from the State.
(bb) Reimbursement of governments for assistance provided to the family After the application of division (aa) and clause (ii)(II)(aa) with respect to the amount so collected, the State shall retain the State share of the amount so collected, and pay to the Federal Government the Federal share (as defined in subsection (c)(2) of this section) of the amount so collected, but only to the extent necessary to reimburse amounts paid to the family as assistance by the State.
(cc) Distribution of the remainder to the family To the extent that neither division (aa) nor division (bb) applies to the amount so collected, the State shall distribute the amount to the family.
(ii) Distribution of arrearages that accrued before the family received assistance
(I) Pre-October 2000 Except as provided in subclause (II), the provisions of this section as in effect and applied on the day before August 22, 1996 (other than subsection (b)(1) (as so in effect)), shall apply with respect to the distribution of support arrearages that
(aa) accrued before the family received assistance, and
(bb) are collected before October 1, 2000.
(II) Post-September 2000 Unless, based on the report required by paragraph (5), the Congress determines otherwise, with respect to the amount so collected on or after October 1, 2000 (or before such date, at the option of the State)
(aa) In general The State shall first distribute the amount so collected (other than any amount described in clause (iv)) to the family to the extent necessary to satisfy any support arrearages with respect to the family that accrued before the family received assistance from the State.
(bb) Reimbursement of governments for assistance provided to the family After the application of clause (i)(II)(aa) and division (aa) with respect to the amount so collected, the State shall retain the State share of the amount so collected, and pay to the Federal Government the Federal share (as defined in subsection (c)(2) of this section) of the amount so collected, but only to the extent necessary to reimburse amounts paid to the family as assistance by the State.
(cc) Distribution of the remainder to the family To the extent that neither division (aa) nor division (bb) applies to the amount so collected, the State shall distribute the amount to the family.
(iii) Distribution of arrearages that accrued while the family received assistance In the case of a family described in this subparagraph, the provisions of paragraph (1) shall apply with respect to the distribution of support arrearages that accrued while the family received assistance.
(iv) Amounts collected pursuant to section
664 Notwithstanding any other provision of this section, any amount of support collected pursuant to section
664 of this title shall be retained by the State to the extent past-due support has been assigned to the State as a condition of receiving assistance from the State, up to the amount necessary to reimburse the State for amounts paid to the family as assistance by the State. The State shall pay to the Federal Government the Federal share of the amounts so retained. To the extent the amount collected pursuant to section
664 of this title exceeds the amount so retained, the State shall distribute the excess to the family.
(v) Ordering rules for distributions For purposes of this subparagraph, unless an earlier effective date is required by this section, effective October 1, 2000, the State shall treat any support arrearages collected, except for amounts collected pursuant to section
664 of this title, as accruing in the following order:
(I) To the period after the family ceased to receive assistance.
(II) To the period before the family received assistance.
(III) To the period while the family was receiving assistance.
(3) Families that never received assistance In the case of any other family, the State shall distribute to the family the portion of the amount so collected that remains after withholding any fee pursuant to section
654 (6)(B)(ii) of this title.
(4) Families under certain agreements In the case of an amount collected for a family in accordance with a cooperative agreement under section
654 (33) of this title, distribute the amount so collected pursuant to the terms of the agreement.
(5) Study and report Not later than October 1, 1999, the Secretary shall report to the Congress the Secretarys findings with respect to
(A) whether the distribution of post-assistance arrearages to families has been effective in moving people off of welfare and keeping them off of welfare;
(B) whether early implementation of a pre-assistance arrearage program by some States has been effective in moving people off of welfare and keeping them off of welfare;
(C) what the overall impact has been of the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 with respect to child support enforcement in moving people off of welfare and keeping them off of welfare; and
(D) based on the information and data the Secretary has obtained, what changes, if any, should be made in the policies related to the distribution of child support arrearages.
(6) State option for applicability
Notwithstanding any other provision of this subsection, a State may elect to apply the rules described in clauses (i)(II), (ii)(II), and (v) of paragraph (2)(B) to support arrearages collected on and after October 1, 1998, and, if the State makes such an election, shall apply the provisions of this section, as in effect and applied on the day before August 22, 1996, other than subsection (b)(1) (as so in effect), to amounts collected before October 1, 1998.
(7) State option to pass through additional support with Federal financial participation
(A) Families that formerly received assistance
Notwithstanding paragraph (2), a State shall not be required to pay to the Federal Government the Federal share of an amount collected on behalf of a family that formerly received assistance from the State to the extent that the State pays the amount to the family.
(B) Families that currently receive assistance
(i) In general Notwithstanding paragraph (1), in the case of a family that receives assistance from the State, a State shall not be required to pay to the Federal Government the Federal share of the excepted portion (as defined in clause (ii)) of any amount collected on behalf of such family during a month to the extent that
(I) the State pays the excepted portion to the family; and
(II) the excepted portion is disregarded in determining the amount and type of assistance provided to the family under such program.
(ii) Excepted portion defined For purposes of this subparagraph, the term excepted portion means that portion of the amount collected on behalf of a family during a month that does not exceed $100 per month, or in the case of a family that includes 2 or more children, that does not exceed an amount established by the State that is not more than $200 per month.
(c) Definitions As used in subsection (a) of this section:
(1) Assistance The term assistance from the State means
(A) assistance under the State program funded under part A of this subchapter or under the State plan approved under part A of this subchapter (as in effect on the day before August 22, 1996); and
(B) foster care maintenance payments under the State plan approved under part E of this subchapter.
(2) Federal share
The term Federal share means that portion of the amount collected resulting from the application of the Federal medical assistance percentage in effect for the fiscal year in which the amount is distributed.
(3) Federal medical assistance percentage The term Federal medical assistance percentage means
(A) 75 percent, in the case of Puerto Rico, the Virgin Islands, Guam, and American Samoa; or
(B) the Federal medical assistance percentage (as defined in section
1396d (b) of this title, as such section was in effect on September 30, 1995) in the case of any other State.
(4) State share
The term State share means 100 percent minus the Federal share.
(d) Gap payments not subject to distribution under this section At State option, this section shall not apply to any amount collected on behalf of a family as support by the State (and paid to the family in addition to the amount of assistance otherwise payable to the family) pursuant to a plan approved under this part if such amount would have been paid to the family by the State under section
602 (a)(28) of this title, as in effect and applied on the day before August 22, 1996.
(e) Amounts collected for child for whom foster care maintenance payments are made Notwithstanding the preceding provisions of this section, amounts collected by a State as child support for months in any period on behalf of a child for whom a public agency is making foster care maintenance payments under part E of this subchapter
(1) shall be retained by the State to the extent necessary to reimburse it for the foster care maintenance payments made with respect to the child during such period (with appropriate reimbursement of the Federal Government to the extent of its participation in the financing);
(2) shall be paid to the public agency responsible for supervising the placement of the child to the extent that the amounts collected exceed the foster care maintenance payments made with respect to the child during such period but not the amounts required by a court or administrative order to be paid as support on behalf of the child during such period; and the responsible agency may use the payments in the manner it determines will serve the best interests of the child, including setting such payments aside for the childs future needs or making all or a part thereof available to the person responsible for meeting the childs day-to-day needs; and
(3) shall be retained by the State, if any portion of the amounts collected remains after making the payments required under paragraphs (1) and (2), to the extent that such portion is necessary to reimburse the State (with appropriate reimbursement to the Federal Government to the extent of its participation in the financing) for any past foster care maintenance payments (or payments of assistance under the State program funded under part A of this subchapter) which were made with respect to the child (and with respect to which past collections have not previously been retained);
and any balance shall be paid to the State agency responsible for supervising the placement of the child, for use by such agency in accordance with paragraph (2).
