Amend Floor Amendment 1 to CSSB 369 as follows:
      (1)  Strike line 4, page 1 through line 22, page 16 and
insert new SECTIONS to read as follows, and renumber the subsequent
sections accordingly:
      SECTION      . Section 31.003 (c), Human Resources Code, is
amended to read as follows:
      (c)  The department shall adopt rules governing sanctions and
penalties under this section to or for:
            (1)  a person who fails to comply with each applicable
requirement of the responsibility agreement prescribed by this
section; and
            (2)  the family of a person who fails to comply with
the requirement of the responsibility agreement prescribed by
Subsection (d)(1) or (4).
      SECTION     . Section 31.0032, Human Resources Code, is
amended to read as follows:
      Sec. 31.00032. PENALTIES AND SANCTIONS. (a) If after an
investigation the department determines that a person is not
complying with a requirement of the responsibility agreement
required under Section 31.0031, the department shall apply
appropriate sanctions or penalties regarding the assistance
provided to or for that person or that person and the person's
family under this chapter.
      (b)  In applying sanctions or penalties for the failure or
refusal of a person, without good cause, to comply with the
requirement of the responsibility agreement prescribed by Section
31.0031(d)(1) or (4), the department shall:
            (1)  after the first violation, reduce the total amount
of financial assistance provided to or for the entire family by an
amount equal to the amount of financial assistance provided for the
needs of each adult member of the family who is not in compliance;
and
            (2)  after the second or a subsequent violation,
terminate the total amount of financial assistance provided to or
for that person and the person's family and deem the family
ineligible for financial assistance for a period of 90 days.
      (c)  Good cause for noncompliance with the requirement of the
responsibility agreement prescribed by Section 31.0031(d)(1) exists
only if requiring the person committing the violation to cooperate
with the department or agency under that section would be harmful
to the physical, mental, or emotional health of the person or the
person's child.
      (d)  The department shall apply a penalty or sanction to or
for a family under Subsection (b) until the person committing the
violation complies with each requirement of the responsibility
agreement for which the penalty or sanction was imposed.
      (e)  If a person fails to comply with a requirement of the
responsibility agreement prescribed by Section 31.0031(d)(1) or (4)
for more than 90 days after a penalty or sanction has been imposed,
the person will be deemed to have committed a second or subsequent
violation.
      (f)  The department shall immediately notify the caretaker
relative, second parent, or payee receiving the financial
assistance whether sanctions will be applied under this section.
      (g)  The department shall review the circumstances
surrounding the sanction to ensure that the sanction has been
applied appropriately within 13 days of providing the notice
required under subsection (f). The department may offer referrals
to appropriate services to address and to help remove barriers to
compliance.
      (h) <(c)> This section does not prohibit the department from
providing medical assistance, child care, or any other social or
support services for a person or that person's family <an>
<individual subject to sanctions or penalties under this chapter>.
      (i)  The department shall give the highest priority to the
administrative processing of sanctions or penalties applied under
this section so that the department's records of the affected
person promptly reflect application of the sanctions or penalties.
      SECTION     . Section 31.0033(c), Human Resources Code, is
amended to read as follows:
      (c)  If the department finds that good cause for
noncompliance was not shown at a hearing, the department shall
apply appropriate sanctions or penalties to or for that person or
that person and the person's family until the department determines
that the person is in compliance with the terms of the
responsibility agreement.
      SECTION     . Subchapter A, Chapter 31, Human Resources Code,
is amended by adding Section 31.0038 to read as follows:
      Sec. 31.0038. EARNED INCOME DISREGARDS FOR EMPLOYMENT. (a)
The purpose of the earned income disregards benefit is to assist a
recipient of financial assistance in making a successful transition
from the receipt of financial assistance to employment and
self-sufficiency.
      (b)  In this section, "former recipient for the earned income
disregards benefit" means a recipient of financial assistance whose
earned income has previously been disregarded by the department
under this section.
      (c)  If a recipient of financial assistance becomes employed
while receiving the assistance, the department may not consider a
significant portion of any earned income received by the recipient
for a period up to the first six months during which employment
earnings are received for purposes of determining:
            (1)  the amount of financial assistance granted to an
individual for the support of dependent children; or
            (2)  whether the family meets household income and
resource requirements for financial assistance.
      (d)  The department may not disregard under Subsection (c)
the earned income of a recipient who left a position of employment
voluntarily without good cause in the three month period
immediately preceding the date on which the recipient applied for
financial assistance or who voluntarily quit without good cause
while receiving financial assistance.
      (e)  The department may not disregard under Subsection (c)
the earned income of a former recipient of the earned income
disregards benefit until the third anniversary of the day after the
last date on which the former recipient's earned income was
disregarded under that subsection.
      (f)  During the period the earned income of a recipient is
disregarded by the department under Subsection (c), the department
may not exempt the recipient from participating in a work or
employment activity under Section 31.012.
      (g)  In adopting rules under this section, the department
shall:
            (1)  ensure that this section applies only to
recipients who earn income in an amount that does not exceed the
maximum gross income limit set by the department under Section
31.003; and
            (2)  promote the purpose described in Subsection (a).
      (2)  On page 28, insert new (5) to read as follows:
            (5)  On page 12, insert a new SECTION 13 to read as
follows and renumber the subsequent sections accordingly:
      SECTION 13. Section 31.043(a), Human Resources Code, as added
by Chapter 878, Acts of the 75th Legislature, Regular Session,
1997, is amended to read as follows: (a) To extend the period of
supported employment for families who receive financial assistance
under this chapter and except as provided by Section 31.0038, the
department may use a form of fill-the-gap budgeting or another
method under which the department disregards earnings of family
members who obtain employment while receiving the assistance.
      (3)  On page 28, insert new (6) to read as follows:
            (6)  On page 35, insert a new SECTION 35, to read as
follows and renumber the subsequent sections accordingly:
      SECTION 35. Not later than December 1, 2000, the Texas
Council on Workforce and Economic Competitiveness, with the
assistance of the Texas Department of Human Services and the Texas
Workforce Commission, shall report to the governor, lieutenant
governor, and speaker of the house of representatives on the
effectiveness and accuracy of the sanctioning process for the TANF
financial assistance program. The report must include any
recommendations for legislative action.
      (4)  On page 28, insert new (7) to read as follows:
            (7)  On page 36, insert new SECTIONS 37 and 38 to read
as follows and renumber the subsequent sections accordingly:
      SECTION 37. The changes in law made by Sections
31.0031-31.0033, Human Resources Code, as amended by this Act,
apply only to conduct that occurs on or after the effective date of
this Act. Conduct that occurs before the effective date of this Act
is governed by the law in effect at the time the conduct occurred,
and that law is continued in effect for that purpose.
      SECTION 38. The change in law made by Section 31.0038, Human
Resources Code, as added by this Act, applies only to a person who
receives financial assistance under Chapter 31, Human Resources
Code, on or after the effective date of this Act, regardless of the
date on which eligibility for the financial assistance was
determined.
      (6)  On page 17, line 7, strike "provided" and replace it
with "referred to".
      (7)  Strike line 14, page 20 through line 15, page 21.
      (8)  Strike lines 4 through 8, on page 24.
      (9)  Strike lines 8 through 17, on page 25.
      (10)  Strike lines 4 through 16, on page 26.
      (11)  Insert the following sections, appropriately numbered,
and renumber the subsequent sections accordingly:
      SECTION     . Subchapter A, Chapter 31, Human Resources Code,
is amended by adding Section 31.0038 to read as follows:
      Sec. 31.0038. INELIGIBILITY RESULTING FROM DRUG-RELATED
FELONY CONVICTIONS. (a) A person is ineligible for financial
assistance if the person is convicted, for conduct occurring after
September 1, 1999, of an offense under federal law or the law of
this state or any other state that at the time of the conviction:
            (1)  is classified as a felony by the jurisdiction
involved; and
            (2)  has as an element the possession, use, or
distribution of a controlled substance, as defined in 21 U.S.C.
Section 802 and its subsequent amendments.
      (b)  The department shall require an applicant for financial
assistance to indicate in writing whether the applicant or any
member of the applicant's household has been convicted of an
offense described by Subsection (a).
      (c)  The section does not affect:
            (1)  the eligibility for financial assistance of any
other member of the household of a person ineligible as a result of
a conviction of an offense described by Subsection (a); or
      (2)  the eligibility of a person convicted of an offense
described by Subsection (a) for a federal benefit specified in 21
U.S.C. Section 862a(f) and its subsequent amendments.
      SECTION     . If before implementing Section 31.0038, Human
Resources Code, as added by this Act, a state agency determines
that a waiver or authorization from a federal agency is necessary
for implementation, the state agency shall request the waiver or
authorization and may delay implementing that section until the
waiver or authorization is granted.
      SECTION     . Section 31.0038, Human Resources Code, as added
by this Act, takes effect September 1, 1999, and applies only to a
person who receives financial assistance under Chapter 31, Human
Resources Code, on or after that date, regardless of the date on
which eligibility for the financial assistance was determined.
      (12)  Insert the following sections, appropriately numbered,
and renumber the subsequent sections accordingly:
      SECTION     . (a) Subchapter A, Chapter 31, Human Resources
Code, is amended by adding Section 31.017 to read as follows:
      Sec. 31.017. FRAUD. (a) For purposes of establishing or
maintaining the eligibility of the person and the person's family
for financial assistance or for purposes of increasing the amount
of the assistance or preventing a reduction in the amount of the
assistance, a person may not intentionally:
            (1)  make a statement that the person knows is false or
misleading:
            (2)  misrepresent, conceal, or withhold a fact; or
      (3)  represent a statement to be true if the person knows the
statement is false.
      (b)  If after an investigation the department determines that
a person has violated this section, the department shall:
            (1)  notify the person of the alleged violation not
later than the 30th day after the date the investigation is
completed and provide the person with an opportunity for a hearing
on the matter; or
            (2)  refer the matter to the appropriate district
attorney for prosecution.
      (c)  If a person waives the right to a hearing or if a
hearing officer at an administrative hearing held under this
section determines that a person has violated this section, the
person:
            (1)  after the first violation, is disqualified from
receiving financial assistance until the first anniversary of the
date of the determination; and
            (2)  after the second or a subsequent violation, is
permanently disqualified from receiving financial assistance.
      (d)  If a person is convicted of or placed on deferred
adjudication community supervision for a state or federal criminal
offense for conduct described by this section, the person is
permanently disqualified from receiving financial assistance.
      (b)  the changes in law made by Section 31.017, Human
Resources Code, as added by this section, apply only to a person
who receives financial assistance under Chapter 31, Human Resources
Code, on or after the effective date of this section, regardless of
the date on which eligibility for that assistance was determined.