SECTION 1. ADULT RELATIVES WHO MEET RELEVANT STATE CHILD PROTECTION 
              STANDARDS TO BE REGARDED AS THE PREFERRED PLACEMENT 
              OPTION FOR CHILDREN.

    Section 471(a) of the Social Security Act (42 U.S.C. 671(a)) is 
amended--
            (1) by striking ``and'' at the end of paragraph (16);
            (2) by striking the period at the end of paragraph (17) and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(18) provides that, where appropriate and timely, the 
        adult relatives of a child will be involved in determining a 
        safe and appropriate placement for the child, and that 
        placement with such relatives will be the preferred placement 
        option for the child if such relatives meet all child 
        protection standards of the State.''.

SEC. 2. DEMONSTRATION PROJECTS.

    Part E of title IV of the Social Security Act (42 U.S.C. 670-679) 
is amended by inserting after section 477 the following:

``SEC. 478. KINSHIP CARE DEMONSTRATION PROJECTS.

    ``(a) Purpose.--The purpose of this section is to allow and 
encourage States to develop effective alternatives to foster care for 
children who might be eligible for foster care but who have adult 
relatives who can provide safe and appropriate care for the child.
    ``(b) Demonstration Authority.--The Secretary may authorize any 
State to conduct a demonstration project designed to determine whether 
it is feasible to establish kinship care as an alternative to foster 
care for a child who--
            ``(1) has been removed from home as a result of a judicial 
        determination that continuation in the home would be contrary 
        to the welfare of the child;
            ``(2) would otherwise be placed in foster care; and
            ``(3) has adult relatives willing to provide safe and 
        appropriate care for the child.
    ``(c) Kinship Care Defined.--As used in this section, the term 
`kinship care' means safe and appropriate care (including long-term 
care) of a child by 1 or more adult relatives of the child who have 
legal custody of the child, or physical custody of the child pending 
transfer to the adult relative of legal custody of the child.
    ``(d) Project Requirements.--In any demonstration project 
authorized to be conducted under this section, the State--
            ``(1) should examine the provision of alternative financial 
        and service supports to families providing kinship care; and
            ``(2) shall establish such procedures as may be necessary 
        to assure the safety of children who are placed in kinship 
        care.
    ``(e) Waiver Authority.--The Secretary may waive compliance with 
any requirement of this part which (if applied) would prevent a State 
from carrying out a demonstration project under this section or prevent 
the State from effectively achieving the purpose of such a project, 
except that the Secretary may not waive--
            ``(1) any provision of section 427 (as in effect before 
        April 1, 1996), section 422(b)(9) (as in effect after such 
        date), section 479, or this section; or
            ``(2) any provision of this part, to the extent that the 
        waiver would impair the entitlement of any qualified child or 
        family to benefits under a State plan approved under this part.
    ``(f) Payments to States; Cost Neutrality.--In lieu of any payment 
under section 473 for expenses incurred by a State during a quarter 
with respect to a demonstration project authorized to be conducted 
under this section, the Secretary shall pay to the State an amount 
equal to the total amount that would be paid to the State for the 
quarter under this part, in the absence of the project, with respect to 
the children and families participating in the project.
    ``(g) Use of Funds.--A State may use funds paid under this section 
for any purpose related to the provision of services and financial 
support for families participating in a demonstration project under 
this section.
    ``(h) Duration of Project.--A demonstration project under this 
section may be conducted for not more than 5 years.
    ``(i) Application.--Any State seeking to conduct a demonstration 
project under this section shall submit to the Secretary an 
application, in such form as the Secretary may require, which 
includes--
            ``(1) a description of the proposed project, the geographic 
        area in which the proposed project would be conducted, the 
        children or families who would be served by the proposed 
        project, the procedures to be used to assure the safety of such 
        children, and the services which would be provided by the 
        proposed project (which shall provide, where appropriate, for 
        random assignment of children and families to groups served 
        under the project and to control groups);
            ``(2) a statement of the period during which the proposed 
        project would be conducted, and how, at the termination of the 
        project, the safety and stability of the children and families 
        who participated in the project will be protected;
            ``(3) a discussion of the benefits that are expected from 
        the proposed project (compared to a continuation of activities 
        under the State plan approved under this part);
            ``(4) an estimate of the savings to the State of the 
        proposed project;
            ``(5) a statement of program requirements for which waivers 
        would be needed to permit the proposed project to be conducted;
            ``(6) a description of the proposed evaluation design; and
            ``(7) such additional information as the Secretary may 
        require.
    ``(j) State Evaluations and Reports.--Each State authorized to 
conduct a demonstration project under this section shall--
            ``(1) obtain an evaluation by an independent contractor of 
        the effectiveness of the project, using an evaluation design 
        approved by the Secretary which provides for--
                    ``(A) comparison of outcomes for children and 
                families (and groups of children and families) under 
                the project, and such outcomes under the State plan 
                approved under this part, for purposes of assessing the 
                effectiveness of the project in achieving program 
                goals; and
                    ``(B) any other information that the Secretary may 
                require;
            ``(2) obtain an evaluation by an independent contractor of 
        the effectiveness of the State in assuring the safety of the 
        children participating in the project; and
            ``(3) provide interim and final evaluation reports to the 
        Secretary, at such times and in such manner as the Secretary 
        may require.
    ``(k) Report to the Congress.--Not later than 4 years after the 
date of the enactment of this section, the Secretary shall submit to 
the Congress a report that contains the recommendations of the 
Secretary for changes in law with respect to kinship care and 
placements.''.
Amends part E (Foster Care and Adoption Assistance) of title IV of the Social Security Act to:  (1) provide that, where appropriate and timely, adult relatives will be involved in child foster care placement determinations, and those who meet relevant State child protection standards will be regarded as the preferred placement option for children; and (2) provide for certain State kinship care demonstration projects as alternatives to foster care for certain eligible children.
To amend part E of title IV of the Social Security Act to require States to regard adult relatives who meet State child protection standards as the preferred placement option for children, and to provide for demonstration projects to test the feasibility of establishing kinship care as an alternative to foster care for a child who has adult relatives willing to provide safe and appropriate care for the child.