A bill to amend title IV of the Social Security Act to authorize the Secretary of Health, Education, and Welfare to reduce Federal financial participation under the aid to families with dependent children program on account of excessive erroneous State payments.

Directs the Secretary of Health, Education, and Welfare to establish a system for monitoring payments of benefits under Part A of Title IV (Aid to Families with Dependent Children) of the Social Security Act to prevent overpayments or erroneous payments to ineligible recipients. Authorizes the Secretary to require that States administering programs under such Title monitor payments for the same purposes.

Reduces Federal payments to a State under such Title by the amount in excess of four percent which the State erroneously pays in benefits under such Title during the six-month period beginning January 1, 1978, and each six-month period thereafter.