Pro-Family Preservation and Demonstration Project Act

Pro-Family Preservation and Demonstration Project Act - Authorizes appropriations to carry out this Act.

Provides for grants to States which have an approved plan for aid to families with dependent children (AFDC) under the Social Security Act but which do not provide AFDC in accordance with specified provisions of such Act relating to dependent children of unemployed parents. Permits such grants to be used to establish a demonstration project to provide assistance to families with a dependent child (as defined in such provisions relating to unemployed parents) in which the parent who is the principal earner meets specified requirements of such provisions. Permits such demonstration project to be administered by the agency that administers the approved State AFDC plan or by any other appropriate State agency.

Provides for grants to States which have an approved AFDC plan and which provide AFDC in accordance with Social Security Act provisions for dependent children of unemployed parents. Permits such grants to be used to supplement payments made to such States for AFDC programs and for the work incentive (WIN) program. Prohibits reduction of such payments by reason of such a grant. Requires that such grant be administered by the agency that administers the approved State AFDC plan.

Requires each State desiring to receive a grant under this Act to submit an application to the Secretary of Health and Human Services.

Requires that applications for demonstration project grants include a description of the ways in which the requirements imposed upon families receiving aid under the demonstration project would differ from requirements imposed upon families receiving aid under the dependent children of unemployed parents AFDC provisions of the Social Security Act. Requires that such modifications include: (1) providing assistance to such families for a limited time, rather than on a continuing basis; (2) imposing stricter work requirements by conditioning a family's eligibility upon participation by the principal wage earner of such family to participate in a job-training, community work experience, work supplementation, or work incentive program; and (3) providing child-care benefits for parents actively seeking employment.

Requires that applications for supplemental grants include a statement of the purposes to which such grant will be applied.

Requires any State receiving a grant under this Act to report to the Secretary on the administration of such grant.

Directs the Secretary to report to the Congress annually with respect to grants made under this Act.

Provides for auditing by the Comptroller General of the United States of State administration of grants under this Act.