A bill to amend Part A of Title IV of the Social Security Act to improve quality control standards and procedures under the AFDC program, and to provide for studies to assist in the further improvement of such standards and procedures.

Amends part A (Aid to Families with Dependent Children) of title IV of the Social Security Act to require, in order to establish and maintain improved AFDC quality control standards and procedures: (1) each State to collect and submit to the Secretary of Health and Human Services a statistically reliable sample of AFDC cases; (2) the Secretary to review the sample and notify the State of its error rate; and (3) the State to develop and submit to the Secretary a corrective plan for eliminating or reducing errors. Permits waivers if a State has had a consistently low error rate. Directs the Secretary to establish criteria for corrective action plans.

Provides for financial sanctions for States with error rates exceeding certain levels. Permits waivers of the sanctions in certain instances. Defines "error rate" as the ratio of erroneous payments to total payments. Defines "erroneous payments" as: (1) payments to ineligible families; and (2) overpayments to eligible families.

Directs the Secretary to study and to report to the Congress concerning: (1) the nature of AFDC client errors; (2) measures of a State's performance under the AFDC program which are broader than the current quality control system based on payment accuracy alone; (3) the desirability of including underpayments as "erroneous payments"; and (4) the cost effectiveness of error reduction.

Provides, with respect to title XVI (Supplemental Security Income) of the Act, for the continuation of certain regulations relating to Federal liability for error rates in State supplementation programs.