A bill to amend part A of title IV of the Social Security Act to provide for a study of quality control standards and procedures under the Aid to Families with Dependent Children program, to provide for a moratorium on the imposition of penalties for erroneous payments, and for other purposes.

Directs the Secretary of Health and Human Services to: (1) conduct a study for the purpose of determining tolerable State error rates under the Aid to Families with Dependent Children Program (part A of title IV of the Social Security Act); and (2) contract with the National Academy of Sciences to conduct a concurrent study. Sets forth reporting requirements.

Sets the AFDC error rate at four percent (currently three percent).

Authorizes the Secretary of Health and Human Services to waive all or any part of any sanction that would otherwise be imposed upon a State if the State is unable to reach the allowable error rate despite a good faith effort. Permits a State to request such a waiver upon a showing that: (1) it has made a good faith effort to reduce erroneous payments; or (2) its error rate was determined incorrectly and should be lower. Permits a State to appeal the Secretary's denial of a waiver.

Provides for a moratorium on reducing payments for excess errors. States that it is the intent of the Congress to revise such moratorium at a time after the reports required by this Act have been submitted.

Provides for incentive payments to States with error rates under four percent, but not until the moratorium is lifted.

Provides that when determining a State's error rate: (1) the rate shall be fixed at the lower bound of the standard interval for errors within which the State's true error rate falls; and (2) errors which are technical in nature or have no fiscal impact shall be disregarded.