To amend title 38, United States Code, to improve the ability of the Department of Veterans Affairs to provide continuity of care in the rehabilitation of chronically mentally ill veterans, and for other purposes.

SECTION 1. AUTHORITY TO ESTABLISH NONPROFIT CORPORATIONS.

    (a) Chapter 17 of title 38, United States Code, is amended by 
inserting after section 1718 the following new section:
``Sec. 1718A. Nonprofit corporations
    ``(a) The Secretary may authorize the establishment at any Veterans 
Health Administration facility of a nonprofit corporation (1) to 
arrange for therapeutic work for patients of such facility or patients 
of other such Department facilities pursuant to section 1718(b) of this 
title, and (2) to provide a flexible funding mechanism to achieve the 
purposes of section 1718 of this title.
    ``(b) The Secretary shall provide for the appointment of a board of 
directors for any corporation established under this section and shall 
determine the number of directors and the composition of the board of 
directors. The board of directors shall include--
            ``(1) the director of the facility and other officials or 
        employees of the facility; and
            ``(2) members appointed from among individuals who are not 
        officers or employees of the Department of Veterans Affairs.
    ``(c) Each such corporation shall have an executive director who 
shall be appointed by the board of directors with concurrence of the 
Under Secretary for Health of the Department. The executive director of 
a corporation shall be responsible for the operations of the 
corporation and shall have such specific duties and responsibilities as 
the board may prescribe.
    ``(d) A corporation established under this section may--
            ``(1) arrange with the Department of Veterans Affairs under 
        section 1718(b)(2) of this title to provide for therapeutic 
        work for patients;
            ``(2) accept gifts and grants from, and enter into 
        contracts with, individuals and public and private entities 
        solely to carry out the purposes of this section; and
            ``(3) employ such employees as it considers necessary for 
        such purposes and fix the compensation of such employees.
    ``(e)(1) Except as provided in paragraph (2), any funds received by 
a corporation established under this section through arrangements 
authorized under subsection (d)(1) in excess of amounts reasonably 
required to carry out obligations of the corporation authorized under 
subsection (d)(3) shall be deposited in or credited to the Special 
Therapeutic and Rehabilitation Activities Fund established under 
section 1718(c) of this title.
    ``(2) The Secretary, in accordance with guidelines which the 
Secretary shall prescribe, may authorize a corporation established 
under this section to retain funds derived from arrangements authorized 
under subsection (d)(1).
    ``(3) Any funds received by a corporation established under this 
section through arrangements authorized under subsection (d)(2) may be 
transferred to the Special Therapeutics and Rehabilitation Activities 
Fund.
    ``(f) A corporation established under this section shall be 
established in accordance with the nonprofit corporation laws of the 
State in which the applicable medical facility is located and shall, to 
the extent not inconsistent with Federal law, be subject to the laws of 
such State.
    ``(g)(1)(A) The records of a corporation established under this 
section shall be available to the Secretary.
    ``(B) For the purposes of sections 4(a)(1) and 6(a)(1) of the 
Inspector General Act of 1978, the programs and operations of such a 
corporation shall be considered to be programs and operations of the 
Department with respect to which the Inspector General of the 
Department has responsibilities under such Act.
    ``(2) Such a corporation shall be considered an agency for the 
purposes of section 716 of title 31 (relating to availability of 
information and inspection of records by the Comptroller General).
    ``(3) Each such corporation shall submit to the Secretary an annual 
report providing a detailed statement of its operations, activities, 
and accomplishments during that year. The corporation shall obtain a 
report of independent auditors concerning the receipts and expenditures 
of funds by the corporation during that year and shall include that 
report in the corporation's report to the Secretary for that year.
    ``(4) Each member of the board of directors of a corporation 
established under this section, each employee of such corporation, and 
each employee of the Department who is involved in the functions of the 
corporation during any year shall--
            ``(A) be subject to Federal laws and regulations applicable 
        to Federal employees with respect to conflicts of interest in 
        the performance of official functions; and
            ``(B) submit to the Secretary an annual statement signed by 
        the director or employee certifying that the director or 
        employee is aware of, and has complied with, such laws and 
        regulations in the same manner as Federal employees are 
        required to.
    ``(h) The Secretary shall submit to the Committees on Veterans' 
Affairs of the Senate and House of Representatives an annual report on 
the number and location of corporations established and the amount of 
the contributions made to each such corporation.
    ``(i) No corporation may be established under this section after 
September 30, 1999.
    ``(j) If by the end of the four-year period beginning on the date 
of the establishment of a corporation under this section the 
corporation is not recognized as an entity the income of which is 
exempt from taxation under the Internal Revenue Code of 1986, the 
Secretary shall dissolve the corporation.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by inserting after the item relating to section 
1718 the following new item:

``1718A. Nonprofit corporations.''.

SEC. 2. EXTENSION OF DEMONSTRATION PROGRAM.

    Section 7 of Public Law 102-54 (105 Stat. 269; 38 U.S.C. 618 note) 
is amended--
            (1) in subsection (a), by striking out ``1994'' and 
        inserting in lieu thereof ``1997'';
            (2) in subsection (c)--
                    (A) by striking out ``no more than 50''; and
                    (B) by striking out ``of this subsection.'' and 
                inserting in lieu thereof ``of this subsection--
            ``(1) at no more than 55 sites during fiscal year 1994;
            ``(2) at no more than 60 sites during fiscal year 1995;
            ``(3) at no more than 65 sites during fiscal year 1996; and
            ``(4) at no more than 70 sites during fiscal year 1997.''; 
        and
            (3) in subsection (k), by inserting after the second 
        sentence the following: ``During the period covering fiscal 
        years 1994 through 1997, the Secretary shall manage the costs 
        of acquisition, management, maintenance, and disposition of 
        real property acquired for such program after October 1, 1994, 
        in such manner as to assure that in any fiscal year the total 
        amount of such expenditures do not exceed $500,000.''.

Summary: Authorizes the Secretary of Veterans Affairs to establish at any Veterans Health Administration facility a nonprofit corporation to: (1) arrange for therapeutic work for patients of such facility or other Department of Veterans Affairs facilities. And (2) provide a funding mechanism to achieve such purposes. Requires the appointment of a board of directors for any such corporation. Requires excess funds received by a corporation to be deposited into the Special Therapeutic and Rehabilitation Activities Fund. Requires an annual corporation report to the Secretary concerning operations, accomplishments, and activities. Requires an annual report from the Secretary to the Congress. Prohibits the establishment of any such corporation after FY 1999. Requires a corporation to be dissolved if not recongized as tax-exempt by the Internal Revenue Service within four years of its establishment. Extends through FY 1997 the Department's compensated work therapy and therapeutic transitional housing demonstration program. Removes the 50-residence limit under the housing program, increasing such amount by five for each of FY 1994 through 1997. Limits the expenditures for each such fiscal year for the costs of acquisition, management, maintenance, and disposition of real property for program purposes.