```

[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1932 Placed on Calendar Senate (PCS)]

                                                       Calendar No. 274
109th CONGRESS
  1st Session
                                S. 1932

    To provide for reconciliation pursuant to section 202(a) of the 
concurrent resolution on the budget for fiscal year 2006 (H. Con. Res. 
                                  95).

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            October 27, 2005

  Mr. Gregg, from the Committee on the Budget, reported the following 
     original bill; which was read twice and placed on the calendar

_______________________________________________________________________

                                 A BILL

 
    To provide for reconciliation pursuant to section 202(a) of the 
concurrent resolution on the budget for fiscal year 2006 (H. Con. Res. 
                                  95).

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Deficit Reduction Omnibus 
Reconciliation Act of 2005''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

       TITLE I--COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

Sec. 1001. Short title.
                     Subtitle A--Commodity Programs

Sec. 1101. Reduction of commodity program payments.
Sec. 1102. Forfeiture penalty for nonrecourse sugar loans.
Sec. 1103. Cotton competitiveness provisions.
Sec. 1104. National dairy market loss payments.
Sec. 1105. Advance direct payments.
                        Subtitle B--Conservation

Sec. 1201. Conservation reserve program.
Sec. 1202. Conservation security program.
Sec. 1203. Environmental quality incentives program.
                       Subtitle C--Miscellaneous

Sec. 1301. Initiative for future agriculture and food systems.
       TITLE II--COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

           Subtitle A--Merger of the Deposit Insurance Funds

Sec. 2001. Short title.
Sec. 2002. Definitions.
Sec. 2003. Merger of BIF and SAIF.
Sec. 2004. Establishment of the Deposit Insurance Fund.
Sec. 2005. Technical and conforming amendments to the Federal Deposit 
                            Insurance Act.
Sec. 2006. Other technical and conforming amendments.
Sec. 2007. Effective date.
      Subtitle B--Deposit Insurance Modernization and Improvement

Sec. 2011. Short title.
Sec. 2012. Changes to Federal deposit insurance coverage.
Sec. 2013. Designated reserve ratio.
Sec. 2014. Assessment credits and dividends.
Sec. 2015. Assessments-related records retention and statute of 
                            limitations.
Sec. 2016. Increase in fees for late assessment payments.
Sec. 2017. Regulations required.
Sec. 2018. Studies of potential changes to the Federal deposit 
                            insurance system.
Sec. 2019. Effective date.
                   Subtitle C--FHA Asset Disposition

Sec. 2021. Short title.
Sec. 2022. Definitions.
Sec. 2023. Appropriated funds requirement for below market sales.
Sec. 2024. Up-front grants.
Sec. 2025. Authorization of appropriations.
     TITLE III--COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

Sec. 3001. Short title.
Sec. 3002. Analog spectrum recovery; hard deadline.
Sec. 3003. Auction of recovered spectrum.
Sec. 3004. Supplemental license fees.
Sec. 3005. Digital Transition and Public Safety Fund.
Sec. 3006. Essential air service program.
                 TITLE IV--ENERGY AND NATURAL RESOURCES

Sec. 401. Oil and gas leasing program.
           TITLE V--COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

Sec. 5001. Technical corrections to SAFETEA-LU.
                           TITLE VI--FINANCE

Sec. 6000. Amendments to Social Security Act.
                          Subtitle A--Medicaid

        Chapter 1--Payment For Prescription Drugs Under Medicaid

Sec. 6001. Pharmacy reimbursement.
Sec. 6002. Increase in rebates for covered outpatient drugs.
Sec. 6003. Improved regulation of authorized generic drugs.
Sec. 6004. Collection of rebates for certain physician administered 
                            drugs.
                Chapter 2--Long-Term Care Under Medicaid

Sec. 6011. Reform of Medicaid asset transfer rules.
Sec. 6012. State long-term care partnerships.
       Chapter 3--Eliminating Fraud, Waste, and Abuse in Medicaid

Sec. 6021. Enhancing third party recovery.
Sec. 6022. Limitation on use of contingency fee arrangements.
Sec. 6023. Encouraging the enactment of State False Claims Acts.
Sec. 6024. Employee education about False Claims Recovery.
Sec. 6025. Prohibition on restocking and double billing of prescription 
                            drugs.
Sec. 6026. Medicaid Integrity Program.
               Chapter 4--State Financing Under Medicaid

Sec. 6031. Reforms of targeted case management.
Sec. 6032. Temporary Federal matching payments for Federal assistance.
Sec. 6033. Managed care organization provider tax reform.
Sec. 6034. Inclusion of podiatrists as physicians.
Sec. 6035. DSH allotment for the District of Columbia.
Sec. 6036. Demonstration project regarding Medicaid reimbursement for 
                            stabilization of emergency medical 
                            conditions by non-publicly owned or 
                            operated institutions for mental diseases.
Chapter 5--Improving the Medicaid and State Children's Health Insurance 
                  subchapter a--family opportunity act
Sec. 6041. Short title of subchapter.
Sec. 6042. Opportunity for families of disabled children to purchase 
                            Medicaid coverage for such children.
Sec. 6043. Demonstration projects regarding home and community-based 
                            alternatives to psychiatric residential 
                            treatment facilities for children.
Sec. 6044. Development and support of family-to-family health 
                            information centers.
Sec. 6045. Restoration of Medicaid eligibility for certain SSI 
        subchapter b--state children's health insurance program
Sec. 6051. Rules for availability, redistribution, and extended 
                            availability of allotments for fiscal years 
                            2003, 2004, and 2005.
Sec. 6052. Authority to use up to 10 percent of fiscal year 2006 and 
                            2007 allotments for outreach.
Sec. 6053. Prohibition against covering nonpregnant childless adults 
                            with SCHIP funds.
Sec. 6054. Continued authority for qualifying States to use certain 
                            funds for Medicaid expenditures.
Sec. 6055. Grants to promote innovative outreach and enrollment under 
    subchapter c--money follows the person rebalancing demonstration
Sec. 6061. Money Follows the Person Rebalancing Demonstration.
   Chapter 6--Option for Hurricane Katrina Disaster States To Delay 
                              Application

Sec. 6071. Option for Hurricane Katrina disaster States to delay 
                            application.
                          Subtitle B--Medicare

Sec. 6101. Improvements to the Medicare-dependent hospital (MDH) 
                            program.
Sec. 6102. Reduction in payments to skilled nursing facilities for bad 
                            debt.
Sec. 6103. Two-year extension of the 50 percent compliance threshold 
                            used to determine whether a hospital or 
                            unit of a hospital is an inpatient 
                            rehabilitation facility under the Medicare 
                            program.
Sec. 6104. Prohibition on physician self referrals to physician owned, 
                            limited service hospitals.
Sec. 6105. Minimum update for physicians' services for 2006.
Sec. 6106. One-year extension of hold harmless provisions for small 
                            rural hospitals and sole community 
                            hospitals under the prospective payment 
                            system for hospital outpatient department 
                            services.
Sec. 6107. Update to the composite rate component of the basic case-mix 
                            adjusted prospective payment system for 
                            dialysis services.
Sec. 6108. One-year extension of moratorium on therapy caps.
Sec. 6109. Transfer of title of certain DME to patient after 13-month 
                            rental.
Sec. 6110. Establishment of Medicare value-based purchasing programs.
Sec. 6111. Phase-out of risk adjustment budget neutrality in 
                            determining the amount of payments to 
                            Medicare Advantage organizations.
Sec. 6112. Elimination of Medicare Advantage regional plan 
                            stabilization fund.
Sec. 6113. Rural PACE provider grant program.
Sec. 6114. Waiver of part B late enrollment penalty for certain 
                            international volunteers.
Sec. 6115. Delivery of services at Federally qualified health centers.
     TITLE VII--COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                    Subtitle A--Education Provisions

                          Chapter 1--Education

Sec. 7101. Provisional grant assistance program.
Sec. 7102. National smart grants.
Sec. 7103. Loan limits.
Sec. 7104. Plus loan interest rates and zero special allowance payment.
Sec. 7105. Reduction of lender insurance reimbursement rates.
Sec. 7106. Guaranty agency origination fee.
Sec. 7107. Deferment of student loans for military service.
Sec. 7108. Recovery through consolidation.
Sec. 7109. Single holder rule.
Sec. 7110. Default reduction program.
Sec. 7111. Requirements for disbursements of student loans.
Sec. 7112. Special insurance and reinsurance rules.
Sec. 7113. School as lender moratorium.
Sec. 7114. Permanent reduction of special allowance payments for loans 
                            from the proceeds of tax exempt issues.
Sec. 7115. Special allowances.
Sec. 7116. Origination fee.
Sec. 7117. Income contingent repayment for public sector employees.
Sec. 7118. Family contribution for dependent students.
Sec. 7119. Family contribution for independent students without 
                            dependents other than a spouse.
Sec. 7120. Family contribution for independent students with dependents 
                            other than a spouse.
Sec. 7121. Regulations; updated tables.
Sec. 7122. Simplified need test and automatic zero improvements.
Sec. 7123. Loan forgiveness for teachers.
Sec. 7124. Effective date.
         Chapter 2--Hurricane Katrina Higher Education Recovery

Sec. 7151. Short title.
Sec. 7152. Definitions.
Sec. 7153. Waiver authority and modifications to certain provisions of 
                            the Higher Education Act of 1965.
Sec. 7154. General waiver authority and required consultation.
Sec. 7155. Notice of waivers, modifications, or extensions.
Sec. 7156. Regulatory requirements inapplicable.
Sec. 7157. Department of Education Inspector General audit and report.
Sec. 7158. Sunset provision.
       Subtitle B--Pension Benefit Guaranty Corporation Premiums

Sec. 7201. Amendments to the Employee Retirement Income Security Act of 
                            1974.
              Subtitle C--Higher Education Reauthorization

       Chapter 1--Short Title; References; General Effective Date

Sec. 7301. Short title.
Sec. 7302. References.
Sec. 7303. General effective date.
                     Chapter 2--General Provisions

Sec. 7311. Additional definitions.
Sec. 7312. General definition of institution of higher education.
Sec. 7313. Definition of institution of higher education for purposes 
                            of title IV programs.
Sec. 7314. Protection of student speech and association rights.
Sec. 7315. National advisory committee on institutional quality and 
                            integrity.
Sec. 7316. Drug and alcohol abuse prevention.
Sec. 7317. Prior rights and obligations.
Sec. 7318. Cost of higher education.
Sec. 7319. Performance-based organization for the delivery of Federal 
                            student financial assistance.
Sec. 7320. Procurement flexibility.
                 Chapter 3--Teacher Quality Enhancement

Sec. 7331. Teacher quality enhancement grants for States and 
                            partnerships.
                      Chapter 4--Institutional Aid

Sec. 7341. Program purpose.
Sec. 7342. Definitions; eligibility.
Sec. 7343. American Indian tribally controlled colleges and 
                            universities.
Sec. 7344. Alaska Native and Native Hawaiian-serving institutions.
Sec. 7345. Native American-serving, nontribal institutions.
Sec. 7346. Part B definitions.
Sec. 7347. Grants to institutions.
Sec. 7348. Allotments to institutions.
Sec. 7349. Professional or graduate institutions.
Sec. 7350. Authorization of appropriations.
Sec. 7351. Technical corrections.
   subchapter a--grants to students in attendance at institutions of 
                            higher education
Sec. 7361. Federal Pell Grants.
Sec. 7362. Federal TRIO Programs.
Sec. 7363. Gaining Early Awareness and Readiness for Undergraduate 
                            Programs.
Sec. 7364. Academic Achievement Incentive Scholarships.
Sec. 7365. Federal Supplemental Educational Opportunity Grants.
Sec. 7366. Leveraging Educational Assistance Partnership Program.
Sec. 7367. Special programs for students whose families are engaged in 
                            migrant and seasonal farmwork.
Sec. 7368. Robert C. Byrd Honors Scholarship Program.
Sec. 7369. Child care access means parents in school.
Sec. 7370.subchapter b--federal family education loan program
Sec. 7381. Extension of authorities.
Sec. 7382. Federal payments to reduce student interest costs.
Sec. 7383. Federal consolidation loans.
Sec. 7384. Default reduction program.
Sec. 7385. Requirements for disbursement of student loans.
Sec. 7386. Reports to credit bureaus and institutions of higher 
                            education.
Sec. 7387. Common forms and formats.
Sec. 7388. Student loan information by eligible borrowers.
Sec. 7389. Consumer education information.
Sec. 7390. Definition of eligible lender.
Sec. 7390A. Repayment by the Secretary of loans of bankrupt, deceased, 
                            or disabled borrowers; treatment of 
                            borrowers attending schools that fail to 
                            provide a refund, attending closed schools, 
               subchapter c--federal work-study programsible to borrow.
Sec. 7391. Authorization of appropriations.
Sec. 7392. Allowance for books and supplies.
Sec. 7393. Grants for Federal work-study programs.
Sec. 7394. Job location and development programs.
Sec. 73subchapter d--william d. ford federal direct loan program
Sec. 7401. Funds fsubchapter e--federal perkins loans
Sec. 7411. Program authority.
Sec. 7412. Terms of loans.
Sec. 7413. Cancellation of loans for certain public service.
Sec. 7414. Federal capsubchapter f--need analysis
Sec. 7421. Cost of attendance.
Sec. 7422. Discretion of student financial aid administrators.
Sec.subchapter g--general provisions relating to student assistance
Sec. 7431. Definitions.
Sec. 7432. Compliance calendar.
Sec. 7433. Forms and regulations.
Sec. 7434. Student eligibility.
Sec. 7435. Statute of limitations and State court judgments.
Sec. 7436. Institutional refunds.
Sec. 7437. Institutional and financial assistance for students.
Sec. 7438. National student loan data system.
Sec. 7439. Early awareness of financial aid eligibility.
Sec. 7440. College access initiative.
Sec. 7441. Program participation agreements.
Sec. 7442. Regulatory relief and improvement.
Sec. 7443. Transfer of allotments.
Sec. 7444. Wage garnishment requirement.
Sec. 7445. Purpose of administrative payments.
Sec. 7446. Advisory committee on student financial assistance.
Sec. 7447. Regional meetings.
Sec. 7448. Year 2000subchapter h--program integrity.
Sec. 7451. Recognition of accrediting agency or association.
Sec. 7452. Administrative capacity standard.
Sec. 7453. Program review and data.
                   Chapter 6--Developing Institutions

Sec. 7501. Definitions.
Sec. 7502. Authorized activities.
Sec. 7503. Duration of grant.
Sec. 7504. Postbaccalaureate opportunities for Hispanic Americans.
Sec. 7505. Applications.
Sec. 7506. Cooperative arrangements.
Sec. 7507. Authorization of appropriations.
              Chapter 7--International Education Programs

Sec. 7601. Findings.
Sec. 7602. Graduate and undergraduate language and area centers and 
                            programs.
Sec. 7603. Undergraduate international studies and foreign language 
                            programs.
Sec. 7604. Research; studies.
Sec. 7605. Technological innovation and cooperation for foreign 
                            information access.
Sec. 7606. Selection of certain grant recipients.
Sec. 7607. American overseas research centers.
Sec. 7608. Authorization of appropriations for international and 
                            foreign language studies.
Sec. 7609. Centers for international business education.
Sec. 7610. Education and training programs.
Sec. 7611. Authorization of appropriations for business and 
                            international education programs.
Sec. 7612. Minority foreign service professional development program.
Sec. 7613. Institutional development.
Sec. 7614. Study abroad program.
Sec. 7615. Advanced degree in international relations.
Sec. 7616. Internships.
Sec. 7617. Financial assistance.
Sec. 7618. Report.
Sec. 7619. Gifts and donations.
Sec. 7620. Authorization of appropriations for the institute for 
                            international public policy.
Sec. 7621. Definitions.
Sec. 7622. Assessment and enforcement.
       Chapter 8--Graduate And Postsecondary Improvement Programs

Sec. 7701. Purpose.
Sec. 7702. Allocation of Jacob K. Javits fellowships.
Sec. 7703. Stipends.
Sec. 7704. Authorization of appropriations for the Jacob K. Javits 
                            Fellowship Program.
Sec. 7705. Institutional eligibility under the graduate assistance in 
                            areas of national need program.
Sec. 7706. Awards to graduate students.
Sec. 7707. Additional assistance for cost of education.
Sec. 7708. Authorization of appropriations for the graduate assistance 
                            in areas of national need program.
Sec. 7709. Authorization of appropriations for the Thurgood Marshall 
                            Legal Educational Opportunity Program.
Sec. 7710. Fund for the improvement of postsecondary education.
Sec. 7711. Special projects.
Sec. 7712. Authorization of appropriations for the fund for the 
                            improvement of postsecondary education.
Sec. 7713. Repeal of the urban community service program.
Sec. 7714. Grants authorized for demonstration projects to ensure 
                            students with disabilities receive a 
                            quality higher education.
Sec. 7715. Applications for demonstration projects to ensure students 
                            with disabilities receive a quality higher 
                            education.
Sec. 7716. Authorization of appropriations for the demonstration 
                            projects to ensure students with 
                            disabilities receive a quality higher 
                            education.
                        Chapter 9--Miscellaneous

Sec. 7801. Msubchapter a--education of the deaf act of 1986
Sec. 7901. Laurent Clerc National Deaf Education Center.
Sec. 7902. Agreement with Gallaudet University.
Sec. 7903. Agreement for the National Technical Institute for the Deaf.
Sec. 7904. Cultural experiences grants.
Sec. 7905. Audit.
Sec. 7906. Reports.
Sec. 7907. Monitoring, evaluation, and reporting.
Sec. 7908. Liaison for educational programs.
Sec. 7909. Federal endowment programs for Gallaudet University and the 
                            National Technical Institute for the Deaf.
Sec. 7910. Oversight and effect of agreements.
Sec. 7911. International students.
Sec. 7912. Research priorities.
Sec. 7913. subchapter b--united states institute of peace act
Sec. 7921subchapter c--the higher education amendments of 1998
Sec. 7931. Repeals.
Sec. 7932. Grants to States for workplace and community transition 
                     subchapter d--indian educationed youth offenders.
                Part I--Tribal Colleges and Universities

Sec. 7941. Reauthorization of the Tribally Controlled College or 
                            University Assistance Act of 1978.
                    Part II--Navajo Higher Education

Sec. 7945. Short title.
Sec. 7946. Reauthorization of Navajo Community College Act.
                 TITLE VIII--COMMITTEE ON THE JUDICIARY

Sec. 8001. Recapture of unused visa numbers.
Sec. 8002. Fees with respect to immigration services for intracompany 
                            transferees.

       TITLE I--COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

SEC. 1001. SHORT TITLE.

    This title may be cited as the ``Agricultural Reconciliation Act of 
2005''.

                     Subtitle A--Commodity Programs

SEC. 1101. REDUCTION OF COMMODITY PROGRAM PAYMENTS.

    (a) In General.--Subtitle F of title I of the Farm Security and 
Rural Investment Act of 2002 (7 U.S.C. 7991 et seq.) is amended by 
adding at the end the following:

``SEC. 1619. REDUCTION OF COMMODITY PROGRAM PAYMENTS.

    ``(a) Definition of Commodity Program Payments.--In this section, 
the term `commodity program payments' means--
            ``(1) direct payments;
            ``(2) counter-cyclical payments; and
            ``(3) payments and benefits associated with the loan 
        program, including gains from the forfeiture of any commodity 
        pledged as collateral for loans and gains from in-kind payments 
        described in section 166 of the Federal Agriculture Improvement 
        and Reform Act of 1996 (7 U.S.C. 7286), as determined by the 
        Secretary.
    ``(b) Reduction.--
            ``(1) In general.--Notwithstanding any other provision of 
        this title, for each of the 2006 through 2010 crop years for 
        wheat, corn, grain sorghum, barley, oats, upland cotton, extra 
        long staple cotton, rice, soybeans, other oilseeds, wool, 
        mohair, honey, dry peas, lentils, small chickpeas, unshorn 
        pelts, silage, hay, and peanuts, the Secretary shall reduce the 
        total amount of commodity program payments received by the 
        producers on a farm for those commodities for that crop year by 
        an amount equal to 2.5 percent of that amount.
            ``(2) Milk.--During the period beginning on October 1, 
        2005, and ending on September 30, 2007, the Secretary shall 
        reduce the total amount of payments received by producers 
        pursuant to section 1502 by an amount equal to 2.5 percent of 
        that amount.''.
    (b) Commodities.--
            (1) In general.--Title I of the Farm Security and Rural 
        Investment Act of 2002 (7 U.S.C. 7901 et seq.), including each 
        amendment made by that title, is amended by striking ``2007'' 
        each place it appears (other than in sections 1104(f), 1304(g), 
        and 1307(a)(6) and amendments made by this title) and inserting 
        ``2011''.
            (2) Cotton.--Sections 1204(e)(1) and 1208(a) of the Farm 
        Security and Rural Investment Act of 2002 (7 U.S.C. 7934(e)(1), 
        7938(a)) are amended by striking ``2008'' each place it appears 
        and inserting ``2012''.

SEC. 1102. FORFEITURE PENALTY FOR NONRECOURSE SUGAR LOANS.

    Section 156 of the Federal Agriculture Improvement and Reform Act 
of 1996 (7 U.S.C. 7272) is amended--
            (1) by redesignating subsections (h), (i), and (j) as 
        subsections (i), (j), and (k), respectively; and
            (2) by inserting after subsection (g) the following:
    ``(h) Forfeiture Penalty.--
            ``(1) In general.--In the case of each of the 2006 through 
        2010 crops of sugar beets and sugarcane, a penalty shall be 
        assessed on the forfeiture of any sugar pledged as collateral 
        for a nonrecourse loan under this section.
            ``(2) Amount.--The penalty for sugarcane and sugar beets 
        under this subsection shall be 1.2 percent of the loan rate 
        established for sugarcane and sugar beets under subsections (a) 
        and (b), respectively.
            ``(3) Effect of forfeiture.--Any payments owed producers by 
        a processor that forfeits any sugar pledged as collateral for a 
        nonrecourse loan shall be reduced in proportion to the loan 
        forfeiture penalty incurred by the processor.
            ``(4) Crops.--This subsection shall apply only to the 2006 
        through 2010 crops of sugar beets and sugarcane.''.

SEC. 1103. COTTON COMPETITIVENESS PROVISIONS.

    (a) In General.--Section 1207 of the Farm Security and Rural 
Investment Act of 2002 (7 U.S.C. 7937) is amended--
            (1) by striking the section heading and inserting the 
        following: ``upland cotton import quotas.'';
            (2) by striking subsection (a);
            (3) by redesignating subsections (b) and (c) as subsections 
        (a) and (b), respectively;
            (4) in subsection (a) (as so redesignated)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (B), by striking ``, 
                        adjusted for the value of any certificate 
                        issued under subsection (a),''; and
                            (ii) in subparagraph (C), by striking ``, 
                        for the value of any certificates issued under 
                        subsection (a)''; and
                    (B) in paragraph (4), by striking ``subsection 
                (c)'' and inserting ``subsection (b)''; and
            (5) in subsection (b)(2) (as so redesignated), by striking 
        ``subsection (b)'' and inserting ``subsection (a)''.
    (b) FAIR.--Section 136 of the Federal Agriculture Improvement and 
Reform Act of 1996 (7 U.S.C. 7236) is repealed.
    (c) Effective Date.--The amendments made by this section take 
effect on August 1, 2006.

SEC. 1104. NATIONAL DAIRY MARKET LOSS PAYMENTS.

    (a) Amount.--Section 1502(c) of the Farm Security and Rural 
Investment Act of 2002 (7 U.S.C. 7982(c)) is amended by striking 
paragraph (3) and inserting the following:
            ``(3)(A) during the period beginning on the first day of 
        the month the producers on a dairy farm enter into a contract 
        under this section and ending on September 30, 2005, 45 
        percent; and
            ``(B) during the period beginning on October 1, 2005, and 
        ending on September 30, 2007, 34 percent.''.
    (b) Duration.--Section 1502 of the Farm Security and Rural 
Investment Act of 2002 (7 U.S.C. 7982) is amended by striking ``2005'' 
each place it appears in subsections (f) and (g)(1) and inserting 
``2007''.
    (c) Conforming Amendments.--Section 1502 of the Farm Security and 
Rural Investment Act of 2002 (7 U.S.C. 7982) is amended--
            (1) in subsection (g)(1), by striking ``and subsection 
        (h)''; and
            (2) by striking subsection (h).

SEC. 1105. ADVANCE DIRECT PAYMENTS.

    (a) In General.--Section 1103(d)(2) of the Farm Security and Rural 
Investment Act of 2002 (7 U.S.C. 7913(d)(2)) is amended in the first 
sentence by striking ``2007 crops years'' and inserting ``2005 crop 
years, up to 40 percent of the direct payment for a covered commodity 
for the 2006 crop year, and up to 29 percent of the direct payment for 
a covered commodity for any of the 2007 through 2011 crop years,''.
    (b) Peanuts.--Section 1303(e)(2) of the Farm Security and Rural 
Investment Act of 2002 (7 U.S.C. 7953(e)(2)) is amended in the first 
sentence by striking ``2007 crops years'' and inserting ``2005 crop 
years, up to 40 percent of the direct payment for the 2006 crop year, 
and up to 29 percent of the direct payment for any of the 2007 through 
2011 crop years,''.

                        Subtitle B--Conservation

SEC. 1201. CONSERVATION RESERVE PROGRAM.

    (a) In General.--Section 1231 of the Food Security Act of 1985 (16 
U.S.C. 3831) is amended--
            (1) in subsection (a), by striking ``2007'' and inserting 
        ``2011'';
            (2) in subsection (d), by striking ``up'' and all that 
        follows through ``years'' and inserting ``in the conservation 
        reserve at any 1 time 36,400,000 acres during the 2002 through 
        2010 calendar years and 38,300,000 acres in the 2011 calendar 
        year''; and
            (3) in subsection (h)(1)(A), by striking ``2007'' and 
        inserting ``2011''.
    (b) Funding.--Section 1241(a) of the Food Security Act of 1985 (16 
U.S.C. 3841(a)) is amended--
            (1) in the matter before paragraph (1), by striking ``For'' 
        and inserting ``Except as otherwise provided in this 
        subsection, for''; and
            (2) in paragraph (1), by striking ``The conservation'' and 
        inserting ``For fiscal years 2002 through 2011, the 
        conservation''.
    (c) Implementation.--In implementing the amendments made by this 
section, the Secretary of Agriculture shall achieve the new maximum 
acreage enrollment limit not later than 2 years after the date of 
enactment of this Act without affecting conservation reserve existing 
contracts.

SEC. 1202. CONSERVATION SECURITY PROGRAM.

    (a) In General.--Section 1238A(a) of the Food Security Act of 1985 
(16 U.S.C. 3838a(a)) is amended by striking ``2007'' and inserting 
``2011''.
    (b) Funding.--Section 1241(a)(3) of the Food Security Act of 1985 
(16 U.S.C. 3841(a)(3)) is amended by striking ``not more than 
$6,037,000,000'' and all that follows through ``2014.'' and inserting 
the following: ``not more than--
                    ``(A) $1,954,000,000 for the period of fiscal years 
                2006 through 2010; and
                    ``(B) $5,200,000,000 for the period of fiscal years 
                2006 through 2015.''.

SEC. 1203. ENVIRONMENTAL QUALITY INCENTIVES PROGRAM.

    (a) In General.--Section 1240B(a)(1) of the Food Security Act of 
1985 (16 U.S.C. 3839aa-2(a)(1)) is amended by striking ``2007'' and 
inserting ``2011''.
    (b) Limitation on Payments.--Section 1240G of the Food Security Act 
of 1985 (16 U.S.C. 3839aa-7) is amended by striking ``2007'' and 
inserting ``2011''.
    (c) Funding.--Section 1241(a)(6) of the Food Security Act of 1985 
(16 U.S.C. 3841(a)(6)) is amended by striking subparagraphs (D) and (E) 
and inserting the following:
                    ``(D) $1,017,000,000 in fiscal year 2005;
                    ``(E) $1,185,000,000 in fiscal year 2006;
                    ``(F) $1,270,000,000 in each of fiscal years 2007 
                through 2010; and
                    ``(G) $1,300,000,000 in fiscal year 2011.''.

                       Subtitle C--Miscellaneous

SEC. 1301. INITIATIVE FOR FUTURE AGRICULTURE AND FOOD SYSTEMS.

    (a) In General.--Section 401(b)(3) of the Agricultural Research, 
Extension, and Education Reform Act of 1998 (7 U.S.C. 7621(b)(3)) is 
amended--
            (1) in subparagraph (C), by striking ``$160,000,000; and'' 
        and inserting ``$104,000,000;'';
            (2) by redesignating subparagraph (D) as subparagraph (E);
            (3) by inserting after subparagraph (C) the following:
                    ``(D) on October 1, 2006, and each October 1 
                thereafter through October 1, 2009, $130,000,000; 
                and''; and
            (4) in subparagraph (E) (as so redesignated), by striking 
        ``2006'' and inserting ``2010''.
    (b) Effective Date.--The amendments made by subsection (a) take 
effect on October 1, 2005.

       TITLE II--COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

           Subtitle A--Merger of the Deposit Insurance Funds

SEC. 2001. SHORT TITLE.

    This subtitle may be cited as the ``Safe and Fair Deposit Insurance 
Act of 2005''.

SEC. 2002. DEFINITIONS.

    In this subtitle--
            (1) the term ``Administration'' means the National Credit 
        Union Administration;
            (2) the term ``Board'' means the Board of Directors of the 
        Federal Deposit Insurance Corporation (other than in connection 
        with the National Credit Union Administration Board);
            (3) the term ``Corporation'' means the Federal Deposit 
        Insurance Corporation;
            (4) the term ``designated reserve ratio'' means the reserve 
        ratio designated by the Board under section 7(b)(3) of the 
        Federal Deposit Insurance Act, as amended by this subtitle;
            (5) the terms ``Fund'' and ``Deposit Insurance Fund'' mean 
        the Deposit Insurance Fund established under section 11(a)(4) 
        of the Federal Deposit Insurance Act, as amended by this 
        subtitle;
            (6) the terms ``depository institution'' and ``insured 
        depository institution'' have the same meanings as in section 3 
        of the Federal Deposit Insurance Act; and
            (7) the term ``reserve ratio'' means the ratio of the fund 
        balance of the Deposit Insurance Fund to aggregate estimated 
        insured deposits held in all insured depository institutions.

SEC. 2003. MERGER OF BIF AND SAIF.

    (a) In General.--
            (1) Merger.--The Bank Insurance Fund and the Savings 
        Association Insurance Fund shall be merged into the Deposit 
        Insurance Fund.
            (2) Disposition of assets and liabilities.--All assets and 
        liabilities of the Bank Insurance Fund and the Savings 
        Association Insurance Fund shall be transferred to the Deposit 
        Insurance Fund.
            (3) No separate existence.--The separate existence of the 
        Bank Insurance Fund and the Savings Association Insurance Fund 
        shall cease on the effective date of the merger thereof under 
        this section.
    (b) Repeal of Outdated Merger Provision.--Section 2704 of the 
Deposit Insurance Funds Act of 1996 (12 U.S.C. 1821 note) is repealed.

SEC. 2004. ESTABLISHMENT OF THE DEPOSIT INSURANCE FUND.

    (a) In General.--Section 11(a)(4) of the Federal Deposit Insurance 
Act (12 U.S.C. 1821(a)(4)) is amended--
            (1) by redesignating subparagraph (B) as subparagraph (C);
            (2) by striking subparagraph (A) and inserting the 
        following:
                    ``(A) Establishment.--There is established the 
                Deposit Insurance Fund, which the Corporation shall--
                            ``(i) maintain and administer;
                            ``(ii) use to carry out its insurance 
                        purposes, in the manner provided by this 
                        subsection; and
                            ``(iii) invest in accordance with section 
                        13(a).
                    ``(B) Uses.--The Deposit Insurance Fund shall be 
                available to the Corporation for use with respect to 
                Deposit Insurance Fund members.'';
            (3) by striking ``(4) General provisions relating to 
        funds.--'' and inserting the following:
            ``(4) Establishment of the deposit insurance fund.--'';
            (4) in subparagraph (C), as redesignated by paragraph (1) 
        of this subsection, by striking ``Bank Insurance Fund and the 
        Savings Association Insurance Fund'' and inserting ``Deposit 
        Insurance Fund''; and
            (5) by adding at the end the following:
                    ``(D) Deposits.--All amounts assessed against 
                insured depository institutions by the Corporation 
                shall be deposited in the Deposit Insurance Fund.''.
    (b) Merger-Related Amendments to the Federal Deposit Insurance 
Act.--
            (1) Definitions.--Section 3(y) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1813(y)) is amended to read as 
        follows:
    ``(y) Definitions Relating to the Deposit Insurance Fund.--
            ``(1) Deposit insurance fund.--The terms `Deposit Insurance 
        Fund' and `Fund' mean the fund established under section 
        11(a)(4).''.
            (2) Assessments.--Section 7 of the Federal Deposit 
        Insurance Act (12 U.S.C. 1817) is amended--
                    (A) by striking subsection (l);
                    (B) by redesignating subsections (m) and (n) as 
                subsections (l) and (m), respectively; and
                    (C) in subsection (b), by striking paragraph (2) 
                and inserting the following:
            ``(2) Assessments.--
                    ``(A) In general.--Each insured depository 
                institution shall pay assessments to the Corporation in 
                such amounts and at such time or times as the Board of 
                Directors may require.
                    ``(B) Factors to be considered.--In setting 
                assessments for insured depository institutions, the 
                Board of Directors shall consider--
                            ``(i) the estimated operating expenses of 
                        the Deposit Insurance Fund;
                            ``(ii) the estimated case resolution 
                        expenditures and income of the Deposit 
                        Insurance Fund;
                            ``(iii) the projected effects of 
                        assessments on the earnings and capital of 
                        insured depository institutions;
                            ``(iv) the need to maintain a risk-based 
                        assessment system under paragraph (1); and
                            ``(v) any other factors that the Board of 
                        Directors may determine to be appropriate.
                    ``(C) Notice of assessments.--The Corporation shall 
                notify each insured depository institution of 
                assessments charged to that institution.
                    ``(D) Newly insured institutions.--To facilitate 
                the administration of this section, the Board of 
                Directors may waive the requirements of subsection 
                (c)(1) and subparagraph (A) of this paragraph for any 
                assessment period in which a depository institution 
                becomes insured.''.
            (3) Repeal of separate funds provisions.--Section 11(a) of 
        the Federal Deposit Insurance Act (12 U.S.C. 1821(a)) is 
        amended--
                    (A) by striking paragraphs (5), (6), and (7); and
                    (B) by redesignating paragraph (8) as paragraph 
                (5).

SEC. 2005. TECHNICAL AND CONFORMING AMENDMENTS TO THE FEDERAL DEPOSIT 
              INSURANCE ACT.

    (a) In General.--The Federal Deposit Insurance Act (12 U.S.C. 1811 
et seq.) is amended--
            (1) in section 3(a)(1) (12 U.S.C. 1813(a)(1)), by striking 
        subparagraph (B) and inserting the following:
                    ``(B) includes any former savings association.'';
            (2) in section 5(b)(5) (12 U.S.C. 1815(b)(5)), by striking 
        ``the Bank Insurance Fund or the Savings Association Insurance 
        Fund;'' and inserting ``the Deposit Insurance Fund,'';
            (3) in section 5(c)(4), by striking ``deposit insurance 
        fund'' and inserting ``Deposit Insurance Fund'';
            (4) in section 5(d) (12 U.S.C. 1815(d)), by striking 
        paragraphs (2) and (3);
            (5) in section 5(d)(1) (12 U.S.C. 1815(d)(1))--
                    (A) in subparagraph (A), by striking ``reserve 
                ratios in the Bank Insurance Fund and the Savings 
                Association Insurance Fund as required by section 7'' 
                and inserting ``the reserve ratio of the Deposit 
                Insurance Fund'';
                    (B) by striking subparagraph (B) and inserting the 
                following:
            ``(2) Fee credited to the deposit insurance fund.--The fee 
        paid by the depository institution under paragraph (1) shall be 
        credited to the Deposit Insurance Fund.'';
                    (C) by striking ``Uninsured institutions.--'' and 
                all that follows through ``general.--'' and inserting 
                ``Uninsured institutions.--''; and
                    (D) by redesignating subparagraph (C) as paragraph 
                (3) and moving the margin 2 ems to the left;
            (6) in section 5(e) (12 U.S.C. 1815(e))--
                    (A) in paragraph (5)(A), by striking ``Bank 
                Insurance Fund or the Savings Association Insurance 
                Fund'' and inserting ``Deposit Insurance Fund'';
                    (B) by striking paragraph (6); and
                    (C) by redesignating paragraphs (7), (8), and (9) 
                as paragraphs (6), (7), and (8), respectively;
            (7) in section 6(5) (12 U.S.C. 1816(5)), by striking ``Bank 
        Insurance Fund or the Savings Association Insurance Fund'' and 
        inserting ``Deposit Insurance Fund'';
            (8) in section 7(a)(3) (12 U.S.C. 1817(a)(3))--
                    (A) by striking ``in July''; and
                    (B) by striking ``in January'';
            (9) in section 7(b) (12 U.S.C. 1817(b))--
                    (A) in paragraph (1)--
                            (i) in subparagraph (B)(ii), by striking 
                        ``institution's semiannual assessment'' and 
                        inserting ``assessments for that institution 
                        under subsection (b)''; and
                            (ii) in subparagraph (C)--
                                    (I) by striking ``a depository 
                                institution's semiannual assessment'' 
                                and inserting ``assessments for a 
                                depository institution under subsection 
                                (b)''; and
                                    (II) by striking ``deposit 
                                insurance fund'' each place that term 
                                appears and inserting ``Deposit 
                                Insurance Fund'';
                    (B) in paragraph (1)(D), by striking ``each deposit 
                insurance fund'' and inserting ``the Deposit Insurance 
                Fund'';
                    (C) by striking paragraph (4) and redesignating 
                paragraphs (5) through (7) as paragraphs (4) through 
                (6), respectively;
                    (D) in paragraph (5), as so redesignated--
                            (i) by striking ``any such assessment'' and 
                        inserting ``any such assessment is necessary'';
                            (ii) by striking subparagraph (B);
                            (iii) in subparagraph (A)--
                                    (I) by striking ``(A) is 
                                necessary--'';
                                    (II) by striking ``Bank Insurance 
                                Fund members'' and inserting ``insured 
                                depository institutions''; and
                                    (III) by redesignating clauses (i), 
                                (ii), and (iii) as subparagraphs (A), 
                                (B), and (C), respectively, and moving 
                                the margins 2 ems to the left; and
                            (iv) in subparagraph (C) (as 
                        redesignated)--
                                    (I) by inserting ``that'' before 
                                ``the Corporation''; and
                                    (II) by striking ``; and'' and 
                                inserting a period; and
                    (E) in paragraph (6), as so redesignated, by 
                striking ``semiannual assessment'' and inserting 
                ``assessment under subsection (b)'';
            (10) in section 7(c) (12 U.S.C. 1817(c))--
                    (A) in paragraph (1), by striking ``institution's 
                semiannual assessment'' and inserting ``assessments for 
                that institution under subsection (b)'';
                    (B) by striking paragraphs (2) and (3); and
                    (C) by redesignating paragraph (4) as paragraph 
                (2);
            (11) in section 7(j)(7)(F) (12 U.S.C. 1817(j)(7)(F)), by 
        striking ``Bank Insurance Fund or the Savings Association 
        Insurance Fund'' and inserting ``Deposit Insurance Fund'';
            (12) in section 8 (12 U.S.C. 1818)--
                    (A) in subsection (p), by striking ``semiannual'';
                    (B) in subsection (q), by striking ``semiannual'' 
                and inserting ``assessment''; and
                    (C) in subsection (t)(2)(C), by striking ``deposit 
                insurance fund'' and inserting ``Deposit Insurance 
                Fund'';
            (13) in section 11 (12 U.S.C. 1821), by striking ``deposit 
        insurance fund'' each place that term appears and inserting 
        ``Deposit Insurance Fund'';
            (14) in section 11(f)(1) (12 U.S.C. 1821(f)(1)), by 
        striking ``, except that--'' and all that follows through the 
        end of the paragraph and inserting a period;
            (15) in section 11(i)(3) (12 U.S.C. 1821(i)(3))--
                    (A) by striking subparagraph (B);
                    (B) by redesignating subparagraph (C) as 
                subparagraph (B); and
                    (C) in subparagraph (B) (as redesignated), by 
                striking ``subparagraphs (A) and (B)'' and inserting 
                ``subparagraph (A)'';
            (16) in section 11(p)(2)(B) (12 U.S.C. 1821(p)(2)(B)), by 
        striking ``institution, any'' and inserting ``institution, 
        the'';
            (17) in section 12(f)(4)(E)(iv) (12 U.S.C. 
        1822(f)(4)(E)(iv)), by striking ``Federal deposit insurance 
        funds'' and inserting ``the Deposit Insurance Fund, or any 
        predecessor deposit insurance fund'';
            (18) in section 13 (12 U.S.C. 1823)--
                    (A) by striking ``deposit insurance fund'' each 
                place that term appears and inserting ``Deposit 
                Insurance Fund'';
                    (B) in subsection (a)(1), by striking ``Bank 
                Insurance Fund, the Savings Association Insurance 
                Fund,'' and inserting ``Deposit Insurance Fund'';
                    (C) in subsection (c)(4)(E)--
                            (i) in the subparagraph heading, by 
                        striking ``funds'' and inserting ``fund''; and
                            (ii) in clause (i), by striking ``any 
                        insurance fund'' and inserting ``the Deposit 
                        Insurance Fund'';
                    (D) in subsection (c)(4)(G)(ii)--
                            (i) by striking ``appropriate insurance 
                        fund'' and inserting ``Deposit Insurance 
                        Fund'';
                            (ii) by striking ``the members of the 
                        insurance fund (of which such institution is a 
                        member)'' and inserting ``insured depository 
                        institutions'';
                            (iii) by striking ``each member's'' and 
                        inserting ``each insured depository 
                        institution's'';
                            (iv) by striking ``the member's'' each 
                        place that term appears and inserting ``the 
                        institution's''; and
                            (v) in subclause (II), by striking 
                        ``semiannual'' and inserting ``applicable 
                        assessment'';
                    (E) in subsection (c), by striking paragraph (11);
                    (F) in subsection (h), by striking ``Bank Insurance 
                Fund'' and inserting ``Deposit Insurance Fund'';
                    (G) in subsection (k)(4)(B)(i), by striking 
                ``Savings Association Insurance Fund member'' and 
                inserting ``savings association''; and
                    (H) in subsection (k)(5)--
                            (i) in subparagraph (A), by striking 
                        ``Savings Association Insurance Fund members'' 
                        and inserting ``savings associations'';
                            (ii) by striking ``member's'' each place 
                        that term appears and inserting ``savings 
                        association's''; and
                            (iii) by striking ``member'' each place 
                        that term appears and inserting ``savings 
                        association'';
            (19) in section 14(a) (12 U.S.C. 1824(a)), in the 5th 
        sentence--
                    (A) by striking ``Bank Insurance Fund or the 
                Savings Association Insurance Fund'' and inserting 
                ``Deposit Insurance Fund''; and
                    (B) by striking ``each such fund'' and inserting 
                ``the Deposit Insurance Fund'';
            (20) in section 14(b) (12 U.S.C. 1824(b)), by striking 
        ``Bank Insurance Fund or Savings Association Insurance Fund'' 
        and inserting ``Deposit Insurance Fund'';
            (21) in section 14(c) (12 U.S.C. 1824(c))--
                    (A) in paragraph (2)(A), by striking ``(7)'' and 
                inserting ``(6)''; and
                    (B) by striking paragraph (3);
            (22) in section 14(d) (12 U.S.C. 1824(d))--
                    (A) by striking ``Bank Insurance Fund member'' each 
                place that term appears and inserting ``insured 
                depository institution'';
                    (B) by striking ``Bank Insurance Fund members'' 
                each place that term appears and inserting ``insured 
                depository institutions'';
                    (C) by striking ``Bank Insurance Fund'' each place 
                that term appears (other than in connection with a 
                reference to a Bank Insurance Fund member or members) 
                and inserting ``Deposit Insurance Fund'';
                    (D) by striking the subsection heading and 
                inserting the following:
    ``(d) Borrowing for the Deposit Insurance Fund From Insured 
Depository Institutions.--'';
                    (E) in paragraph (3), in the paragraph heading, by 
                striking ``bif'' and inserting ``the deposit insurance 
                fund''; and
                    (F) in paragraph (5), in the paragraph heading, by 
                striking ``bif members'' and inserting ``insured 
                depository institutions'';
            (23) in section 14 (12 U.S.C. 1824), by adding at the end 
        the following:
    ``(e) Borrowing for the Deposit Insurance Fund From Federal Home 
Loan Banks.--
            ``(1) In general.--The Corporation may borrow from the 
        Federal home loan banks, with the concurrence of the Federal 
        Housing Finance Board, such funds as the Corporation considers 
        necessary for the use of the Deposit Insurance Fund.
            ``(2) Terms and conditions.--Any loan from any Federal home 
        loan bank under paragraph (1) to the Deposit Insurance Fund 
        shall--
                    ``(A) bear a rate of interest of not less than the 
                current marginal cost of funds to that bank, taking 
                into account the maturities involved;
                    ``(B) be adequately secured, as determined by the 
                Federal Housing Finance Board; and
                    ``(C) be a direct liability of the Deposit 
                Insurance Fund.'';
            (24) in section 15(c)(5) (12 U.S.C. 1825(c)(5))--
                    (A) by striking ``the Bank Insurance Fund or 
                Savings Association Insurance Fund, respectively'' each 
                place that term appears and inserting ``the Deposit 
                Insurance Fund''; and
                    (B) in subparagraph (B), by striking ``the Bank 
                Insurance Fund or the Savings Association Insurance 
                Fund, respectively'' and inserting ``the Deposit 
                Insurance Fund'';
            (25) in section 17(a) (12 U.S.C. 1827(a))--
                    (A) in the subsection heading, by striking ``BIF, 
                SAIF,'' and inserting ``the Deposit Insurance Fund''; 
                and
                    (B) in paragraph (1)--
                            (i) by striking ``the Bank Insurance Fund, 
                        the Savings Association Insurance Fund,'' each 
                        place that term appears and inserting ``the 
                        Deposit Insurance Fund''; and
                            (ii) in subparagraph (D), by striking 
                        ``each insurance fund'' and inserting ``the 
                        Fund'';
            (26) in section 17(d) (12 U.S.C. 1827(d)), by striking ``, 
        the Bank Insurance Fund, the Savings Association Insurance 
        Fund,'' each place that term appears and inserting ``the 
        Deposit Insurance Fund'';
            (27) in section 18(m) (12 U.S.C. 1828(m))--
                    (A) in paragraph (2), in the matter preceding 
                subparagraph (A), by striking the colon and inserting a 
                dash;
                    (B) in paragraph (3)(A)--
                            (i) by striking ``poses a serious threat to 
                        the Savings Association Insurance Fund'' and 
                        inserting ``of an insured savings association 
                        poses a serious threat to the Deposit Insurance 
                        Fund''; and
                            (ii) by striking ``Savings Association 
                        Insurance Fund member'' and inserting ``insured 
                        savings association''; and
                    (C) in paragraph (3)(C), by striking ``Savings 
                Association Insurance Fund or the Bank Insurance Fund'' 
                and inserting ``Deposit Insurance Fund'';
            (28) in section 18(o) (12 U.S.C. 1828(o)), by striking 
        ``deposit insurance funds'' and ``deposit insurance fund'' each 
        place those terms appear and inserting ``Deposit Insurance 
        Fund'';
            (29) in section 18(p) (12 U.S.C. 1828(p)), by striking 
        ``deposit insurance funds'' and inserting ``Deposit Insurance 
        Fund'';
            (30) in section 24 (12 U.S.C. 1831a)--
                    (A) in subsections (a)(1) and (d)(1)(A), by 
                striking ``appropriate deposit insurance fund'' each 
                place that term appears and inserting ``Deposit 
                Insurance Fund'';
                    (B) in subsection (e)(2)(A), by striking ``risk 
                to'' and all that follows through the period and 
                inserting ``risk to the Deposit Insurance Fund.''; and
                    (C) in subsections (e)(2)(B)(ii) and (f)(6)(B), by 
                striking ``the insurance fund of which such bank is a 
                member'' each place that term appears and inserting 
                ``the Deposit Insurance Fund'';
            (31) in section 28 (12 U.S.C. 1831e), by striking 
        ``affected deposit insurance fund'' each place that term 
        appears and inserting ``Deposit Insurance Fund'';
            (32) by striking section 31 (12 U.S.C. 1831h);
            (33) in section 36(i)(3) (12 U.S.C. 1831m(i)(3)), by 
        striking ``affected deposit insurance fund'' and inserting 
        ``Deposit Insurance Fund'';
            (34) in section 37(a)(1)(C) (12 U.S.C. 1831n(a)(1)(C)), by 
        striking ``insurance funds'' and inserting ``Deposit Insurance 
        Fund'';
            (35) in section 38 (12 U.S.C. 1831o), by striking ``the 
        deposit insurance fund'' each place that term appears and 
        inserting ``the Deposit Insurance Fund'';
            (36) in section 38(a) (12 U.S.C. 1831o(a)), in the 
        subsection heading, by striking ``Funds'' and inserting 
        ``Fund'';
            (37) in section 38(k) (12 U.S.C. 1831o(k))--
                    (A) in paragraph (1), by striking ``a deposit 
                insurance fund'' and inserting ``the Deposit Insurance 
                Fund'';
                    (B) in paragraph (2), by striking ``A deposit 
                insurance fund'' and inserting ``The Deposit Insurance 
                Fund''; and
                    (C) in paragraphs (2)(A) and (3)(B), by striking 
                ``the deposit insurance fund's outlays'' each place 
                that term appears and inserting ``the outlays of the 
                Deposit Insurance Fund''; and
            (38) in section 38(o) (12 U.S.C. 1831o(o))--
                    (A) by striking ``Associations.--'' and all that 
                follows through ``Subsections (e)(2)'' in paragraph (2) 
                and inserting ``Associations.--Subsections (e)(2)'';
                    (B) by redesignating subparagraphs (A), (B), and 
                (C) as paragraphs (1), (2), and (3), respectively, and 
                moving the margins 2 ems to the left; and
                    (C) in paragraph (1) (as so redesignated), by 
                redesignating clauses (i) and (ii) as subparagraphs (A) 
                and (B), respectively, and moving the margins 2 ems to 
                the left.
    (b) Conforming Transfer of Funds.--Any funds resulting from the 
application of section 7(d)(2) of the Federal Deposit Insurance Act 
prior to its repeal under subsection (a)(4) of this section shall be 
deposited into the general fund of the Deposit Insurance Fund 
established pursuant to this subtitle.

SEC. 2006. OTHER TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Section 5136 of the Revised Statutes.--The paragraph designated 
the ``Eleventh'' of section 5136 of the Revised Statutes of the United 
States (12 U.S.C. 24) is amended in the 5th sentence, by striking 
``affected deposit insurance fund'' and inserting ``Deposit Insurance 
Fund''.
    (b) Investments Promoting Public Welfare; Limitations on Aggregate 
Investments.--The 23d undesignated paragraph of section 9 of the 
Federal Reserve Act (12 U.S.C. 338a) is amended in the 4th sentence, by 
striking ``affected deposit insurance fund'' and inserting ``Deposit 
Insurance Fund''.
    (c) Advances to Critically Undercapitalized Depository 
Institutions.--Section 10B(b)(3)(A)(ii) of the Federal Reserve Act (12 
U.S.C. 347b(b)(3)(A)(ii)) is amended by striking ``any deposit 
insurance fund in'' and inserting ``the Deposit Insurance Fund of''.
    (d) Amendments to the Balanced Budget and Emergency Deficit Control 
Act of 1985.--Section 255(g)(1)(A) of the Balanced Budget and Emergency 
Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended--
            (1) by striking ``Bank Insurance Fund'' and inserting 
        ``Deposit Insurance Fund''; and
            (2) by striking ``Federal Deposit Insurance Corporation, 
        Savings Association Insurance Fund;''.
    (e) Amendments to the Federal Home Loan Bank Act.--The Federal Home 
Loan Bank Act (12 U.S.C. 1421 et seq.) is amended--
            (1) in section 11(k) (12 U.S.C. 1431(k))--
                    (A) in the subsection heading, by striking ``SAIF'' 
                and inserting ``the Deposit Insurance Fund''; and
                    (B) by striking ``Savings Association Insurance 
                Fund'' each place that term appears and inserting 
                ``Deposit Insurance Fund'';
            (2) in section 21 (12 U.S.C. 1441)--
                    (A) in subsection (f)(2), by striking ``, except 
                that'' and all that follows through the end of the 
                paragraph and inserting a period; and
                    (B) in subsection (k), by striking paragraph (4);
            (3) in section 21A(b)(4)(B) (12 U.S.C. 1441a(b)(4)(B)), by 
        striking ``affected deposit insurance fund'' and inserting 
        ``Deposit Insurance Fund''; and
            (4) in section 21B(k) (12 U.S.C. 1441b(k)) by inserting 
        before the colon ``, the following definitions shall apply''.
    (f) Amendments to the Home Owners' Loan Act.--The Home Owners' Loan 
Act (12 U.S.C. 1461 et seq.) is amended--
            (1) in section 5 (12 U.S.C. 1464)--
                    (A) in subsection (c)(6), by striking ``As used in 
                this subsection--'' and inserting ``For purposes of 
                this subsection, the following definitions shall 
                apply:'';
                    (B) in subsection (o)(1), by striking ``that is a 
                Bank Insurance Fund member'';
                    (C) in subsection (o)(2)(A), by striking ``a Bank 
                Insurance Fund member until such time as it changes its 
                status to a Savings Association Insurance Fund member'' 
                and inserting ``insured by the Deposit Insurance 
                Fund'';
                    (D) in subsection (t)(5)(D)(iii)(II), by striking 
                ``affected deposit insurance fund'' and inserting 
                ``Deposit Insurance Fund'';
                    (E) in subsection (t)(7)(C)(i)(I), by striking 
                ``affected deposit insurance fund'' and inserting 
                ``Deposit Insurance Fund''; and
                    (F) in subsection (v)(2)(A)(i), by striking ``the 
                Savings Association Insurance Fund'' and inserting ``or 
                the Deposit Insurance Fund''; and
            (2) in section 10 (12 U.S.C. 1467a)--
                    (A) in subsection (c)(6)(D), by striking ``this 
                title'' and inserting ``this Act'';
                    (B) in subsection (e)(1)(B), by striking ``Savings 
                Association Insurance Fund or Bank Insurance Fund'' and 
                inserting ``Deposit Insurance Fund'';
                    (C) in subsection (e)(2), by striking ``Savings 
                Association Insurance Fund or the Bank Insurance Fund'' 
                and inserting ``Deposit Insurance Fund'';
                    (D) in subsection (e)(4)(B), by striking 
                ``subsection (1)'' and inserting ``subsection (l)'';
                    (E) in subsection (g)(3)(A), by striking ``(5) of 
                this section'' and inserting ``(5) of this 
                subsection'';
                    (F) in subsection (i), by redesignating paragraph 
                (5) as paragraph (4);
                    (G) in subsection (m)(3), by striking subparagraph 
                (E), and by redesignating subparagraphs (F), (G), and 
                (H) as subparagraphs (E), (F), and (G), respectively;
                    (H) in subsection (m)(7)(A), by striking ``during 
                period'' and inserting ``during the period''; and
                    (I) in subsection (o)(3)(D), by striking ``sections 
                5(s) and (t) of this Act'' and inserting ``subsections 
                (s) and (t) of section 5''.
    (g) Amendments to the National Housing Act.--The National Housing 
Act (12 U.S.C. 1701 et seq.) is amended--
            (1) in section 317(b)(1)(B) (12 U.S.C. 1723i(b)(1)(B)), by 
        striking ``Bank Insurance Fund for banks or through the Savings 
        Association Insurance Fund for savings associations'' and 
        inserting ``Deposit Insurance Fund''; and
            (2) in section 536(b)(1)(B)(ii) (12 U.S.C. 1735f-
        14(b)(1)(B)(ii)), by striking ``Bank Insurance Fund for banks 
        and through the Savings Association Insurance Fund for savings 
        associations'' and inserting ``Deposit Insurance Fund''.
    (h) Amendments to the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989.--The Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989 (12 U.S.C. 1811 note) is amended--
            (1) in section 951(b)(3)(B) (12 U.S.C. 1833a(b)(3)(B)), by 
        striking ``Bank Insurance Fund, the Savings Association 
        Insurance Fund,'' and inserting ``Deposit Insurance Fund (or 
        any predecessor deposit insurance fund)''; and
            (2) in section 1112(c)(1)(B) (12 U.S.C. 3341(c)(1)(B)), by 
        striking ``Bank Insurance Fund, the Savings Association 
        Insurance Fund,'' and inserting ``Deposit Insurance Fund''.
    (i) Amendment to the Bank Holding Company Act of 1956.--The Bank 
Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended--
            (1) in section 2(j)(2) (12 U.S.C. 1841(j)(2)), by striking 
        ``Savings Association Insurance Fund'' and inserting ``Deposit 
        Insurance Fund''; and
            (2) in section 3(d)(1)(D)(iii) (12 U.S.C. 
        1842(d)(1)(D)(iii)), by striking ``appropriate deposit 
        insurance fund'' and inserting ``Deposit Insurance Fund''.
    (j) Amendments to the Gramm-Leach-Bliley Act.--Section 114 of the 
Gramm-Leach-Bliley Act (12 U.S.C. 1828a) is amended in each of 
subsection (a)(1)(B), paragraphs (2)(B) and (4)(B) of subsection (b), 
and subsection (c)(1)(B), by striking ``any Federal deposit insurance 
fund'' and inserting ``the Deposit Insurance Fund''.

SEC. 2007. EFFECTIVE DATE.

    (a) In General.--Except as otherwise provided in this subtitle, 
this subtitle and the amendments made by this subtitle shall become 
effective not later than the first day of the first calendar quarter 
that begins more than 90 days after the date of enactment of this Act.
    (b) Earlier Implementation.--
            (1) Corporation determination.--If the Corporation 
        determines that merger of the deposit insurance funds should 
        occur before the first day of the first calendar quarter as 
        described in subsection (a), the Corporation shall--
                    (A) announce such determination publicly; and
                    (B) establish the effective date of the merger.
            (2) Earlier effective date.--On the date established under 
        paragraph (1)(B), this subtitle and the amendments made by this 
        subtitle shall become effective.

      Subtitle B--Deposit Insurance Modernization and Improvement

SEC. 2011. SHORT TITLE.

    This subtitle may be cited as the ``Deposit Insurance Reform Act of 
2005''.

SEC. 2012. CHANGES TO FEDERAL DEPOSIT INSURANCE COVERAGE.

    (a) Insured Depository Institutions.--
            (1) In general.--Section 11(a)(1) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1821(a)(1)) is amended--
                    (A) by striking subparagraph (B) and inserting the 
                following:
                    ``(B) Net amount of insured deposits.--The net 
                amount of deposit insurance payable to any depositor at 
                an insured depository institution shall not exceed the 
                standard maximum deposit insurance amount, as 
                determined in accordance with subparagraphs (C) through 
                (M).''; and
                    (B) by striking subparagraph (D) and inserting the 
                following:
                    ``(D) Coverage for certain employee benefit plan 
                deposits.--
                            ``(i) Pass-through insurance.--The 
                        Corporation shall provide pass-through deposit 
                        insurance for the deposits of any employee 
                        benefit plan.
                            ``(ii) Prohibition on acceptance of benefit 
                        plan deposits.--An insured depository 
                        institution that is not well capitalized or 
                        adequately capitalized may not accept employee 
                        benefit plan deposits.
                            ``(iii) Definitions.--For purposes of this 
                        subparagraph, the following definitions shall 
                        apply:
                                    ``(I) Capital standards.--The terms 
                                `well capitalized' and `adequately 
                                capitalized' have the same meanings as 
                                in section 38.
                                    ``(II) Employee benefit plan.--The 
                                term `employee benefit plan' has the 
                                same meaning as in paragraph 
                                (5)(B)(ii), and includes any eligible 
                                deferred compensation plan described in 
                                section 457 of the Internal Revenue 
                                Code of 1986.
                                    ``(III) Pass-through deposit 
                                insurance.--The term `pass-through 
                                deposit insurance' means, with respect 
                                to an employee benefit plan, deposit 
                                insurance coverage based on the 
                                interest of each participant, in 
                                accordance with regulations issued by 
                                the Corporation.
                    ``(E) Standard maximum deposit insurance amount 
                defined.--For purposes of this paragraph, the term 
                `standard maximum deposit insurance amount' means, 
                until April 1, 2010, $100,000.
                    ``(F) Determination regarding inflation 
                adjustments.--
                            ``(i) Adjustments to standard maximum 
                        deposit insurance amount.--Not later than April 
                        1, 2010, and the first day of each 5-year 
                        period thereafter, the Board of Directors shall 
                        determine whether to increase the standard 
                        maximum deposit insurance amount based on the 
                        factors set forth under subparagraph (G).
                            ``(ii) Adjustments for certain retirement 
                        accounts.--Not later than April 1, 2010, and 
                        the first day of each 5-year period thereafter, 
                        the Board of Directors shall determine whether 
                        to increase the amount of insurance available 
                        for retirement accounts under paragraph (3), 
                        based on the factors set forth under 
                        subparagraph (G).
                    ``(G) Inflation adjustment considerations.--In 
                making any determination under subparagraph (F), the 
                Board of Directors shall consider--
                            ``(i) the economic conditions affecting 
                        insured depository institutions;
                            ``(ii) the overall risk or risks to the 
                        Deposit Insurance Fund;
                            ``(iii) a demonstrated need by depositors 
                        for the inflation adjustment increase;
                            ``(iv) the ability of insured depository 
                        institutions to identify and obtain alternative 
                        funding sources;
                            ``(v) the ability of insured depository 
                        institutions to meet the credit needs of their 
                        communities;
                            ``(vi) potential problems affecting insured 
                        depository institutions generally or a specific 
                        group or type of insured depository 
                        institutions; and
                            ``(vii) any other factors that the Board of 
                        Directors deems appropriate.
                    ``(H) Inflation adjustment calculations for 2010.--
                            ``(i) Calculation for standard maximum 
                        deposit insurance amount.--The amount provided 
                        for any increase in the standard maximum 
                        deposit insurance amount shall be, as of April 
                        1, 2010, the product of--
                                    ``(I) $100,000; and
                                    ``(II) the ratio of the value of 
                                the Personal Consumption Expenditures 
                                Chain-Type Index (or any successor 
                                index thereto), published by the 
                                Department of Commerce, for December 31 
                                of the year preceding the year in which 
                                the adjustment is calculated under this 
                                subparagraph, to the value of such 
                                index for December 31 of the year 
                                preceding the effective date of the 
                                Safe and Fair Deposit Insurance Act of 
                                2005.
                            ``(ii) Calculation for certain retirement 
                        accounts for 2010.--The amount provided for any 
                        increase in the insurance for retirement 
                        accounts under paragraph (3) shall be, as of 
                        April 1, 2010, the product of--
                                    ``(I) $250,000; and
                                    ``(II) the ratio of the value of 
                                the Personal Consumption Expenditures 
                                Chain-Type Index (or any successor 
                                index thereto), published by the 
                                Department of Commerce, for December 31 
                                of the year preceding the year in which 
                                the adjustment is calculated under this 
                                subparagraph, to the value of such 
                                index for December 31 of the year 
                                preceding the effective date of the 
                                Safe and Fair Deposit Insurance Act of 
                                2005.
                    ``(I) Inflation adjustment calculations after 
                2010.--
                            ``(i) Calculation for the standard maximum 
                        deposit insurance amount.--The amount provided 
                        for any increase in the standard maximum 
                        deposit insurance amount shall be, as of the 
                        1st day of each 5-year period beginning on 
                        April 1, 2015, the product of--
                                    ``(I) the standard maximum deposit 
                                insurance amount; and
                                    ``(II) the ratio of the value of 
                                the Personal Consumption Expenditures 
                                Chain-Type Index (or any successor 
                                index thereto), published by the 
                                Department of Commerce, for December 31 
                                of the year preceding the year in which 
                                the adjustment is calculated under this 
                                subparagraph, to the value of such 
                                index for December 31 of the 6 years 
                                prior to the year in which the 
                                adjustment is calculated under this 
                                subparagraph.
                            ``(ii) Calculation for certain retirement 
                        accounts.--The amount provided for any increase 
                        in the insurance for retirement accounts under 
                        paragraph (3) shall be, as of the 1st day of 
                        each 5-year period beginning on April 1, 2015, 
                        the product of--
                                    ``(I) the amount available for 
                                retirement accounts under paragraph 
                                (3), as adjusted pursuant to 
                                subparagraph (H) or this subparagraph, 
                                as appropriate; and
                                    ``(II) the ratio of the value of 
                                the Personal Consumption Expenditures 
                                Chain-Type Index (or any successor 
                                index thereto), published by the 
                                Department of Commerce, for December 31 
                                of the year preceding the year in which 
                                the adjustment is calculated under this 
                                subparagraph, to the value of such 
                                index for December 31 of the 6 years 
                                prior to the year in which the 
                                adjustment is calculated under this 
                                subparagraph.
                    ``(J) Determination of no inflation increases.--If 
                the Board cannot support an increase under subparagraph 
                (F) after consideration of the factors in subparagraph 
                (G), no inflation adjustment shall be made until 
                reconsideration at the beginning of the next 5-year 
                period.
                    ``(K) Rounding.--If the amount of increase 
                determined for any period is not a multiple of $10,000, 
                the amount so determined shall be rounded to the 
                nearest $10,000.
                    ``(L) Publication.--Not later than April 1, 2010, 
                and not later than the first day of each 5-year period 
                thereafter, the Board of Directors shall publish in the 
                Federal Register the standard maximum deposit insurance 
                amount and the amount of deposit insurance coverage 
                that may be due to any depositor at any insured 
                depository institution during the applicable 5-year 
                period.
                    ``(M) No inflation adjustments for public funds.--
                Subparagraphs (E) through (L) shall not apply to any 
                deposits of depositors described in paragraph (2), and 
                the net amount due to any such depositor at an insured 
                depository institution shall not exceed $100,000.''.
            (2) Deposit insurance for retirement accounts.--Section 
        11(a)(3)(A) of the Federal Deposit Insurance Act (12 U.S.C. 
        1821(a)(3)(A)) is amended--
                    (A) by striking ``$100,000'' and inserting 
                ``$250,000''; and
                    (B) by inserting before the period at the end the 
                following: ``which amount shall be subject to inflation 
                adjustments as provided in paragraph (1).''.
            (3) Technical and conforming amendment relating to 
        insurance of trust funds.--Section 7(i) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1817(i)) is amended in each of 
        paragraphs (1) and (3), by striking ``$100,000'' each place it 
        appears and inserting ``the standard maximum deposit insurance 
        amount (as determined under section 11(a)(1))''.
            (4) Other technical and conforming amendments.--The Federal 
        Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended--
                    (A) in section 11(m)(6) (12 U.S.C. 1821(m)(6)), by 
                striking ``$100,000'' and inserting ``the standard 
                maximum deposit insurance amount (as determined under 
                subsection (a)(1))'';
                    (B) in section 18 (12 U.S.C. 1828), by striking 
                subsection (a) and inserting the following:
    ``(a) Insurance Logo.--
            ``(1) Insured depository institutions.--
                    ``(A) In general.--Each insured depository 
                institution shall display at each place of business 
                maintained by that institution a sign or signs relating 
                to the insurance of the deposits of the institution, in 
                accordance with regulations to be prescribed by the 
                Corporation.
                    ``(B) Statement to be included.--Each sign required 
                under subparagraph (A) shall include a statement that 
                insured deposits are backed by the full faith and 
                credit of the United States Government.
            ``(2) Regulations.--The Corporation shall prescribe 
        regulations to carry out this subsection, including regulations 
        governing the substance of signs required by paragraph (1) and 
        the manner of display or use of such signs.
            ``(3) Penalties.--For each day that an insured depository 
        institution continues to violate this subsection or any 
        regulation issued under this subsection, it shall be subject to 
        a penalty of not more than $100, which the Corporation may 
        recover for its use.''; and
                    (C) in section 43(d) (12 U.S.C. 1831t(d)), by 
                striking ``$100,000'' and inserting ``the standard 
                maximum deposit insurance amount (as determined under 
                section 11(a)(1))''.
    (b) Insured Credit Unions.--
            (1) In general.--Section 207(k) of the Federal Credit Union 
        Act (12 U.S.C. 1787(k)) is amended--
                    (A) by striking ``(k)(1)'' and all that follows 
                through the end of paragraph (1) and inserting the 
                following:
    ``(k) Insured Amounts Payable.--
            ``(1) Net insured amount.--
                    ``(A) In general.--Subject to the provisions of 
                paragraph (2), the net amount of share insurance 
                payable to any member at an insured credit union shall 
                not exceed the total amount of the shares or deposits 
                in the name of the member (after deducting offsets), 
                less any part thereof which is in excess of the 
                standard maximum share insurance amount, as determined 
                in accordance with this paragraph and paragraphs (5) 
                and (6), and consistent with actions taken by the 
                Federal Deposit Insurance Corporation under section 
                11(a) of the Federal Deposit Insurance Act.
                    ``(B) Aggregation.--Determination of the net amount 
                of share insurance under subparagraph (A), shall be in 
                accordance with such regulations as the Board may 
                prescribe, and, in determining the amount payable to 
                any member, there shall be added together all accounts 
                in the credit union maintained by that member for that 
                member's own benefit, either in the member's own name 
                or in the names of others.
                    ``(C) Authority to define the extent of coverage.--
                The Board may define, with such classifications and 
                exceptions as it may prescribe, the extent of the share 
                insurance coverage provided for member accounts, 
                including member accounts in the name of a minor, in 
                trust, or in joint tenancy.'';
                    (B) by adding at the end the following:
            ``(4) Coverage for certain employee benefit plan 
        deposits.--
                    ``(A) Pass-through insurance.--The Administration 
                shall provide pass-through share insurance for the 
                deposits or shares of any employee benefit plan, 
                subject to subparagraph (B).
                    ``(B) Prohibition on acceptance of deposits.--An 
                insured credit union that is not well capitalized or 
                adequately capitalized may not accept employee benefit 
                plan deposits.
                    ``(C) Definitions.--For purposes of this paragraph, 
                the following definitions shall apply:
                            ``(i) Capital standards.--The terms `well 
                        capitalized' and `adequately capitalized' have 
                        the same meanings as in section 216(c), as 
                        added by section 301 of the Credit Union 
                        Membership Access Act (Public Law 105-219, 112 
                        Stat. 931).
                            ``(ii) Employee benefit plan.--The term 
                        `employee benefit plan'--
                                    ``(I) has the same meaning as in 
                                section 3(3) of the Employee Retirement 
                                Income Security Act of 1974;
                                    ``(II) includes any plan described 
                                in section 401(d) of the Internal 
                                Revenue Code of 1986; and
                                    ``(III) includes any eligible 
                                deferred compensation plan described in 
                                section 457 of the Internal Revenue 
                                Code of 1986.
                            ``(iii) Pass-through share insurance.--The 
                        term `pass-through share insurance' means, with 
                        respect to an employee benefit plan, insurance 
                        coverage based on the interest of each 
                        participant, in accordance with regulations 
                        issued by the Corporation.
            ``(5) Standard maximum share insurance amount defined.--For 
        purposes of this subsection, the term `standard maximum share 
        insurance amount' means, until April 1, 2010, $100,000.
            ``(6) Determinations regarding inflation adjustments.--
                    ``(A) Adjustments to standard maximum share 
                insurance amount.--Not later than April 1, 2010, and 
                the first day of each 5-year period thereafter, the 
                Board shall determine whether to increase the standard 
                maximum share insurance amount based on the factors set 
                forth under paragraph (7).
                    ``(B) Adjustment for certain retirement accounts.--
                Not later than April 1, 2010, and the first day of each 
                5-year period thereafter, the Board shall determine 
                whether to increase the amount of insurance available 
                for retirement accounts under paragraph (3), based on 
                the factors set forth under paragraph (7).
            ``(7) Inflation adjustment considerations.--In making any 
        determination under paragraph (6), the Board shall consider--
                    ``(A) the economic conditions affecting insured 
                credit unions;
                    ``(B) the overall risk or risks to the National 
                Credit Union Share Insurance Fund;
                    ``(C) a demonstrated need by members for the 
                inflation adjustment increase;
                    ``(D) the ability of insured credit unions to 
                identify and obtain alternative funding sources;
                    ``(E) the ability of insured credit unions to meet 
                the credit needs of their communities;
                    ``(F) potential problems affecting insured credit 
                unions generally or a specific group or type of insured 
                credit unions; and
                    ``(G) any other factors that the Board deems 
                appropriate.
            ``(8) Inflation adjustment calculations for 2010.--
                    ``(A) Calculation for standard maximum share 
                insurance amount.--The amount provided for any increase 
                in the standard maximum share insurance amount shall 
                be, as of April 1, 2010, the product of--
                            ``(i) $100,000; and
                            ``(ii) the ratio of the value of the 
                        Personal Consumption Expenditures Chain-Type 
                        Index (or any successor index thereto), 
                        published by the Department of Commerce, for 
                        December 31 of the year preceding the year in 
                        which the adjustment is calculated under this 
                        paragraph, to the value of such index for 
                        December 31 of the year preceding the effective 
                        date of the Safe and Fair Deposit Insurance Act 
                        of 2005.
                    ``(B) Calculation for certain retirement accounts 
                for 2010.--The amount provided for any increase in the 
                insurance for retirement accounts under paragraph (3) 
                shall be, as of April 1, 2010, the product of--
                            ``(i) $250,000; and
                            ``(ii) the ratio of the value of the 
                        Personal Consumption Expenditures Chain-Type 
                        Index (or any successor index thereto), 
                        published by the Department of Commerce, for 
                        December 31 of the year preceding the year in 
                        which the adjustment is calculated under this 
                        paragraph, to the value of such index for 
                        December 31 of the year preceding the effective 
                        date of the Safe and Fair Deposit Insurance Act 
                        of 2005.
            ``(9) Inflation adjustment calculations after 2010.--
                    ``(A) Calculation for the standard maximum share 
                insurance amount.--The amount provided for any increase 
                in the standard maximum share insurance amount shall 
                be, as of the 1st day of each 5-year period beginning 
                on April 1, 2015, the product of--
                            ``(i) the standard maximum share insurance 
                        amount; and
                            ``(ii) the ratio of the value of the 
                        Personal Consumption Expenditures Chain-Type 
                        Index (or any successor index thereto), 
                        published by the Department of Commerce, for 
                        December 31 of the year preceding the year in 
                        which the adjustment is calculated under this 
                        paragraph, to the value of such index for 
                        December 31 of the 6 years prior to the year in 
                        which the adjustment is calculated under this 
                        paragraph.
                    ``(B) Calculation for certain retirement 
                accounts.--The amount provided for any increase in the 
                insurance for retirement accounts under paragraph (3) 
                shall be, as of the 1st day of each 5-year period 
                beginning on April 1, 2015, the product of--
                            ``(i) the amount available for retirement 
                        accounts under paragraph (3), as adjusted 
                        pursuant to paragraph (8) or this paragraph, as 
                        appropriate; and
                            ``(ii) the ratio of the value of the 
                        Personal Consumption Expenditures Chain-Type 
                        Index (or any successor index thereto), 
                        published by the Department of Commerce, for 
                        December 31 of the year preceding the year in 
                        which the adjustment is calculated under this 
                        paragraph, to the value of such index for 
                        December 31 of the 6 years prior to the year in 
                        which the adjustment is calculated under this 
                        paragraph.
            ``(10) Determination of no inflation increase.--If the 
        Board cannot support an increase under paragraph (6) after 
        consideration of the factors in paragraph (7), no inflation 
        adjustment shall be made until reconsideration at the beginning 
        of the next 5-year period.
            ``(11) Rounding.--If the amount of increase determined for 
        any period is not a multiple of $10,000, the amount so 
        determined shall be rounded to the nearest $10,000.
            ``(12) Publication.--Not later than April 1, 2010, and not 
        later than the first day of each 5-year period thereafter, the 
        Board shall publish in the Federal Register the standard 
        maximum share insurance amount and the amount of share 
        insurance coverage that may be due to any depositor at any 
        insured credit union during the applicable 5-year period.
            ``(13) No inflation adjustments for public funds.--
        Paragraphs (5) through (12) shall not apply to any deposits of 
        depositors described in paragraph (2), and the net amount due 
        to any such depositor at an insured credit union shall not 
        exceed $100,000.''; and
                    (C) in paragraph (3), by striking ``$100,000 per 
                account'' and inserting the following: ``$250,000 per 
                account, which amount shall be subject to inflation 
                adjustments as provided in paragraphs (6) through 
                (12).''.
            (2) Technical amendment.--Section 202(h) of the Federal 
        Credit Union Act (12 U.S.C. 1782(h)) is amended by striking 
        ``207(c)(1)'' and inserting ``207(k)''.
    (c) Effective Date.--Except as otherwise specifically provided in 
this section or the amendments made by this section, this section and 
such amendments shall become effective on the effective date of the 
regulations required under section 2017(a)(2), relating to the 
implementation of deposit insurance changes under this section.

SEC. 2013. DESIGNATED RESERVE RATIO.

    (a) Repeal of Recapitalization Schedule.--
            (1) In general.--Section 7(b)(3) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1817(b)(3)) is amended to read as 
        follows:
            ``(3) Designated reserve ratio.--
                    ``(A) Action by the board.--
                            ``(i) In general.--Before the beginning of 
                        each calendar year, the Board of Directors 
                        shall, subject to clause (ii)--
                                    ``(I) designate the reserve ratio 
                                applicable to the Deposit Insurance 
                                Fund for that year; and
                                    ``(II) publish the reserve ratio so 
                                designated.
                            ``(ii) Rulemaking.--Any change to the 
                        designated reserve ratio for any calendar year 
                        shall be made pursuant to section 553 of title 
                        5, United States Code.
                    ``(B) Range.--The reserve ratio designated by the 
                Board of Directors for any year--
                            ``(i) may not exceed 1.50 percent; and
                            ``(ii) may not be less than 1.15 percent.
                    ``(C) Factors.--In designating a reserve ratio for 
                any year, the Board of Directors shall--
                            ``(i) take into account the risk of losses 
                        to the Deposit Insurance Fund in that year and 
                        in future years;
                            ``(ii) take into account economic 
                        conditions generally affecting insured 
                        depository institutions, to provide for an 
                        increase in the designated reserve ratio during 
                        more favorable economic conditions and to 
                        provide for a decrease in the designated 
                        reserve ratio during less favorable economic 
                        conditions, notwithstanding the increased risks 
                        of loss that may exist during such less 
                        favorable conditions, as determined to be 
                        appropriate by the Board;
                            ``(iii) seek to prevent sharp swings in the 
                        assessment rates for insured depository 
                        institutions; and
                            ``(iv) take into account such other factors 
                        as the Board of Directors may determine to be 
                        appropriate, consistent with the requirements 
                        of this subparagraph.''.
            (2) Technical and conforming amendments.--Section 3(y) of 
        the Federal Deposit Insurance Act (12 U.S.C. 1813), as amended 
        by this title, is amended by adding at the end the following:
            ``(2) Reserve ratio.--The term `reserve ratio' means the 
        ratio of the fund balance of the Deposit Insurance Fund to 
        aggregate estimated insured deposits held in all insured 
        depository institutions.
            ``(3) Designated reserve ratio.--The term `designated 
        reserve ratio' means the reserve ratio designated by the Board 
        of Directors under section 7(b)(3).''.
            (3) Effective date.--Subject to paragraph (4), and except 
        as otherwise provided, this subsection and the amendments made 
        by this subsection shall become effective on the effective date 
        of the regulations required under section 2017(a)(1), relating 
        to designation of the reserve ratio by the Board.
            (4) Designation of initial reserve ratio for deposit 
        insurance fund.--During the period beginning on the effective 
        date of the merger of the deposit insurance funds under section 
        2003, and ending on the effective date of final regulations 
        designating the reserve ratio, as required by section 
        2017(a)(1), the designated reserve ratio of the Deposit 
        Insurance Fund shall continue to be determined pursuant to 
        section 7(b)(2)(A)(iv), as in effect on the day before the 
        effective date of the merger under section 2003.
    (b) Requirements Applicable to Any Modification of the Risk-Based 
Assessment System.--Section 7(b)(1) of the Federal Deposit Insurance 
Act (12 U.S.C. 1817(b)(1)) is amended by adding at the end the 
following:
                    ``(E) Requirements applicable to any modification 
                of the risk-based assessment system.--
                            ``(i) In general.--In revising or modifying 
                        the risk-based assessment system at any time 
                        after the date of enactment of the Deposit 
                        Insurance Reform Act of 2005, the Board of 
                        Directors--
                                    ``(I) may not make any change to 
                                the information collected from or 
                                required to be retained by insured 
                                depository institutions solely for 
                                purposes of the assessment risk 
                                classification, as defined by 
                                regulations of the Board, if the change 
                                would result in the imposition of an 
                                overall greater regulatory or reporting 
                                burden on insured depository 
                                institutions than was the case before 
                                that date of enactment; and
                                    ``(II) may implement any such 
                                revision or modification in final form 
                                only after notice and opportunity for 
                                comment.
                            ``(ii) Rule of construction.--An increase 
                        in an assessment rate or a revision of the 
                        assessment base shall not be considered to be a 
                        revision or modification resulting in greater 
                        regulatory or reporting burden for purposes of 
                        this subparagraph.''.

SEC. 2014. ASSESSMENT CREDITS AND DIVIDENDS.

    (a) In General.--Section 7(e)(2) of the Federal Deposit Insurance 
Act (12 U.S.C. 1817(e)(2)) is amended to read as follows:
            ``(2) One-time credit based on total assessment base at 
        year-end 1996.--
                    ``(A) In general.--The Board of Directors shall, by 
                regulation, provide for a credit to each insured 
                depository institution that was in existence on 
                December 31, 1996, and that had paid a deposit 
                insurance assessment prior to that date (or a successor 
                insured depository institution), based on the 
                assessment base of the institution on that date, as 
                compared to the combined aggregate assessment base of 
                all such institutions, taking into account such factors 
                as the Board may determine to be appropriate.
                    ``(B) Credit limit.--The aggregate amount of 
                credits available under subparagraph (A) to all insured 
                depository institutions that are eligible for the 
                credit shall not exceed the amount that the Corporation 
                could collect if it imposed an assessment of 9 basis 
                points on the combined assessment base of the Bank 
                Insurance Fund and the Savings Association Insurance 
                Fund as of December 31, 2001.
                    ``(C) Definition of successor.--The Corporation 
                shall define the term `successor' for purposes of this 
                paragraph, by regulation, and may consider, among other 
                factors and as the Board may deem appropriate, whether 
                and to what extent, if any, an insured depository 
                institution that acquires deposits from another insured 
                depository institution may deemed to be a successor.
                    ``(D) Application of credits.--The amount of a 
                credit to any insured depository institution under this 
                paragraph may be applied by the Corporation to those 
                portions of the assessments under subsection (b) 
                applicable to that institution which become due for 
                assessment periods beginning after the effective date 
                of regulations required by subparagraph (A).''.
    (b) Amendments to Section 7.--Section 7(e) of the Federal Deposit 
Insurance Act (12 U.S.C. 1817(e)) is amended by adding at the end the 
following new paragraphs:
            ``(3) Dividends.--
                    ``(A) Reserve ratio in excess of 1.50 percent of 
                estimated insured deposits.--The Corporation shall 
                provide cash dividends to insured depository 
                institutions in accordance with this paragraph if the 
                reserve ratio of the Deposit Insurance Fund exceeds the 
                maximum amount established under subsection 
                (b)(3)(B)(i), to the extent of that excess amount.
                    ``(B) Amount equal to or in excess of 1.40 percent 
                of estimated insured deposits and not more than 1.50 
                percent.--The Corporation shall provide cash dividends 
                to insured depository institutions in accordance with 
                this paragraph if the reserve ratio of the Deposit 
                Insurance Fund equals or exceeds 1.40 and is not more 
                than 1.50 percent, and that amount shall equal 50 
                percent of the amount in excess of the amount required 
                to maintain the reserve ratio at 1.40 percent of the 
                estimated insured deposits.
                    ``(C) Factors for consideration for allocation of 
                dividends.--In implementing the provisions of this 
                paragraph, and in accordance with its regulations, the 
                Corporation shall consider--
                            ``(i) the ratio of the assessment base of 
                        an insured depository institution (including 
                        any predecessor institution) on December 31, 
                        1996, to the assessment base of all eligible 
                        insured depository institutions on such date;
                            ``(ii) the total amount of assessments paid 
                        on or after January 1, 1997, by an insured 
                        depository institution (including any 
                        predecessor institution) to the Deposit 
                        Insurance Fund (and any predecessor deposit 
                        insurance fund);
                            ``(iii) that portion of assessments paid by 
                        an insured depository institution (including 
                        any predecessor institution) that reflects 
                        higher levels of risk assumed by such 
                        institution; and
                            ``(iv) such other factors as the 
                        Corporation determines appropriate.
                    ``(D) Limitation.--The Board of Directors may 
                suspend or limit dividends paid under subparagraph (B) 
                if the Board determines in writing that--
                            ``(i) a significant risk of losses to the 
                        Deposit Insurance Fund exists over the next 
                        one-year period; and
                            ``(ii) it is likely that such losses will 
                        be sufficiently high as to justify a finding by 
                        the Board that the reserve ratio should 
                        temporarily be allowed--
                                    ``(I) to grow without requiring 
                                dividends under subparagraph (B); or
                                    ``(II) to exceed the maximum amount 
                                established under subsection 
                                (b)(3)(B)(i).
                    ``(E) Considerations.--In making a determination 
                under subparagraph (D), the Board shall consider--
                            ``(i) national and regional conditions and 
                        their impact on insured depository 
                        institutions;
                            ``(ii) potential problems affecting insured 
                        depository institutions or a specific group or 
                        type of depository institution;
                            ``(iii) the degree to which the contingent 
                        liability of the Corporation for anticipated 
                        failures of insured institutions adequately 
                        addresses concerns over funding levels in the 
                        Deposit Insurance Fund; and
                            ``(iv) any other factors that the Board 
                        determines are appropriate.
                    ``(F) Report to congress.--
                            ``(i) Submission.--Any determination under 
                        subparagraph (D) shall be submitted to the 
                        Committee on Banking, Housing, and Urban 
                        Affairs of the Senate and the Committee on 
                        Financial Services of the House of 
                        Representatives, not later than 270 days after 
                        making such determination.
                            ``(ii) Content.--The report submitted under 
                        clause (i) shall include--
                                    ``(I) a detailed explanation for 
                                the determination; and
                                    ``(II) a discussion of the factors 
                                required to be considered under 
                                subparagraph (E).
                    ``(G) Review of determination.--
                            ``(i) Annual review.--A determination to 
                        suspend or limit dividends under subparagraph 
                        (D) shall be reviewed by the Board of Directors 
                        annually.
                            ``(ii) Action by board.--Based on each 
                        annual review under clause (i), the Board of 
                        Directors shall either renew or remove a 
                        determination to suspend or limit dividends 
                        under subparagraph (D), or shall make a new 
                        determination in accordance with this 
                        paragraph. Unless justified under the terms of 
                        the renewal or new determination, the 
                        Corporation shall be required to provide cash 
                        dividends under subparagraph (A) or (B), as 
                        appropriate.
            ``(4) Challenges to credit or dividend amounts.--The 
        regulations required under this subsection shall include 
        provisions allowing an insured depository institution a 
        reasonable opportunity to challenge administratively the amount 
        of its credit or dividend under this subsection. The 
        determination of the Corporation of the amount of the credit or 
        dividend following such challenge shall be final, and not 
        subject to judicial review.''.
    (c) Effective Date.--The amendments made by this section shall 
become effective on the effective date of the regulations required to 
be issued under section 2017(a)(3), relating to implementation of the 
one-time assessment credit.

SEC. 2015. ASSESSMENTS-RELATED RECORDS RETENTION AND STATUTE OF 
              LIMITATIONS.

    (a) Records Retention.--Paragraph (5) of section 7(b) of the 
Federal Deposit Insurance Act (12 U.S.C. 1817(b)) is amended to read as 
follows:
            ``(5) Records to be maintained by insured depository 
        institution.--Each insured depository institution shall 
        maintain all records that the Corporation may require for 
        verifying the correctness of the institution's assessments 
        until the later of--
                    ``(A) 3 years from the due date of each assessment 
                payment; or
                    ``(B) the date of the final determination of any 
                dispute between the insured depository institution and 
                the Corporation over the amount of any assessment.''.
    (b) Statute of Limitations for Assessment Actions.--Subsection (g) 
of section 7 of the Federal Deposit Insurance Act (12 U.S.C. 1817(g)) 
is amended to read as follows:
    ``(g) Statute of Limitations for Assessment Actions.--The 
Corporation, in any court of competent jurisdiction, shall be entitled 
to recover from any insured depository institution the amount of any 
unpaid assessment lawfully payable by such insured depository 
institution. Notwithstanding any other provision in Federal law, or the 
law of any State--
            ``(1) any action by an insured depository institution to 
        recover from the Corporation the overpaid amount of any 
        assessment shall be brought within 3 years after the date the 
        assessment payment was due, subject to the exception in 
        paragraph (5);
            ``(2) any action by the Corporation to recover from an 
        insured depository institution the underpaid amount of any 
        assessment shall be brought within 3 years after the date the 
        assessment payment was due, subject to the exceptions in 
        paragraphs (3) and (5);
            ``(3) if an insured depository institution has made a false 
        or fraudulent statement with intent to evade any or all of its 
        assessment, the Corporation shall have until 3 years after the 
        date of discovery of the false or fraudulent statement in which 
        to bring an action to recover the underpaid amount;
            ``(4) assessment deposit information contained in records 
        no longer required to be maintained pursuant to subsection 
        (b)(5) shall be considered conclusive and not subject to 
        change; and
            ``(5) any action for the underpaid or overpaid amount of 
        any assessment that became due prior to the effective date of 
        this subsection shall be subject to the statute of limitations 
        for assessments in effect at the time the assessment became 
        due.''.

SEC. 2016. INCREASE IN FEES FOR LATE ASSESSMENT PAYMENTS.

    Subsection (h) of section 18 of the Federal Deposit Insurance Act 
(12 U.S.C. 1828(h)) is amended--
            (1) by striking ``Any insured depository institution'' and 
        inserting ``(1) In general.--Any insured depository 
        institution'';
            (2) in paragraph (1), as redesignated, by striking 
        ``penalty of not more than $100'' and inserting ``penalty in an 
        amount of not more than 1 percent of the amount of the 
        assessment due''; and
            (3) by inserting new paragraphs (2) and (3) as follows:
            ``(2) Exception for small assessment amounts.--
        Notwithstanding paragraph (1), if the amount of the assessment 
        for an insured depository institution is less than $10,000 at 
        the time such institution fails or refuses to pay the 
        assessment, such institution shall be subject to a penalty of 
        not more than $100 for each day that such violation continues.
            ``(3) Authority to modify or remit penalty.--The 
        Corporation, in the sole discretion of the Corporation, may 
        compromise, modify, or remit any penalty which the Corporation 
        may assess or has already assessed under paragraph (1) or (2) 
        upon a finding that good cause prevented the timely payment of 
        an assessment.''.

SEC. 2017. REGULATIONS REQUIRED.

    (a) In General.--Not later than 270 days after the date of 
enactment of this Act, the Board shall issue final regulations, in 
accordance with section 553 of chapter 5 of title 5, United States 
Code--
            (1) designating the reserve ratio for the Deposit Insurance 
        Fund, in accordance with section 7(b)(3) of the Federal Deposit 
        Insurance Act, as amended by section 2013 of this subtitle, 
        which regulations shall become effective not later than 90 days 
        after the date of their publication in final form;
            (2) implementing changes in deposit insurance coverage in 
        accordance with the amendments made by section 2012, which 
        regulations shall become effective not later than 90 days after 
        the date of their publication in final form;
            (3) implementing the one-time assessment credit to certain 
        insured depository institutions in accordance with section 
        7(e)(2) of the Federal Deposit Insurance Act, as amended by 
        section 2014 of this subtitle;
            (4) establishing the qualifications and procedures under 
        which the Corporation may provide dividends under section 
        7(e)(3) of the Federal Deposit Insurance Act, as amended by 
        section 2014 of this subtitle; and
            (5) providing for assessments under section 7 of the 
        Federal Deposit Insurance Act, as amended by this subtitle, 
        which regulations shall become effective on the effective date 
        of the regulations required by paragraph (3).
    (b) Savings Clause.--
            (1) In general.--
                    (A) Continuation of existing assessment 
                regulations.--Nothing in this title or the amendments 
                made by this title shall be construed to affect the 
                authority of the Corporation with regard to the setting 
                or collection of deposit insurance assessments pursuant 
                to any regulations in effect prior to the effective 
                date of any regulations required under subsection (a).
                    (B) Treatment of dif members under existing 
                regulations.--Assessment regulations in effect prior to 
                the date of enactment of this title shall be read as 
                applying to members of the Deposit Insurance Fund 
                rather than members of the Bank Insurance Fund or 
                Savings Association Insurance Fund, effective on or 
                after the date on which merger of the deposit insurance 
                funds becomes effective under title I.
            (2) Setting assessments.--Clause (i) of section 7(b)(2)(A) 
        of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)) 
        is amended by striking ``necessary--'' and all that follows 
        through the period at the end and inserting ``necessary.''.

SEC. 2018. STUDIES OF POTENTIAL CHANGES TO THE FEDERAL DEPOSIT 
              INSURANCE SYSTEM.

    (a) Study and Report by FDIC and NCUA.--
            (1) Study.--The Board of Directors of the Federal Deposit 
        Insurance Corporation and the National Credit Union 
        Administration Board shall each conduct a study of--
                    (A) the feasibility of increasing the limit on 
                deposit insurance for deposits of municipalities and 
                other units of general local government, and the 
                potential benefits and the potential adverse 
                consequences that may result from any such increase; 
                and
                    (B) the feasibility of establishing a voluntary 
                deposit insurance system for deposits in excess of the 
                maximum amount of deposit insurance for any depositor, 
                and the potential benefits and the potential adverse 
                consequences that may result from the establishment of 
                any such system.
            (2) Report.--Not later than 1 year after the date of 
        enactment of this title, the Board of Directors of the Federal 
        Deposit Insurance Corporation and the National Credit Union 
        Administration Board shall each submit a report to the Congress 
        on the study required under paragraph (1), containing the 
        findings and conclusions of the reporting agency, together with 
        such recommendations for legislative or administrative changes 
        as the agency may determine to be appropriate.
    (b) Study and Report Regarding Appropriate Reserve Ratio.--
            (1) Study.--The Corporation shall conduct a study on the 
        feasibility of using alternatives to estimated insured deposits 
        in calculating the reserve ratio of the Deposit Insurance Fund.
            (2) Report.--Not later than 1 year after the date of 
        enactment of this title, the Board shall submit a report to 
        Congress on the results of the study required under paragraph 
        (1), together with such recommendations for legislative or 
        administrative actions as may be determined to be appropriate.

SEC. 2019. EFFECTIVE DATE.

    Except as otherwise specifically provided in this subtitle, this 
subtitle and the amendments made by this subtitle shall become 
effective on the date of enactment of this Act.

                   Subtitle C--FHA Asset Disposition

SEC. 2021. SHORT TITLE.

    This subtitle may be cited as the ``FHA Asset Disposition Act of 
2005''.

SEC. 2022. DEFINITIONS.

    For purposes of this subtitle--
            (1) the term ``affordability requirement'' means any 
        requirement or restriction imposed by the Secretary, at the 
        time of sale, on any multifamily real property or multifamily 
        loan, including a use restriction, rent restriction, or 
        rehabilitation requirement;
            (2) the term ``discount sale'' means the sale of 
        multifamily real property in a transaction, including a 
        negotiated sale, in which the sale price is--
                    (A) lower than the property market value; and
                    (B) set outside of a competitive bidding process 
                that has no affordability requirements;
            (3) the term ``discount loan sale'' means the sale of a 
        multifamily loan in a transaction, including a negotiated sale, 
        in which the sale price is lower than the loan market value and 
        is set outside of a competitive bidding process that has no 
        affordability requirements;
            (4) the term ``loan market value'' means the value of a 
        multifamily loan, without taking into account any affordability 
        requirements;
            (5) the term ``multifamily real property'' means any rental 
        or cooperative housing project of 5 or more units owned by the 
        Secretary that prior to acquisition by the Secretary was 
        security for a loan or loans insured under title II of the 
        National Housing Act;
            (6) the term ``multifamily loan'' means a loan held by the 
        Secretary and secured by a multifamily rental or cooperative 
        housing project of 5 or more units that was formerly insured 
        under title II of the National Housing Act;
            (7) the term ``property market value'' means the value of 
        any multifamily real property for its current use, without 
        taking into account any affordability requirements; and
            (8) the term ``Secretary'' means the Secretary of Housing 
        and Urban Development.

SEC. 2023. APPROPRIATED FUNDS REQUIREMENT FOR BELOW MARKET SALES.

    (a) Dispositions by Secretary.--Notwithstanding any other provision 
of law, other than any statutory affordability requirement for the 
elderly and disabled, disposition by the Secretary of any multifamily 
real property through a discount sale under section 207(l) or 246 of 
the National Housing Act, section 203 of the Housing and Community 
Development Amendments of 1978, or section 204 of the Departments of 
Veterans Affairs and Housing and Urban Development, and Independent 
Agencies Appropriations Act, 1997, shall be subject to the availability 
of appropriations to the extent that the property value exceeds the 
sale proceeds. If the multifamily real property is sold for an amount 
equal to or greater than the property market value, the transaction is 
not subject to the availability of appropriations.
    (b) Discount Loan Sales.--Notwithstanding any other provision of 
law, and in accordance with the Credit Reform Act of 1990, a discount 
loan sale under 207(k) of the National Housing Act, section 203(k) of 
the Housing and Community Development Amendments of 1978, or section 
204(a) of the Departments of Veterans Affairs and Housing and Urban 
Development, and Independent Agencies Appropriations Act, 1997, shall 
be subject to the availability of appropriations, to the extent that 
the loan value exceeds the sale proceeds. If the multifamily loan is 
sold for an amount equal to or greater than the loan market value, then 
the transaction is not subject to the availability of appropriations.
    (c) Limitation.--This section shall not apply to any transaction 
that formally commences during the 1-year period preceding the date of 
enactment of this Act.

SEC. 2024. UP-FRONT GRANTS.

    (a) VA-HUD.--Section 204(a) of the Departments of Veterans Affairs 
and Housing and Urban Development, and Independent Agencies 
Appropriations Act, 1997 (12 U.S.C. 1715z-11a(a)) is amended by adding 
at the end the following: ``A grant provided under this subsection 
shall be available only to the extent that appropriations are made in 
advance for such purpose, and shall not be derived from the General 
Insurance Fund.''.
    (b) Other Grant Authority.--Section 203(f) of the Housing and 
Community Development Amendments of 1978 (12 U.S.C. 1701z-11(f)) is 
amended--
            (1) by striking paragraph (4); and
            (2) by redesignating paragraphs (5) through (9) as 
        paragraphs (4) through (8), respectively.
    (c) Limitation.--The amendments made by this section shall not 
apply to any grant in connection with any transaction that formally 
commences during the 1-year period preceding the date of enactment of 
this Act.

SEC. 2025. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated for fiscal year 2006, 
$100,000,000 to carry out this subtitle.

     TITLE III--COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

SEC. 3001. SHORT TITLE.

    This title may be cited as the ``Digital Transition and Public 
Safety Act of 2005.''.

SEC. 3002. ANALOG SPECTRUM RECOVERY; HARD DEADLINE.

    Section 309(j)(14) of the Communications Act of 1934 (47 U.S.C. 
309(j)(14)) is amended--
            (1) by striking ``December 31, 2006.'' in subparagraph (A) 
        and inserting ``April 7, 2009.'';
            (2) by striking subparagraph (B);
            (3) by striking ``or (B)'' in subparagraph (C)(i)(I);
            (4) by striking ``(C)(i),'' in subparagraph (D) and 
        inserting ``(B)(i),''; and
            (5) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (B) and (C), respectively.

SEC. 3003. AUCTION OF RECOVERED SPECTRUM.

    (a) Auction: Date, Applicable Requirements.--Section 309(j)(15)(C) 
of the Communications Act of 1934 (47 U.S.C. 309(j)(15)(C)) is amended 
by adding at the end the following:
                            ``(v) Additional deadlines for recovered 
                        analog spectrum.--Notwithstanding subparagraph 
                        (B), the Commission shall--
                                    ``(I) conduct the auction of the 
                                licenses for recovered analog spectrum 
                                commencing January 28, 2008;
                                    ``(II) not later than 60 days after 
                                the end of the pleading cycle for long-
                                form applications for such auction 
                                established pursuant to part 1 of title 
                                47, Code of Federal Regulations, grant 
                                or deny such long-form applications and 
                                issue the licenses for such recovered 
                                analog spectrum to each successful 
                                bidder whose long-form application is 
                                granted; and
                                    ``(III) collect and deposit the 
                                proceeds of such auction in the Digital 
                                Transition and Public Safety Fund 
                                established by section 3005 of the 
                                Digital Transition and Public Safety 
                                Act of 2005.
                            ``(vi) Recovered analog spectrum.--For 
                        purposes of this subparagraph, the term 
                        `recovered analog spectrum' means spectrum 
                        reclaimed from the analog television service 
                        under paragraph (14), except--
                                    ``(I) spectrum required by section 
                                337 to be made available for public 
                                safety services; and
                                    ``(II) spectrum auctioned prior to 
                                the date of enactment of the Digital 
                                Transition and Public Safety Act of 
                                2005.''.
    (b) Extension of Auction Authority.--Paragraph (11) of section 
309(j) of the Communications Act of 1934 (47 U.S.C. 309(j)(11)) is 
amended by striking ``September 30, 2007.'' and inserting ``September 
30, 2009.''.

SEC. 3004. SUPPLEMENTAL LICENSE FEES.

    In addition to any fees assessed under the Communications Act of 
1934 (47 U.S.C. 151 et seq.), the Commission shall assess extraordinary 
fees for licenses in the aggregate amount of $10,000,000, which shall 
be deposited in the Treasury during fiscal year 2006 as offsetting 
receipts.

SEC. 3005. DIGITAL TRANSITION AND PUBLIC SAFETY FUND.

    (a) Establishment.--There is established in the Treasury of the 
United States a fund called the Digital Transition and Public Safety 
Fund.
    (b) Deposit of Auction Proceeds.--The Commission shall deposit the 
proceeds of the auction authorized by section 309(j)(15)(C)(v) of the 
Communications Act of 1934 (47 U.S.C. 309(j)(15)(C)(v)) in the Fund as 
required by item (III) of that section.
    (c) Payments Authorized.--The Secretary of Commerce or the 
Secretary's designee shall make payments from the Fund in the following 
amounts, for the following programs, and in the following order:
            (1) $3,000,000,000 for a program to assist consumers in the 
        purchase of converter boxes that convert a digital television 
        signal to an analog television signal, and any amounts 
        unexpended or unobligated at the conclusion of the program 
        shall be used for the program described in paragraph (3).
            (2) $200,000,000 for a program to convert low-power 
        television stations and television translator stations from 
        analog to digital, and any amounts unexpended or unobligated at 
        the conclusion of the program shall be used for the program 
        described in paragraph (3).
            (3) $1,250,000,000 for a program to facilitate emergency 
        communications, of which $1,000,000,000 shall be used for an 
        interoperability fund and $250,000,000 shall be used to 
        implement a national alert system, of which $50,000,000 shall 
        be used for tsunami warning and coastal vulnerability programs.
            (4) $250,000,000 for a program to implement the ENHANCE 911 
        Act of 2004 (47 U.S.C. 942 note).
            (5) $200,000,000 for a program to provide assistance to 
        coastal States and Indian tribes affected by hurricanes and 
        other coastal disasters.
    (d) Transfer of Amount to Treasury.--On October 2, 2009, Secretary 
shall transfer $5,000,000,000 from the Fund to the general fund of the 
Treasury.
    (e) Obligation Time Period.--The amounts payable from the Fund 
under subsection (c) shall be obligated no later than September 14, 
2010.
    (f) Excess Proceeds used for Deficit Reduction.--If the proceeds of 
the auction authorized by section 309(j)(15)(C)(v) of the 
Communications Act of 1934 (47 U.S.C. 309(j)(15)(C)(v)) exceed the sum 
of the payments under subsection (c), the transfer under subsection 
(d), and any amount made available under section 3006, the excess in 
the Fund shall be transferred to and deposited in the general fund of 
the Treasury as miscellaneous receipts.

SEC. 3006. ESSENTIAL AIR SERVICE PROGRAM.

    (a) In General.--If the amount appropriated to carry out the 
essential air service program under subchapter II of chapter 417 of 
title 49, United States Code, equals or exceeds $110,000,000 for fiscal 
year 2006, 2007, 2008, 2009, or 2010, then the Secretary of Commerce 
shall make $15,000,000 available from the Digital Transition and Public 
Safety Fund available to the Secretary of Transportation for use in 
carrying out the essential air service program for that fiscal year.
    (b) Application with Other Funds.--Amounts made available under 
subsection (a) for any fiscal year shall be in addition to any 
amounts--
            (1) appropriated for that fiscal year; or
            (2) derived from fees collected pursuant to section 
        45301(a)(1) of title 49, United States Code, that are made 
        available for obligation and expenditure to carry out the 
        essential air service program for that fiscal year.

                 TITLE IV--ENERGY AND NATURAL RESOURCES

SEC. 401. OIL AND GAS LEASING PROGRAM.

    (a) Definitions.--In this section:
            (1) Coastal plain.--The term ``Coastal Plain'' means the 
        area identified as the Coastal Plain on the map prepared by the 
        United States Geological Survey, entitled ``Arctic National 
        Wildlife Refuge 1002 Coastal Plain Area'', dated September 
        2005, and on file with the United States Geological Survey.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior, acting through the Bureau of Land Management.
    (b) Program.--
            (1) In general.--Congress--
                    (A) authorizes the leasing, development, 
                production, and transportation of oil and gas in and 
                from the Coastal Plain; and
                    (B) directs the Secretary to take such actions as 
                are necessary to--
                            (i) establish and implement an 
                        environmentally sound competitive oil and gas 
                        leasing program to carry out the activities 
                        authorized under subparagraph (A); and
                            (ii) conduct 2 lease sales before October 
                        1, 2010.
            (2) Administration.--The Secretary shall administer this 
        section through regulations, lease terms, conditions, 
        restrictions, prohibitions, stipulations, and other provisions 
        that ensure the oil and gas exploration, development, 
        production, and transportation activities on the Coastal Plain 
        are carried out in a manner that will ensure the receipt of 
        fair market value by the public for the mineral resources to be 
        leased.
    (c) 2 Lease Sales Before Fiscal Year 2011.--
            (1) In general.--In order to enable the Secretary to hold 2 
        lease sales before October 1, 2010, this subsection shall apply 
        with respect to the oil and gas leasing program established by 
        the Secretary pursuant to this section.
            (2) Purposes.--For purposes of the National Wildlife Refuge 
        System Administration Act of 1966 (16 U.S.C. 668dd et seq.) and 
        amendments made by that Act, the oil and gas leasing program 
        and activities authorized by this section in the Coastal Plain 
        are deemed to be compatible with the purposes for which the 
        Arctic National Wildlife Refuge was established, and no further 
        findings or decisions are required to implement this 
        determination of compatibility.
            (3) Prelease activities.--The Final Legislative 
        Environmental Impact Statement on the Coastal Plain dated April 
        1987 and prepared pursuant to section 1002 of the Alaska 
        National Interest Lands Conservation Act (16 U.S.C. 3142) and 
        section 102(2)(C) of the National Environmental Policy Act of 
        1969 (42 U.S.C. 4332(2)(C)) is deemed to satisfy the 
        requirements under the National Environmental Policy Act of 
        1969 (42 U.S.C. 4321 et seq.) that apply with respect to 
        prelease activities, including actions authorized to be taken 
        by the Secretary to develop and promulgate regulations for the 
        establishment of the leasing program authorized by this section 
        before the conduct of the first lease sale.
            (4) Preferred action.--
                    (A) Nonleasing alternatives.--With respect to any 
                environmental impact statement prepared by the 
                Secretary under the National Environmental Policy Act 
                of 1969 (42 U.S.C. 4321 et seq.) with respect to any 
                lease sale conducted under the leasing program 
                authorized by this section, the Secretary is not 
                required to identify nonleasing alternative courses of 
                action or to analyze the environmental effects of those 
                courses of action.
                    (B) Leasing alternatives.--The Secretary shall only 
                identify a preferred action for leasing and a single 
                leasing alternative, and analyze the environmental 
                effects and potential mitigation measures for the 
                preferred action and leasing alternative.
                    (C) Deadline.--The identification and related 
                analyses required by subparagraph (B) shall be 
                completed within 18 months after the date of enactment 
                of this Act.
                    (D) Public comments.--The Secretary shall only 
                consider public comments that are filed within 30 days 
                after publication of an environmental analysis.
                    (E) Compliance.--Compliance with this paragraph 
                satisfies all requirements of section 102(2)(C) of the 
                National Environmental Policy Act of 1969 (42 U.S.C. 
                4332(2)(C)) for the analysis and consideration of the 
                environmental effects of proposed leasing under this 
                section.
            (5) Expedited judicial review.--
                    (A) Venue; deadline.--Any complaint seeking 
                judicial review of this section or any action of the 
                Secretary under this section shall be filed in the 
                United States Court of Appeals for the District of 
                Columbia--
                            (i) within the 90-day period beginning on 
                        the date of the action being challenged; or
                            (ii) in the case of a complaint based 
                        solely on grounds arising after that period, 
                        within 90 days after the complainant knew or 
                        reasonably should have known of the grounds for 
                        the complaint.
                    (B) Scope.--Judicial review of a decision of the 
                Secretary to conduct a lease sale under this section 
                (including the environmental analysis of the decision) 
                shall be--
                            (i) limited to whether the Secretary has 
                        complied with this section; and
                            (ii) based on the administrative record of 
                        that decision.
    (d) Receipts.--Notwithstanding any other provision of law, of the 
amount of adjusted bonus, rental, and royalty receipts derived from oil 
and gas leasing and operations authorized under this section--
            (1) 50 percent shall be paid to the State of Alaska; and
            (2) the balance shall be deposited into the Treasury as 
        miscellaneous receipts.
    (e) Rights-of-Way.--For purposes of section 1102(4)(A) of the 
Alaska National Interest Lands Conservation Act (16 U.S.C. 3162(4)(A)), 
any rights-of-way or easements across the Coastal Plain for the 
exploration, development, production, or transportation of oil and gas 
shall be considered to be established incident to the management of the 
Coastal Plain under this section.
    (f) Maximum Surface Acreage.--In administering this section, the 
Secretary shall ensure that the maximum quantity of surface acreage 
covered by production and support facilities (including airstrips and 
any area covered by gravel berms or piers for support of pipelines) 
does not exceed 2,000 acres on the Coastal Plain.

           TITLE V--COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

SEC. 5001. TECHNICAL CORRECTIONS TO SAFETEA-LU.

    (a)(1) Notwithstanding any other provision of law, the amount of 
$639,000,000 described in section 1102(b)(10) of the Safe, Accountable, 
Flexible, Efficient Transportation Equity Act: A Legacy for Users (119 
Stat. 1144), shall be considered to be--
            (A) for fiscal year 2006 only, $631,000,000; and
            (B) for fiscal year 2007 only, $647,000,000.
    (2) Notwithstanding any other provision of law, the amount of 
$2,639,000,000 described in section 1102(c)(6) of the Safe, 
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy 
for Users (119 Stat. 1144), shall be considered to be--
            (A) for fiscal year 2006 only, $2,631,000,000; and
            (B) for fiscal year 2007 only, $2,647,000,000.
    (b) Section 4409 of the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users (119 Stat. 1144) is 
amended--
            (1) by striking ``Section'' and inserting the following:
    ``(a) In General.--Section''; and
            (2) by adding at the end the following:
    ``(b) Effective Date.--The amendments made by this section shall 
take effect on December 31, 2008.''.

                     TITLE VI--COMMITTEE ON FINANCE

SEC. 6000. AMENDMENTS TO SOCIAL SECURITY ACT.

    (a) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this title an amendment is expressed 
in terms of an amendment to or repeal of a section or other provision, 
the reference shall be considered to be made to that section or other 
provision of the Social Security Act.
    (b) References to the Secretary.--In this title, the term 
``Secretary'' means the Secretary of Health and Human Services.

                          Subtitle A--Medicaid

        CHAPTER 1--PAYMENT FOR PRESCRIPTION DRUGS UNDER MEDICAID

SEC. 6001. PHARMACY REIMBURSEMENT.

    (a) Definition of Average Manufacturer Price.--
            (1) In general.--Section 1927(k)(1) (42 U.S.C. 1396r-
        8(k)(1)) is amended--
                    (A) in the paragraph heading, by striking ``price'' 
                and inserting ``price; weighted average manufacturer 
                price'';
                    (B) by striking ``The term'' and inserting the 
                following:
                    ``(A) In general.--The term''; and
                    (C) by adding at the end the following:
                    ``(B) Calculation requirements.--For purposes of 
                subparagraph (A), the average manufacturer price shall 
                be calculated according to the following:
                            ``(i) Sales exempted from computation.--
                        Without regard to--
                                    ``(I) sales exempt from inclusion 
                                in the determination of best price 
                                under subsection (c)(1)(C)(i);
                                    ``(II) such other sales as the 
                                Secretary identifies as sales to an 
                                entity that are merely nominal in 
                                amount under subsection 
                                (c)(1)(C)(ii)(III); and
                                    ``(III) bona fide service fees (as 
                                defined in subparagraph (E)) that are 
                                paid by a manufacturer to an entity, 
                                that represent fair market value for a 
                                bona fide service, and that are not 
                                passed on in whole or in part to a 
                                client or customer of an entity.
                            ``(ii) Sale price net of discounts.--By 
                        including the following:
                                    ``(I) Cash discounts and volume 
                                discounts.
                                    ``(II) Free goods that are 
                                contingent upon any purchase 
                                requirement or agreement.
                                    ``(III) Sales at a nominal price 
                                that are contingent upon any purchase 
                                requirement or agreement.
                                    ``(IV) Chargebacks, rebates 
                                provided to a pharmacy (including a 
                                mail order pharmacy but excluding a 
                                pharmacy benefit manager), or any other 
                                direct or indirect discounts.
                                    ``(V) Any other price concessions, 
                                which may be based on recommendations 
                                of the Inspector General of the 
                                Department of Health and Human 
                                Services, that would result in a 
                                reduction of the cost to the purchaser, 
                                but only if the Secretary provides 
                                notice of the Secretary's intent to 
                                include such price concessions in 
                                accordance with section 553 of title 5, 
                                United States Code.
                    ``(C) Weighted average manufacturer price.--The 
                term `weighted average manufacturer price' means, with 
                respect to a rebate period and multiple source drug, 
                the volume-weighted average of the average manufacturer 
                prices reported under subsection (b)(3)(A)(i)(I) for 
                all drug products described in paragraph (7)(A)(i) that 
                are therapeutically equivalent and bioequivalent forms 
                of the drug, determined by--
                            ``(i) computing the sum of the products 
                        (for each National Drug Code assigned to such 
                        drug products) of--
                                    ``(I) the average manufacturer 
                                price; and
                                    ``(II) the total number of units 
                                reported sold under subsection 
                                (b)(3)(A)(i)(I); and
                            ``(ii) dividing the sum determined under 
                        clause (i) by the sum of the total number of 
                        units under clause (i)(II) for all National 
                        Drug Codes assigned to such drug products.
                    ``(D) Limitation on sales at a nominal price.--
                            ``(i) In general.--For purposes of clauses 
                        (i)(II) and (ii)(III) of subparagraph (B), only 
                        sales by a manufacturer of covered outpatient 
                        drugs that are single source drugs, innovator 
                        multiple source drugs, or authorized generic 
                        drugs at nominal prices to the following shall 
                        be considered to be sales at a nominal price or 
                        merely nominal in amount:
                                    ``(I) A covered entity described in 
                                section 340B(a)(4) of the Public Health 
                                Service Act.
                                    ``(II) An intermediate care 
                                facility for the mentally retarded.
                                    ``(III) A State-owned or operated 
                                nursing facility.
                                    ``(IV) Any other facility or entity 
                                that the Secretary determines is a 
                                safety net provider to which sales of 
                                such drugs at a nominal price would be 
                                appropriate based on the following 
                                factors:
                                            ``(aa) The type of 
                                        facility.
                                            ``(bb) The services 
                                        provided by the facility.
                                            ``(cc) The patient 
                                        population served by the 
                                        facility.
                                            ``(dd) The number of other 
                                        facilities eligible to purchase 
                                        at nominal prices in the same 
                                        service area.
                            ``(ii) Nonapplication.--Clause (i) shall 
                        not apply with respect to sales by a 
                        manufacturer at a nominal price of covered 
                        outpatient drugs that are single source drugs, 
                        innovator multiple source drugs, or authorized 
                        generic drugs pursuant to a master agreement 
                        under section 8126 of title 38, United States 
                        Code.
                    ``(E) Bona fide service fees.--For purposes of 
                subparagraph (B)(i)(III), the term `bona fide service 
                fees' means expenses that are for an itemized service 
                actually performed by an entity on behalf of a 
                manufacturer that would have generally been paid for by 
                the manufacturer at the same rate had these services 
                been performed by another entity.''.
            (2) Conforming amendments.--Section 1927(b)(3)(A)(i) (42 
        U.S.C. 1396r-8(b)(3)(A)(i)), as amended by section 6003(a), is 
        amended--
                    (A) in subclause (I)--
                            (i) by inserting ``and the total number of 
                        units sold'' after ``(as defined in subsection 
                        (k)(1))''; and
                            (ii) by striking ``and'' at the end;
                    (B) in subclause (II), by adding ``and'' at the 
                end; and
                    (C) by adding at the end the following:
                                    ``(III) information and data on any 
                                sales that were made during such period 
                                at a nominal price, including, with 
                                respect to each such sale, the 
                                purchaser, the name of the product, the 
                                amount or number of units of the 
                                product sold at a nominal price, and 
                                the nominal price paid;''.
            (3) Effective date.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the amendments made by this subsection shall take 
                effect on January 1, 2006.
                    (B) Exception.--Subparagraph (D) of section 
                1927(k)(1) of the Social Security Act (42 U.S.C. 1396r-
                8(k)(1)) (as added by paragraph (1)) shall not apply 
                with respect to a contract in effect on the date of 
                enactment of this Act pursuant to which pharmaceutical 
                products are or may be available at nominal prices 
                until the expiration date of such contract, or October 
                1, 2006, whichever is earlier, and shall apply to sales 
                made, and rebate periods beginning, on or after that 
                date.
    (b) Upper Payment Limit for Ingredient Cost of Covered Outpatient 
Drugs.--
            (1) In general.--Section 1927(e) (42 U.S.C. 1396r-8(e)) is 
        amended to read as follows:
    ``(e) Pharmacy Reimbursement Limits.--
            ``(1) Upper payment limit for ingredient cost of covered 
        outpatient drugs.--No Federal financial participation shall be 
        available for payment for the ingredient cost of a covered 
        outpatient drug that exceeds the upper payment limit for that 
        drug established under paragraph (2).
            ``(2) Upper payment limit.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), the upper payment limit 
                established under this paragraph for the ingredient 
                cost of a--
                            ``(i) single source drug, is 105 percent of 
                        the average manufacturer price for that drug; 
                        and
                            ``(ii) multiple source drug, is 115 percent 
                        of the weighted average manufacturer price for 
                        that drug.
                    ``(B) Exception for initial sales periods.--
                            ``(i) In general.--In the case of a covered 
                        outpatient drug during an initial sales period 
                        (not to exceed 2 calendar quarters) in which 
                        data on sales for the drug is not sufficiently 
                        available from the manufacturer to compute the 
                        average manufacturer price or the weighted 
                        average manufacturer price, the Secretary shall 
                        establish the upper payment limit for the 
                        ingredient cost of such drug to apply only 
                        during such period based on the following:
                                    ``(I) In the case of a single 
                                source drug, such upper payment limit 
                                shall be the wholesale acquisition cost 
                                for the drug.
                                    ``(II) In the case of a first 
                                noninnovator multiple source drug, such 
                                upper payment limit shall be the 
                                average manufacturer price for the 
                                single source drug that is rated as 
                                therapeutically equivalent and 
                                bioequivalent to such drug, minus 10 
                                percent.
                                    ``(III) In the case of a subsequent 
                                noninnovator multiple source drug--
                                            ``(aa) if the Secretary has 
                                        sufficient data to determine 
                                        the weighted average 
                                        manufacturer price for the 
                                        drug, such upper payment limit 
                                        shall be the weighted average 
                                        manufacturer price determined 
                                        for the therapeutically 
                                        equivalent and bioequivalent 
                                        form of the drug; and
                                            ``(bb) if the Secretary 
                                        does not have sufficient data 
                                        to determine the weighted 
                                        average manufacturer price for 
                                        the drug, such upper payment 
                                        limit shall be the average 
                                        manufacturer price for the 
                                        single source drug that is 
                                        rated as therapeutically 
                                        equivalent and bioequivalent to 
                                        the drug, minus 10 percent.
                            ``(ii) Definition of wholesale acquisition 
                        cost.--For purposes of clause (i), the term 
                        `wholesale acquisition cost' means, with 
                        respect to a drug or biological, the 
                        manufacturer's list price for the drug or 
                        biological to wholesalers or direct purchasers 
                        in the United States, not including prompt pay 
                        or other discounts, rebates, or reductions in 
                        price, for the most recent month for which the 
                        information is available, as reported in 
                        wholesale price guides or other publications of 
                        drug or biological pricing data.
                    ``(C) Exception for certain innovator multiple 
                source drugs.--In the case of an innovator multiple 
                source drug that a prescribing health care provider 
                determines is necessary for treatment of a condition 
                and that a noninnovator multiple source drug would not 
                be as effective for the individual or would have 
                adverse effects for the individual or both, and for 
                which the provider obtains prior authorization in 
                accordance with a program described in subsection 
                (d)(5), the upper payment limit for the innovator 
                multiple source drug shall be 105 percent of the 
                average manufacturer price for such drug.
                    ``(D) Updates; availability of data.--
                            ``(i) Frequency of determination.--The 
                        Secretary shall update the upper payment limits 
                        applicable under this paragraph on a quarterly 
                        basis, taking into account the most recent data 
                        collected for purposes of determining such 
                        limits and the Food and Drug Administration's 
                        most recent publication of `Approved Drug 
                        Products with Therapeutic Equivalence 
                        Evaluations'.
                            ``(ii) Collection of data.--
                                    ``(I) In general.--Beginning on 
                                January 1, 2006, the Secretary shall 
                                collect data with respect to the 
                                average manufacturer prices and volume 
                                of sales of covered outpatient drugs 
                                (or, in the case of covered outpatient 
                                drugs that are first marketed after 
                                such date, beginning with the first 
                                quarter during which the drugs are 
                                first marketed).
                                    ``(II) Data reported for purposes 
                                of determining weighted average 
                                manufacturer price.--Insofar as there 
                                is a lag in the reporting of the 
                                information on rebates and chargebacks 
                                so that adequate data are not available 
                                on a timely basis to update the 
                                weighted average manufacturer price for 
                                a multiple source drug, the 
                                manufacturer of such drug shall apply a 
                                methodology based on a 12-month rolling 
                                average for the manufacturer to 
                                estimate costs attributable to rebates 
                                and charge backs for such drug. For 
                                years after 2006, the Secretary shall 
                                establish a uniform methodology to 
                                estimate and apply such costs.
                            ``(iii) Availability of data to states.--
                        Notwithstanding subsection (b)(3)(D), beginning 
                        with the first quarter of fiscal year 2006 for 
                        which data is available, and for each fiscal 
                        year quarter thereafter, the Secretary shall 
                        make available to States the most recently 
                        reported average manufacturer prices for single 
                        source drugs and weighted average manufacturer 
                        prices for multiple source drugs.
                    ``(E) Authority to enter contracts.--The Secretary 
                may enter into contracts with appropriate entities to 
                determine average manufacturer prices, volume, and 
                other data necessary to calculate the upper payment 
                limit for a covered outpatient drug established under 
                this subsection and to calculate that payment limit.
            ``(3) State use of price data.--
                    ``(A) Distribution of data.--The Secretary shall 
                devise and implement a means for electronic 
                distribution of the most recently calculated weighted 
                average manufacturer price and the average manufacturer 
                price for all covered outpatient drugs to each State 
                agency designated under section 1902(a)(5) with 
                responsibility for the administration or supervision of 
                the administration of the State plan under this title.
                    ``(B) Authority to establish payment rates based on 
                data.--A State may use the price data received in 
                accordance with subparagraph (A) in establishing 
                payment rates for the ingredient costs and dispensing 
                fees for covered outpatient drugs dispensed to 
                individuals eligible for medical assistance under this 
                title.
            ``(4) Reasonable dispensing fees required.--
                    ``(A) In general.--A State which provides medical 
                assistance for covered outpatient drugs shall pay a 
                dispensing fee for each covered outpatient drug for 
                which Federal financial participation is available in 
                accordance with this section in accordance with the 
                following:
                            ``(i) The dispensing fee for a noninnovator 
                        multiple source drug shall be greater than the 
                        dispensing fee for an innovator multiple source 
                        drug that is rated as therapeutically 
                        equivalent and bioequivalent to such drug.
                            ``(ii) In establishing such dispensing 
                        fees, the State takes into consideration such 
                        requirements as the Secretary shall, by 
                        regulation, establish, and which shall include 
                        consideration of the following:
                                    ``(I) Any reasonable costs 
                                associated with a pharmacist's time in 
                                checking for information about an 
                                individual's coverage or performing 
                                quality assurance activities.
                                    ``(II) Costs associated with--
                                            ``(aa) the measurement or 
                                        mixing of a covered outpatient 
                                        drug;
                                            ``(bb) filling the 
                                        container for the drug;
                                            ``(cc) physically providing 
                                        the completed prescription to 
                                        an individual enrolled in the 
                                        program under this title;
                                            ``(dd) delivery;
                                            ``(ee) special packaging;
                                            ``(ff) overhead related to 
                                        maintaining the facility and 
                                        equipment necessary to operate 
                                        the pharmacy, including the 
                                        salaries of pharmacists and 
                                        other pharmacy workers;
                                            ``(gg) geographic factors 
                                        that impact operational costs;
                                            ``(hh) patient counseling; 
                                        and
                                            ``(ii) the dispensing of 
                                        drugs requiring specialty 
                                        pharmacy care management 
                                        services (as determined by the 
                                        Secretary in accordance with 
                                        subparagraph (B)).
                    ``(B) Determination of drugs requiring specialty 
                pharmacy care management services.--
                            ``(i) In general.--Not later than 15 months 
                        after the date of enactment of the Deficit 
                        Reduction Omnibus Reconciliation Act of 2005, 
                        the Secretary shall establish a list of covered 
                        outpatient drugs which require specialty 
                        pharmacy care management services that includes 
                        only those drugs for which the Secretary 
                        determines that access by individuals eligible 
                        for medical assistance under this title would 
                        be seriously impaired without the provision of 
                        specialty pharmacy care management services.
                            ``(ii) Specialty pharmacy care management 
                        services defined.--For purposes of this 
                        paragraph, the term `specialty pharmacy care 
                        management services' means services provided in 
                        connection with the dispensing or 
                        administration of a covered outpatient drug 
                        which the Secretary determines requires--
                                    ``(I) significant caregiver and 
                                provider contact and education 
                                regarding the relevant disease state, 
                                prevention, treatment, drug 
                                indications, benefits, risks, 
                                complications, use, pharmacy 
                                counseling, and explanation of existing 
                                provider guidelines;
                                    ``(II) patient compliance services, 
                                including coordination of provider 
                                visits with drug delivery, compliance 
                                with a drug dosing regimen, mailing or 
                                telephone call reminders, compiling 
                                compliance data, and assisting 
                                providers in developing compliance 
                                programs; or
                                    ``(III) tracking services, 
                                including developing referral processes 
                                with providers, screening referrals, 
                                and tracking patient weight for dosing 
                                requirements.
                            ``(iii) Quarterly updates.--The Secretary 
                        shall update the list of covered outpatient 
                        drugs requiring specialty pharmacy management 
                        services on a quarterly basis.
            (2) Conforming amendments.--
                    (A) Section 1927(b)(3)(D)(i) (42 U.S.C. 1396r-
                8(b)(3)(D)(i)) is amended by inserting ``(including 
                with respect to the determination of weighted average 
                manufacturer prices under subsection (e)(2) and the 
                distribution of weighted average manufacturer prices 
                and average manufacturer prices for covered outpatient 
                drugs to States under subsection (e)(3))'' after ``this 
                section''.
                    (B) Section 1903(i)(10) (42 U.S.C. 1396b(i)(10)) is 
                amended--
                            (i) in subparagraph (A), by striking 
                        ``and'' at the end;
                            (ii) in subparagraph (B), by striking 
                        ``or'' at the end and inserting ``and''; and
                            (iii) by adding at the end the following:
            ``(C) with respect to any amount expended for the 
        ingredient cost of a covered outpatient drug that exceeds the 
        upper payment limit for that drug established under section 
        1927(e); or''.
            (3) Effective date.--The amendments made by this subsection 
        take effect with respect to a State on the later of--
                    (A) January 1, 2007; or
                    (B) the date that is 6 months after the close of 
                the first regular session of the State legislature that 
                begins after the date of enactment of this Act.
    (c) Interim Upper Payment Limit.--
            (1) In general.--With respect to a State program under 
        title XIX of the Social Security Act, during the period that 
        begins on January 1, 2006, and ends on the effective date 
        applicable to such State under subsection (b)(3), the Secretary 
        shall--
                    (A) apply the Federal upper payment limit 
                established under section 447.332(b) of title 42, Code 
                of Federal Regulations to the State by substituting 
                ``125 percent'' for ``150 percent''; and
                    (B) in the case of covered outpatient drugs under 
                title XIX of such Act that are marketed as of July 1, 
                2005, and are subject to Federal upper payment limits 
                that apply under section 447.332 of title 42, Code of 
                Federal Regulations, use average wholesale prices, 
                direct prices, and wholesale acquisition costs for such 
                drugs that do not exceed such prices and costs as of 
                such date to determine the Federal upper payment limits 
                that apply under section 447.332 of title 42, Code of 
                Federal Regulations to such drugs during such period.
            (2) Application to new drugs.--Paragraph (1)(A) shall apply 
        to a covered outpatient drug under title XIX of the Social 
        Security Act that is first marketed after July 1, 2005, but 
        before January 1, 2007, and is subject to the Federal upper 
        payment limit established under section 447.332(b) of title 42, 
        Code of Federal Regulations.

SEC. 6002. INCREASE IN REBATES FOR COVERED OUTPATIENT DRUGS.

    (a) Increase in Basic Rebate for Single Source Drugs and Innovator 
Multiple Source Drugs.--Section 1927(c)(1)(B)(i) (42 U.S.C. 1396r-
8(c)(1)(B)(i)) is amended--
            (1) in subclause (IV), by striking ``and'' after the 
        semicolon;
            (2) in subclause (V)--
                    (A) by inserting ``and before January 1, 2006,'' 
                after ``1995,''; and
                    (B) by striking the period and inserting ``; and''; 
                and
            (3) by adding at the end the following:
                                    ``(VI) after December 31, 2005, is 
                                17 percent.''.
    (b) Increase in Rebate for Other Drugs.--Section 1927(c)(3)(B) (42 
U.S.C. 1396r-8(c)(3)(B)) is amended--
            (1) in clause (i), by striking ``and'' at the end;
            (2) in clause (ii)--
                    (A) by inserting ``and before January 1, 2006,'' 
                after ``December 31, 1993,''; and
                    (B) by striking the period at the end and inserting 
                ``; and''; and
            (3) by adding at the end the following:
                            ``(iii) after December 31, 2005, is 17 
                        percent.''.

SEC. 6003. IMPROVED REGULATION OF AUTHORIZED GENERIC DRUGS.

    (a) Inclusion With Other Reported Average Manufacturer and Best 
Prices.--Section 1927(b)(3)(A) (42 U.S.C. 1396r-8(b)(3)(A)) is 
amended--
            (1) by striking clause (i) and inserting the following:
                            ``(i) not later than 30 days after the last 
                        day of each rebate period under the agreement--
                                    ``(I) on the average manufacturer 
                                price (as defined in subsection (k)(1)) 
                                for each covered outpatient drug for 
                                the rebate period under the agreement 
                                (including for each such drug that is 
                                an authorized generic drug or is any 
                                other drug sold under a new drug 
                                application approved under section 
                                505(c) of the Federal Food, Drug, and 
                                Cosmetic Act); and
                                    ``(II) for each single source drug, 
                                innovator multiple source drug, 
                                authorized generic drug, and any other 
                                drug sold under a new drug application 
                                approved under section 505(c) of the 
                                Federal Food, Drug, and Cosmetic Act, 
                                on the manufacturer's best price (as 
                                defined in subsection (c)(1)(C)) for 
                                such drug for the rebate period under 
                                the agreement;''; and
            (2) in clause (ii), by inserting ``(including for such 
        drugs that are authorized generic drugs or are any other drugs 
        sold under a new drug application approved under section 505(c) 
        of the Federal Food, Drug, and Cosmetic Act)'' after ``drugs''.
    (b) Conforming Amendments.--Section 1927 of such Act (42 U.S.C. 
1396r-8) is amended--
            (1) in subsection (c)(1)(C)--
                    (A) in clause (i), in the matter preceding 
                subclause (I), by striking ``or innovator multiple 
                source drug of a manufacturer'' and inserting ``, 
                innovator multiple source drug, or authorized generic 
                drug of a manufacturer, or any other drug of a 
                manufacturer that is sold under a new drug application 
                approved under section 505(c) of the Federal Food, 
                Drug, and Cosmetic Act''; and
                    (B) in clause (ii)--
                            (i) in subclause (II), by striking ``and'' 
                        at the end;
                            (ii) in subclause (III), by striking the 
                        period at the end and inserting ``; and''; and
                            (iii) by adding at the end the following:
                                    ``(IV) in the case of a 
                                manufacturer that approves, allows, or 
                                otherwise permits an authorized generic 
                                drug or any other drug of the 
                                manufacturer to be sold under a new 
                                drug application approved under section 
                                505(c) of the Federal Food, Drug, and 
                                Cosmetic Act, shall be inclusive of the 
                                lowest price for such authorized 
                                generic or other drug available from 
                                the manufacturer during the rebate 
                                period to any wholesaler, retailer, 
                                provider, health maintenance 
                                organization, nonprofit entity, or 
                                governmental entity within the United 
                                States, excluding those prices 
                                described in subclauses (I) through 
                                (IV) of clause (i).''; and
            (2) in subsection (k)--
                    (A) in paragraph (1), as amended by section 
                6001(a)(1)(B), by adding at the end the following:
                    ``(F) Inclusion of authorized generic drugs.--In 
                the case of a manufacturer that approves, allows, or 
                otherwise permits an authorized generic drug or any 
                other drug of the manufacturer to be sold under a new 
                drug application approved under section 505(c) of the 
                Federal Food, Drug, and Cosmetic Act, such term shall 
                be inclusive of the average price paid for such 
                authorized generic or other drug.''; and
                    (B) by adding at the end the following:
            ``(10) Authorized generic drug.--The term `authorized 
        generic drug' means a listed drug (as that term is used in 
        section 505(j) of the Federal Food, Drug, and Cosmetic Act) 
        that--
                    ``(A) has been approved under section 505(c) of 
                such Act; and
                    ``(B) is marketed, sold, or distributed directly or 
                indirectly to the retail class of trade under a 
                different labeling, packaging (other than repackaging 
                as the listed drug in blister packs, unit doses, or 
                similar packaging for use in institutions), product 
                code, labeler code, trade name, or trade mark than the 
                listed drug.''.
    (c) Effective Date.--The amendments made by this section take 
effect on January 1, 2006.

SEC. 6004. COLLECTION OF REBATES FOR CERTAIN PHYSICIAN ADMINISTERED 
              DRUGS.

    (a) In General.--Section 1927(a) (42 U.S.C. 1396r-8(a)) is amended 
by adding at the end the following:
            ``(7) Requirement for submission of utilization data for 
        certain physician-administered drugs.--In order for payment to 
        be available under section 1903(a) for a covered outpatient 
        drug that is physician administered (as determined by the 
        Secretary), and that is administered on or after January 1, 
        2006, the State shall provide for the submission of such 
        utilization data and coding (including both J-codes and 
        National Drug Code numbers) for each such drug as the Secretary 
        may specify as necessary in order to secure rebates for 
        payments made under this title.''.
    (b) Limitation on Payment.--Section 1903(i)(10) (42 U.S.C. 
1396b(i)(10)), as amended by section 6001(b)(2)(B), is amended--
            (1) in subparagraph (B), by striking ``and'' at the end;
            (2) in subparagraph (C), by striking ``; or'' at the end 
        and inserting ``, and''; and
            (3) by adding at the end the following:
            ``(D) with respect to covered outpatient drugs described in 
        section 1927(a)(7), unless information with respect to 
        utilization data and coding on such drugs is submitted in 
        accordance with that section; or''.

                CHAPTER 2--LONG-TERM CARE UNDER MEDICAID

SEC. 6011. REFORM OF MEDICAID ASSET TRANSFER RULES.

    (a) Requirement To Impose Partial Months of Ineligibility.--Section 
1917(c)(1)(E) (42 U.S.C. 1396p(c)(1)(E)) is amended by adding at the 
end the following:
    ``(iv) A State shall not round down, or otherwise disregard any 
fractional period of ineligibility determined under clause (i) or (ii) 
with respect to the disposal of assets.''.
    (b) Authority for States To Accumulate Multiple Transfers Into 1 
Penalty Period.--Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)) is amended 
by adding at the end the following:
    ``(F) Notwithstanding the preceding provisions of this paragraph, 
in the case of an individual (or individual's spouse) who disposes of 
multiple assets in more than 1 month for less than fair market value on 
or after the applicable look-back date specified in subparagraph (B), a 
State may determine the period of ineligibility applicable to such 
individual under this paragraph by--
            ``(i) treating the total, cumulative uncompensated value of 
        all assets transferred by the individual (or individual's 
        spouse) during all months on or after the look-back date 
        specified in subparagraph (B) as 1 transfer for purposes of 
        clause (i) or (ii) (as the case may be) of subparagraph (E); 
        and
            ``(ii) beginning such period on the earliest date which 
        would apply under subparagraph (D) to any of such transfers.''.
    (c) Inclusion of Transfer of Certain Notes and Loans Assets.--
Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)), as amended by subsection 
(b), is amended by adding at the end the following:
    ``(G) For purposes of this paragraph with respect to a transfer of 
assets, the term `assets' includes funds used to purchase a promissory 
note, loan, or mortgage unless such note, loan, or mortgage--
            ``(i) has a repayment term that is actuarially sound (as 
        determined in accordance with actuarial publications of the 
        Office of the Chief Actuary of the Social Security 
        Administration);
            ``(ii) provides for payments to be made in equal amounts 
        during the term of the loan, with no deferral and no balloon 
        payments made; and
            ``(iii) prohibits the cancellation of the balance upon the 
        death of the lender.
In the case of a promissory note, loan, or mortgage that does not 
satisfy the requirements of clauses (i) through (iii), the value of 
such note, loan, or mortgage shall be the outstanding balance due as of 
the date of the individual's application for medical assistance for 
services described in subparagraph (C).''.
    (d) Treatment of Annuities.--
            (1) Inclusion of transfers to purchase balloon annuities.--
        Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)), as amended by 
        subsection (c), is amended by adding at the end the following:
    ``(H) For purposes of this paragraph with respect to a transfer of 
assets, the term `assets' includes an annuity purchased by or on behalf 
of an annuitant who has applied for medical assistance with respect to 
nursing facility services or other long-term care services under this 
title unless--
            ``(i) the annuity is--
                    ``(I) an annuity described in subsection (b) or (q) 
                of section 408 of the Internal Revenue Code of 1986; or
                    ``(II) purchased with proceeds from--
                            ``(aa) an account or trust described in 
                        subsection (a), (c), (p) of section 408 of such 
                        Code;
                            ``(bb) a simplified employee pension 
                        (within the meaning of section 408(k) of such 
                        Code); or
                            ``(cc) a Roth IRA described in section 408A 
                        of such Code; or
            ``(ii) the annuity--
                    ``(I) is irrevocable and nonassignable;
                    ``(II) is actuarially sound (as determined in 
                accordance with actuarial publications of the Office of 
                the Chief Actuary of the Social Security 
                Administration); and
                    ``(III) provides for payments in equal amounts 
                during the term of the annuity, with no deferral and no 
                balloon payments made.''.
            (2) Requirement for state to be named as a remainder 
        beneficiary.--Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)), as 
        amended by paragraph (1), is amended by adding at the end the 
        following:
    ``(I) For purposes of this paragraph, the purchase of an annuity 
shall be treated as the disposal of an asset for less than fair market 
value unless the State is named as the remainder beneficiary in the 
first position for at least the total amount of medical assistance paid 
on behalf of the annuitant under this title or is named as such a 
beneficiary in the second position after the community spouse and such 
spouse does not dispose of any such remainder for less than fair market 
value.''.
            (3) Inclusion of certain annuities in an estate.--Section 
        1917(b)(4) (42 U.S.C. 1396p(b)(4)) is amended--
                    (A) in subparagraph (A), by striking ``and'' at the 
                end;
                    (B) in subparagraph (B), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(C) shall include an annuity unless the annuity was 
        purchased from a financial institution or other business that 
        sells annuities in the State as part of its regular 
        business.''.
    (e) Inclusion of Transfers To Purchase Life Estates.--Section 
1917(c)(1) (42 U.S.C. 1396p(c)(1)), as amended by subsection (d)(2), is 
amended by adding at the end the following:
    ``(J) For purposes of this paragraph with respect to a transfer of 
assets, the term `assets' includes the purchase of a life estate 
interest in another individual's home unless the purchaser resides in 
the home for a period of at least 1 year after the date of the 
purchase.
    (f) Protection Against Undue Hardship.--Section 1917(c) (42 U.S.C. 
1396p(c)) is amended by adding at the end the following:
    ``(6) For purposes of paragraph (2)(D) and subsection (d)(5), the 
procedures established by the State in accordance with standards 
specified by the Secretary shall provide for--
            ``(A) notice, before application of the provisions of 
        paragraph (1) or subsection (d), to an individual who is an 
        applicant for medical assistance under this title who would be 
        subject to such a penalty under such provisions that an undue 
        hardship exception exists;
            ``(B) a timely process before the imposition of a penalty 
        for determining whether an undue hardship waiver will be 
        granted for the individual;
            ``(C) a process under which an adverse determination can be 
        appealed; and
            ``(D) application of criteria that specifies that an undue 
        hardship exists when application of the provisions of paragraph 
        (1) or subsection (d) would deprive the individual of medical 
        care such that the individual's health or life would be 
        endangered or when the application of such provisions would 
        deprive the individual of food, clothing, shelter, or other 
        necessities of life.''.
    (g) Effective Dates.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (3), the amendments made by this section shall apply to 
        payments under title XIX of the Social Security Act (42 U.S.C. 
        1396 et seq.) for calendar quarters beginning on or after the 
        date of enactment of this Act, without regard to whether or not 
        final regulations to carry out such amendments have been 
        promulgated by such date.
            (2) Exceptions.--The amendments made by this section shall 
        not apply--
                    (A) to medical assistance provided for services 
                furnished before the date of enactment;
                    (B) with respect to assets disposed of on or before 
                the date of enactment of this Act; or
                    (C) with respect to trusts established on or before 
                the date of enactment of this Act.
            (3) Extension of effective date for state law amendment.--
        In the case of a State plan under title XIX of the Social 
        Security Act (42 U.S.C. 1396 et seq.) which the Secretary of 
        Health and Human Services determines requires State legislation 
        in order for the plan to meet the additional requirements 
        imposed by the amendments made by a provision of this section, 
        the State plan shall not be regarded as failing to comply with 
        the requirements of such title solely on the basis of its 
        failure to meet these additional requirements before the first 
        day of the first calendar quarter beginning after the close of 
        the first regular session of the State legislature that begins 
        after the date of the enactment of this Act. For purposes of 
        the previous sentence, in the case of a State that has a 2-year 
        legislative session, each year of the session is considered to 
        be a separate regular session of the State legislature.

SEC. 6012. STATE LONG-TERM CARE PARTNERSHIPS.

    (a) Expansion of State Long-Term Care Partnerships.--
            (1) In general.--Section 1917(b)(1)(C)(ii) (42 U.S.C. 
        1396p(b)(1)(C)(ii)) is amended to read as follows:
            ``(ii) Clause (i) shall not apply in the case of an 
        individual who received medical assistance under--
                    ``(I) a Qualified State Long-Term Care Insurance 
                Partnership (as defined in paragraph (5)); or
                    ``(II) under a State plan of a State which--
                            ``(aa) had a State plan amendment approved 
                        as of May 14, 1993, which provided for the 
                        disregard of any assets or resources to the 
                        extent that payments are made under a long-term 
                        care insurance policy or because an individual 
                        has received (or is entitled to receive) 
                        benefits under a long-term care insurance 
                        policy; and
                            ``(bb) has a State plan amendment which 
                        satisfies the requirements of subparagraphs (B) 
                        through (G) of paragraph (5) in the case of any 
                        long-term care insurance policy sold under such 
                        plan amendment on or after the date that is 2 
                        years after the date of enactment of such 
                        paragraph.
        For purposes of this clause and paragraphs (5) and (6), the 
        term `long-term care insurance policy' includes a certificate 
        issued under a group insurance contract.''.
            (2) Satisfaction of minimum federal standards, tax 
        qualifications, inflation protection, and other requirements 
        for long-term care insurance partnerships.--Section 1917(b) (42 
        U.S.C. 1396p(b)) is amended by inserting at the end the 
        following:
            ``(5) The term `Qualified State Long-Term Care Insurance 
        Partnership' means a program offered in a State with an 
        approved State plan amendment that provides for the following:
                    ``(A) Subject to the limit specified in 
                subparagraph (D), the disregard of any assets or 
                resources in an amount equal to the amount of payments 
                made to, or on behalf of, an individual who is a 
                beneficiary under any long-term care insurance policy 
                sold under such plan amendment.
                    ``(B) A requirement that the State will treat 
                benefits paid under any long-term care insurance policy 
                sold under a plan amendment of another State that 
                maintains a Qualified Long-Term Care Insurance 
                Partnership or is described in subsection 
                (b)(1)(C)(ii)(II) the same as the State treats benefits 
                paid under such a policy sold under the State's plan 
                amendment.
                    ``(C) A requirement that any long-term care 
                insurance policy sold under such plan amendment--
                            ``(i) be a qualified long-term care 
                        insurance contract within the meaning of 
                        section 7702B(b) of the Internal Revenue Code 
                        of 1986; and
                            ``(ii) meet the requirements described in 
                        paragraph (6).
                    ``(D) A requirement that any such policy sold under 
                the State plan amendment shall provide for--
                            ``(i) compound annual inflation protection 
                        of at least 5 percent; and
                            ``(ii) asset protection that does not 
                        exceed $250,000.
                The dollar amount specified in the preceding sentence 
                shall be increased, beginning with 2007, from year to 
                year based on the percentage increase in the medical 
                care expenditure category of the Consumer Price Index 
                for All Urban Consumers (United States city average), 
                published by the Bureau of Labor Statistics, rounded to 
                the nearest $100.
                    ``(E) A requirement that an insurer may rescind a 
                long-term care insurance policy sold under such State 
                plan amendment that has been in effect for at least 2 
                years or deny an otherwise valid long-term care 
                insurance claim under such a policy only upon a showing 
                of misrepresentation that is material to the acceptance 
                of coverage, pertains to the claim made, and could not 
                have been known by the insurer at the time the policy 
                was sold.
                    ``(F) A requirement that any individual who sells 
                such a policy receive training, and demonstrate 
                evidence of an understanding of, the policy and how the 
                policy relates to other public and private coverage of 
                long-term care.
                    ``(G) A requirement that the issuer of any such 
                policy report--
                            ``(i) to the Secretary, such information or 
                        data as the Secretary may require; and
                            ``(ii) to the State, the information or 
                        data reported to the Secretary (if any), the 
                        information or data required under the minimum 
                        reporting requirements developed under section 
                        6012(b)(2)(B) of the Deficit Reduction Omnibus 
                        Reconciliation Act of 2005, and such additional 
                        information or data as the State may require.
        For purposes of applying this paragraph, if a long-term care 
        insurance policy is exchanged for another such policy, the date 
        coverage became effective under the first policy shall 
        determine when coverage first becomes effective.
            ``(6)(A) For purposes of subparagraph (C)(ii) of paragraph 
        (5), the requirements of this paragraph are met if a long-term 
        care insurance policy sold under a plan amendment described in 
        that paragraph meets--
                    ``(i) Model regulation.--The following requirements 
                of the model regulation:
                            ``(I) Section 6A (relating to guaranteed 
                        renewal or noncancellability), other than 
                        paragraph (5) thereof, and the requirements of 
                        section 6B of the model Act relating to such 
                        section 6A.
                            ``(II) Section 6B (relating to prohibitions 
                        on limitations and exclusions) other than 
                        paragraph (7) thereof.
                            ``(III) Section 6C (relating to extension 
                        of benefits).
                            ``(IV) Section 6D (relating to continuation 
                        or conversion of coverage).
                            ``(V) Section 6E (relating to 
                        discontinuance and replacement of policies).
                            ``(VI) Section 7 (relating to unintentional 
                        lapse).
                            ``(VII) Section 8 (relating to disclosure), 
                        other than sections 8F, 8G, 8H, and 8I thereof.
                            ``(VIII) Section 9 (relating to required 
                        disclosure of rating practices to consumer).
                            ``(IX) Section 11 (relating to prohibitions 
                        against post-claims underwriting).
                            ``(X) Section 12 (relating to minimum 
                        standards).
                            ``(XI) Section 14 (relating to application 
                        forms and replacement coverage).
                            ``(XII) Section 15 (relating to reporting 
                        requirements).
                            ``(XIII) Section 22 (relating to filing 
                        requirements for marketing).
                            ``(XIV) Section 23 (relating to standards 
                        for marketing), including inaccurate completion 
                        of medical histories, other than paragraphs 
                        (1), (6), and (9) of section 23C.
                            ``(XV) Section 25 (relating to prohibition 
                        against preexisting conditions and probationary 
                        periods in replacement policies or 
                        certificates).
                            ``(XVI) The provisions of section 26 
                        relating to contingent nonforfeiture benefits, 
                        if the policyholder declines the offer of a 
                        nonforfeiture provision described in paragraph 
                        (4).
                            ``(XVII) Section 29 (relating to standard 
                        format outline of coverage).
                            ``(XVIII) Section 30 (relating to 
                        requirement to deliver shopper's guide).
                    ``(ii) Model act.--The following requirements of 
                the model Act:
                            ``(I) Section 6C (relating to preexisting 
                        conditions).
                            ``(II) Section 6D (relating to prior 
                        hospitalization).
                            ``(III) The provisions of section 8 
                        relating to contingent nonforfeiture benefits.
                            ``(IV) Section 6F (relating to right to 
                        return).
                            ``(V) Section 6G (relating to outline of 
                        coverage).
                            ``(VI) Section 6H (relating to requirements 
                        for certificates under group plans).
                            ``(VII) Section 6J (relating to policy 
                        summary).
                            ``(VIII) Section 6K (relating to monthly 
                        reports on accelerated death benefits).
            ``(B) Definitions.--For purposes of this paragraph--
                    ``(i) Model provisions.--The terms `model 
                regulation' and `model Act' mean the long-term care 
                insurance model regulation, and the long-term care 
                insurance model Act, respectively, promulgated by the 
                National Association of Insurance Commissioners (as 
                adopted as of October 2000).
                    ``(ii) Coordination.--Any provision of the model 
                regulation or model Act listed under clause (i) or (ii) 
                of subparagraph (A) shall be treated as including any 
                other provision of such regulation or Act necessary to 
                implement the provision.
                    ``(iii) Determination.--For purposes of this 
                paragraph, the determination of whether any requirement 
                of a model regulation or the model Act has been met 
                shall be made by the Secretary.''.
            (3) Effective date.--The amendments made by this subsection 
        take effect on October 1, 2007, and apply to long-term care 
        insurance policies sold on or after that date.
    (b) Development of Uniform Standards and Recommendations.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, the Secretary, in consultation with the 
        National Association of Insurance Commissioners, issuers of 
        long-term care insurance policies, States with experience with 
        long-term care insurance partnership plans, other States, and 
        representatives of consumers of long-term care insurance 
        policies shall develop the uniform standards described in 
        paragraph (2) and submit recommendations to Congress with 
        respect to the issues identified in paragraph (3).
            (2) Uniform standards.--The uniform standards described in 
        this paragraph are the following:
                    (A) Reciprocity.--Standards for ensuring that long-
                term care insurance policies issued under a State long-
                term care insurance partnership under section 
                1917(b)(1)(C)(ii) of the Social Security Act (42 U.S.C. 
                1396p(b)(1)(C)(ii)) (as amended by subsection (a)) are 
                portable to other States with such a partnership.
                    (B) Minimum reporting requirements.--Standards for 
                minimum reporting requirements for issuers of long-term 
                care insurance policies under such State long-term care 
                insurance partnerships that shall specify the data and 
                information that each such issuer shall report to the 
                State with which it has such a partnership. The 
                requirements developed in accordance with this 
                subparagraph shall specify the type and format of the 
                data and information to be reported and the frequency 
                with which such reports are to be made.
                    (C) Suitability.--Suitability standards for 
                determining whether a long-term care insurance policy 
                is appropriate for the needs of an applicant, based on 
                guidance of the National Association of Insurance 
                Commissioners regarding suitability.
            (3) Recommendations.--The recommendations described in this 
        paragraph are the following:
                    (A) Incontestability.--Recommendations regarding 
                whether the requirements relating to incontestability 
                for long-term care insurance policies sold under a 
                State long-term care insurance partnership program 
                under section 1917(b)(1)(C)(ii) of the Social Security 
                Act should be modified based on guidance of the 
                National Association of Insurance Commissioners 
                regarding incontestability.
                    (B) Nonforfeiture.--Recommendations regarding 
                whether requirements relating to nonforfeiture for 
                issuers of long-term care insurance policies under a 
                State long-term care insurance partnership program 
                under section 1917(b)(1)(C)(ii) of such Act should be 
                modified to reflect changes in an insured's financial 
                circumstances.
                    (C) Independent certification for benefits 
                assessment.--Recommendations regarding whether uniform 
                standards for requiring benefits assessment evaluations 
                to be conducted by independent entities should be 
                established for issuers of long-term care insurance 
                policies under such a State partnership program and, if 
                so, what such standards should be.
                    (D) Rating requirements.--Recommendations regarding 
                whether uniform standards for the establishment of, and 
                annual increases in, premiums for long-term care 
                insurance policies sold under such a State partnership 
                program should be established and, if so, what such 
                standards should be.
                    (E) Dispute resolution.--Recommendations regarding 
                whether uniform standards are needed to ensure fair 
                adjudication of coverage disputes under long-term care 
                insurance policies sold under such a State partnership 
                program and the delivery of the benefits promised under 
                such policies.
            (4) State reporting requirements.--Nothing in paragraph 
        (2)(B) shall be construed as prohibiting a State from requiring 
        an issuer of a long-term care insurance policy sold in the 
        State (regardless of whether the policy is issued under a State 
        long-term care insurance partnership under section 
        1917(b)(1)(C)(ii) of the Social Security Act) to require the 
        issuer to report information or data to the State that is in 
        addition to the information or data required under the minimum 
        reporting requirements developed under that paragraph.
    (c) Annual Reports to Congress.--The Secretary of Health and Human 
Services shall annually report to Congress on the long-term care 
insurance partnerships established in accordance with section 
1917(b)(1)(C)(ii) of the Social Security Act (42 U.S.C. 
1396p(b)(1)(C)(ii)) (as amended by subsection (a)(1)). Such reports 
shall include analyses of the extent to which such partnerships expand 
or limit access of individuals to long-term care and the impact of such 
partnerships on Federal and State expenditures under the Medicare and 
Medicaid programs.

       CHAPTER 3--ELIMINATING FRAUD, WASTE, AND ABUSE IN MEDICAID

SEC. 6021. ENHANCING THIRD PARTY RECOVERY.

    (a) Clarification of Right of Recovery Against Any Third Party 
Legally Responsible for Payment of a Claim for a Health Care Item or 
Service.--Section 1902(a)(25) (42 U.S.C. 1396a(a)(25)) is amended--
            (1) in subparagraph (A), in the matter preceding clause 
        (i)--
                    (A) by inserting ``, including self-insured plans'' 
                after ``health insurers''; and
                    (B) by striking ``and health maintenance 
                organizations'' and inserting ``health maintenance 
                organizations, pharmacy benefit managers, or other 
                parties that are, by statute, contract, or agreement, 
                legally responsible for payment of a claim for a health 
                care item or service''; and
            (2) in subparagraph (G)--
                    (A) by inserting ``a self-insured plan,'' after 
                ``1974,''; and
                    (B) by striking ``and a health maintenance 
                organization'' and inserting ``a health maintenance 
                organization, a pharmacy benefit manager, or other 
                party that is, by statute, contract, or agreement, 
                legally responsible for payment of a claim for a health 
                care item or service''.
     (b) Requirement for Third Parties To Provide the State With 
Coverage Eligibility and Claims Data.--Section 1902(a)(25) (42 U.S.C. 
1396a(a)(25)) is amended--
            (1) in subparagraph (G), by striking ``and'' at the end;
            (2) in subparagraph (H), by adding ``and'' after the 
        semicolon at the end; and
            (3) by inserting after subparagraph (H), the following:
                    ``(I) that the State shall provide assurances 
                satisfactory to the Secretary that the State has in 
                effect laws requiring health insurers, including self-
                insured plans, group health plans (as defined in 
                section 607(1) of the Employee Retirement Income 
                Security Act of 1974), service benefit plans, health 
                maintenance organizations, pharmacy benefit managers, 
                or other parties that are, by statute, contract, or 
                agreement, legally responsible for payment of a claim 
                for a health care item or service, as a condition of 
                doing business in the State, to--
                            ``(i) provide eligibility and claims 
                        payment data with respect to an individual who 
                        is eligible for, or is provided, medical 
                        assistance under the State plan, upon the 
                        request of the State;
                            ``(ii) accept the subrogation of the State 
                        to any right of an individual or other entity 
                        to payment from the party for an item or 
                        service for which payment has been made under 
                        the State plan;
                            ``(iii) respond to any inquiry by the State 
                        regarding a claim for payment for any health 
                        care item or service submitted not later than 3 
                        years after the date of the provision of such 
                        health care item or service; and
                            ``(iv) agree not to deny a claim submitted 
                        by the State solely on the basis of the date of 
                        submission of the claim;''.
    (c) Effective date.--Except as provided in section 6026(e), the 
amendments made by this section take effect on January 1, 2006.

SEC. 6022. LIMITATION ON USE OF CONTINGENCY FEE ARRANGEMENTS.

    (a) In General.--Section 1903(i) (42 U.S.C. 1396b(i)), as amended 
by section 104(b) of the QI, TMA, and Abstinence Programs Extension and 
Hurricane Katrina Unemployment Relief Act of 2005 (Public Law 109-91), 
is amended--
            (1) in paragraph (19), by adding ``or'' at the end;
            (2) by striking the period at the end of paragraph (21) and 
        inserting ``; or''; and
            (3) by inserting after paragraph (21), the following:
            ``(22) with respect to any amount expended in connection 
        with a contract or agreement (other than a risk contract under 
        section 1903(m)) between the State agency under section 
        1902(a)(5) (or any State or local agency designated by such 
        agency to administer any portion of the State plan under this 
        title) and a consultant or other contractor if the terms of 
        compensation for the consultant or other contractor do not meet 
        the standards established by the Inspector General of the 
        Department of Health and Human Services under section 6022(b) 
        of the Deficit Reduction Omnibus Reconciliation Act of 2005.''.
    (b) Contingency Fee Arrangement Standards.--Not later than 6 months 
after the date of enactment of this Act, the Inspector General of the 
Department of Health and Human Services shall issue standards for the 
terms of compensation of consultants and other individuals or entities 
contracting with State agencies (or their designees) administering 
State Medicaid plans under title XIX of the Social Security Act that 
ensure prudent purchasing and program integrity with respect to Federal 
funds. The Inspector General shall annually review and, as necessary, 
revise such standards to promptly address new compensation arrangements 
that may present a risk to program integrity under such title.
    (c) Effective Date.--Except as provided in section 6026(e), the 
amendments made by subsection (a) take effect on January 1, 2007.

SEC. 6023. ENCOURAGING THE ENACTMENT OF STATE FALSE CLAIMS ACTS.

    (a) In General.--Title XIX (42 U.S.C. 1396 et seq.) is amended by 
inserting after section 1908A the following:

  ``state false claims act requirements for increased state share of 
                               recoveries

    ``Sec. 1909. (a) In General.--Notwithstanding section 1905(b), if a 
State has in effect a law relating to false or fraudulent claims that 
meets the requirements of subsection (b), the Federal medical 
assistance percentage with respect to any amounts recovered under a 
State action brought under such law, shall be decreased by 10 
percentage points.
    ``(b) Requirements.--For purposes of subsection (a), the 
requirements of this subsection are that the Inspector General of the 
Department of Health and Human Services, in consultation with the 
Attorney General, determines that the State has in effect a law that 
meets the following requirements:
            ``(1) The law establishes liability to the State for false 
        or fraudulent claims described in section 3729 of title 31, 
        United States Code, with respect to any expenditure described 
        in section 1903(a).
            ``(2) The law contains provisions that are at least as 
        effective in rewarding and facilitating qui tam actions for 
        false or fraudulent claims as those described in sections 3730 
        through 3732 of title 31, United States Code.
            ``(3) The law contains a requirement for filing an action 
        under seal for 60 days with review by the State Attorney 
        General.
            ``(4) The law contains a civil penalty that is not less 
        than the amount of the civil penalty authorized under section 
        3729 of title 31, United States Code.
            ``(5) The law contains provisions that are designed to 
        prevent a windfall recovery for a qui tam relator in the event 
        that the relator files a Federal and State action for the same 
        false or fraudulent claim.
    ``(c) Deemed Compliance.--A State that, as of January 1, 2007, has 
a law in effect that meets the requirements of subsection (b) shall be 
deemed to be in compliance with such requirements for so long as the 
law continues to meet such requirements.
    ``(d) No preclusion of broader laws.--Nothing in this section shall 
be construed as prohibiting a State that has in effect a law that 
establishes liability to the State for false or fraudulent claims 
described in section 3729 of title 31, United States Code, with respect 
to programs in addition to the State program under this title, or with 
respect to expenditures in addition to expenditures described in 
section 1903(a), from being considered to be in compliance with the 
requirements of subsection (a) so long as the law meets such 
requirements.''.
    (b) Effective Date.--Except as provided in section 6026(e), the 
amendments made by this section take effect on January 1, 2007.

SEC. 6024. EMPLOYEE EDUCATION ABOUT FALSE CLAIMS RECOVERY.

    (a) In General.--Section 1902(a) (42 U.S.C. 1396a(a)) is amended--
            (1) in paragraph (66), by striking ``and'' at the end;
            (2) in paragraph (67) by striking the period at the end and 
        inserting ``; and''; and
            (3) by inserting after paragraph (67) the following:
            ``(68) provide that any entity that receives or makes 
        annual payments under the State plan of at least $1,000,000, as 
        a condition of receiving such payments, shall--
                    ``(A) establish written policies, procedures, and 
                protocols for training of all employees of the entity 
                (including management), and of any contractor or agent 
                of the entity, that includes a detailed discussion of 
                the False Claims Act established under sections 3729 
                through 3733 of title 31, United States Code, 
                administrative remedies for false claims and statements 
                established under chapter 38 of title 31, United States 
                Code, any State laws pertaining to civil or criminal 
                penalties for false claims and statements, and 
                whistleblower protections under such laws, with respect 
                to the role of such laws in preventing and detecting 
                fraud, waste, and abuse in Federal health care programs 
                (as defined in section 1128B(f));
                    ``(B) include as part of such written policies, 
                procedures, and protocols, detailed provisions and 
                training regarding the entity's policies and procedures 
                for detecting and preventing fraud, waste, and abuse;
                    ``(C) include in any employee handbook for the 
                entity, a specific discussion of the laws described in 
                subparagraph (A), the rights of employees to be 
                protected as whistleblowers, and the entity's policies 
                and procedures for detecting and preventing fraud, 
                waste, and abuse; and
                    ``(D) require mandatory training for all employees 
                of the entity and of any contractor or agent of the 
                entity, at the time of hiring, with respect to the laws 
                described in subparagraph (A) (including the 
                whistleblower protections under such laws) and the 
                entity's policies and procedures for detecting fraud, 
                waste, and abuse.''.
    (b) Effective Date.--Except as provided in section 6026(e), the 
amendments made by subsection (a) take effect on January 1, 2007.

SEC. 6025. PROHIBITION ON RESTOCKING AND DOUBLE BILLING OF PRESCRIPTION 
              DRUGS.

    (a) In General.--Section 1903(i)(10) (42 U.S.C. 1396b(i)), as 
amended by section 6004(b), is amended--
            (1) in subparagraph (C), by striking ``and'' at the end;
            (2) in subparagraph (D), by striking ``; or'' at the end 
        and inserting ``, and''; and
            (3) by adding at the end the following:
            ``(E) with respect to any amount expended for reimbursement 
        to a pharmacy under this title for the ingredient cost of a 
        covered outpatient drug for which the pharmacy has already 
        received payment under this title (other than with respect to a 
        reasonable restocking fee for such drug); or''.
    (b) Effective Date.--The amendments made by subsection (a) take 
effect on the first day of the first fiscal year quarter that begins 
after the date of enactment of this Act.

SEC. 6026. MEDICAID INTEGRITY PROGRAM.

    (a) Establishment of Medicaid Integrity Program; Medicaid CFO; 
Medicaid Program Integrity Oversight Board.--Title XIX (42 U.S.C. 1396 
et seq.) is amended--
            (1) by redesignating section 1936 as section 1938; and
            (2) by inserting after section 1935 the following:

                      ``medicaid integrity program

    ``Sec. 1936. (a) In General.--There is hereby established the 
Medicaid Integrity Program (in this section referred to as the 
`Program') under which the Secretary shall promote the integrity of the 
program under this title by entering into contracts in accordance with 
this section with eligible entities to carry out the activities 
described in subsection (b).
    ``(b) Activities Described.--The activities described in this 
subsection are as follows:
            ``(1) Review of the actions of individuals or entities 
        furnishing items or services (whether on a fee-for-service, 
        risk, or other basis) for which payment may be made under a 
        State plan approved under this title (or under any waiver of 
        such plan approved under section 1115) to determine whether 
        fraud, waste, or abuse has occurred, is likely to occur, or 
        whether such actions have any potential for resulting in an 
        expenditure of funds under this title in a manner which is not 
        intended under the provisions of this title.
            ``(2) Audit of claims for payment for items or services 
        furnished, or administrative services rendered, under a State 
        plan under this title, including--
                    ``(A) cost reports;
                    ``(B) consulting contracts; and
                    ``(C) risk contracts under section 1903(m).
            ``(3) Identification and recovery of overpayments to 
        individuals or entities receiving Federal funds under this 
        title.
            ``(4) Education of providers of services, managed care 
        entities, beneficiaries, and other individuals with respect to 
        payment integrity and benefit quality assurance issues.
    ``(c) Eligible Entity and Contracting Requirements.--
            ``(1) In general.--An entity is eligible to enter into a 
        contract under the Program to carry out any of the activities 
        described in subsection (b) if the entity satisfies the 
        requirements of paragraphs (2) and (3).
            ``(2) Eligibility Requirements.--The requirements of this 
        paragraph are the following:
                    ``(A) The entity has demonstrated capability to 
                carry out the activities described in subsection (b).
                    ``(B) In carrying out such activities, the entity 
                agrees to cooperate with the Inspector General of the 
                Department of Health and Human Services, the Attorney 
                General, and other law enforcement agencies, as 
                appropriate, in the investigation and deterrence of 
                fraud and abuse in relation to this title and in other 
                cases arising out of such activities.
                    ``(C) The entity complies with such conflict of 
                interest standards as are generally applicable to 
                Federal acquisition and procurement.
                    ``(D) The entity meets such other requirements as 
                the Secretary may impose.
            ``(3) Contracting Requirements.--The entity has contracted 
        with the Secretary in accordance with such procedures as the 
        Secretary shall by regulation establish, except that such 
        procedures shall include the following:
                    ``(A) Procedures for identifying, evaluating, and 
                resolving organizational conflicts of interest that are 
                generally applicable to Federal acquisition and 
                procurement.
                    ``(B) Competitive procedures to be used--
                            ``(i) when entering into new contracts 
                        under this section;
                            ``(ii) when entering into contracts that 
                        may result in the elimination of 
                        responsibilities under section 202(b) of the 
                        Health Insurance Portability and Accountability 
                        Act of 1996; and
                            ``(iii) at any other time considered 
                        appropriate by the Secretary.
                    ``(C) Procedures under which a contract under this 
                section may be renewed without regard to any provision 
                of law requiring competition if the contractor has met 
                or exceeded the performance requirements established in 
                the current contract.
        The Secretary may enter into such contracts without regard to 
        final rules having been promulgated.
            ``(4) Limitation on contractor liability.--The Secretary 
        shall by regulation provide for the limitation of a 
        contractor's liability for actions taken to carry out a 
        contract under the Program, and such regulation shall, to the 
        extent the Secretary finds appropriate, employ the same or 
        comparable standards and other substantive and procedural 
        provisions as are contained in section 1157.
    ``(d) Comprehensive Plan for Program Integrity.--
            ``(1) 5-year plan.--With respect to the 5 fiscal year 
        period beginning with fiscal year 2006, and each such 5-fiscal 
        year period that begins thereafter, the Secretary shall 
        establish a comprehensive plan for ensuring the integrity of 
        the program established under this title by combatting fraud, 
        waste, and abuse.
            ``(2) Consultation.--Each 5-fiscal year plan established 
        under paragraph (1) shall be developed by the Secretary in 
        consultation with the Attorney General, the Director of the 
        Federal Bureau of Investigation, the Comptroller General of the 
        United States, the Inspector General of the Department of 
        Health and Human Services, and State officials with 
        responsibility for controlling provider fraud and abuse under 
        State plans under this title.
    ``(e) Appropriation.--
            ``(1) In general.--Out of any money in the Treasury of the 
        United States not otherwise appropriated, there are 
        appropriated to carry out the Medicaid Integrity Program under 
        this section, without further appropriation--
                    ``(A) for each of fiscal years 2006 through 2008, 
                $50,000,000; and
                    ``(B) for each fiscal year after fiscal year 2008, 
                $75,000,000.
            ``(2) Availability.--Amounts appropriated pursuant to 
        paragraph (1) shall remain available until expended.
            ``(3) Annual report.--Not later than 180 days after the end 
        of each fiscal year (beginning with fiscal year 2006), the 
        Secretary shall submit a report to Congress which identifies--
                    ``(A) the use of funds appropriated pursuant to 
                paragraph (1); and
                    ``(B) the effectiveness of the use of such 
                funds.''.

    ``medicaid chief financial officer; medicaid program integrity 
                            oversight board

    ``Sec. 1937. (a) Establishment of Medicaid CFO.--
            ``(1) In general.--There is established in the Centers for 
        Medicare & Medicaid Services within the Office of Financial 
        Management the position of Medicaid Chief Financial Officer. 
        The Medicaid Chief Financial Officer shall be appointed by, and 
        report directly to, the Administrator of such Centers. The 
        Medicaid Chief Financial Officer may be removed only for cause.
            ``(2) Duties and Authority.--The duties and authority of 
        the Medicaid Chief Financial Officer with respect to the 
        management and expenditure of Federal funds under this title 
        shall be comparable to the duties and authority of other Chief 
        Financial Officers with respect to the management and 
        expenditure of Federal funds under Federal health care programs 
        (as defined in section 1128B(f)).
    ``(b) Program Integrity Oversight Board.--The Secretary shall 
establish a Medicaid Program Integrity Oversight Board. The duties and 
authority of the Medicaid Program Integrity Oversight Board shall be 
comparable to the duties and authority of other oversight boards 
established for purposes of Federal health care programs (as so 
defined) and shall include responsibility for identifying 
vulnerabilities in the State programs established under this title and 
developing strategies for minimizing integrity risks to such 
programs.''.
    (b) State Requirement To Cooperate with Integrity Program 
Efforts.--Section 1902(a) (42 U.S.C. 1396a(a)), as amended by section 
6024(a), is amended--
            (1) in paragraph (67), by striking ``and'' at the end;
            (2) in paragraph (68), by striking the period at the end 
        and inserting ``; and''; and
            (3) by inserting after paragraph (68), the following:
            ``(69) provide that the State must comply with any 
        requirements determined by the Secretary to be necessary for 
        carrying out the Medicaid Integrity Program established under 
        section 1936, or the duties of the Medicaid Chief Financial 
        Officer and the Medicaid Program Integrity Oversight Board 
        established under section 1937.''.
    (c) Increased Funding for Medicaid Fraud and Abuse Control 
Activities.--
            (1) In general.--Out of any money in the Treasury of the 
        United States not otherwise appropriated, there are 
        appropriated to the Office of the Inspector General of the 
        Department of Health and Human Services, without further 
        appropriation, $25,000,000 for each of fiscal years 2006 
        through 2010, for activities of such Office with respect to the 
        Medicaid program under title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.).
            (2) Availability; amounts in addition to other amounts 
        appropriated for such activities.--Amounts appropriated 
        pursuant to paragraph (1) shall--
                    (A) remain available until expended; and
                    (B) be in addition to any other amounts 
                appropriated or made available to the Office of the 
                Inspector General of the Department of Health and Human 
                Services for activities of such Office with respect to 
                the Medicaid program.
            (3) Annual report.--Not later than 180 days after the end 
        of each fiscal year (beginning with fiscal year 2006), the 
        Inspector General of the Department of Health and Human 
        Services shall submit a report to Congress which identifies--
                    (A) the use of funds appropriated pursuant to 
                paragraph (1); and
                    (B) the effectiveness of the use of such funds.
    (d) Increase in CMS Staffing Devoted To Ensuring Medicaid Program 
Integrity.--The Secretary shall significantly increase the number of 
full-time equivalent employees whose duties consist solely of ensuring 
the integrity of the Medicaid program established under title XIX of 
the Social Security Act by providing effective support and assistance 
to States to combat provider fraud and abuse.
    (e) Delayed Effective Date for Chapter.--in the case of a State 
plan under title XIX of the Social Security Act which the Secretary 
determines requires State legislation in order for the plan to meet the 
additional requirements imposed by the amendments made by a provision 
of this chapter, the State plan shall not be regarded as failing to 
comply with the requirements of such Act solely on the basis of its 
failure to meet these additional requirements before the first day of 
the first calendar quarter beginning after the close of the first 
regular session of the State legislature that begins after the date of 
enactment of this Act. For purposes of the previous sentence, in the 
case of a State that has a 2-year legislative session, each year of the 
session shall be considered to be a separate regular session of the 
State legislature.

               CHAPTER 4--STATE FINANCING UNDER MEDICAID

SEC. 6031. REFORMS OF TARGETED CASE MANAGEMENT.

    (a) In General.--Section 1915(g) (42 U.S.C. 1396n(g)(2)) is amended 
by striking paragraph (2) and inserting the following:
    ``(2) For purposes of this subsection:
            ``(A)(i) The term `case management services' means services 
        which will assist individuals eligible under the plan in 
        gaining access to needed medical, social, educational, and 
        other services.
            ``(ii) Such term includes the following:
                    ``(I) Assessment of an eligible individual to 
                determine service needs, including activities that 
                focus on needs identification, to determine the need 
                for any medical, educational, social, or other 
                services. Such assessment activities include the 
                following:
                            ``(aa) Taking client history.
                            ``(bb) Identifying the needs of the 
                        individual, and completing related 
                        documentation.
                            ``(cc) Gathering information from other 
                        sources such as family members, medical 
                        providers, social workers, and educators, if 
                        necessary, to form a complete assessment of the 
                        eligible individual.
                    ``(II) Development of a specific care plan based on 
                the information collected through an assessment, that 
                specifies the goals and actions to address the medical, 
                social, educational, and other services needed by the 
                eligible individual, including activities such as 
                ensuring the active participation of the eligible 
                individual and working with the individual (or the 
                individual's authorized health care decision maker) and 
                others to develop such goals and identify a course of 
                action to respond to the assessed needs of the eligible 
                individual.
                    ``(III) Referral and related activities to help an 
                individual obtain needed services, including activities 
                that help link eligible individuals with medical, 
                social, educational providers or other programs and 
                services that are capable of providing needed services, 
                such as making referrals to providers for needed 
                services and scheduling appointments for the 
                individual.
                    ``(IV) Monitoring and followup activities, 
                including activities and contacts that are necessary to 
                ensure the care plan is effectively implemented and 
                adequately addressing the needs of the eligible 
                individual, and which may be with the individual, 
                family members, providers, or other entities and 
                conducted as frequently as necessary to help determine 
                such matters as--
                            ``(aa) whether services are being furnished 
                        in accordance with an individual's care plan;
                            ``(bb) whether the services in the care 
                        plan are adequate; and
                            ``(cc) whether there are changes in the 
                        needs or status of the eligible individual, and 
                        if so, making necessary adjustments in the care 
                        plan and service arrangements with providers.
            ``(iii) Such term does not include the direct delivery of 
        an underlying medical, educational, social, or other service to 
        which an eligible individual has been referred, including, with 
        respect to the direct delivery of foster care services, 
        services such as (but not limited to) the following:
                    ``(I) Research gathering and completion of 
                documentation required by the foster care program.
                    ``(II) Assessing adoption placements.
                    ``(III) Recruiting or interviewing potential foster 
                care parents.
                    ``(IV) Serving legal papers.
                    ``(V) Home investigations.
                    ``(VI) Providing transportation.
                    ``(VII) Administering foster care subsidies.
                    ``(VIII) Making placement arrangements.
            ``(B) The term `targeted case management services' are case 
        management services that are furnished without regard to the 
        requirements of section 1902(a)(1) and section 1902(a)(10)(B) 
        to specific classes of individuals or to individuals who reside 
        in specified areas.
    ``(3) With respect to contacts with individuals who are not 
eligible for medical assistance under the State plan or, in the case of 
targeted case management services, individuals who are eligible for 
such assistance but are not part of the target population specified in 
the State plan, such contacts--
            ``(A) are considered an allowable case management activity, 
        when the purpose of the contact is directly related to the 
        management of the eligible individual's care; and
            ``(B) are not considered an allowable case management 
        activity if such contacts relate directly to the identification 
        and management of the noneligible or nontargeted individual's 
        needs and care.
    ``(4)(A) In accordance with section 1902(a)(25), Federal financial 
participation only is available under this title for case management 
services or targeted case management services if there are no other 
third parties liable to pay for such services, including as 
reimbursement under a medical, social, educational, or other program.
    ``(B) A State shall allocate the costs of any part of such services 
which are reimbursable under another federally funded program in 
accordance with OMB Circular A-87 (or any related or successor guidance 
or regulations regarding allocation of costs among federally funded 
programs) under an approved cost allocation program.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on January 1, 2006.

SEC. 6032. TEMPORARY FEDERAL MATCHING PAYMENTS FOR FEDERAL ASSISTANCE.

    (a) 100 Percent Federal Matching Payments for Medical Assistance 
Provided To Specified Individuals.--
            (1) In general.--Notwithstanding section 1905(b) of the 
        Social Security Act (42 U.S.C. 1396d(b)), for items and 
        services furnished during the period that begins on August 28, 
        2005, and ends on May 15, 2006, the Federal medical assistance 
        percentage for providing medical assistance for such items and 
        services under a State Medicaid plan to a specified individual 
        (as defined in subsection (b)), and for costs directly 
        attributable to all administrative activities that relate to 
        the provision of such medical assistance, shall be 100 percent.
            (2) Application to child health assistance.--
        Notwithstanding section 2105(b) of the Social Security Act (42 
        U.S.C. 1397ee(b)), for items and services furnished during the 
        period described in paragraph (1), the Federal matching rate 
        for providing child health assistance for such items and 
        services under a State child health plan to a specified 
        individual (as so defined), and for costs directly attributable 
        to all administrative activities that relate to the provision 
        of such child health assistance, shall be 100 percent.
    (b) Specified Individual.--
            (1) In general.--For purposes of subsection (a), the term 
        ``specified individual'' means an individual who, on any day 
        during the week preceding August 28, 2005, had a primary 
        residence in a Louisiana parish described in paragraph (2), a 
        Mississippi county described in paragraph (3), or an Alabama 
        county described in paragraph (4).
            (2) Louisiana parishes described.--For purposes of 
        paragraph (1), the Louisiana parishes described in this 
        paragraph are the following:
                    (A) Acadia.
                    (B) Ascension.
                    (C) Assumption.
                    (D) Calcasieu.
                    (E) Cameron.
                    (F) East Baton Rouge.
                    (G) East Feliciana.
                    (H) Iberia.
                    (I) Iberville.
                    (J) Jefferson.
                    (K) Jefferson Davis.
                    (L) Lafayette.
                    (M) Lafourche.
                    (N) Livingston.
                    (O) Orleans.
                    (P) Pointe Coupee.
                    (Q) Plaquemines.
                    (R) St. Bernard.
                    (S) St. Charles.
                    (T) St. Helena.
                    (U) St. James.
                    (V) St. John.
                    (W) St. Mary.
                    (X) St. Martin.
                    (Y) St. Tammany.
                    (Z) Tangipahoa.
                    (AA) Terrebonne.
                    (BB) Vermilion.
                    (CC) Washington.
                    (DD) West Baton Rouge.
                    (EE) West Feliciana.
            (3) Mississippi counties described.--For purposes of 
        paragraph (1), the Mississippi counties described in this 
        paragraph are the following:
                    (A) Adams.
                    (B) Amite.
                    (C) Attala.
                    (D) Clairborne.
                    (E) Choctaw.
                    (F) Clarke.
                    (G) Copiah.
                    (H) Covington.
                    (I) Forrest.
                    (J) Franklin.
                    (K) George.
                    (L) Greene.
                    (M) Hancock.
                    (N) Harrison.
                    (O) Hinds.
                    (P) Jackson.
                    (Q) Jasper.
                    (R) Jefferson.
                    (S) Jefferson Davis.
                    (T) Jones.
                    (U) Kemper.
                    (V) Lamar.
                    (W) Lauderdale.
                    (X) Lawrence.
                    (Y) Leake.
                    (Z) Lincoln.
                    (AA) Lowndes.
                    (BB) Madison.
                    (CC) Marion.
                    (DD) Neshoba.
                    (EE) Newton.
                    (FF) Noxubee.
                    (GG) Oktibbeha.
                    (HH) Pearl River.
                    (II) Perry.
                    (JJ) Pike.
                    (KK) Rankin.
                    (LL) Scott.
                    (MM) Simpson.
                    (NN) Smith.
                    (OO) Stone.
                    (PP) Walthall.
                    (QQ) Warren.
                    (RR) Wayne.
                    (SS) Wilkinson.
                    (TT) Winston.
                    (UU) Yazoo.
            (4) Alabama counties described.--For purposes of paragraph 
        (1) the Alabama counties described in this paragraph are the 
        following:
                    (A) Baldwin.
                    (B) Choctaw.
                    (C) Clarke.
                    (D) Greene.
                    (E) Hale.
                    (F) Marengo.
                    (G) Mobile.
                    (H) Pickens.
                    (I) Sumter.
                    (J) Tuscaloosa.
                    (K) Washington.
    (c) FMAP Adjustment.--Notwithstanding the first sentence of section 
1905(b) of the Social Security Act (42 U.S.C. 1396d(b)), if, for 
purposes of titles XIX and XXI of the Social Security Act (42 U.S.C. 
1396 et seq., 1397aa et seq.), the Federal medical assistance 
percentage determined for Alaska for fiscal year 2006 or fiscal year 
2007 is less than the Federal medical assistance percentage determined 
for Alaska for fiscal year 2005, the Federal medical assistance 
percentage determined for Alaska for fiscal year 2005 shall be 
substituted for the Federal medical assistance percentage otherwise 
determined for Alaska for fiscal year 2006 or fiscal year 2007, as the 
case may be.

SEC. 6033. MANAGED CARE ORGANIZATION PROVIDER TAX REFORM.

    (a) In General.--Section 1903(w)(7)(A)(viii) (42 U.S.C. 
1396b(w)(7)(A)(viii)) is amended to read as follows:
                    ``(viii) Services of managed care organizations 
                (including health maintenance organizations, preferred 
                provider organizations, and such other similar 
                organizations as the Secretary may specify by 
                regulation).''.
    (b) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendment made by subsection (a) shall take effect on January 
        1, 2006.
            (2) Nonapplication.--The amendment made by subsection (a) 
        shall not apply in the case of a State that, as of December 31, 
        2005, has in effect a tax imposed on the class of health care 
        items and services described in section 1903(w)(7)(A)(viii) of 
        the Social Security Act (42 U.S.C. 1396b(w)(7)(A)(viii)) (as in 
        effect before the date of enactment of this Act).

SEC. 6034. INCLUSION OF PODIATRISTS AS PHYSICIANS.

    (a) In General.--Section 1905(a)(5)(A) (42 U.S.C. 1396d(a)(5)(A)) 
is amended by striking ``section 1861(r)(1)'' and inserting 
``paragraphs (1) and (3) of section 1861(r)''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to services furnished on or after January 1, 2006.

SEC. 6035. DSH ALLOTMENT FOR THE DISTRICT OF COLUMBIA.

    (a) In General.--The table in section 1923(f)(2) (42 U.S.C. 1396r-
4(f)(2)) is amended under each of the columns for FY 00, FY 01, and FY 
02, in the entry for the District of Columbia, by striking ``32'' and 
inserting ``49''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect as if enacted on October 1, 2005 and shall apply to 
expenditures made on or after that date.

SEC. 6036. DEMONSTRATION PROJECT REGARDING MEDICAID REIMBURSEMENT FOR 
              STABILIZATION OF EMERGENCY MEDICAL CONDITIONS BY NON-
              PUBLICLY OWNED OR OPERATED INSTITUTIONS FOR MENTAL 
              DISEASES.

    (a) Authority To Conduct Demonstration Project.--The Secretary 
shall establish a demonstration project under which an eligible State 
(as defined in subsection (b)) shall provide reimbursement under the 
State medicaid plan to an institution for mental diseases that is not 
publicly owned or operated and that is subject to the requirements of 
section 1867 of the Social Security Act (42 U.S.C, 1395dd) for the 
provision of medical assistance available under such plan to an 
individual who--
            (1) has attained age 21, but has not attained age 65;
            (2) is eligible for medical assistance under such plan; and
            (3) requires such medical assistance to stabilize an 
        emergency medical condition.
    (b) Eligible State Defined.--
            (1) Application.--Upon approval of an application submitted 
        by a State described in paragraph (2), the State shall be an 
        eligible State for purposes of conducting a demonstration 
        project under this section.
            (2) State described.--A State described in this paragraph 
        is each of the following:
                    (A) Arizona.
                    (B) Arkansas.
                    (C) Louisiana.
                    (D) Maine.
                    (E) North Dakota.
                    (F) Wyoming.
                    (G) Four other States selected by the Secretary to 
                provide geographic diversity on the basis of the 
                application to conduct a demonstration project under 
                this section submitted by such States.
    (c) Length of Demonstration Project.--The demonstration project 
established under this section shall be conducted for a period of 3 
consecutive years.
    (d) Limitations on Federal Funding.--
            (1) Appropriation.--
                    (A) In general.--Out of any funds in the Treasury 
                not otherwise appropriated, there is appropriated to 
                carry out this section, $30,000,000 for fiscal year 
                2006.
                    (B) Budget authority.--Subparagraph (A) constitutes 
                budget authority in advance of appropriations Act and 
                represents the obligation of the Federal Government to 
                provide for the payment of the amounts appropriated 
                under that subparagraph.
            (2) 3-year availability.--Funds appropriated under 
        paragraph (1) shall remain available for obligation through 
        December 31, 2008.
            (3) Limitation on payments.--In no case may--
                    (A) the aggregate amount of payments made by the 
                Secretary to eligible States under this section exceed 
                $30,000,000; or
                    (B) payments be provided by the Secretary under 
                this section after December 31, 2008.
            (4) Funds allocated to states.--The Secretary shall 
        allocate funds to eligible States based on their applications 
        and the availability of funds.
            (5) Payments to states.--The Secretary shall pay to each 
        eligible State, from its allocation under paragraph (4), an 
        amount each quarter equal to the Federal medical assistance 
        percentage of expenditures in the quarter for medical 
        assistance described in subsection (a).
    (e) Reports.--
            (1) Annual progress reports.--The Secretary shall submit 
        annual reports to Congress on the progress of the demonstration 
        project conducted under this section.
            (2) Final report and recommendation.--Not later than March 
        31, 2009, the Secretary shall submit to Congress a final report 
        on the demonstration project conducted under this section that 
        shall include the following:
                    (A) A determination as to whether the demonstration 
                project resulted in increased access to inpatient 
                mental health services under the medicaid program.
                    (B) An analysis regarding whether the demonstration 
                project produced a significant reduction in the use of 
                higher cost emergency room visits for individuals 
                eligible for medical assistance under the medicaid 
                program.
                    (C) An assessment of the impact of the 
                demonstration project on the costs related to the 
                provision of inpatient psychiatric care and services 
                under the medicaid program.
                    (D) A recommendation regarding whether the 
                demonstration project should be continued after 
                December 31, 2008, and expanded on a national basis.
    (f) Waiver Authority.--
            (1) In general.--The Secretary shall waive the limitation 
        of subdivision (B) following paragraph (28) of section 1905(a) 
        of the Social Security Act (42 U.S.C. 1396d(a)) (relating to 
        limitations on payments for care or services for individuals 
        under 65 years of age who are patients in an institution for 
        mental diseases) for purposes of carrying out the demonstration 
        project under this section.
            (2) Limited other waiver authority.--The Secretary may 
        waive other requirements of titles XI and XIX of the Social 
        Security Act (including the requirements of sections 1902(a)(1) 
        (relating to statewideness) and 1902(a)(10)(B) (relating to 
        comparability)) only to extent necessary to carry out the 
        demonstration project under this section.
    (g) Definitions.--In this section:
            (1) Emergency medical condition.--The term ``emergency 
        medical condition'' has the meaning given that term in section 
        1867(e)(1) of the Social Security Act (42 U.S.C. 1395dd(e)(1)).
            (2) Federal medical assistance percentage.--The term 
        ``Federal medical assistance percentage'' has the meaning given 
        that term with respect to a State in section 1905(b) of the 
        Social Security Act (42 U.S.C. 1396d(b)).
            (3) Institution for mental diseases.--The term 
        ``institution for mental diseases'' has the meaning given that 
        term in section 1905(i) of the Social Security Act (42 U.S.C. 
        1396d(i)).
            (4) Medical assistance.--The term ``medical assistance'' 
        has the meaning given that term in section 1905(a) of the 
        Social Security Act (42 U.S.C. 1396d(a)).
            (5) Stabilize.--The term ``stabilize'' has the meaning 
        given that term in section 1867(e)(3)(A) of the Social Security 
        Act (42 U.S..C 1395dd(e)(3)(A)).
            (6) State.--The term ``State'' has the meaning given that 
        term for purposes of title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.).

CHAPTER 5--IMPROVING THE MEDICAID AND STATE CHILDREN'S HEALTH INSURANCE 
                                PROGRAMS

                  Subchapter A--Family Opportunity Act

SEC. 6041. SHORT TITLE OF SUBCHAPTER.

    This subchapter may be cited as the ``Family Opportunity Act of 
2005'' or the ``Dylan Lee James Act''.

SEC. 6042. OPPORTUNITY FOR FAMILIES OF DISABLED CHILDREN TO PURCHASE 
              MEDICAID COVERAGE FOR SUCH CHILDREN.

    (a) State Option To Allow Families of Disabled Children To Purchase 
Medicaid Coverage for Such Children.--
            (1) In general.--Section 1902 (42 U.S.C. 1396a) is 
        amended--
                    (A) in subsection (a)(10)(A)(ii)--
                            (i) by striking ``or'' at the end of 
                        subclause (XVII);
                            (ii) by adding ``or'' at the end of 
                        subclause (XVIII); and
                            (iii) by adding at the end the following 
                        new subclause:
                                    ``(XIX) who are disabled children 
                                described in subsection (cc)(1);''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(cc)(1) Individuals described in this paragraph are individuals--
            ``(A) who are children who have not attained 19 years of 
        age and are born--
                    ``(i) on or after January 1, 2002 (or, at the 
                option of a State, on or after an earlier date), in the 
                case of the second, third, and fourth quarters of 
                fiscal year 2008;
                    ``(ii) on or after October 1, 1996 (or, at the 
                option of a State, on or after an earlier date), in the 
                case of each quarter of fiscal year 2009; and
                    ``(iii) after October 1, 1990, in the case of each 
                quarter of fiscal year 2010 and each quarter of any 
                fiscal year thereafter;
            ``(B) who would be considered disabled under section 
        1614(a)(3)(C) but for having earnings or deemed income or 
        resources (as determined under title XVI for children) that 
        exceed the requirements for receipt of supplemental security 
        income benefits; and
            ``(C) whose family income does not exceed such income level 
        as the State establishes and does not exceed--
                    ``(i) 300 percent of the poverty line (as defined 
                in section 2110(c)(5)) applicable to a family of the 
                size involved; or
                    ``(ii) such higher percent of such poverty line as 
                a State may establish, except that--
                            ``(I) any medical assistance provided to an 
                        individual whose family income exceeds 300 
                        percent of such poverty line may only be 
                        provided with State funds; and
                            ``(II) no Federal financial participation 
                        shall be provided under section 1903(a) for any 
                        medical assistance provided to such an 
                        individual.''.
            (2) Interaction with employer-sponsored family coverage.--
        Section 1902(cc) (42 U.S.C. 1396a(cc)), as added by paragraph 
        (1)(B), is amended by adding at the end the following new 
        paragraph:
    ``(2)(A) If an employer of a parent of an individual described in 
paragraph (1) offers family coverage under a group health plan (as 
defined in section 2791(a) of the Public Health Service Act), the State 
shall--
            ``(i) require such parent to apply for, enroll in, and pay 
        premiums for such coverage as a condition of such parent's 
        child being or remaining eligible for medical assistance under 
        subsection (a)(10)(A)(ii)(XIX) if the parent is determined 
        eligible for such coverage and the employer contributes at 
        least 50 percent of the total cost of annual premiums for such 
        coverage; and
            ``(ii) if such coverage is obtained--
                    ``(I) subject to paragraph (2) of section 1916(h), 
                reduce the premium imposed by the State under that 
                section in an amount that reasonably reflects the 
                premium contribution made by the parent for private 
                coverage on behalf of a child with a disability; and
                    ``(II) treat such coverage as a third party 
                liability under subsection (a)(25).
    ``(B) In the case of a parent to which subparagraph (A) applies, a 
State, subject to paragraph (1)(C)(ii), may provide for payment of any 
portion of the annual premium for such family coverage that the parent 
is required to pay. Any payments made by the State under this 
subparagraph shall be considered, for purposes of section 1903(a), to 
be payments for medical assistance.''.
    (b) State Option To Impose Income-Related Premiums.--Section 1916 
(42 U.S.C. 1396o) is amended--
            (1) in subsection (a), by striking ``subsection (g)'' and 
        inserting ``subsections (g) and (h)''; and
            (2) by adding at the end the following new subsection:
    ``(h)(1) With respect to disabled children provided medical 
assistance under section 1902(a)(10)(A)(ii)(XIX), subject to paragraph 
(2), a State may (in a uniform manner for such children) require the 
families of such children to pay monthly premiums set on a sliding 
scale based on family income.
    ``(2) A premium requirement imposed under paragraph (1) may only 
apply to the extent that--
            ``(A) in the case of a disabled child described in that 
        paragraph whose family income--
                    ``(i) does not exceed 200 percent of the poverty 
                line, the aggregate amount of such premium and any 
                premium that the parent is required to pay for family 
                coverage under section 1902(cc)(2)(A)(i) and other 
                cost-sharing charges do not exceed 5 percent of the 
                family's income; and
                    ``(ii) exceeds 200, but does not exceed 300, 
                percent of the poverty line, the aggregate amount of 
                such premium and any premium that the parent is 
                required to pay for family coverage under section 
                1902(cc)(2)(A)(i) and other cost-sharing charges do not 
                exceed 7.5 percent of the family's income; and
            ``(B) the requirement is imposed consistent with section 
        1902(cc)(2)(A)(ii)(I).
    ``(3) A State shall not require prepayment of a premium imposed 
pursuant to paragraph (1) and shall not terminate eligibility of a 
child under section 1902(a)(10)(A)(ii)(XIX) for medical assistance 
under this title on the basis of failure to pay any such premium until 
such failure continues for a period of at least 60 days from the date 
on which the premium became past due. The State may waive payment of 
any such premium in any case where the State determines that requiring 
such payment would create an undue hardship.''.
    (c) Conforming Amendments.--(1) Section 1903(f)(4) (42 U.S.C. 
1396b(f)(4)) is amended in the matter preceding subparagraph (A), by 
inserting ``1902(a)(10)(A)(ii)(XIX),'' after 
``1902(a)(10)(A)(ii)(XVIII),''.
    (2) Section 1905(u)(2)(B) (42 U.S.C. 1396d(u)(2)(B)) is amended by 
adding at the end the following sentence: ``Such term excludes any 
child eligible for medical assistance only by reason of section 
1902(a)(10)(A)(ii)(XIX).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to medical assistance for items and services furnished on or 
after January 1, 2008.

SEC. 6043. DEMONSTRATION PROJECTS REGARDING HOME AND COMMUNITY-BASED 
              ALTERNATIVES TO PSYCHIATRIC RESIDENTIAL TREATMENT 
              FACILITIES FOR CHILDREN.

    (a) In General.--The Secretary is authorized to conduct, during 
each of fiscal years 2007 through 2011, demonstration projects (each in 
the section referred to as a ``demonstration project'') in accordance 
with this section under which up to 10 States (as defined for purposes 
of title XIX of the Social Security Act) are awarded grants, on a 
competitive basis, to test the effectiveness in improving or 
maintaining a child's functional level and cost-effectiveness of 
providing coverage of home and community-based alternatives to 
psychiatric residential treatment for children enrolled in the Medicaid 
program under title XIX of such Act.
    (b) Application of Terms and Conditions.--
            (1) In general.--Subject to the provisions of this section, 
        for the purposes of the demonstration projects, and only with 
        respect to children enrolled under such demonstration projects, 
        a psychiatric residential treatment facility (as defined in 
        section 483.352 of title 42 of the Code of Federal Regulations) 
        shall be deemed to be a facility specified in section 1915(c) 
        of the Social Security Act (42 U.S.C. 1396n(c)), and to be 
        included in each reference in such section 1915(c) to 
        hospitals, nursing facilities, and intermediate care facilities 
        for the mentally retarded.
            (2) State option to assure continuity of medicaid 
        coverage.--Upon the termination of a demonstration project 
        under this section, the State that conducted the project may 
        elect, only with respect to a child who is enrolled in such 
        project on the termination date, to continue to provide medical 
        assistance for coverage of home and community-based 
        alternatives to psychiatric residential treatment for the child 
        in accordance with section 1915(c) of the Social Security Act 
        (42 U.S.C. 1396n(c)), as modified through the application of 
        paragraph (1). Expenditures incurred for providing such medical 
        assistance shall be treated as a home and community-based 
        waiver program under section 1915(c) of the Social Security Act 
        (42 U.S.C. 1396n(c)) for purposes of payment under section 1903 
        of such Act (42 U.S.C. 1396b).
    (c) Terms of Demonstration Projects.--
            (1) In general.--Except as otherwise provided in this 
        section, a demonstration project shall be subject to the same 
        terms and conditions as apply to a waiver under section 1915(c) 
        of the Social Security Act (42 U.S.C. 1396n(c)), including the 
        waiver of certain requirements under the first sentence of 
        paragraph (3) of such section but not applying the second 
        sentence of such paragraph.
            (2) Budget neutrality.--In conducting the demonstration 
        projects under this section, the Secretary shall ensure that 
        the aggregate payments made by the Secretary under title XIX of 
        the Social Security Act (42 U.S.C. 1396 et seq.) do not exceed 
        the amount which the Secretary estimates would have been paid 
        under that title if the demonstration projects under this 
        section had not been implemented.
            (3) Evaluation.--The application for a demonstration 
        project shall include an assurance to provide for such interim 
        and final evaluations of the demonstration project by 
        independent third parties, and for such interim and final 
        reports to the Secretary, as the Secretary may require.
    (d) Payments to States; Limitations to Scope and Funding.--
            (1) In general.--Subject to paragraph (2), a demonstration 
        project approved by the Secretary under this section shall be 
        treated as a home and community-based waiver program under 
        section 1915(c) of the Social Security Act (42 U.S.C. 1396n(c)) 
        for purposes of payment under section 1903 of such Act (42 
        U.S.C. 1396b).
            (2) Limitation.--In no case may the amount of payments made 
        by the Secretary under this section for State demonstration 
        projects for a fiscal year exceed the amount available under 
        subsection (f)(2)(A) for such fiscal year.
    (e) Secretary's Evaluation and Report.--The Secretary shall conduct 
an interim and final evaluation of State demonstration projects under 
this section and shall report to the President and Congress the 
conclusions of such evaluations within 12 months of completing such 
evaluations.
    (f) Funding.--
            (1) In general.--For the purpose of carrying out this 
        section, there are appropriated, from amounts in the Treasury 
        not otherwise appropriated, for fiscal years 2007 through 2011, 
        a total of $218,000,000, of which--
                    (A) the amount specified in paragraph (2) shall be 
                available for each of fiscal years 2007 through 2011; 
                and
                    (B) a total of $1,000,000 shall be available to the 
                Secretary for the evaluations and report under 
                subsection (e).
            (2) Fiscal year limit.--
                    (A) In general.--For purposes of paragraph (1), the 
                amount specified in this paragraph for a fiscal year is 
                the amount specified in subparagraph (B) for the fiscal 
                year plus the difference, if any, between the total 
                amount available under this paragraph for prior fiscal 
                years and the total amount previously expended under 
                paragraph (1)(A) for such prior fiscal years.
                    (B) Fiscal year amounts.--The amount specified in 
                this subparagraph for--
                            (i) fiscal year 2007 is $21,000,000;
                            (ii) fiscal year 2008 is $37,000,000;
                            (iii) fiscal year 2009 is $49,000,000;
                            (iv) fiscal year 2010 is $53,000,000; and
                            (v) fiscal year 2011 is $57,000,000.

SEC. 6044. DEVELOPMENT AND SUPPORT OF FAMILY-TO-FAMILY HEALTH 
              INFORMATION CENTERS.

    Section 501 (42 U.S.C. 701) is amended by adding at the end the 
following new subsection:
    ``(c)(1)(A) For the purpose of enabling the Secretary (through 
grants, contracts, or otherwise) to provide for special projects of 
regional and national significance for the development and support of 
family-to-family health information centers described in paragraph 
(2)--
            ``(i) there is appropriated to the Secretary, out of any 
        money in the Treasury not otherwise appropriated--
                    ``(I) $3,000,000 for fiscal year 2007;
                    ``(II) $4,000,000 for fiscal year 2008; and
                    ``(III) $5,000,000 for fiscal year 2009; and
            ``(ii) there is authorized to be appropriated to the 
        Secretary, $5,000,000 for each of fiscal years 2010 and 2011.
    ``(B) Funds appropriated or authorized to be appropriated under 
subparagraph (A) shall--
            ``(i) be in addition to amounts appropriated under 
        subsection (a) and retained under section 502(a)(1) for the 
        purpose of carrying out activities described in subsection 
        (a)(2); and
            ``(ii) remain available until expended.
    ``(2) The family-to-family health information centers described in 
this paragraph are centers that--
            ``(A) assist families of children with disabilities or 
        special health care needs to make informed choices about health 
        care in order to promote good treatment decisions, cost-
        effectiveness, and improved health outcomes for such children;
            ``(B) provide information regarding the health care needs 
        of, and resources available for, such children;
            ``(C) identify successful health delivery models for such 
        children;
            ``(D) develop with representatives of health care 
        providers, managed care organizations, health care purchasers, 
        and appropriate State agencies, a model for collaboration 
        between families of such children and health professionals;
            ``(E) provide training and guidance regarding caring for 
        such children;
            ``(F) conduct outreach activities to the families of such 
        children, health professionals, schools, and other appropriate 
        entities and individuals; and
            ``(G) are staffed--
                    ``(i) by such families who have expertise in 
                Federal and State public and private health care 
                systems; and
                    ``(ii) by health professionals.
    ``(3) The Secretary shall develop family-to-family health 
information centers described in paragraph (2) in accordance with the 
following:
            ``(A) With respect to fiscal year 2007, such centers shall 
        be developed in not less than 25 States.
            ``(B) With respect to fiscal year 2008, such centers shall 
        be developed in not less than 40 States.
            ``(C) With respect to fiscal year 2009 and each fiscal year 
        thereafter, such centers shall be developed in all States.
    ``(4) The provisions of this title that are applicable to the funds 
made available to the Secretary under section 502(a)(1) apply in the 
same manner to funds made available to the Secretary under paragraph 
(1)(A).
    ``(5) For purposes of this subsection, the term `State' means each 
of the 50 States and the District of Columbia.''.

SEC. 6045. RESTORATION OF MEDICAID ELIGIBILITY FOR CERTAIN SSI 
              BENEFICIARIES.

    (a) In General.--Section 1902(a)(10)(A)(i)(II) (42 U.S.C. 
1396a(a)(10)(A)(i)(II)) is amended--
            (1) by inserting ``(aa)'' after ``(II)'';
            (2) by striking ``) and'' and inserting ``and'';
            (3) by striking ``section or who are'' and inserting 
        ``section), (bb) who are''; and
            (4) by inserting before the comma at the end the following: 
        ``, or (cc) who are under 21 years of age and with respect to 
        whom supplemental security income benefits would be paid under 
        title XVI if subparagraphs (A) and (B) of section 1611(c)(7) 
        were applied without regard to the phrase `the first day of the 
        month following'''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to medical assistance for items and services furnished on or 
after the date that is 1 year after the date of enactment of this Act.

        Subchapter B--State Children's Health Insurance Program

SEC. 6051. RULES FOR AVAILABILITY, REDISTRIBUTION, AND EXTENDED 
              AVAILABILITY OF ALLOTMENTS FOR FISCAL YEARS 2003, 2004, 
              AND 2005.

    (a) In General.--Section 2104 (42 U.S.C. 1397dd) is amended--
            (1) by amending subsection (e) to read as follows:
    ``(e) Availability of Amounts Allotted.--
            ``(1) In general.--Except as provided in paragraph (2), 
        amounts allotted to a State pursuant to this section--
                    ``(A) for each of fiscal years 1998 through 2003, 
                and for fiscal year 2006 and each fiscal year 
                thereafter, shall remain available for expenditure by 
                the State through the end of the second succeeding 
                fiscal year; and
                    ``(B) for each of fiscal years 2004 and 2005, shall 
                remain available for expenditure by the State during 
                the initial availability period (as defined in 
                paragraph (3)(A)).
            ``(2) Availability of reallotments, redistributed amounts, 
        and extended availability.--
                    ``(A) In general.--Amounts reallotted to a State 
                under subsection (f) shall be available for expenditure 
                by the State through the end of the fiscal year in 
                which they are reallotted.
                    ``(B) Availability of redistributed funds and 
                extended availability.--Amounts redistributed to a 
                State under subsection (i)(3) or (j)(3) and unused 
                allotments of a State extended under subsection (i)(4) 
                or (j)(4) are available for expenditure by the State 
                during the redistribution/extension period (as defined 
                in paragraph (3)(B)).
            ``(3) Periods defined.--For purposes of this section:
                    ``(A) Initial availability period.--The term 
                `initial availability period' means, with respect to 
                allotments for a fiscal year, the 2-fiscal year period 
                beginning with that fiscal year.
                    ``(B) Redistribution/extension period.--The term 
                `redistribution/extension period' means, with respect 
                to allotments for a fiscal year, the second year 
                following that fiscal year.''; and
            (2) by adding at the end the following new subsections:
    ``(h) Rule for Redistribution of Fiscal Year 2003 Allotments.--
            ``(1) Computation of unexpended allotments for fiscal year 
        2003.--The Secretary shall determine--
                    ``(A) the amount of each State's allotment under 
                this section for fiscal year 2003 that was not expended 
                by the end of fiscal year 2005; and
                    ``(B) the total of the unexpended allotments 
                determined under subparagraph (A).
            ``(2) Determination of initial projected shortfalls for 
        fiscal year 2006.--For each State that receives an allotment 
        for fiscal year 2006 under subsection (b), the Secretary shall 
        determine the following:
                    ``(A) Fiscal year 2005 carryover.--The amount of 
                the State's allotment for 2005 that was not expended in 
                fiscal year 2005.
                    ``(B) Projected expenditures for fiscal year 
                2006.--The estimated expenditures for the State as 
                would be reported as quarterly expenditures under 
                section 2105(a) for quarters in fiscal year 2006.
                    ``(C) Initial projected shortfall for fiscal year 
                2006.--The amount, if any, by which the projected 
                expenditures determined under subparagraph (B) for the 
                State for quarters in fiscal year 2006 exceeds the sum 
                of the following:
                            ``(i) Fiscal year 2005 carryover.--The 
                        amount determined under subparagraph (A) for 
                        the State.
                            ``(ii) Fiscal year 2006 allotment.--The 
                        amount of the State's allotment for fiscal year 
                        2006.
                    ``(D) State's proportion of aggregate shortfall.--
                For each State for which there is an excess determined 
                under subparagraph (C), the ratio of--
                            ``(i) the amount of such excess; to
                            ``(ii) the total of such excesses 
                        determined for all States with such an excess.
            ``(3) Redistribution of unexpended allotments for fiscal 
        year 2003.--From the total of the unexpended allotments for 
        fiscal year 2003 determined under paragraph (1)(B) the 
        Secretary shall redistribute under subsection (f) the 
        following:
                    ``(A) States other than territories.--There shall 
                be redistributed to each State for which there is an 
                excess determined under paragraph (2)(C) an amount 
                equal to the product of the following:
                            ``(i) State redistribution pool.--The 
                        amount determined under paragraph (1)(B), 
                        reduced by the total amount redistributed under 
                        subparagraph (B).
                            ``(ii) State's shortfall proportion.--The 
                        ratio described in paragraph (2)(D) for that 
                        State.
                    ``(B) Territories.--There shall be redistributed to 
                each commonwealth or territory described in subsection 
                (c)(3) an amount equal to the product of the following:
                            ``(i) Territorial redistribution pool.--
                        1.05 percent of the amount determined under 
                        paragraph (1)(B).
                            ``(ii) Territorial proportion.--The ratio 
                        of--
                                    ``(I) the allotment for fiscal year 
                                2003 for such commonwealth or territory 
                                under subsection (c), to
                                    ``(II) the total of all such 
                                allotments for such fiscal year for 
                                such commonwealths or territories under 
                                such subsection.
            ``(4) Determination of amounts.--For purposes of 
        calculating the amounts described in--
                    ``(A) paragraphs (1) and (2)(A), the Secretary 
                shall use the amounts reported by the States not later 
                than November 30, 2005, on Form CMS-64 or Form CMS-21, 
                as the case may be, as approved by the Secretary; and
                    ``(B) paragraph (2)(B), the Secretary shall use the 
                amounts reported by the States not later than September 
                30, 2005, on Form CMS-37 or Form CMS-21B, as the case 
                may be, as approved by the Secretary.
    ``(i) Redistribution and Extension of Availability of Unused 
Allotments for Fiscal Year 2004.--Notwithstanding subsection (f):
            ``(1) Computation of unexpended allotments for fiscal year 
        2004.--
                    ``(A) In general.--The Secretary shall determine 
                with respect to each State that receives an allotment 
                for fiscal year 2004 under subsection (b)--
                            ``(i) the amount of the State's allotment 
                        for such fiscal year that was not expended by 
                        the end of fiscal year 2005; and
                            ``(ii) the total of the unexpended 
                        allotments determined under clause (i).
                    ``(B) Reduction of unexpended allotment by net 
                fiscal year 2006 shortfall.--
                            ``(i) In general.--In the case of a State 
                        described in clause (ii), the Secretary shall 
                        reduce, but not below 0, the amount determined 
                        for the State under subparagraph (A)(i) 
                        (relating to the State's unexpended allotment 
                        for fiscal year 2004) by the amount of the 
                        allotment of the State for which availability 
                        is extended under paragraph (4)(A).
                            ``(ii) State described.--A State described 
                        in this clause is a State that meets the 
                        following requirements:
                                    ``(I) Fully spent fiscal year 2003 
                                allotment.--The State's allotment under 
                                this section for fiscal year 2003 was 
                                fully expended by the end of fiscal 
                                year 2005.
                                    ``(II) Did not fully expend fiscal 
                                year 2004 allotment by end of fiscal 
                                year 2005.--The State's allotment under 
                                this section for fiscal year 2004 was 
                                not fully expended by the end of fiscal 
                                year 2005.
                                    ``(III) Projected fiscal year 2006 
                                shortfall.--The State has an excess 
                                determined under subsection (h)(2)(C) 
                                (relating to initial projected fiscal 
                                year 2006 shortfall).
                    ``(C) Totals and ratios.--The Secretary shall 
                determine the following:
                            ``(i) Redistribution pool.--A 
                        redistribution pool equal to the total of the 
                        amounts determined under subparagraph (A)(i), 
                        as reduced (if applicable) under subparagraph 
                        (B)(i).
                            ``(ii) State proportion toward 
                        redistribution pool.--For each State in which 
                        the amount determined under subparagraph (A)(i) 
                        (as reduced, if applicable, under subparagraph 
                        (B)(i)) exceeds 0, the ratio of--
                                    ``(I) such amount (as so reduced) 
                                for the State; to
                                    ``(II) the total determined under 
                                clause (i).
                    ``(D) Amount of unexpended fiscal year 2004 
                allotment applied to redistributions.--For each State 
                described in subparagraph (C)(ii), the Secretary shall 
                determine a redistribution/reduction amount equal to 
                the product of the following:
                            ``(i) Total amount redistributed.--The 
                        total amount redistributed under paragraph (3).
                            ``(ii) State's proportion of unexpended 
                        allotments.--The ratio for the State determined 
                        under subparagraph (C)(ii).
            ``(2) Determination of net projected shortfalls for fiscal 
        year 2006.--For each State that has an excess determined under 
        subsection (h)(2)(C) (relating to initial projected fiscal year 
        2006 shortfall), the Secretary shall determine an amount equal 
        to the amount determined under such subsection, reduced by the 
        sum of--
                    ``(A) the amount redistributed to the State under 
                subsection (h)(3)(A), and
                    ``(B) the amount of funds of the State for which 
                availability is extended under paragraph (4)(A).
            ``(3) Redistribution from redistribution pool.--From the 
        redistribution pool determined under paragraph (1)(C)(i)--
                    ``(A) States other than territories.--There shall 
                be redistributed to each State which has a net 
                projected shortfall under paragraph (2) an amount 
                determined under such paragraph for the State.
                    ``(B) Territories.--There shall be redistributed to 
                each commonwealth or territory described in subsection 
                (c)(3) an amount equal to the product of the following:
                            ``(i) Territorial redistribution pool.--
                        1.05 percent of the amount of such unexpended 
                        allotments determined under paragraph 
                        (1)(A)(ii).
                            ``(ii) Territorial proportion.--The ratio 
                        of--
                                    ``(I) the allotment under 
                                subsection (c) for such commonwealth or 
                                territory for fiscal year 2004, to
                                    ``(II) the total of all such 
                                allotments for such commonwealths and 
                                territories.
            ``(4) Extended availability of remaining unexpended 
        allotments.--
                    ``(A) To meet net shortfall for fiscal year 2006.--
                In the case of a State described in paragraph 
                (1)(B)(ii), the Secretary shall extend the availability 
                of funds from the State's allotment for fiscal year 
                2004 to the extent that--
                            ``(i) the amount determined under 
                        subsection (h)(2)(C) (relating to initial 
                        shortfall for fiscal year 2006), exceeds
                            ``(ii) the amount redistributed to the 
                        State under subsection (h)(3)(A).
                    ``(B) Other extensions.--The Secretary shall extend 
                the availability of funds from allotments for fiscal 
                year 2004 for each State which has an unexpended 
                allotment for fiscal year 2004 determined under 
                paragraph (1)(A) (as reduced, if applicable, under 
                paragraph (1)(B)) by an amount equal to the amount (if 
                any) by which--
                            ``(i) the amount of such unexpended 
                        allotment (as so reduced) for the State, 
                        exceeds
                            ``(ii) the redistribution/reduction amount 
                        determined under paragraph (1)(D) for the State 
                        (relating to the portion of the unexpended 
                        allotment applied to redistributions).
            ``(5) Determination of amounts.--For purposes of 
        calculating the amounts described in--
                    ``(A) paragraph (1)(A)(i), the Secretary shall use 
                the amounts reported by the States not later than 
                November 30, 2005, on Form CMS-64 or Form CMS-21, as 
                the case may be, as approved by the Secretary; and
                    ``(B) paragraph (1)(B)(i), the Secretary shall use 
                the amounts reported by the States not later than 
                September 30, 2005, on Form CMS-37 or Form CMS-21B, as 
                the case may be, as approved by the Secretary.
    ``(j) Redistribution and Extension of Availability of Unused 
Allotments for Fiscal Year 2005.--Notwithstanding subsection (f):
            ``(1) Computation of unexpended allotments for fiscal year 
        2005.--
                    ``(A) In general.--The Secretary shall determine 
                with respect to each State that receives an allotment 
                for fiscal year 2005 under subsection (b)--
                            ``(i) the amount of the State's allotment 
                        for fiscal year 2005 that was not expended by 
                        the end of fiscal year 2006; and
                            ``(ii) the total of the unexpended 
                        allotments determined under clause (i).
                    ``(B) Reduction of unexpended allotment by net 
                fiscal year 2007 shortfall.--
                            ``(i) In general.--In the case of a State 
                        described in clause (ii), the Secretary shall 
                        reduce, but not below 0, the amount determined 
                        for the State under subparagraph (A)(i) 
                        (relating to the State's unexpended allotment 
                        for fiscal year 2005) by the amount of the 
                        allotment of the State for which availability 
                        is extended under paragraph (4)(A).
                            ``(ii) State described.--A State described 
                        in this clause is a State that meets the 
                        following requirements:
                                    ``(I) Did not fully expend fiscal 
                                year 2005 allotment by end of fiscal 
                                year 2006.--The State's allotment under 
                                this section for fiscal year 2005 was 
                                not fully expended by the end of fiscal 
                                year 2006.
                                    ``(II) Projected shortfall for 
                                fiscal year 2007.--The State has an 
                                excess determined under paragraph 
                                (2)(C) for fiscal year 2007 (relating 
                                to initial projected fiscal year 2007 
                                shortfall).
                    ``(C) Totals and ratios.--The Secretary shall 
                determine the following:
                            ``(i) Redistribution pool.--A 
                        redistribution pool equal to the total of the 
                        amounts determined under subparagraph (A)(i), 
                        as reduced (if applicable) under subparagraph 
                        (B)(i).
                            ``(ii) State proportion toward 
                        redistribution pool.--For each State in which 
                        the amount determined under subparagraph (A)(i) 
                        (as reduced, if applicable, under subparagraph 
                        (B)(i)) exceeds 0, the ratio of--
                                    ``(I) such amount (as so reduced) 
                                for the State; to
                                    ``(II) the total determined under 
                                clause (i).
                    ``(D) Amount of unexpended fiscal year 2005 
                allotment applied to redistributions.--For each State 
                described in subparagraph (C)(ii), the Secretary shall 
                determine a redistribution/reduction amount equal to 
                the product of the following:
                            ``(i) Total amount redistributed.--The 
                        total amount redistributed under paragraph (3).
                            ``(ii) State's proportion of unexpended 
                        allotments.--The ratio for the State determined 
                        under subparagraph (C)(ii).
            ``(2) Determination of initial projected shortfalls for 
        fiscal year 2007.--For each State that receives an allotment 
        for fiscal year 2007 under subsection (b), the Secretary shall 
        determine the following:
                    ``(A) Fiscal year 2006 carryover.--The amount of 
                the State's allotment for fiscal year 2006 that was not 
                expended in fiscal year 2006.
                    ``(B) Projected expenditures for fiscal year 
                2007.--The estimated expenditures for the State as 
                would be reported as quarterly expenditures under 
                section 2105(a) for quarters in fiscal year 2007.
                    ``(C) Initial projected shortfall for fiscal year 
                2007.--The amount, if any, by which the projected 
                expenditures determined under subparagraph (B) for the 
                State for quarters in fiscal year 2007 exceeds the sum 
                of the following:
                            ``(i) Fiscal year 2006 carryover.--The 
                        amount determined under subparagraph (A) for 
                        the State.
                            ``(ii) Fiscal year 2007 allotment.--The 
                        amount of the State's allotment for fiscal year 
                        2007.
                    ``(D) Determination of net projected shortfalls for 
                fiscal year 2007.--For each State that has an excess 
                determined under subparagraph (C), the Secretary shall 
                determine an amount equal to the amount determined 
                under such subparagraph, reduced by the amount of funds 
                (if any) of the State for which availability is 
                extended under paragraph (4)(A).
                    ``(E) State's proportion of net aggregate 
                shortfall.--For each State for which there is a net 
                excess determined under subparagraph (D), the ratio 
                of--
                            ``(i) the amount of such net excess; to
                            ``(ii) the total of such net excesses.
            ``(3) Redistribution from redistribution pool.--From the 
        redistribution pool determined under paragraph (1)(C)(i)--
                    ``(A) States other than territories.--There shall 
                be redistributed to each State for which there is a net 
                projected shortfall under paragraph (2)(D) an amount 
                equal the lesser of the following:
                            ``(i) Net fiscal year 2007 shortfall.--The 
                        amount of the net excess described in paragraph 
                        (2)(D) for the State.
                            ``(ii) Portion of unexpended funds 
                        available.--The product of the following:
                                    ``(I) State redistribution pool.--
                                The amount determined under paragraph 
                                (1)(C)(i), reduced by the total amount 
                                redistributed under subparagraph (B).
                                    ``(II) State's shortfall 
                                proportion.--The ratio described in 
                                paragraph (2)(E) for that State.
                    ``(B) Territories.--There shall be redistributed to 
                each commonwealth or territory described in subsection 
                (c)(3) an amount equal to the product of the following:
                            ``(i) Territorial redistribution pool.--
                        1.05 percent of the total amount of unexpended 
                        allotments determined under paragraph 
                        (1)(A)(ii).
                            ``(ii) Territorial proportion.--The ratio 
                        of--
                                    ``(I) the allotment under 
                                subsection (c) for such commonwealth or 
                                territory for fiscal year 2005, to
                                    ``(II) the total of all such 
                                allotments for such commonwealths and 
                                territories.
            ``(4) Extended availability of remaining unexpended 
        allotments.--
                    ``(A) To meet initial projected shortfall for 
                fiscal year 2007.--In the case of a State that is 
                described in paragraph (1)(B)(ii), the Secretary shall 
                extend the availability of funds from the State's 
                allotment for fiscal year 2005 to the extent of the 
                amount described in paragraph (2)(C).
                    ``(B) Other extensions.--If the redistribution pool 
                amount determined under paragraph (1)(C)(i) exceeds the 
                total amount redistributed under paragraph (3), the 
                Secretary shall extend the availability of funds from 
                allotments for fiscal year 2005 for each State which 
                has an unexpended allotment for that fiscal year 
                determined under paragraph (1)(A) (as reduced, if 
                applicable, under paragraph (1)(B)) by an amount equal 
                to the amount (if any) by which--
                            ``(i) the amount of the unexpended 
                        allotment (as so reduced) for the State, 
                        exceeds
                            ``(ii) the redistribution/reduction amount 
                        determined under paragraph (1)(D) for the State 
                        (relating to the portion of the unexpended 
                        allotment applied to redistributions).
            ``(5) Determination of amounts.--For purposes of 
        calculating the amounts described in--
                    ``(A) paragraph (1)(A), the Secretary shall use the 
                amounts reported by the States not later than November 
                30, 2006, on Form CMS-64 or Form CMS-21, as the case 
                may be, as approved by the Secretary; or
                    ``(B) paragraph (2), the Secretary shall use the 
                amounts reported by the States not later than September 
                30, 2006, on Form CMS-37 or Form CMS-21B, as the case 
                may be, as approved by the Secretary.''.
    (b) Use of Redistributed Funds for Child Health Assistance for 
Targeted Low-Income Children.--Section 2105(a) (42 U.S.C. 1397ee(a)) is 
amended--
            (1) in paragraph (1), in the matter preceding subparagraph 
        (A), by inserting ``or paragraph (3)'' after ``subparagraph 
        (B)''; and
            (2) by adding at the end the following:
            ``(3) Use of redistributed funds for child health 
        assistance for targeted low-income children.--For purposes of 
        paragraph (1), the expenditures described in this paragraph are 
        expenditures that are not expenditures for child health 
        assistance for targeted low-income children, but only if such 
        expenditures are from any amounts redistributed under 
        subparagraphs (A) or (B) of subsection (h)(3), (i)(3), or 
        (j)(3) of section 2104.''.

SEC. 6052. AUTHORITY TO USE UP TO 10 PERCENT OF FISCAL YEAR 2006 AND 
              2007 ALLOTMENTS FOR OUTREACH.

    Section 2105(c)(2) (42 U.S.C. 1397ee(c)(2)) is amended by adding at 
the end the following:
                    ``(C) Use of up to 10 percent of 2006 and 2007 
                allotments for outreach activities.--Notwithstanding 
                subparagraph (A), a State may use up to 10 percent of 
                the allotment for the State for fiscal year 2006 and 
                for fiscal year 2007 for expenditures incurred during 
                the respective fiscal year for outreach activities as 
                provided in section 2102(c)(1) under the plan.''.

SEC. 6053. PROHIBITION AGAINST COVERING NONPREGNANT CHILDLESS ADULTS 
              WITH SCHIP FUNDS.

    (a) Prohibition on Use of SCHIP Funds.--Section 2107 (42 U.S.C. 
1397gg) is amended by adding at the end the following:
    ``(f) Limitation of Waiver Authority.--Notwithstanding subsection 
(e)(2)(A) and section 1115(a), on and after the date of enactment of 
this subsection, the Secretary may not approve a waiver, experimental, 
pilot, or demonstration project that would allow funds made available 
under this title to be used to provide child health assistance or other 
health benefits coverage to a nonpregnant childless adult. For purposes 
of the preceding sentence, a caretaker relative (as such term is 
defined for purposes of carrying out section 1931) shall not be 
considered a childless adult.''.
    (b) Conforming Amendments.--Section 2105(c)(1) (42 U.S.C. 
1397ee(c)(1)) is amended--
            (1) by inserting ``and may not include coverage of a 
        nonpregnant childless adult'' after ``section 2101)''; and
            (2) by adding at the end the following: ``For purposes of 
        the preceding sentence, a caretaker relative (as such term is 
        defined for purposes of carrying out section 1931) shall not be 
        considered a childless adult.''.
    (c) Rule of Construction.--Nothing in this section or the 
amendments made by this section shall be construed to--
            (1) authorize the waiver of any provision of title XIX or 
        XXI of the Social Security Act (42 U.S.C. 1396 et seq., 1397aa 
        et seq.) that is not otherwise authorized to be waived under 
        such titles or under title XI of such Act (42 U.S.C. 1301 et 
        seq.) as of the date of enactment of this Act;
            (2) imply congressional approval of any waiver, 
        experimental, pilot, or demonstration project affecting funds 
        made available under the State children's health insurance 
        program under title XXI of the Social Security Act (42 U.S.C. 
        1397aa et. seq.) or any amendment to such a waiver or project 
        that has been approved as of such date of enactment; or
            (3) apply to any waiver, experimental, pilot, or 
        demonstration project that would allow funds made available 
        under title XXI of the Social Security Act (42 U.S.C. 1397aa et 
        seq.) to be used to provide child health assistance or other 
        health benefits coverage to a nonpregnant childless adult that 
        is approved before the date of enactment of this Act or to any 
        extension, renewal, or amendment of such a waiver or project 
        that is approved on or after such date of enactment.

SEC. 6054. CONTINUED AUTHORITY FOR QUALIFYING STATES TO USE CERTAIN 
              FUNDS FOR MEDICAID EXPENDITURES.

    (a) In General.--Section 2105(g)(1)(A) (42 U.S.C. 1397ee(g)(1)(A)) 
is amended by striking ``or 2001'' and inserting ``2001, 2004, or 
2005''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to expenditures made under title XIX of the Social Security Act 
(42 U.S.C. 1396 et seq.) on or after October 1, 2005.

SEC. 6055. GRANTS TO PROMOTE INNOVATIVE OUTREACH AND ENROLLMENT UNDER 
              MEDICAID AND SCHIP.

    Title XXI (42 U.S.C. 1397aa et seq.) is amended by adding at the 
end the following:

``SEC. 2111. EXPANDED OUTREACH ACTIVITIES.

    ``(a) Grants To Conduct Innovative Outreach and Enrollment 
Efforts.--
            ``(1) In general.--The Secretary shall award grants to 
        eligible entities to--
                    ``(A) conduct innovative outreach and enrollment 
                efforts that are designed to increase the enrollment 
                and participation of eligible children under this title 
                and title XIX; and
                    ``(B) promote understanding of the importance of 
                health insurance coverage for prenatal care and 
                children.
            ``(2) Performance bonuses.--The Secretary may reserve a 
        portion of the funds appropriated under subsection (g) for a 
        fiscal year for the purpose of awarding performance bonuses 
        during the succeeding fiscal year to eligible entities that 
        meet enrollment goals or other criteria established by the 
        Secretary.
    ``(b) Priority for Award of Grants.--
            ``(1) In general.--In making grants under subsection 
        (a)(1), the Secretary shall give priority to--
                    ``(A) eligible entities that propose to target 
                geographic areas with high rates of--
                            ``(i) eligible but unenrolled children, 
                        including such children who reside in rural 
                        areas; or
                            ``(ii) racial and ethnic minorities and 
                        health disparity populations, including those 
                        proposals that address cultural and linguistic 
                        barriers to enrollment; and
                    ``(B) eligible entities that plan to engage in 
                outreach efforts with respect to individuals described 
                in subparagraph (A) and that are--
                            ``(i) Federal health safety net 
                        organizations; or
                            ``(ii) faith-based organizations or 
                        consortia.
            ``(2) 10 percent set aside for outreach to indian 
        children.--An amount equal to 10 percent of the funds 
        appropriated under subsection (g) for a fiscal year shall be 
        used by the Secretary to award grants to Indian Health Service 
        providers and urban Indian organizations receiving funds under 
        title V of the Indian Health Care Improvement Act (25 U.S.C. 
        1651 et seq.) for outreach to, and enrollment of, children who 
        are Indians.
    ``(c) Application.--An eligible entity that desires to receive a 
grant under subsection (a)(1) shall submit an application to the 
Secretary in such form and manner, and containing such information, as 
the Secretary may decide. Such application shall include--
            ``(1) quality and outcomes performance measures to evaluate 
        the effectiveness of activities funded by a grant awarded under 
        this section to ensure that the activities are meeting their 
        goals; and
            ``(2) an assurance that the entity shall--
                    ``(A) conduct an assessment of the effectiveness of 
                such activities against such performance measures; and
                    ``(B) cooperate with the collection and reporting 
                of enrollment data and other information determined as 
                a result of conducting such assessments to the 
                Secretary, in such form and manner as the Secretary 
                shall require.
    ``(d) Dissemination of Enrollment Data and Information Determined 
From Effectiveness Assessments; Annual Report.--The Secretary shall--
            ``(1) disseminate to eligible entities and make publicly 
        available the enrollment data and information collected and 
        reported in accordance with subsection (c)(2)(B); and
            ``(2) submit an annual report to Congress on the outreach 
        activities funded by grants awarded under this section.
    ``(e) Supplement, Not Supplant.--Federal funds awarded under this 
section shall be used to supplement, not supplant, non-Federal funds 
that are otherwise available for activities funded under this section.
    ``(f) Definitions.--In this section:
            ``(1) Eligible entity.--The term `eligible entity' means 
        any of the following:
                    ``(A) A State or local government.
                    ``(B) A Federal health safety net organization.
                    ``(C) A national, local, or community-based public 
                or nonprofit private organization.
                    ``(D) A faith-based organization or consortia, to 
                the extent that a grant awarded to such an entity is 
                consistent with the requirements of section 1955 of the 
                Public Health Service Act (42 U.S.C. 300x-65) relating 
                to a grant award to non-governmental entities.
                    ``(E) An elementary or secondary school.
            ``(2) Federal health safety net organization.--The term 
        `Federal health safety net organization' means--
                    ``(A) an Indian tribe, tribal organization, or an 
                urban Indian organization receiving funds under title V 
                of the Indian Health Care Improvement Act (25 U.S.C. 
                1651 et seq.), or an Indian Health Service provider;
                    ``(B) a Federally-qualified health center (as 
                defined in section 1905(l)(2)(B));
                    ``(C) a hospital defined as a disproportionate 
                share hospital for purposes of section 1923;
                    ``(D) a covered entity described in section 
                340B(a)(4) of the Public Health Service Act (42 U.S.C. 
                256b(a)(4)); and
                    ``(E) any other entity or a consortium that serves 
                children under a federally-funded program, including 
                the special supplemental nutrition program for women, 
                infants, and children (WIC) established under section 
                17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786), 
                the head start and early head start programs under the 
                Head Start Act (42 U.S.C. 9801 et seq.), the school 
                lunch program established under the Richard B. Russell 
                National School Lunch Act, and an elementary or 
                secondary school.
            ``(3) Indians; indian tribe; tribal organization; urban 
        indian organization.--The terms `Indian', `Indian tribe', 
        `tribal organization', and `urban Indian organization' have the 
        meanings given such terms in section 4 of the Indian Health 
        Care Improvement Act (25 U.S.C. 1603).
    ``(g) Appropriation.--There is appropriated, out of any money in 
the Treasury not otherwise appropriated, $25,000,000 for fiscal year 
2007 for the purpose of awarding grants under this section. Amounts 
appropriated and paid under the authority of this section shall--
            ``(1) be in addition to amounts appropriated under section 
        2104 and paid to States in accordance with section 2105; and
            ``(2) not be subject to the limitation on expenditures 
        described in section 2105(c)(2)(A).''.

    Subchapter C--Money Follows the Person Rebalancing Demonstration

SEC. 6061. MONEY FOLLOWS THE PERSON REBALANCING DEMONSTRATION.

    (a) Program Purpose and Authority.--The Secretary is authorized to 
award, on a competitive basis, grants to States in accordance with this 
section for demonstration projects (each in this section referred to as 
an ``MFP demonstration project'') designed to achieve the following 
objectives with respect to institutional and home and community-based 
long-term care services under State Medicaid programs:
            (1) Rebalancing.--Increase the use of home and community-
        based, rather than institutional, long-term care services.
            (2) Money follows the person.--Eliminate barriers or 
        mechanisms, whether in the State law, the State Medicaid plan, 
        the State budget, or otherwise, that prevent or restrict the 
        flexible use of Medicaid funds to enable Medicaid-eligible 
        individuals to receive support for appropriate and necessary 
        long-term services in the settings of their choice.
            (3) Continuity of service.--Increase the ability of the 
        State Medicaid program to assure continued provision of home 
        and community-based long-term care services to eligible 
        individuals who choose to transition from an institutional to a 
        community setting.
            (4) Quality assurance and quality improvement.--Ensure that 
        procedures are in place (at least comparable to those required 
        under the qualified HCB program) to provide quality assurance 
        for eligible individuals receiving Medicaid home and community-
        based long-term care services and to provide for continuous 
        quality improvement in such services.
    (b) Definitions.--For purposes of this section:
            (1) Home and community-based long-term care services.--The 
        term ``home and community-based long-term care services'' 
        means, with respect to a State Medicaid program, home and 
        community-based services (including home health and personal 
        care services) that are provided under the State's qualified 
        HCB program or that could be provided under such a program but 
        are otherwise provided under the Medicaid program.
            (2) Eligible individual.--The term ``eligible individual'' 
        means, with respect to an MFP demonstration project of a State, 
        an individual in the State--
                    (A) who, immediately before beginning participation 
                in the MFP demonstration project--
                            (i) resides (and has resided, for a period 
                        of not less than 6 months or for such longer 
                        minimum period, not to exceed 2 years, as may 
                        be specified by the State) in an inpatient 
                        facility;
                            (ii) is receiving Medicaid benefits for 
                        inpatient services furnished by such inpatient 
                        facility; and
                            (iii) with respect to whom a determination 
                        has been made that, but for the provision of 
                        home and community-based long-term care 
                        services, the individual would continue to 
                        require the level of care provided in an 
                        inpatient facility; and
                    (B) who resides in a qualified residence beginning 
                on the initial date of participation in the 
                demonstration project.
            (3) Inpatient facility.--The term ``inpatient facility'' 
        means a hospital, nursing facility, or intermediate care 
        facility for the mentally retarded. Such term includes an 
        institution for mental diseases, but only, with respect to a 
        State, to the extent medical assistance is available under the 
        State Medicaid plan for services provided by such institution.
            (4) Medicaid.--The term ``Medicaid'' means, with respect to 
        a State, the State program under title XIX of the Social 
        Security Act (including any waiver or demonstration under such 
        title or under section 1115 of such Act relating to such 
        title).
            (5) Qualified hcb program.--The term ``qualified HCB 
        program'' means a program providing home and community-based 
        long-term care services operating under Medicaid, whether or 
        not operating under waiver authority.
            (6) Qualified residence.--The term ``qualified residence'' 
        means, with respect to an eligible individual--
                    (A) a home owned or leased by the individual or the 
                individual's family member;
                    (B) an apartment with an individual lease, with 
                lockable access and egress, and which includes living, 
                sleeping, bathing, and cooking areas over which the 
                individual or the individual's family has domain and 
                control; and
                    (C) a residence, in a community-based residential 
                setting, in which no more than 4 unrelated individuals 
                reside.
            (7) Qualified expenditures.--The term ``qualified 
        expenditures'' means expenditures by the State under its MFP 
        demonstration project for home and community-based long-term 
        care services for an eligible individual participating in the 
        MFP demonstration project, but only with respect to services 
        furnished during the 12-month period beginning on the date the 
        individual is discharged from an inpatient facility referred to 
        in paragraph (2)(A)(i).
            (8) Self-directed services.--The term ``self-directed'' 
        means, with respect to home and community-based long-term care 
        services for an eligible individual, such services for the 
        individual which are planned and purchased under the direction 
        and control of such individual or the individual's authorized 
        representative (as defined by the Secretary), including the 
        amount, duration, scope, provider, and location of such 
        services, under the State Medicaid program consistent with the 
        following requirements:
                    (A) Assessment.--There is an assessment of the 
                needs, capabilities, and preferences of the individual 
                with respect to such services.
                    (B) Service plan.--Based on such assessment, there 
                is developed jointly with such individual or the 
                individual's authorized representative a plan for such 
                services for such individual that is approved by the 
                State and that--
                            (i) specifies those services, if any, which 
                        the individual or the individual's authorized 
                        representative would be responsible for 
                        directing;
                            (ii) identifies the methods by which the 
                        individual or the individual's authorized 
                        representative or an agency designated by an 
                        individual or representative will select, 
                        manage, and dismiss providers of such services;
                            (iii) specifies the role of family members 
                        and others whose participation is sought by the 
                        individual or the individual's authorized 
                        representative with respect to such services;
                            (iv) is developed through a person-centered 
                        process that--
                                    (I) is directed by the individual 
                                or the individual's authorized 
                                representative;
                                    (II) builds upon the individual's 
                                capacity to engage in activities that 
                                promote community life and that 
                                respects the individual's preferences, 
                                choices, and abilities; and
                                    (III) involves families, friends, 
                                and professionals as desired or 
                                required by the individual or the 
                                individual's authorized representative;
                            (v) includes appropriate risk management 
                        techniques that recognize the roles and sharing 
                        of responsibilities in obtaining services in a 
                        self-directed manner and assure the 
                        appropriateness of such plan based upon the 
                        resources and capabilities of the individual or 
                        the individual's authorized representative; and
                            (vi) may include an individualized budget 
                        which identifies the dollar value of the 
                        services and supports under the control and 
                        direction of the individual or the individual's 
                        authorized representative.
                    (C) Budget Process.--With respect to individualized 
                budgets described in subparagraph (B)(vi), the State 
                application under subsection (c)--
                            (i) describes the method for calculating 
                        the dollar values in such budgets based on 
                        reliable costs and service utilization;
                            (ii) defines a process for making 
                        adjustments in such dollar values to reflect 
                        changes in individual assessments and service 
                        plans; and
                            (iii) provides a procedure to evaluate 
                        expenditures under such budgets.
            (9) State.--The term ``State'' has the meaning given such 
        term for purposes of title XIX of the Social Security Act.
    (c) State Application.--A State seeking approval of an MFP 
demonstration project shall submit to the Secretary, at such time and 
in such format as the Secretary requires, an application meeting the 
following requirements and containing such additional information, 
provisions, and assurances, as the Secretary may require:
            (1) Assurance of a public development process.--The 
        application contains an assurance that the State has engaged, 
        and will continue to engage, in a public process for the 
        design, development, and evaluation of the MFP demonstration 
        project that allows for input from eligible individuals, the 
        families of such individuals, authorized representatives of 
        such individuals, providers, and other interested parties.
            (2) Operation in connection with qualified hcb program to 
        assure continuity of services.--The State will conduct the MFP 
        demonstration project for eligible individuals in conjunction 
        with the operation of a qualified HCB program that is in 
        operation (or approved) in the State for such individuals in a 
        manner that assures continuity of Medicaid coverage for such 
        individuals so long as such individuals continue to be eligible 
        for medical assistance.
            (3) Demonstration project period.--The application shall 
        specify the period of the MFP demonstration project, which 
        shall include at least 2 consecutive fiscal years in the 5-
        fiscal-year period beginning with fiscal year 2009.
            (4) Service area.--The application shall specify the 
        service area or areas of the MFP demonstration project, which 
        may be a statewide area or one or more geographic areas of the 
        State.
            (5) Targeted groups and numbers of individuals served.--The 
        application shall specify--
                    (A) the target groups of eligible individuals to be 
                assisted to transition from an inpatient facility to a 
                qualified residence during each fiscal year of the MFP 
                demonstration project;
                    (B) the projected numbers of eligible individuals 
                in each targeted group of eligible individuals to be so 
                assisted during each such year; and
                    (C) the estimated total annual qualified 
                expenditures for each fiscal year of the MFP 
                demonstration project.
            (6) Individual choice, continuity of care.--The application 
        shall contain assurances that--
                    (A) each eligible individual or the individual's 
                authorized representative will be provided the 
                opportunity to make an informed choice regarding 
                whether to participate in the MFP demonstration 
                project;
                    (B) each eligible individual or the individual's 
                authorized representative will choose the qualified 
                residence in which the individual will reside and the 
                setting in which the individual will receive home and 
                community-based long-term care services;
                    (C) the State will continue to make available, so 
                long as the State operates its qualified HCB program 
                consistent with applicable requirements, home and 
                community-based long-term care services to each 
                individual who completes participation in the MFP 
                demonstration project for as long as the individual 
                remains eligible for medical assistance for such 
                services under such qualified HCB program (including 
                meeting a requirement relating to requiring a level of 
                care provided in an inpatient facility and continuing 
                to require such services).
            (7) Rebalancing.--The application shall--
                    (A) provide such information as the Secretary may 
                require concerning the dollar amounts of State Medicaid 
                expenditures for the fiscal year, immediately preceding 
                the first fiscal year of the State's MFP demonstration 
                project, for long-term care services and the percentage 
                of such expenditures that were for institutional long-
                term care services or were for home and community-based 
                long-term care services;
                    (B)(i) specify the methods to be used by the State 
                to increase, for each fiscal year during the MFP 
                demonstration project, the dollar amount of such total 
                expenditures for home and community-based long-term 
                care services and the percentage of such total 
                expenditures for long-term care services that are for 
                home and community-based long-term care services; and
                    (ii) describe the extent to which the MFP 
                demonstration project will contribute to accomplishment 
                of objectives described in subsection (a).
            (8) Money follows the person.--The application shall 
        describe the methods to be used by the State to eliminate any 
        legal, budgetary, or other barriers to flexibility in the 
        availability of Medicaid funds to pay for long-term care 
        services for eligible individuals participating in the project 
        in the appropriate settings of their choice, including costs to 
        transition from an institutional setting to a qualified 
        residence.
            (9) Maintenance of effort and cost-effectiveness.--The 
        application shall contain or be accompanied by such information 
        and assurances as may be required to satisfy the Secretary 
        that--
                    (A) total expenditures under the State Medicaid 
                program for home and community-based long-term care 
                services will not be less for any fiscal year during 
                the MFP demonstration project than for the greater of 
                such expenditures for--
                            (i) fiscal year 2005; or
                            (ii) any succeeding fiscal year before the 
                        first year of the MFP demonstration project; 
                        and
                    (B) in the case of a qualified HCB program 
                operating under a waiver under subsection (c) or (d) of 
                section 1915 of the Social Security Act (42 U.S.C. 
                1396n), but for the amount awarded under a grant under 
                this section, the State program would continue to meet 
                the cost-effectiveness requirements of subsection 
                (c)(2)(D) of such section or comparable requirements 
                under subsection (d)(5) of such section, respectively.
            (10) Waiver requests.--The application shall contain or be 
        accompanied by requests for any modification or adjustment of 
        waivers of Medicaid requirements described in subsection 
        (d)(3), including adjustments to the maximum numbers of 
        individuals included and package of benefits, including one-
        time transitional services, provided.
            (11) Quality assurance and quality improvement.--The 
        application shall include--
                    (A) a plan satisfactory to the Secretary for 
                quality assurance and quality improvement for home and 
                community-based long-term care services under the State 
                Medicaid program, including a plan to assure the health 
                and welfare of individuals participating in the MFP 
                demonstration project; and
                    (B) an assurance that the State will cooperate in 
                carrying out activities under subsection (f) to develop 
                and implement continuous quality assurance and quality 
                improvement systems for home and community-based long-
                term care services.
            (12) Optional program for self-directed services.--If the 
        State elects to provide for any home and community-based long-
        term care services as self-directed services (as defined in 
        subsection (b)(8)) under the MFP demonstration project, the 
        application shall provide the following:
                    (A) Meeting requirements.--A description of how the 
                project will meet the applicable requirements of such 
                subsection for the provision of self-directed services.
                    (B) Voluntary election.--A description of how 
                eligible individuals will be provided with the 
                opportunity to make an informed election to receive 
                self-directed services under the project and after the 
                end of the project.
                    (C) State support in service plan development.--
                Satisfactory assurances that the State will provide 
                support to eligible individuals who self-direct in 
                developing and implementing their service plans.
                    (D) Oversight of receipt of services.--Satisfactory 
                assurances that the State will provide oversight of 
                eligible individual's receipt of such self-directed 
                services, including steps to assure the quality of 
                services provided and that the provision of such 
                services are consistent with the service plan under 
                such subsection.
        Nothing in this section shall be construed as requiring a State 
        to make an election under the project to provide for home and 
        community-based long-term care services as self-directed 
        services, or as requiring an individual to elect to receive 
        self-directed services under the project.
            (13) Reports and evaluation.--The application shall provide 
        that--
                    (A) the State will furnish to the Secretary such 
                reports concerning the MFP demonstration project, on 
                such timetable, in such uniform format, and containing 
                such information as the Secretary may require, as will 
                allow for reliable comparisons of MFP demonstration 
                projects across States; and
                    (B) the State will participate in and cooperate 
                with the evaluation of the MFP demonstration project.
    (d) Secretary's Award of Competitive Grants.--
            (1) In general.--The Secretary shall award grants under 
        this section on a competitive basis to States selected from 
        among those with applications meeting the requirements of 
        subsection (c), in accordance with the provisions of this 
        subsection.
            (2) Selection and modification of state applications.--In 
        selecting State applications for the awarding of such a grant, 
        the Secretary--
                    (A) shall take into consideration the manner in 
                which, and extent to which, the State proposes to 
                achieve the objectives specified in subsection (a);
                    (B) shall seek to achieve an appropriate national 
                balance in the numbers of eligible individuals, within 
                different target groups of eligible individuals, who 
                are assisted to transition to qualified residences 
                under MFP demonstration projects, and in the geographic 
                distribution of States operating MFP demonstration 
                projects;
                    (C) shall give preference to State applications 
                proposing--
                            (i) to provide transition assistance to 
                        eligible individuals within multiple target 
                        groups; and
                            (ii) to provide eligible individuals with 
                        the opportunity to receive home and community-
                        based long-term care services as self-directed 
                        services, as defined in subsection (b)(8); and
                    (D) shall take such objectives into consideration 
                in setting the annual amounts of State grant awards 
                under this section.
            (3) Waiver authority.--The Secretary is authorized to waive 
        the following provisions of title XIX of the Social Security 
        Act, to the extent necessary to enable a State initiative to 
        meet the requirements and accomplish the purposes of this 
        section:
                    (A) Statewideness.--Section 1902(a)(1), in order to 
                permit implementation of a State initiative in a 
                selected area or areas of the State.
                    (B) Comparability.--Section 1902(a)(10)(B), in 
                order to permit a State initiative to assist a selected 
                category or categories of individuals described in 
                subsection (b)(2)(A).
                    (C) Income and resources eligibility.--Section 
                1902(a)(10)(C)(i)(III), in order to permit a State to 
                apply institutional eligibility rules to individuals 
                transitioning to community-based care.
                    (D) Provider agreements.--Section 1902(a)(27), in 
                order to permit a State to implement self-directed 
                services in a cost-effective manner.
            (4) Conditional approval of outyear grant.--In awarding 
        grants under this section, the Secretary shall condition the 
        grant for the second and any subsequent fiscal years of the 
        grant period on the following:
                    (A) Numerical benchmarks.--The State must 
                demonstrate to the satisfaction of the Secretary that 
                it is meeting numerical benchmarks specified in the 
                grant agreement for--
                            (i) increasing State Medicaid support for 
                        home and community-based long-term care 
                        services under subsection (c)(5); and
                            (ii) numbers of eligible individuals 
                        assisted to transition to qualified residences.
                    (B) Quality of care.--The State must demonstrate to 
                the satisfaction of the Secretary that it is meeting 
                the requirements under subsection (c)(11) to assure the 
                health and welfare of MFP demonstration project 
                participants.
    (e) Payments to States; Carryover of Unused Grant Amounts.--
            (1) Payments.--For each calendar quarter in a fiscal year 
        during the period a State is awarded a grant under subsection 
        (d), the Secretary shall pay to the State from its grant award 
        for such fiscal year an amount equal to the lesser of--
                    (A) 90 percent of the amount of qualified 
                expenditures made during such quarter; or
                    (B) the total amount remaining in such grant award 
                for such fiscal year (taking into account the 
                application of paragraph (2)).
            (2) Carryover of unused amounts.--Any portion of a State 
        grant award for a fiscal year under this section remaining at 
        the end of such fiscal year shall remain available to the State 
        for the next 4 fiscal years, subject to paragraph (3).
            (3) Reawarding of certain unused amounts.--In the case of a 
        State that the Secretary determines pursuant to subsection 
        (d)(4) has failed to meet the conditions for continuation of a 
        MFP demonstration project under this section in a succeeding 
        year or years, the Secretary shall rescind the grant awards for 
        such succeeding year or years, together with any unspent 
        portion of an award for prior years, and shall add such amounts 
        to the appropriation for the immediately succeeding fiscal year 
        for grants under this section.
            (4) Preventing duplication of payment.--The payment under a 
        MFP demonstration project with respect to qualified 
        expenditures shall be in lieu of any payment with respect to 
        such expenditures that could otherwise be paid under Medicaid, 
        including under section 1903(a) of the Social Security Act. 
        Nothing in the previous sentence shall be construed as 
        preventing the payment under Medicaid for such expenditures in 
        a grant year after amounts available to pay for such 
        expenditures under the MFP demonstration project have been 
        exhausted.
    (f) Quality Assurance and Improvement; Technical Assistance; 
Oversight.--
            (1) In general.--The Secretary, either directly or by grant 
        or contract, shall provide for technical assistance to, and 
        oversight of, States for purposes of upgrading quality 
        assurance and quality improvement systems under Medicaid home 
        and community-based waivers, including--
                    (A) dissemination of information on promising 
                practices;
                    (B) guidance on system design elements addressing 
                the unique needs of participating beneficiaries;
                    (C) ongoing consultation on quality, including 
                assistance in developing necessary tools, resources, 
                and monitoring systems; and
                    (D) guidance on remedying programmatic and systemic 
                problems.
            (2) Funding.--From the amounts appropriated under 
        subsection (h)(1) for the portion of fiscal year 2009 that 
        begins on January 1, 2009, and ends on September 30, 2009, and 
        for fiscal year 2010, not more than $2,400,000 shall be 
        available to the Secretary to carry out this subsection during 
        the period that begins on January 1, 2009, and ends on 
        September 30, 2013.
    (g) Research and Evaluation.--
            (1) In general.--The Secretary, directly or through grant 
        or contract, shall provide for research on, and a national 
        evaluation of, the program under this section, including 
        assistance to the Secretary in preparing the final report 
        required under paragraph (2). The evaluation shall include an 
        analysis of projected and actual savings related to the 
        transition of individuals to qualified residences in each State 
        conducting an MFP demonstration project.
            (2) Final report.--The Secretary shall make a final report 
        to the President and Congress, not later than September 30, 
        2013, reflecting the evaluation described in paragraph (1) and 
        providing findings and conclusions on the conduct and 
        effectiveness of MFP demonstration projects.
            (3) Funding.--From the amounts appropriated under 
        subsection (h)(1) for each of fiscal years 2010 through 2013, 
        not more than $1,100,000 per year shall be available to the 
        Secretary to carry out this subsection.
    (h) Appropriations.--
            (1) In general.--There are appropriated, from any funds in 
        the Treasury not otherwise appropriated, for grants to carry 
        out this section--
                    (A) $250,000,000 for the portion of fiscal year 
                2009 beginning on January 1, 2009, and ending on 
                September 30, 2009;
                    (B) $300,000,000 for fiscal year 2010;
                    (C) $350,000,000 for fiscal year 2011;
                    (D) $400,000,000 for fiscal year 2012; and
                    (E) $450,000,000 for fiscal year 2013.
            (2) Availability.--Amounts made available under paragraph 
        (1) for a fiscal year shall remain available for the awarding 
        of grants to States by not later than September 30, 2013.

   CHAPTER 6--OPTION FOR HURRICANE KATRINA DISASTER STATES TO DELAY 
                              APPLICATION

SEC. 6071. OPTION FOR HURRICANE KATRINA DISASTER STATES TO DELAY 
              APPLICATION.

    Notwithstanding any provision of this subtitle, or any amendment 
made by this subtitle, the State of Louisiana, Mississippi, or Alabama 
may elect to not have the provisions of this subtitle, or of any 
amendment made by this subtitle, apply with respect to the State during 
any period for which a major disaster declared in accordance with 
section 401 of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5170) with respect to a parish, in the case 
of Louisiana, or a county, in the case of Mississippi or Alabama, as a 
result of Hurricane Katrina is in effect.

                          Subtitle B--Medicare

SEC. 6101. IMPROVEMENTS TO THE MEDICARE-DEPENDENT HOSPITAL (MDH) 
              PROGRAM.

    (a) 5-Year Extension.--
            (1) Extension of Payment Methodology.--Section 
        1886(d)(5)(G) (42 U.S.C. 1395ww(d)(5)(G)) is amended--
                    (A) in clause (i), by striking ``October 1, 2006'' 
                and inserting ``October 1, 2011''; and
                    (B) in clause (ii)(II)--
                            (i) by striking ``October 1, 2006'' and 
                        inserting ``October 1, 2011''; and
                            (ii) by inserting ``or for discharges in 
                        the fiscal year'' after ``for the cost 
                        reporting period''.
            (2) Conforming amendments.--
                    (A) Extension of target amount.--Section 
                1886(b)(3)(D) (42 U.S.C. 1395ww(b)(3)(D)) is amended--
                            (i) in the matter preceding clause (i)--
                                    (I) by striking ``beginning'' and 
                                inserting ``occurring''; and
                                    (II) by striking ``October 1, 
                                2006'' and inserting ``October 1, 
                                2011''; and
                            (ii) in clause (iv), by striking ``through 
                        fiscal year 2005'' and inserting ``through 
                        fiscal year 2011''.
                    (B) Permitting hospitals to decline 
                reclassification.--Section 13501(e)(2) of the Omnibus 
                Budget Reconciliation Act of 1993 (42 U.S.C. 1395ww 
                note) is amended by striking ``through fiscal year 
                2005'' and inserting ``through fiscal year 2011''.
    (b) Option to Use of 2002 as Base Year.--Section 1886(b)(3) (42 
U.S.C. 1395ww(b)(3)) is amended--
            (1) in subparagraph (D), by inserting ``subject to 
        subparagraph (K),'' after ``(d)(5)(G)),''; and
            (2) by adding at the end the following new subparagraph:
    ``(K)(i) With respect to discharges occurring on or after October 
1, 2006, in the case of a medicare-dependent, small rural hospital, for 
purposes of applying subparagraph (D)--
            ``(I) there shall be substituted for the base cost 
        reporting period described in subparagraph (D)(i) the 12-month 
        cost reporting period beginning during fiscal year 2002; and
            ``(II) any reference in such subparagraph to the `first 
        cost reporting period' described in such subparagraph is deemed 
        a reference to the first cost reporting period beginning on or 
        after October 1, 2006.
    ``(ii) This subparagraph shall only apply to a hospital if the 
substitution described in clause (i)(I) results in an increase in the 
target amount under subparagraph (D) for the hospital.''.
    (c) Enhanced Payment for Amount by Which the Target Exceeds the PPS 
Rate.--Section 1886(d)(5)(G)(ii)(II) (42 U.S.C. 
1395ww(d)(5)(G)(iv)(II)) is amended by inserting ``(or 75 percent in 
the case of discharges occurring on or after October 1, 2006)'' after 
``50 percent''.
    (d) Enhanced Disproportionate Share Hospital (DSH) Treatment for 
Medicare Dependent Hospitals.--Section 1886(d)(5)(F)(xiv)(II) (42 
U.S.C. 1395ww(d)(5)(F)(xiv)(II)) is amended by inserting ``or, in the 
case of discharges occurring on or after October 1, 2006, as a 
medicare-dependent, small rural hospital under subparagraph (G)(iv)'' 
before the period at the end.

SEC. 6102. REDUCTION IN PAYMENTS TO SKILLED NURSING FACILITIES FOR BAD 
              DEBT.

    (a) In General.--Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)) is 
amended by adding at the end the following new subparagraph:
    ``(V) In determining such reasonable costs for skilled nursing 
facilities with respect to services furnished on or after October 1, 
2005, the amount of bad debts otherwise treated as allowed costs which 
are attributable to the deductibles and coinsurance amounts under this 
title shall be reduced by 30 percent of such amount otherwise 
allowable.''.
    (b) Technical Amendment.--Section 1861(v)(1)(T) (42 U.S.C. 
1395x(v)(1)(T)) is amended by striking ``section 1833(t)(5)(B)'' and 
inserting ``section 1833(t)(8)(B)''.

SEC. 6103. TWO-YEAR EXTENSION OF THE 50 PERCENT COMPLIANCE THRESHOLD 
              USED TO DETERMINE WHETHER A HOSPITAL OR UNIT OF A 
              HOSPITAL IS AN INPATIENT REHABILITATION FACILITY UNDER 
              THE MEDICARE PROGRAM.

    (a) Extension.--
            (1) In general.--Effective as if enacted on June 30, 2005, 
        notwithstanding section 412.23(b)(2) of title 42, Code of 
        Federal Regulations, during the period beginning on July 1, 
        2005, and ending on June 30, 2007, the Secretary of Health and 
        Human Services shall not--
                    (A) require a compliance rate, pursuant to the 
                criterion (commonly known as the ``75 percent rule'') 
                that is used to determine whether a hospital or unit of 
                a hospital is an inpatient rehabilitation facility (as 
                defined in the rule published in the Federal Register 
                on May 7, 2004, entitled ``Medicare Program; Final 
                Rule; Changes to the Criteria for Being Classified as 
                an Inpatient Rehabilitation Facility'' (69 Fed. Reg. 
                25752)), that is greater than the 50 percent compliance 
                threshold that became effective on July 1, 2004; or
                    (B) change the designation of an inpatient 
                rehabilitation facility that is in compliance with such 
                50 percent threshold.
            (2) Retroactive Status as an Inpatient Rehabilitation 
        Facility; Payments; Expedited Review.--The Secretary of Health 
        and Human Services shall establish procedures for--
                    (A) making any necessary retroactive adjustment to 
                restore the status of a facility as an inpatient 
                rehabilitation facility as a result of subsection (a); 
                and
                    (B) making any necessary payments to inpatient 
                rehabilitation facilities based on such adjustment for 
                discharges occurring on or after July 1, 2005, and 
                before the date of enactment of this Act.
    (b) Special Rule.--In the case of a hospital or unit of a hospital 
that failed to meet the 50 percent compliance threshold described in 
subsection (a)(1)(A) with respect to the first cost reporting period of 
the hospital or unit that began on or after July 1, 2004, the following 
rules shall apply:
            (1) Such hospital or unit shall be deemed to meet such 50 
        percent threshold for purposes of subsection (a).
            (2) The Secretary shall examine all the claims of the 
        hospital or unit under title XVIII of the Social Security Act 
        submitted during the 6-month period beginning after the end of 
        such first cost reporting period.
            (3) If the Secretary determines after such review that the 
        hospital or unit is still not in compliance with such 50 
        percent compliance threshold--
                    (A) the deemed status of the hospital or unit under 
                paragraph (1) shall be revoked retroactive to the 
                beginning of such 6-month period; and
                    (B) the Secretary shall provide for the collection 
                of any necessary overpayments by reason of the 
                revocation under subparagraph (A).
    (c) Study and Report by the HHS Inspector General.--
            (1) Study.--
                    (A) In general.--The Inspector General of the 
                Department of Health and Human Services shall conduct a 
                study of hospitals and units of hospitals that--
                            (i) are designated as inpatient 
                        rehabilitation facilities under title XVIII of 
                        the Social Security Act; and
                            (ii) would not be so designated if this 
                        section had not been enacted because the 
                        hospital or unit has a compliance rate that is 
                        greater than the 50 percent compliance 
                        threshold described in subsection (a)(1)(A) but 
                        is less than the 60 percent compliance 
                        threshold that would have become effective on 
                        July 1, 2005, but for this section.
                    (B) Requirement.--In conducting the study under 
                subparagraph (A), the Inspector General shall analyze 
                the types of patients the hospitals and units are 
                treating and issues relating to the medical conditions 
                of such patients that do not meet the medical 
                requirements for determining compliance with such 
                threshold.
            (2) Report.--Not later than January 1, 2007, the Inspector 
        General shall submit to Congress and the Secretary a report on 
        the study conducted under paragraph (1), together with such 
        recommendations as the Inspector General determines 
        appropriate.
    (d) Rehabilitation Advisory Council.--
            (1) Establishment.--The Secretary shall establish an 
        advisory council to be known as the ``Rehabilitation Advisory 
        Council''.
            (2) Membership.--The membership of the Rehabilitation 
        Advisory Council shall include--
                    (A) physicians;
                    (B) Medicare beneficiaries;
                    (C) representatives of inpatient rehabilitation 
                facilities; and
                    (D) representatives of other entities and 
                practitioners that provide rehabilitative care in 
                settings other than in such facilities, such as skilled 
                nursing facilities.
            (3) Duties.--
                    (A) Advice and recommendations.--The Rehabilitation 
                Advisory Council shall provide advice and 
                recommendations to Congress and the Secretary 
                concerning the coverage of rehabilitation services 
                under the Medicare program, including the appropriate 
                medical criteria for determining the appropriateness of 
                inpatient rehabilitation facility admissions.
                    (B) Periodic reports.--The Rehabilitation Advisory 
                Council shall provide Congress and the Secretary with 
                periodic reports that summarize--
                            (i) the Council's activities; and
                            (ii) any recommendations for legislation or 
                        administrative action the Council considers to 
                        be appropriate.
                    (4) Termination.--The Rehabilitation Advisory 
                Council shall terminate on September 30, 2010.

SEC. 6104. PROHIBITION ON PHYSICIAN SELF REFERRALS TO PHYSICIAN OWNED, 
              LIMITED SERVICE HOSPITALS.

    (a) Prohibition.--Section 1877(d) (42 U.S.C. 1395nn(d)) is amended 
in each of paragraphs (2)(B) and (3)(B) by striking ``effective for the 
18-month period beginning on the date of enactment of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003'' and 
inserting ``on and after December 8, 2003''.
    (b) Revisions to the Requirements to Qualify for the Exception to 
the Definition of Specialty Hospital.--Section 1877(h)(7)(B) (42 U.S.C. 
1395nn(h)(7)(B)) is amended--
            (1) by redesignating clauses (iii), (iv), and (v) as 
        clauses (vi), (vii), and (viii), respectively;
            (2) by inserting after clause (ii) the following new 
        clauses:
                            ``(iii) for which the percent of investment 
                        in the hospital by physician investors at any 
                        time on or after June 8, 2005, is no greater 
                        than the percent of such investment by 
                        physician investors as of such date;
                            ``(iv) for which the percent of investment 
                        in the hospital by any physician investor at 
                        any time on or after June 8, 2005, is no 
                        greater than the percent of such investment by 
                        such physician as of such date;
                            ``(v) for which the number of operating 
                        rooms at the hospital at any time on or after 
                        June 8, 2005, is no greater than the number of 
                        such rooms as of such date;''; and
            (3) by striking clause (vii), as so redesignated, and 
        inserting the following:
                            ``(vii) for which--
                                    ``(I) during the period beginning 
                                on December 8, 2003, and ending on June 
                                7, 2005, any increase in the number of 
                                beds occurs only in the facilities on 
                                the main campus of the hospital and 
                                does not exceed 50 percent of the 
                                number of beds in the hospital as of 
                                November 18, 2003, or 5 beds, whichever 
                                is greater; and
                                    ``(II) the number of beds at the 
                                hospital at any time on or after June 
                                8, 2005, is no greater than the number 
                                of such beds as of such date; and''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on June 8, 2005.

SEC. 6105. MINIMUM UPDATE FOR PHYSICIANS' SERVICES FOR 2006.

    (a) Minimum Update for 2006.--Section 1848(d) (42 U.S.C. 1395w-
4(d)), as amended by section 6110(c), is amended by adding at the end 
the following new paragraph:
            ``(7) Update for 2006.--The update to the single conversion 
        factor established in paragraph (1)(C) for 2006 shall be not 
        less than 1 percent.''.
    (b) Conforming Amendment.--Section 1848(d)(4)(B) (42 U.S.C. 1395w-
4(d)(4)(B)) is amended, in the matter preceding clause (i), by striking 
``paragraph (5)'' and inserting ``paragraphs (5) and (7)''.
    (c) Not Treated as Change in Law and Regulation in Sustainable 
Growth Rate Determination.--The amendments made by this section shall 
not be treated as a change in law for purposes of applying section 
1848(f)(2)(D) of the Social Security Act (42 U.S.C. 1395w-4(f)(2)(D)).

SEC. 6106. ONE-YEAR EXTENSION OF HOLD HARMLESS PROVISIONS FOR SMALL 
              RURAL HOSPITALS AND SOLE COMMUNITY HOSPITALS UNDER THE 
              PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT 
              DEPARTMENT SERVICES.

    Section 1833(t)(7)(D)(i) (42 U.S.C. 1395l(t)(7)(D)(i)) is amended 
by striking ``January 1, 2006'' and inserting ``January 1, 2007''.

SEC. 6107. UPDATE TO THE COMPOSITE RATE COMPONENT OF THE BASIC CASE-MIX 
              ADJUSTED PROSPECTIVE PAYMENT SYSTEM FOR DIALYSIS 
              SERVICES.

    Section 1881(b)(12) (42 U.S.C. 1395rr(b)(12)) is amended--
            (1) in subparagraph (F), in the flush matter at the end, by 
        striking ``Nothing'' and inserting ``Except as provided in 
        subparagraph (G), nothing'';
            (2) by redesignating subparagraph (G) as subparagraph (H); 
        and
            (3) by inserting after subparagraph (F) the following new 
        subparagraph:
    ``(G) The Secretary shall increase the amount of the composite rate 
component of the basic case-mix adjusted system under subparagraph (B) 
for dialysis services furnished on or after January 1, 2006, by 1.6 
percent above the amount of such composite rate component for such 
services furnished on December 31, 2005.''.

SEC. 6108. ONE-YEAR EXTENSION OF MORATORIUM ON THERAPY CAPS.

    Section 1833(g)(4) (42 U.S.C. 1395l(g)(4)) is amended by striking 
``and 2005'' and inserting ``2005, and 2006''.

SEC. 6109. TRANSFER OF TITLE OF CERTAIN DME TO PATIENT AFTER 13-MONTH 
              RENTAL.

    (a) In General.--Section 1834(a)(7)(A) (42 U.S.C. 1395m(a)(7)(A)) 
is amended to read as follows:
                    ``(A) Payment.--In the case of an item of durable 
                medical equipment not described in paragraphs (2) 
                through (6), the following rules shall apply:
                            ``(i) Rental.--
                                    ``(I) In general.--Payment for the 
                                item shall be made on a monthly basis 
                                for the rental of the item during the 
                                period of medical need (but payments 
                                under this clause may not extend over a 
                                period of continuous use (as determined 
                                by the Secretary) of longer than 13 
                                months).
                                    ``(II) Payment amount.--Subject to 
                                subparagraph (B), the amount recognized 
                                for the item--
                                            ``(aa) for each of the 
                                        first 3 months of such period 
                                        is 10 percent of the purchase 
                                        price recognized under 
                                        paragraph (8) with respect to 
                                        the item; and
                                            ``(bb) for each of the 
                                        remaining months of such period 
                                        is 7.5 percent of such purchase 
                                        price.
                            ``(ii) Ownership after rental.--
                                    ``(I) Transfer of title.--On the 
                                first day that begins after the 13th 
                                continuous month during which payment 
                                is made for the rental of an item under 
                                clause (i), the supplier of the item 
                                shall transfer title to the item to the 
                                individual.
                                    ``(II) Maintenance and servicing.--
                                After the supplier transfers title to 
                                the item under subclause (I), 
                                maintenance and servicing payments 
                                shall, if the Secretary determines such 
                                payments are reasonable and necessary, 
                                be made (for parts and labor not 
                                covered by the supplier's or 
                                manufacturer's warranty, as determined 
                                by the Secretary to be appropriate for 
                                the particular type of durable medical 
                                equipment), and such payments shall be 
                                in an amount determined to be 
                                appropriate by the Secretary.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to items furnished for which the first rental month occurs on or 
after January 1, 2006.

SEC. 6110. ESTABLISHMENT OF MEDICARE VALUE-BASED PURCHASING PROGRAMS.

    (a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) is amended--
            (1) by redesignating part E as part F; and
            (2) by inserting after part D the following new part:

                    ``Part E--Value-Based Purchasing

   ``quality measurement systems for value-based purchasing programs

    ``Sec. 1860E-1. (a) Establishment.--
            ``(1) In general.--The Secretary shall develop quality 
        measurement systems in accordance with subsections (b), (c), 
        (d), and (e), for purposes of providing value-based payments 
        to--
                    ``(A) hospitals pursuant to section 1860E-2;
                    ``(B) physicians and practitioners pursuant to 
                section 1860E-3;
                    ``(C) plans pursuant to section 1860E-4;
                    ``(D) end stage renal disease providers and 
                facilities pursuant to section 1860E-5; and
                    ``(E) home health agencies pursuant to section 
                1860E-6.
            ``(2) Quality.--The systems developed under paragraph (1) 
        shall measure the quality of the care furnished by the provider 
        involved.
            ``(3) High quality health care defined.--In this part, the 
        term `high quality health care' means health care that is safe, 
        effective, patient-centered, timely, equitable, efficient, 
        necessary, and appropriate.
    ``(b) Requirements for Systems.--Under each quality measurement 
system described in subsection (a)(1), the Secretary shall do the 
following:
            ``(1) Measures.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary shall select measures of quality to be used 
                by the Secretary under each system.
                    ``(B) Requirements.--In selecting the measures to 
                be used under each system pursuant to subparagraph (A), 
                the Secretary shall, to the extent feasible and 
                practicable, ensure that--
                            ``(i) such measures are evidence-based, 
                        reliable and valid, actionable, and reasonable 
                        to collect and report;
                            ``(ii) measures of process, structure, 
                        outcomes, and beneficiary experience of care 
                        are included;
                            ``(iii) except for the system that is used 
                        to provide value-based payments to physicians 
                        and practitioners under section 1860E-3, 
                        measures of efficiency (where efficiency is 
                        improved quality care through the effective use 
                        of resources) are included;
                            ``(iv) measures of overuse and underuse of 
                        health care items and services are included;
                            ``(v)(I) at least 1 measure of health 
                        information technology infrastructure that 
                        enables the provision of high quality health 
                        care and facilitates the exchange of health 
                        information, such as the use of 1 or more 
                        elements of a qualified health information 
                        system (as defined in subparagraph (E)), is 
                        included during the first year each system is 
                        implemented; and
                            ``(II) additional measures of health 
                        information technology infrastructure are 
                        included in subsequent years;
                            ``(vi) in the case of the system that is 
                        used to provide value-based payments to 
                        hospitals under section 1860E-2, by not later 
                        than January 1, 2008, at least 5 measures that 
                        take into account the unique characteristics of 
                        small hospitals located in rural areas and 
                        frontier areas are included; and
                            ``(vii) measures that assess the quality of 
                        care furnished to frail individuals over the 
                        age of 75 and to individuals with multiple 
                        complex chronic conditions are included.
                    ``(C) Requirement for collection of data on a 
                measure for 1 year prior to use under the systems.--
                Data on any measure selected by the Secretary under 
                subparagraph (A) must be collected by the Secretary for 
                at least a 12-month period before such measure may be 
                used to determine whether a provider receives a value-
                based payment under a program described in subsection 
                (a)(1).
                    ``(D) Authority to vary measures.--The Secretary 
                may vary the measures selected under subparagraph (A) 
                by the entity or individual involved based on factors 
                such as the type of, the size of, and the scope and 
                volume of services provided by, the entity or 
                individual. If the Secretary varies the measures for 
                providers under the preceding sentence, the Secretary 
                shall ensure that such measures are aligned to promote 
                coordinated quality of care across provider settings.
                    ``(E) Qualified health information system 
                defined.--For purposes of subparagraph (B)(iv)(I), the 
                term `qualified health information system' means a 
                computerized system (including hardware, software, and 
                training) that--
                            ``(i) protects the privacy and security of 
                        health information and properly encrypts such 
                        health information;
                            ``(ii) maintains and provides access to 
                        patients' health records in an electronic 
                        format;
                            ``(iii) incorporates decision support 
                        software to reduce medical errors and enhance 
                        health care quality;
                            ``(iv) is consistent with data standards 
                        and certification processes recommended by the 
                        Secretary;
                            ``(v) allows for the reporting of quality 
                        measures; and
                            ``(vi) includes other features determined 
                        appropriate by the Secretary.
            ``(2) Weights of measures.--The Secretary shall assign 
        weights to the measures used by the Secretary under each 
        system. If the Secretary determines appropriate, in assigning 
        the weights under the preceding sentence, some measures may be 
        weighted more heavily than other measures.
            ``(3) Risk adjustment.--The Secretary shall establish 
        procedures, as appropriate, to control for differences in 
        beneficiary health status and beneficiary characteristics. To 
        the extent feasible, such procedures may be based on existing 
        models for controlling for such differences.
            ``(4) Maintenance.--
                    ``(A) In general.--The Secretary shall, as 
                determined appropriate, but not more often than once 
                each 12-month period, review and revise each system, 
                including through--
                            ``(i) the refinement of measures under the 
                        systems and the retirement of existing outdated 
                        measures under the system;
                            ``(ii) the refinement of the weights 
                        assigned to measures under the system; and
                            ``(iii) the refinement of the risk 
                        adjustment procedures established pursuant to 
                        paragraph (3) under the system.
                    ``(B) Revision shall allow for comparison of 
                data.--Each revision under subparagraph (A) of a 
                quality measurement system shall allow for the 
                comparison of data from one year to the next for 
                purposes of providing value-based payments under the 
                programs described in subsection (a)(1).
            ``(5) Use of most recent quality data.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the Secretary shall use the most 
                recent quality data with respect to the provider 
                involved that is available to the Secretary.
                    ``(B) Insufficient data due to low volume.--If the 
                Secretary determines that there is insufficient data 
                with respect to a measure or measures because of a low 
                number of services provided, the Secretary may 
                aggregate data across more than 1 fiscal or calendar 
                year, as the case may be.
    ``(c) Requirements for Developing and Reviewing and Revising the 
Systems.--In developing and reviewing and revising each quality 
measurement system under this section, the Secretary shall--
            ``(1) consult with, and take into account the 
        recommendations of, the entity that the Secretary has an 
        arrangement with under subsection (e);
            ``(2) consult with provider-based groups, clinical 
        specialty societies, and certification boards;
            ``(3) take into account existing quality measurement 
        systems that have been developed through a rigorous process of 
        validation and with the involvement of entities and persons 
        described in subsection (e)(2)(B); and
            ``(4) take into account--
                    ``(A) each of the reports by the Medicare Payment 
                Advisory Commission that are required under section 
                1860E-3(a)(1);
                    ``(B) the results of appropriate studies, reports, 
                and demonstration programs; and
                    ``(C) the report by the Institute of Medicine of 
                the National Academy of Sciences under section 238(b) 
                of the Medicare Prescription Drug, Improvement, and 
                Modernization Act of 2003 (Public Law 108-173).
    ``(d) Requirements for Implementing the Systems.--In implementing 
each quality measurement system under this section, the Secretary shall 
consult with entities--
            ``(1) that have joined together to develop strategies for 
        quality measurement and reporting, including the feasibility of 
        collecting and reporting meaningful data on quality measures; 
        and
            ``(2) that involve representatives of health care 
        providers, health plans, consumers, employers, purchasers, 
        quality experts, government agencies, and other individuals and 
        groups that are interested in quality of care.
    ``(e) Arrangement With an Entity To Provide Advice and 
Recommendations.--
            ``(1) Arrangement.--On and after July 1, 2006, the 
        Secretary shall have in place an arrangement with an entity 
        that meets the requirements described in paragraph (2) under 
        which such entity provides the Secretary with advice on, and 
        recommendations with respect to, the development and review and 
        revision of the quality measurement systems under this section, 
        including the assigning of weights to the measures under 
        subsection (b)(2).
            ``(2) Requirements described.--The requirements described 
        in this paragraph are the following:
                    ``(A) The entity is a private nonprofit entity 
                governed by an executive director and a board.
                    ``(B) The members of the entity include 
                representatives of--
                            ``(i)(I) health plans and providers 
                        receiving reimbursement under this title for 
                        the provision of items and services, including 
                        health plans and providers with experience in 
                        the care of the frail elderly and individuals 
                        with multiple complex chronic conditions; or
                            ``(II) groups representing such health 
                        plans and providers;
                            ``(ii) groups representing individuals 
                        receiving benefits under this title;
                            ``(iii) purchasers and employers or groups 
                        representing purchasers or employers;
                            ``(iv) organizations that focus on quality 
                        improvement as well as the measurement and 
                        reporting of quality measures;
                            ``(vi) organizations that certify and 
                        license such providers;
                            ``(vi) State government health programs;
                            ``(vii) persons skilled in the conduct and 
                        interpretation of biomedical, health services, 
                        and health economics research and with 
                        expertise in outcomes and effectiveness 
                        research and technology assessment; and
                            ``(viii) persons or entities involved in 
                        the development and establishment of standards 
                        and certification for health information 
                        technology systems and clinical data.
                    ``(C) The membership of the entity is 
                representative of individuals with experience with--
                            ``(i) urban health care issues;
                            ``(ii) safety net health care issues; and
                            ``(iii) rural and frontier health care 
                        issues.
                    ``(D) The entity does not charge a fee for 
                membership for participation in the work of the entity 
                related to the arrangement with the Secretary under 
                paragraph (1). If the entity does require a fee for 
                membership for participation in other functions of the 
                entity, there shall be no linkage between such fee and 
                participation in the work of the entity related to such 
                arrangement with the Secretary.
                    ``(E) The entity--
                            ``(i) permits members described in 
                        subparagraph (B) to vote on matters of the 
                        entity related to the arrangement with the 
                        Secretary under paragraph (1); and
                            ``(ii) ensures that such members have an 
                        equal vote on such matters.
                    ``(F) With respect to matters related to the 
                arrangement with the Secretary under paragraph (1), the 
                entity conducts its business in an open and transparent 
                manner and provides the opportunity for public comment.
                    ``(G) The entity operates as a voluntary consensus 
                standards setting organization as defined for purposes 
                of section 12(d) of the National Technology Transfer 
                and Advancement Act of 1995 (Public Law 104-113) and 
                Office of Management and Budget Revised Circular A-119 
                (published in the Federal Register on February 10, 
                1998).
            ``(3) Authorization of appropriations.--For the purpose of 
        carrying out the provisions of this subsection, there are 
        authorized to be appropriated--
                    ``(A) for each of the fiscal years 2006 and 2007, 
                $3,000,000; and
                    ``(B) for fiscal year 2008 and each subsequent 
                fiscal year, an amount equal to the sum of--
                            ``(i) $3,000,000; and
                            ``(ii) such amount multiplied by the 
                        percentage (if any) by which the average of the 
                        Consumer Price Index for all urban consumers 
                        (United States city average) for the 12-month 
                        period ending with June of the calendar year in 
                        which such fiscal year begins exceeds such 
                        average for the 12-month period ending with 
                        June 2006.

             ``pps hospital value-based purchasing program

    ``Sec. 1860E-2. (a) Program.--
            ``(1) In general.--The Secretary shall establish a program 
        under which value-based payments are provided each fiscal year 
        to hospitals that demonstrate the provision of high quality 
        health care to individuals who are entitled to benefits under 
        part A and are inpatients of the hospital.
            ``(2) Program to begin in fiscal year 2007.--The Secretary 
        shall establish the program under this section so that value-
        based payments described in subsection (b) are made with 
        respect to fiscal year 2007 and each subsequent fiscal year.
            ``(3) Applicability of program to hospitals.--For purposes 
        of this section, the term `hospital' means a subsection (d) 
        hospital (as defined in section 1886(d)(1)(B)).
    ``(b) Value-Based Payments.--
            ``(1) In general.--Subject to paragraph (4), the Secretary 
        shall make a value-based payment to a hospital with respect to 
        a fiscal year if the Secretary determines that the quality of 
        the care provided in that year to individuals who are entitled 
        to benefits under part A and are inpatients of the hospital--
                    ``(A) has substantially improved (as determined by 
                the Secretary) over the prior year; or
                    ``(B) exceeds a threshold established by the 
                Secretary.
            ``(2) Use of system.--In determining which hospitals 
        qualify for a value-based payment under paragraph (1), the 
        Secretary shall use the quality measurement system developed 
        for this section pursuant to section 1860E-1(a).
            ``(3) Determination of amount of award and allocation of 
        awards.--
                    ``(A) In general.--The Secretary shall determine--
                            ``(i) the amount of a value-based payment 
                        under paragraph (1) provided to a hospital; and
                            ``(ii) subject to subparagraph (B), the 
                        allocation of the total amount available under 
                        subsection (d) for value-based payments for any 
                        fiscal year between payments with respect to 
                        hospitals that meet the requirement under 
                        subparagraph (A) of paragraph (1) and hospitals 
                        that meet the requirement under subparagraph 
                        (B) of such paragraph.
                    ``(B) Requirements regarding the amount of funding 
                available for value-based payments for hospitals 
                exceeding a threshold.--The Secretary shall ensure 
                that--
                            ``(i) a majority of the total amount 
                        available under subsection (d) for value-based 
                        payments for any fiscal year is provided to 
                        hospitals that are receiving such payments 
                        because they meet the requirement under 
                        paragraph (1)(B); and
                            ``(ii) with respect to fiscal year 2008 and 
                        each subsequent fiscal year, the percentage of 
                        the total amount available under subsection (d) 
                        for value-based payments for any fiscal year 
                        that is used to make payments to hospitals that 
                        meet such requirement is greater than such 
                        percentage in the previous fiscal year.
            ``(4) Requirements.--
                    ``(A) Required submission of data.--In order for a 
                hospital to be eligible for a value-based payment for a 
                fiscal year, the hospital must have complied with the 
                requirements under section 1886(b)(3)(B)(viii)(II) with 
                respect to that fiscal year.
                    ``(B) Attestation regarding data.--In order for a 
                hospital to be eligible for a value-based payment for a 
                fiscal year, the hospital must have provided the 
                Secretary (under procedures established by the 
                Secretary) with an attestation that the data submitted 
                under section 1886(b)(3)(B)(viii)(II) for the fiscal 
                year is complete and accurate.
            ``(5) Total amount of value-based payments equal to total 
        amount of available funding.--The Secretary shall establish 
        payment amounts under paragraph (3)(A) so that, as estimated by 
        the Secretary, the total amount of value-based payments made in 
        a fiscal year under paragraph (1) is equal to the total amount 
        available under subsection (d) for such payments for the year.
            ``(6) Payment methods and timing of payments.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                payment of value-based payments under paragraph (1) 
                shall be based on such a method as the Secretary 
                determines appropriate.
                    ``(B) Timing.--The Secretary shall ensure that 
                value-based payments under paragraph (1) with respect 
                to a fiscal year are made by not later than the close 
                of the following fiscal year.
    ``(c) Description of How Hospitals Would Have Fared Under 
Program.--Not later than January 1, 2007, the Secretary shall provide 
each hospital with a description of the Secretary's estimate of how 
payments to the hospital under this title would have been affected with 
respect to items and services furnished during a period, as determined 
by the Secretary, if the program under this section (and the amendments 
made by paragraphs (1) and (2) of section 6110(b) of the Deficit 
Reduction Omnibus Reconciliation Act of 2005) had been in effect with 
respect to that period.
    ``(d) Funding.--
            ``(1) Amount.--The amount available for value-based 
        payments under this section with respect to a fiscal year shall 
        be equal to the amount of the reduction in expenditures under 
        the Federal Hospital Insurance Trust Fund under section 1817 in 
        the year as a result of the amendments made by section 
        6110(b)(2) of the Deficit Reduction Omnibus Reconciliation Act 
        of 2005, as estimated by the Secretary.
            ``(2) Payments from trust fund.--Payments to hospitals 
        under this section shall be made from the Federal Hospital 
        Insurance Trust Fund.

      ``physician and practitioner value-based purchasing program

    ``Sec. 1860E-3. (a) Program.--
            ``(1) In general.--The Secretary shall establish a program 
        under which value-based payments are provided each year to 
        physicians and practitioners that demonstrate the provision of 
        high quality health care to individuals enrolled under part B 
        and the Medicare Payment Advisory Commission shall (A) conduct 
        a study, and submit to Congress and the Secretary an initial 
        report by not later than March 1, 2008, and a final report by 
        not later than June 1, 2012, on how the Medicare value-based 
        purchasing programs under this part will impact Medicare 
        beneficiaries, Medicare providers, and Medicare financing, 
        including how such programs will impact the access of such 
        beneficiaries to items and services under this title, the 
        volume and utilization of such items and services, and low-
        volume providers; and (B) conduct a study, and submit to 
        Congress and the Secretary a report by not later than March 1, 
        2007, on the advisability and feasibility of establishing a 
        value-based purchasing program under the this title for 
        critical access hospitals (as defined in section 1861(mm)(1)); 
        and (C) conduct a study, and submit to Congress and the 
        Secretary a report by not later than June 1, 2007, on the 
        advisability and feasibility of including renal dialysis 
        facilities described in subsection (a)(3)(A) of section 1860E-5 
        in the value-based purchasing program under such section 1860E-
        5 or establishing a value-based purchasing program under this 
        title for such facilities; (D) taking into account the results 
        to date of the demonstration of bundled case-mix adjusted 
        payment system for ESRD services under section 623(e) of the 
        Medicare Prescription Drug, Improvement, and Modernization Act 
        of 2003, conduct a study, and submit to Congress and the 
        Secretary a report by not later than June 1, 2008, on the 
        implementation of the ESRD provider and facility value-based 
        purchasing program under section 1860E-5, including issues for 
        the Secretary to consider in operating the ESRD provider and 
        facility value-based purchasing program and recommendations on 
        such issues; and (E) conduct a study, and submit to Congress 
        and the Secretary a report by not later than June 1, 2007, on 
        the advisability and feasibility of establishing a value-based 
        purchasing program under this title for skilled nursing 
        facilities (as defined in section 1819(a)).
            ``(2) Program to begin in 2009.--The Secretary shall 
        establish the program under this section so that value-based 
        payments described in subsection (b) are made with respect to 
        2009 and each subsequent year.
            ``(3) Definition of physician and practitioner.--In this 
        section:
                    ``(A) Physician.--The term `physician' has the 
                meaning given that term in section 1861(r).
                    ``(B) Practitioner.--The term `practitioner' 
                means--
                            ``(i) a practitioner described in section 
                        1842(b)(18)(C);
                            ``(ii) a physical therapist (as described 
                        in section 1861(p));
                            ``(iii) an occupational therapist (as so 
                        described); and
                            ``(iv) a qualified speech-language 
                        pathologist (as defined in section 
                        1861(ll)(3)(A)).
            ``(4) Identification of physicians and practitioners.--For 
        purposes of applying this section and paragraphs (4)(G) and (6) 
        of section 1848(d), the Secretary shall establish procedures 
        for the identification of physicians and practitioners, such as 
        through physician or practitioner billing units or other units, 
        provider identification numbers, taxpayer identification 
        numbers, the National Provider Identifier, and unique physician 
        identifier numbers.
    ``(b) Value-Based Payments.--
            ``(1) In general.--Subject to paragraph (4), the Secretary 
        shall make a value-based payment to a physician or a 
        practitioner with respect to a year if the Secretary determines 
        that both the quality of the care and the efficiency of the 
        care provided in that year by the physician or practitioner to 
        individuals enrolled under part B--
                    ``(A) has substantially improved (as determined by 
                the Secretary) over the prior year; or
                    ``(B) exceeds a threshold established by the 
                Secretary.
            ``(2) Use of systems and data.--
                    ``(A) In general.--In determining which physicians 
                and practitioners qualify for a value-based payment 
                under paragraph (1), the Secretary shall use--
                            ``(i) the quality measurement system 
                        developed for this section pursuant to section 
                        1860E-1(a) with respect to the quality of the 
                        care provided by the physician or practitioner; 
                        and
                            ``(ii) the comparative utilization system 
                        developed under subsection (c) with respect to 
                        the efficiency and appropriateness of such 
                        care.
            ``(3) Determination of amount of award and allocation of 
        awards.--
                    ``(A) In general.--The Secretary shall determine--
                            ``(i) the amount of a value-based payment 
                        under paragraph (1) provided to a physician or 
                        a practitioner; and
                            ``(ii) subject to subparagraph (B), the 
                        allocation of the total amount available under 
                        subsection (e) for value-based payments for any 
                        year between payments with respect to 
                        physicians and practitioners that meet the 
                        requirement under subparagraph (A) of paragraph 
                        (1) and physicians and practitioners that meet 
                        the requirement under subparagraph (B) of such 
                        paragraph.
                    ``(B) Requirements regarding the amount of funding 
                available for value-based payments for physicians and 
                practitioners exceeding a threshold.--The Secretary 
                shall ensure that--
                            ``(i) a majority of the total amount 
                        available under subsection (e) for value-based 
                        payments for any year is provided to physicians 
                        and practitioners that are receiving such 
                        payments because they meet the requirement 
                        under paragraph (1)(B); and
                            ``(ii) with respect to 2010 and each 
                        subsequent year, the percentage of the total 
                        amount available under subsection (e) for 
                        value-based payments for any year that is used 
                        to make payments to physicians and 
                        practitioners that meet such requirement is 
                        greater than such percentage in the previous 
                        year.
            ``(4) Requirements.--
                    ``(A) Required submission of data.--In order for a 
                physician or a practitioner to be eligible for a value-
                based payment for a year, the physician or practitioner 
                must have complied with the requirements under section 
                1848(d)(6)(B)(ii) with respect to that year.
                    ``(B) Attestation regarding data.--In order for a 
                physician or a practitioner to be eligible for a value-
                based payment for a year, the physician or practitioner 
                must have provided the Secretary (under procedures 
                established by the Secretary) with an attestation that 
                the data submitted under section 1848(d)(6)(B)(ii) with 
                respect to that year is complete and accurate.
            ``(5) Total amount of value-based payments equal to total 
        amount of available funding.--The Secretary shall establish 
        payment amounts under paragraph (3)(A) so that, as estimated by 
        the Secretary, the total amount of value-based payments made in 
        a year under paragraph (1) is equal to the total amount 
        available under subsection (e) for such payments for the year.
            ``(6) Payment methods and timing of payments.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                payment of value-based payments under paragraph (1) 
                shall be based on such a method as the Secretary 
                determines appropriate.
                    ``(B) Timing.--The Secretary shall ensure that 
                value-based payments under paragraph (1) with respect 
                to a year are made by not later than December 31 of the 
                subsequent year.
    ``(c) Comparative Utilization System.--
            ``(1) Development.--The Secretary, in consultation with 
        relevant stakeholders, shall develop a comparative utilization 
        system for purposes of providing value-based payments under 
        subsection (b).
            ``(2) Measures of efficiency and appropriateness of care.--
        The comparative utilization system developed under paragraph 
        (1) shall measure the efficiency and appropriateness of the 
        care provided by a physician or practitioner.
            ``(3) Requirements for system.--Under the comparative 
        utilization system described in paragraph (1), the Secretary 
        shall do the following:
                    ``(A) Measures.--The Secretary shall select 
                measures of efficiency appropriateness to be used by 
                the Secretary under the system. The Secretary may vary 
                the measures selected under the preceding sentence by 
                the type or specialty of the physician or practitioner. 
                If the Secretary varies the measures for providers 
                under the preceding sentence, the Secretary shall 
                ensure that such measures are aligned to promote 
                coordinated quality of care across provider settings.
                    ``(B) Use of claims data for utilization 
                patterns.--
                            ``(i) Review of claims data.--The Secretary 
                        shall review claims data with respect to 
                        services furnished or ordered by physicians and 
                        practitioners.
                            ``(ii) Use of most recent claims data.--The 
                        Secretary shall use the most recent claims data 
                        with respect to the physician or practitioner 
                        that is available to the Secretary.
                    ``(C) Risk adjustment.--The Secretary shall 
                establish procedures, as appropriate, to control for 
                differences in beneficiary health status and 
                beneficiary characteristics.
            ``(4) Annual Reports.--Beginning in 2007, the Secretary 
        shall provide physicians and practitioners with annual reports 
        on the utilization of items and services under this title based 
        upon the review of claims data under paragraph (3)(B). With 
        respect to reports provided in 2007 and 2008, such reports are 
        confidential and the Secretary shall not make such reports 
        available to the public.
    ``(d) Description of How Physicians and Practitioners Would Have 
Fared Under Program.--Not later than March 1, 2009, the Secretary shall 
provide each physician and practitioner with a description of the 
Secretary's estimate of how payments to the physician or practitioner 
under this title would have been affected with respect to items and 
services furnished during a period, as determined by the Secretary, if 
the program under this section (and the amendments made by paragraphs 
(1) and (2) of section 6110(c) of the Deficit Reduction Omnibus 
Reconciliation Act of 2005) had been in effect with respect to that 
period.
    ``(e) Funding.--
            ``(1) Amount.--The amount available for value-based 
        payments under this section with respect to a year shall be 
        equal to the amount of the reduction in expenditures under the 
        Federal Supplementary Medical Insurance Trust Fund under 
        section 1841 in the year as a result of the amendments made by 
        section 6110(c)(2) of the Deficit Reduction Omnibus 
        Reconciliation Act of 2005, as estimated by the Secretary.
            ``(2) Payments from trust fund.--Payments to physicians and 
        practitioners under this section shall be made from the Federal 
        Supplementary Medical Insurance Trust Fund.

                 ``plan value-based purchasing program

    ``Sec. 1860E-4. (a) Program.--
            ``(1) In general.--The Secretary shall establish a program 
        under which value-based payments are provided each year to 
        Medicare Advantage organizations offering Medicare Advantage 
        plans under part C that demonstrate the provision of high 
        quality health care to enrollees under the plan.
            ``(2) Program to begin in 2009.--The Secretary shall 
        establish the program under this section so that value-based 
        payments under subsection (b) are made with respect to 2009 and 
        each subsequent year.
            ``(3) Definitions of medicare advantage organization and 
        plan.--
                    ``(A) In general.--In this section:
                            ``(i) Medicare advantage organization.--The 
                        term `Medicare Advantage organization' has the 
                        meaning given such term in section 1859(a)(1).
                            ``(ii) Medicare advantage plan.--The term 
                        `Medicare Advantage plan' has the meaning given 
                        such term in section 1859(b)(1).
                    ``(B) Applicability of program to medicare 
                advantage regional and local plans.--For purposes of 
                this section, the term `Medicare Advantage plan' shall 
                include both Medicare Advantage regional plans (as 
                defined in section 1859(b)(4)) and Medicare Advantage 
                local plans (as defined in section 1859(b)(5)).
                    ``(C) Applicability of program to reasonable cost 
                contracts.--Except for paragraphs (5) and (6) of 
                subsection (b), for purposes of this section, the 
                terms--
                            ``(i) `Medicare Advantage organization' and 
                        `organization' include an organization that is 
                        providing benefits under a reasonable cost 
                        reimbursement contract under section 1876(h); 
                        and
                            ``(ii) `Medicare Advantage plan' and `plan' 
                        include such a contract.
    ``(b) Value-Based Payments.--
            ``(1) In general.--Subject to paragraph (4), the Secretary 
        shall make value-based payments to Medicare Advantage 
        organizations with respect to each Medicare Advantage plan 
        offered by the organization during a year if the Secretary 
        determines that the quality of the care provided under the 
        plan--
                    ``(A) has substantially improved (as determined by 
                the Secretary) over the prior year; or
                    ``(B) exceeds a threshold established by the 
                Secretary.
            ``(2) Use of system.--In determining which organizations 
        offering Medicare Advantage plans qualify for a value-based 
        payment under paragraph (1), the Secretary shall--
                    ``(A) use the quality measurement system developed 
                for this section pursuant to section 1860E-1(a); and
                    ``(B) ensure that awards are based on data from a 
                full 12-month period (or 24-month period in the case of 
                an award described in paragraph (1)(A)), such periods 
                determined without regard to calendar year periods.
            ``(3) Determination of amount of award and allocation of 
        awards.--
                    ``(A) In general.--The Secretary shall determine--
                            ``(i) the amount of a value-based payment 
                        under paragraph (1) provided to an organization 
                        with respect to a plan; and
                            ``(ii) subject to subparagraph (B), the 
                        allocation of the total amount available under 
                        subsection (d) for value-based payments for any 
                        year between payments with respect to plans 
                        that meet the requirement under subparagraph 
                        (A) of paragraph (1) and plans that meet the 
                        requirement under subparagraph (B) of such 
                        paragraph.
                    ``(B) Requirement regarding the amount of funding 
                available for value-based payments for plans exceeding 
                a threshold.--The Secretary shall ensure that--
                            ``(i) a majority of the total amount 
                        available under subsection (d) for value-based 
                        payments for any year is provided to 
                        organizations, with respect to plans offered by 
                        such organizations, that are receiving such 
                        payments because they meet the requirement 
                        under paragraph (1)(B); and
                            ``(ii) with respect to 2010 and each 
                        subsequent year, the percentage of the total 
                        amount available under subsection (d) for 
                        value-based payments for any year that is used 
                        to make payments to organizations, with respect 
                        to plans offered by such organizations, that 
                        meet such requirement is greater than such 
                        percentage in the previous year.
            ``(4) Use of payments.--Value-based payments received under 
        this section may only be used for the following purposes:
                    ``(A) To invest in quality improvement programs 
                operated by the organization with respect to the plan.
                    ``(B) To enhance beneficiary benefits under the 
                plan.
            ``(5) Required submission of data.--In order for an 
        organization to be eligible for a value-based payment for a 
        year with respect to a Medicare Advantage plan or a reasonable 
        cost contract, the organization must have provided for the 
        collection, analysis, and reporting of data pursuant to 
        sections 1852(e)(3) (or submitted the data under section 
        1876(h)(6) in the case of a reasonable cost contract) with 
        respect to the plan or contract for the 2 years preceding that 
        year.
            ``(6) No effect on medicare advantage plan bids.--In order 
        for a Medicare Advantage organization to be eligible for a 
        value-based payment for a year with respect to a Medicare 
        Advantage plan, the organization must have provided the 
        Secretary with an attestation that the program under this 
        section, including the payment adjustments made by reason of 
        the amendments made by section 6110(d)(2)(A) of the Deficit 
        Reduction Omnibus Reconciliation Act of 2005, had no effect on 
        the integrity and actuarial soundness of the bid submitted 
        under section 1854 for the plan for the year.
            ``(7) Total amount of value-based payments equal to total 
        amount of reduction in payments.--The Secretary shall establish 
        payment amounts under paragraph (3)(A) so that, as estimated by 
        the Secretary, the total amount of value-based payments made in 
        a year under paragraph (1) is equal to the total amount 
        available under subsection (d) for such payments for the year.
            ``(8) Payment methods and timing of payments.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                payment of value-based payments under paragraph (1) 
                shall be based on such a method as the Secretary 
                determines appropriate.
                    ``(B) Timing.--The Secretary shall ensure that 
                value-based payments under paragraph (1) with respect 
                to a year are made by not later than March 1 of the 
                subsequent year.
    ``(c) Description of How Plans Would Have Fared Under Program.--Not 
later than March 1, 2009, the Secretary shall provide each Medicare 
Advantage organization offering a Medicare Advantage plan with a 
description of the Secretary's estimate of how payments under this 
title to such organization with respect to the plan for a period, as 
determined by the Secretary, would have been affected if the program 
under this section (and the amendments made by section 6110(d) of the 
Deficit Reduction Omnibus Reconciliation Act of 2005) had been in 
effect with respect to that period.
    ``(d) Funding.--
            ``(1) Amount.--The amount available for value-based 
        payments under this section with respect to a year shall be 
        equal to the amount of the reduction in expenditures under the 
        Federal Hospital Insurance Trust Fund under section 1817 and 
        the Federal Supplementary Medical Insurance Trust Fund under 
        section 1841 in the year as a result of the amendments made by 
        section 6110(d)(2) of the Deficit Reduction Omnibus 
        Reconciliation Act of 2005, as estimated by the Secretary.
            ``(2) Payments from trust funds.--Payments to organizations 
        under this section shall be made from the Federal Hospital 
        Insurance Trust Fund and the Federal Supplementary Medical 
        Insurance Trust Fund in the same proportion as payments to 
        Medicare Advantage organizations are made from such Trust Funds 
        under the first sentence of section 1853(f).

      ``esrd provider and facility value-based purchasing program

    ``Sec. 1860E-5. (a) Program.--
            ``(1) In general.--The Secretary shall establish a program 
        under which value-based payments are provided each year to 
        providers of services and renal dialysis facilities that--
                    ``(A) provide items and services to individuals 
                with end stage renal disease who are enrolled under 
                part B; and
                    ``(B) demonstrate the provision of high quality 
                health care to such individuals.
            ``(2) Program to begin in 2007.--The Secretary shall 
        establish the program under this section so that value-based 
        payments described in subsection (b) are made with respect to 
        2007 and each subsequent year.
            ``(3) Exclusions from program.--
                    ``(A) Pediatric facilities.--Any renal dialysis 
                facility at least 50 percent of whose patients are 
                individuals under 18 years of age shall not be included 
                in the program under this section.
                    ``(B) Providers and facilities currently 
                participating in bundled case-mix demonstration not 
                included in program.--Any provider of services or renal 
                dialysis facility that is currently participating in 
                the bundled case-mix adjusted payment system for ESRD 
                services demonstration project under section 623(e) of 
                the Medicare Prescription Drug, Improvement, and 
                Modernization Act of 2003 (Public Law 108-173) shall 
                not be included in the program under this section, but 
                only for so long as the provider or facility is so 
                participating.
    ``(b) Value-Based Payments.--
            ``(1) In general.--Subject to paragraph (4), the Secretary 
        shall make a value-based payment to a provider of services or a 
        renal dialysis facility with respect to a year if the Secretary 
        determines that the quality of the care provided in that year 
        by the provider or facility to individuals with end stage renal 
        disease who are enrolled under part B--
                    ``(A) has substantially improved (as determined by 
                the Secretary) over the prior year; or
                    ``(B) exceeds a threshold established by the 
                Secretary.
            ``(2) Use of system.--In determining which providers of 
        services and renal dialysis facilities qualify for a value-
        based payment under paragraph (1), the Secretary shall use the 
        quality measurement system developed for this section pursuant 
        to section 1860E-1(a).
            ``(3) Determination of amount of award and allocation of 
        awards.--
                    ``(A) In general.--The Secretary shall determine--
                            ``(i) the amount of a value-based payment 
                        under paragraph (1) provided to a provider of 
                        services or a renal dialysis facility; and
                            ``(ii) subject to subparagraphs (B) and 
                        (C), the allocation of the total amount 
                        available under subsection (c) for value-based 
                        payments for any year between payments with 
                        respect to providers and facilities that meet 
                        the requirement under subparagraph (A) of 
                        paragraph (1) and providers and facilities that 
                        meet the requirement under subparagraph (B) of 
                        such paragraph.
                    ``(B) Requirement regarding amount of funding 
                available for value-based payments for providers and 
                facilities exceeding a threshold.--The Secretary shall 
                ensure that--
                            ``(i) a majority of the total amount 
                        available under subsection (c) for value-based 
                        payments for any year is provided to providers 
                        of services and renal dialysis facilities that 
                        are receiving such payments because they meet 
                        the requirement under paragraph (1)(B); and
                            ``(ii) with respect to 2009 and each 
                        subsequent year, the percentage of the total 
                        amount available under subsection (c) for 
                        value-based payments for any year that is used 
                        to make payments to providers and facilities 
                        that meet such requirement is greater than such 
                        percentage in the previous year.
                    ``(C) Only value-based payments for providers and 
                facilities exceeding a threshold in 2007.--With respect 
                to 2007, the entire amount available under subsection 
                (c) for value-based payments for that year shall be 
                used to make payments to providers of services and 
                renal dialysis facilities that meet the requirement 
                under paragraph (1)(B).
            ``(4) Requirements.--
                    ``(A) Required submission of data.--
                            ``(i) In general.--In order for a provider 
                        of services or a renal dialysis facility to be 
                        eligible for a value-based payment for a year, 
                        the provider or facility must have provided for 
                        the submission of data in accordance with 
                        clause (ii) with respect to that year.
                            ``(ii) Submission of data.--For 2007 and 
                        each subsequent year, each provider of services 
                        and renal dialysis facility that receives 
                        payments under paragraph (12) shall submit to 
                        the Secretary such data that the Secretary 
                        determines is appropriate for the measurement 
                        of health outcomes and other indices of 
                        quality, including data necessary for the 
                        operation of the program under this section. 
                        Such data shall be submitted in a form and 
                        manner, and at a time, specified by the 
                        Secretary for purposes of this clause.
                            ``(iii) Availability to the public.--The 
                        Secretary shall establish procedures for making 
                        data submitted under clause (ii) available to 
                        the public in a clear and understandable form. 
                        Such procedures shall ensure that a provider or 
                        facility has the opportunity to review the data 
                        that is to be made public with respect to the 
                        provider or facility prior to such data being 
                        made public.
                    ``(B) Attestation regarding data.--In order for a 
                provider of services or a renal dialysis facility to be 
                eligible for a value-based payment for a year, the 
                provider or facility must have provided the Secretary 
                (under procedures established by the Secretary) with an 
                attestation that the data submitted under subparagraph 
                (A)(ii) for the year is complete and accurate.
            ``(5) Total amount of value-based payments equal to total 
        amount of available funding.--The Secretary shall establish 
        payment amounts under paragraph (3)(A) so that, as estimated by 
        the Secretary, the total amount of value-based payments made in 
        a year under paragraph (1) is equal to the total amount 
        available under subsection (c) for such payments for the year.
            ``(6) Payment methods and timing of payments.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                payment of value-based payments under paragraph (1) 
                shall be based on such a method as the Secretary 
                determines appropriate.
                    ``(B) Timing.--The Secretary shall ensure that 
                value-based payments under paragraph (1) with respect 
                to a year are made by not later than December 31 of the 
                subsequent year.
    ``(c) Funding.--
            ``(1) Amount.--The amount available for value-based 
        payments under this section with respect to a year shall be 
        equal to the amount of the reduction in expenditures under the 
        Federal Supplementary Medical Insurance Trust Fund under 
        section 1841 in the year by reason of the application of 
        section 1881(b)(12)(G), as estimated by the Secretary.
            ``(2) Payments from trust fund.--Payments to providers of 
        services and renal dialysis facilities under this section shall 
        be made from the Federal Supplementary Medical Insurance Trust 
        Fund.

          ``home health agency value-based purchasing program

    ``Sec. 1860E-6. (a) Program.--
            ``(1) In general.--The Secretary shall establish a program 
        under which value-based payments are provided each year to home 
        health agencies that demonstrate the provision of high quality 
        health care to individuals entitled to benefits under part A or 
        enrolled under part B.
            ``(2) Program to begin in 2008.--The Secretary shall 
        establish the program under this section so that value-based 
        payments described in subsection (b) are made with respect to 
        2008 and each subsequent year.
            ``(3) Home health agency defined.--In this section, the 
        term ``home health agency'' has the meaning given that term in 
        section 1861(o).
    ``(b) Value-Based Payments.--
            ``(1) In general.--Subject to paragraph (4), the Secretary 
        shall make a value-based payment to a home health agency with 
        respect to a year if the Secretary determines that the quality 
        of the care provided in that year by the agency to individuals 
        entitled to benefits under part A or enrolled under part B--
                    ``(A) has substantially improved (as determined by 
                the Secretary) over the prior year; or
                    ``(B) exceeds a threshold established by the 
                Secretary.
            ``(2) Use of system.--In determining which home health 
        agencies qualify for a value-based payment under paragraph (1), 
        the Secretary shall use the quality measurement system 
        developed for this section pursuant to section 1860E-1(a).
            ``(3) Determination of amount of award and allocation of 
        awards.--
                    ``(A) In general.--The Secretary shall determine--
                            ``(i) the amount of a value-based payment 
                        under paragraph (1) provided to a home health 
                        agency; and
                            ``(ii) subject to subparagraph (B), the 
                        allocation of the total amount available under 
                        subsection (d) for value-based payments for any 
                        year between payments with respect to agencies 
                        that meet the requirement under subparagraph 
                        (A) of paragraph (1) and agencies that meet the 
                        requirement under subparagraph (B) of such 
                        paragraph.
                    ``(B) Requirements regarding the amount of funding 
                available for value-based payments for agencies 
                exceeding a threshold.--The Secretary shall ensure 
                that--
                            ``(i) a majority of the total amount 
                        available under subsection (d) for value-based 
                        payments for any year is provided to home 
                        health agencies that are receiving such 
                        payments because they meet the requirement 
                        under paragraph (1)(B); and
                            ``(ii) with respect to 2009 and each 
                        subsequent year, the percentage of the total 
                        amount available under subsection (d) for 
                        value-based payments for any year that is used 
                        to make payments to agencies that meet such 
                        requirement is greater than such percentage in 
                        the previous year.
            ``(4) Requirements.--
                    ``(A) Required submission of data.--In order for a 
                home health agency to be eligible for a value-based 
                payment for a year, the agency must have complied with 
                the requirements under section 1895(b)(3)(B)(v)(II) 
                with respect to that year.
                    ``(B) Attestation regarding data.--In order for a 
                home health agency to be eligible for a value-based 
                payment for a year, the agency must have provided the 
                Secretary (under procedures established by the 
                Secretary) with an attestation that the data submitted 
                under section 1895(b)(3)(B)(v)(II) with respect to that 
                year is complete and accurate.
            ``(5) Total amount of value-based payments equal to total 
        amount of available funding.--The Secretary shall establish 
        payment amounts under paragraph (3)(A) so that, as estimated by 
        the Secretary, the total amount of value-based payments made in 
        a year under paragraph (1) is equal to the total amount 
        available under subsection (d) for such payments for the year.
            ``(6) Payment methods and timing of payments.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                payment of value-based payments under paragraph (1) 
                shall be based on such a method as the Secretary 
                determines appropriate.
                    ``(B) Timing.--The Secretary shall ensure that 
                value-based payments under paragraph (1) with respect 
                to a year are made by not later than December 31 of the 
                subsequent year.
    ``(c) Description of How Agencies Would Have Fared Under Program.--
Not later than January 1, 2008, the Secretary shall provide each home 
health agency with a description of the Secretary's estimate of how 
payments to the agency under this title would have been affected with 
respect to items and services furnished during a period, as determined 
by the Secretary, if the program under this section (and the amendments 
made by section 6110(f) of the Deficit Reduction Omnibus Reconciliation 
Act of 2005) had been in effect with respect to that period.
    ``(d) Funding.--
            ``(1) Amount.--The amount available for value-based 
        payments under this section with respect to a year shall be 
        equal to the amount of the reduction in expenditures under the 
        Federal Hospital Insurance Trust Fund under section 1817 and 
        Federal Supplementary Medical Insurance Trust Fund under 
        section 1841 in the year as a result of the application of 
        section 1895(b)(3)(D), as estimated by the Secretary.
            ``(2) Payments from trust fund.--Payments to home health 
        agencies under this section shall be made from the Federal 
        Hospital Insurance Trust Fund and Federal Supplementary Medical 
        Insurance Trust Fund, in the same proportion as payments for 
        home health services are made from such trust funds.''.
    (b) Hospitals.--
            (1) Voluntary submission of hospital quality data.--
                    (A) Update for hospitals that submit quality 
                data.--Section 1886(b)(3)(B) (42 U.S.C. 
                1395ww(b)(3)(B)) is amended--
                            (i) in clause (vii)--
                                    (I) in subclause (I), by striking 
                                ``for each of fiscal years 2005 through 
                                2007'' and inserting ``for fiscal years 
                                2005 and 2006''; and
                                    (II) in subclause (II), by striking 
                                ``Each'' and inserting ``For fiscal 
                                years 2005 and 2006, each''; and
                            (ii) by adding at the end the following new 
                        clause:
                            ``(viii)(I) For purposes of clause (i)(XX), 
                        for fiscal year 2007 and each subsequent fiscal 
                        year, in the case of a subsection (d) hospital 
                        that does not submit data in accordance with 
                        subclause (II) with respect to such a fiscal 
                        year, the applicable percentage increase under 
                        such clause for such fiscal year shall be 
                        reduced by 2 percentage points. Such reduction 
                        shall apply only with respect to the fiscal 
                        year involved, and the Secretary shall not take 
                        into account such reduction in computing the 
                        applicable percentage increase under clause 
                        (i)(XX) for a subsequent fiscal year.
                            ``(II) For fiscal year 2007 and each 
                        subsequent fiscal year, each subsection (d) 
                        hospital shall submit to the Secretary such 
                        data that the Secretary determines is 
                        appropriate for the measurement of health care 
                        quality, including data necessary for the 
                        operation of the PPS hospital value-based 
                        purchasing program under section 1860E-2. Such 
                        data shall be submitted in a form and manner, 
                        and at a time, specified by the Secretary for 
                        purposes of this clause.
                            ``(III) The Secretary shall establish 
                        procedures for making data submitted under 
                        subclause (II) available to the public in a 
                        clear and understandable form. Such procedures 
                        shall ensure that a subsection (d) hospital has 
                        the opportunity to review the data that is to 
                        be made public with respect to the hospital 
                        prior to such data being made public.''.
                    (B) Conforming amendments.--Section 
                1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)) is 
                amended--
                            (i) in subclause (XIX), by striking 
                        ``2007'' and inserting ``2006''; and
                            (ii) in subclause (XX)--
                                    (I) by striking ``2008'' and 
                                inserting ``2007''; and
                                    (II) by inserting ``subject to 
                                clause (viii),'' after ``fiscal 
                                year,''.
            (2) Reduction in payments in order to fund program.--
                    (A) Reduction in payments.--Section 1886(d)(5)(A) 
                (42 U.S.C. 1395ww(d)(5)(A)) is amended--
                            (i) in clause (iv), by striking ``5 percent 
                        nor more than 6 percent'' and inserting ``the 
                        applicable lower percent nor more than the 
                        applicable upper percent''; and
                            (ii) by adding at the end the following new 
                        clause:
    ``(vii) For purposes of clause (iv)--
            ``(I) for fiscal years prior to 2007, the `lower percent' 
        is 5.0 percent and the `upper percent' is 6.0 percent;
            ``(II) for fiscal year 2007, the `lower percent' is 4.0 
        percent and the `upper percent' is 5.0 percent;
            ``(III) for fiscal year 2008, the `lower percent' is 3.75 
        percent and the `upper percent' is 4.75 percent;
            ``(IV) for fiscal year 2009, the `lower percent' is 3.5 
        percent and the `upper percent' is 4.5 percent;
            ``(V) for fiscal year 2010, the `lower percent' is 3.25 
        percent and the `upper percent' is 4.25 percent; and
            ``(VI) for fiscal year 2011 and each subsequent fiscal 
        year, the `lower percent' is 3.0 percent and the `upper 
        percent' is 4.0 percent.''.
                    (B) Continuation of current level of reductions to 
                the average standardized amount.--Section 1886(d)(3)(B) 
                (42 U.S.C. 1395ww(d)(3)(B)) is amended to read as 
                follows:
            ``(B) Reducing for value of outlier payments and for 
        funding of hospital value-based purchasing program.--
                    ``(i) In general.--The Secretary shall reduce each 
                of the average standardized amounts determined under 
                subparagraph (A) by a factor equal to a fraction--
                            ``(I) the numerator of which is the sum 
                        of--
                                    ``(aa) the additional payments 
                                described in paragraph (5)(A) (relating 
                                to outlier payments); and
                                    ``(bb) the applicable percent of 
                                the total payments projected or 
                                estimated to be made based on DRG 
                                prospective payment rates for 
                                discharges in that year; and
                            ``(II) the denominator of which is the 
                        total payments projected or estimated to be 
                        made based on DRG prospective payment rates for 
                        discharges in that year.
                    ``(ii) Applicable percent.--For purposes of clause 
                (i)(I)(bb), the term `applicable percent' means--
                            ``(I) for fiscal years prior to fiscal year 
                        2007, 0 percent;
                            ``(II) for fiscal year 2007, 1.0 percent;
                            ``(III) for fiscal year 2008, 1.25 percent;
                            ``(IV) for fiscal year 2009, 1.5 percent;
                            ``(V) for fiscal year 2010, 1.75 percent; 
                        and
                            ``(VI) for fiscal year 2011 and each 
                        subsequent year, 2.0 percent.''.
            (3) Value-based purchasing demonstration program for 
        critical access hospitals.--
                    (A) Establishment.--Not later than 6 months after 
                the date of enactment of this Act, the Secretary shall 
                establish a 2-year demonstration program under which 
                the Secretary establishes a value-based purchasing 
                program under the Medicare program under title XVIII of 
                the Social Security Act for critical access hospitals 
                (as defined in section 1861(mm)(1) of such Act (42 
                U.S.C. 1395x(mm)(1)) in order to test innovative 
                methods of measuring and rewarding quality health care 
                furnished by such hospitals.
                    (B) Sites.--The Secretary shall conduct the 
                demonstration program at 6 critical access hospitals. 
                The Secretary shall ensure that such hospitals are 
                representative of the spectrum of such hospitals that 
                participate in the Medicare program.
                    (C) Waiver Authority.--The Secretary may waive such 
                requirements of titles XI and XVIII of the Social 
                Security Act as may be necessary to carry out the 
                demonstration program.
                    (D) Funding.--The Secretary shall provide for the 
                transfer from the Federal Hospital Insurance Trust Fund 
                under section 1817 of the Social Security Act (42 
                U.S.C. 1395i) of such funds as are necessary for the 
                costs of carrying out the demonstration program.
                    (E) Report.--Not later than 6 months after the 
                demonstration program is completed, the Secretary shall 
                submit to Congress a report on the demonstration 
                program together with recommendations on the 
                establishment of a permanent value-based purchasing 
                program under the Medicare program for critical access 
                hospitals and recommendations for such other 
                legislation or administrative action as the Secretary 
                determines appropriate.
    (c) Physicians and Practitioners.--
            (1) Voluntary submission of physician and practitioner 
        quality data.--
                    (A) Update for physicians and practitioners that 
                submit quality data.--Section 1848(d)(4) (42 U.S.C. 
                1395w-4(d)(4)) is amended by adding at the end the 
                following new subparagraph:
                    ``(G) Adjustment if quality data not submitted.--
                            ``(i) Adjustment.--For 2007 and each 
                        subsequent year, in the case of services 
                        furnished by a physician or a practitioner (as 
                        defined in section 1860E-3(a)(3)) that does not 
                        submit data in accordance with clause (ii) with 
                        respect to such a year, the update otherwise 
                        determined under subparagraph (A) shall be 
                        reduced by 2 percentage points. Such reduction 
                        shall apply only with respect to the year 
                        involved, and the Secretary shall not take into 
                        account such reduction in computing the 
                        conversion factor for a subsequent year.
                            ``(ii) Submission of quality data.--For 
                        2007 and each subsequent year, each physician 
                        and practitioner (as defined in section 1860E-
                        3(a)(3)) shall submit to the Secretary such 
                        data that the Secretary determines is 
                        appropriate for the measurement of health 
                        outcomes and other indices of quality, 
                        including data necessary for the operation of 
                        the physician and practitioner value-based 
                        purchasing program under section 1860E-3. Such 
                        data shall be submitted in a form and manner, 
                        and at a time, specified by the Secretary for 
                        purposes of this subparagraph.
                            ``(iii) Available to the public.--
                                    ``(I) In general.--Subject to 
                                subclauses (II) and (III), the 
                                Secretary shall establish procedures 
                                for making data submitted under clause 
                                (ii), with respect to items and 
                                services furnished on or after January 
                                1, 2008, available to the public in 3 
                                phases as follows:
                                            ``(aa) Phase I.--During 
                                        phase I, the Secretary shall 
                                        make available to the public 
                                        the identity of physicians and 
                                        practitioners that are 
                                        submitting such data.
                                            ``(bb) Phase II.--During 
                                        phase II, the Secretary shall 
                                        make available to the public 
                                        the identity of physicians and 
                                        practitioners that are 
                                        receiving a value-based payment 
                                        under section 1860E-3.
                                            ``(cc) Phase III.--During 
                                        phase III, the Secretary shall 
                                        make data submitted under 
                                        clause (ii) available to the 
                                        public in a clear and 
                                        understandable form.
                                    ``(II) Review.--The procedures 
                                established under subclause (I) shall 
                                ensure that a physician or practitioner 
                                has the opportunity to review the data 
                                that is to be made public with respect 
                                to the physician or practitioner under 
                                subclause (I)(cc) prior to such data 
                                being made public.
                                    ``(III) Exceptions.--The Secretary 
                                shall establish exceptions to the 
                                requirement for making data available 
                                to the public under subclause (I). In 
                                providing for such exceptions, the 
                                Secretary shall take into account the 
                                size and specialty representation of 
                                the practice involved.''.
                    (B) Conforming amendment.--Section 1848(d)(4)(A) 
                (42 U.S.C. 1395w-4(d)(4)(A)) is amended, in the matter 
                preceding clause (i), by striking ``subparagraph (F)'' 
                and inserting ``subparagraphs (F) and (G)''.
            (2) Reduction in conversion factor for physicians and 
        practitioners that submit quality data in order to fund 
        program.--
                    (A) In general.--Section 1848(d) (42 U.S.C. 1395w-
                4(d)) is amended by adding at the end the following new 
                paragraph:
            ``(6) Reduction in conversion factor for physicians and 
        practitioners in order to fund value-based purchasing 
        program.--
                    ``(A) In general.--For 2009 and each subsequent 
                year, the single conversion factor otherwise applicable 
                under this subsection to services furnished in the year 
                by a physician or a practitioner (as defined in section 
                1860E-3(a)(3)) that complies with the requirements 
                under paragraph (4)(G)(ii) for the year (determined 
                after application of the update under paragraph (4)) 
                shall be reduced by the applicable percent.
                    ``(B) Applicable percent.--For purposes of 
                subparagraph (A), the term `applicable percent' means--
                            ``(i) for 2009, 1.0 percent;
                            ``(ii) for 2010, 1.25 percent;
                            ``(iii) for 2011, 1.5 percent;
                            ``(iv) for 2012, 1.75 percent; and
                            ``(v) for 2013 and each subsequent year, 
                        2.0 percent.''.
                    (B) Conforming amendment.--Section 1848(d)(1)(A) 
                (42 U.S.C. 1395w-4(d)(1)(A)) is amended by striking 
                ``The conversion factor'' and inserting ``Subject to 
                paragraph (6), the conversion factor''.
    (d) Plans.--
            (1) Submission of quality data.--
                    (A) Medicare advantage organizations.--Section 
                1852(e) (42 U.S.C. 1395w-22(e)), as amended by section 
                722 of the Medicare Prescription Drug, Improvement, and 
                Modernization Act of 2003 (Public Law 108-173; 117 
                Stat. 2347), is amended--
                            (i) in paragraph (1), by striking ``an MA 
                        private fee-for-service plan or''; and
                            (ii) in paragraph (3)--
                                    (I) in subparagraph (A)--
                                            (aa) in clause (i), by 
                                        adding at the end the following 
                                        new sentence: ``Such data shall 
                                        include data necessary for the 
                                        operation of the plan value-
                                        based purchasing program under 
                                        section 1860E-4.'';
                                            (bb) by redesignating 
                                        clause (iv) as clause (vi); and
                                            (cc) by inserting after 
                                        clause (iii) the following new 
                                        clauses:
                            ``(iv) Application to ma private fee-for-
                        service plans.--The Secretary shall establish 
                        as appropriate by regulation requirements for 
                        the collection, analysis, and reporting of data 
                        that permits the measurement of health outcomes 
                        and other indices of quality for MA 
                        organizations with respect to MA private fee-
                        for-service plans.''.
                            ``(v) Availability to the public.--The 
                        Secretary shall establish procedures for making 
                        data reported under this subparagraph available 
                        to the public in a clear and understandable 
                        form. Such procedures shall ensure that an MA 
                        organization has the opportunity to review the 
                        data that is to be made public with respect to 
                        the plan offered by the organization prior to 
                        such data being made public.''; and
                                    (II) in subparagraph (B)--
                                            (aa) in clause (i), by 
                                        striking ``The'' and inserting 
                                        ``Subject to clause (ii), 
                                        the''; and
                                            (bb) by striking clause 
                                        (ii) and inserting the 
                                        following new clause:
                            ``(ii) Changes in types of data.--Subject 
                        to clause (iii), the Secretary may only change 
                        the types of data that are required to be 
                        submitted under subparagraph (A) after 
                        submitting to Congress a report on the reasons 
                        for such changes that was prepared--
                                    ``(I) in the case of data necessary 
                                for the operation of the plan value-
                                based purchasing program under section 
                                1860E-4, after the requirements under 
                                subsections (c) and (d) of section 
                                1860E-1 have been complied with; and
                                    ``(II) in the case of any other 
                                data, in consultation with MA 
                                organizations and private accrediting 
                                bodies.''.
                    (B) Eligible entities with reasonable cost 
                contracts.--Section 1876(h) (42 U.S.C. 1395mm(h)) is 
                amended by adding at the end the following new 
                paragraph:
    ``(6)(A) With respect to plan years beginning on or after January 
1, 2006, an eligible entity with a reasonable cost reimbursement 
contract under this subsection shall submit to the Secretary such data 
that the Secretary determines is appropriate for the measurement of 
health outcomes and other indices of quality, including data necessary 
for the operation of the plan value-based purchasing program under 
section 1860E-4. Such data shall be submitted in a form and manner, and 
at a time, specified by the Secretary for purposes of this 
subparagraph.
    ``(B) The Secretary shall establish procedures for making data 
reported under subparagraph (A) available to the public in a clear and 
understandable form. Such procedures shall ensure that an eligible 
entity has the opportunity to review the data that is to be made public 
with respect to the contract prior to such data being made public.''.
                    (C) Effective Date.--The amendments made by this 
                subsection shall apply to plan years beginning on or 
                after January 1, 2006.
                    (D) Sense of the senate.--It is the sense of the 
                Senate that, in establishing the timeframes for 
                Medicare Advantage organizations and entities with a 
                reasonable cost reimbursement contract under section 
                1876(h) of the Social Security Act (42 U.S.C. 
                1395mm(h)) to report quality data under sections 
                1852(e)(3) and 1876(h)(6), respectively, of such Act, 
                as added by this section, the Secretary should take 
                into account other timeframes for reporting quality 
                data that such organizations and entities are subject 
                to under other Federal and State programs and in the 
                commercial market.
            (2) Reduction in payments to organizations in order to fund 
        program.--
                    (A) Medicare advantage payments.--
                            (i) In general.--Section 1853(a)(1) (42 
                        U.S.C. 1395w-23(a)(1)), as amended by section 
                        222(e) of the Medicare Prescription Drug, 
                        Improvement, and Modernization Act of 2003 
                        (Public Law 108-173; 117 Stat. 2200), is 
                        amended--
                                    (I) in clauses (i) and (ii) of 
                                subparagraph (B), by inserting ``and, 
                                for 2009 and each subsequent year, 
                                except in the case of an MSA plan or an 
                                MA plan for which there was no contract 
                                under section 1857 during either of the 
                                preceding 2 years, reduced by the 
                                applicable percent (as defined in 
                                subparagraph (I))'' after ``(G)''; and
                                    (II) by adding at the end the 
                                following new subparagraph:
                    ``(I) Applicable percent.--For purposes of clauses 
                (i) and (ii) of subparagraph (B), the term `applicable 
                percent' means--
                            ``(i) for 2009, 1.0 percent;
                            ``(ii) for 2010, 1.25 percent;
                            ``(iii) for 2011, 1.5 percent;
                            ``(iv) for 2012, 1.75 percent; and
                            ``(v) for 2013 and each subsequent year, 
                        2.0 percent.''.
                            (iii) Reductions in payments do not affect 
                        the rebate for bids below the benchmark.--The 
                        amendments made by subparagraph (A) shall not 
                        be construed to have any effect on--
                                    (I) the determination of whether a 
                                Medicare Advantage plan has average per 
                                capita monthly savings described in 
                                paragraph (3)(C) or (4)(C) of section 
                                1854(b) of the Social Security Act (42 
                                U.S.C. 1395w-24(b)); or
                                    (II) the amount of such savings.
                    (A) Reasonable cost contract payments.--Section 
                1876(h) (42 U.S.C. 1395mm(h)), as amended by subsection 
                (a)(2), is amended by adding at the end the following 
                new paragraph:
    ``(7) Notwithstanding the preceding provisions of this subsection, 
the Secretary shall reduce each payment to an eligible organization 
under this subsection with respect to benefits provided on or after 
January 1, 2009, by an amount equal to the applicable percent (as 
defined in section 1853(a)(1)(I)) of the payment amount.''.
            (3) Requirement for reporting on use of value-based 
        payments.--
                    (A) MA plans.--Section 1854(a) (42 U.S.C. 1395w-
                24(a)), as amended by section 222(a) of the Medicare 
                Prescription Drug, Improvement, and Modernization Act 
                of 2003 (Public Law 108-173; 117 Stat. 2193), is 
                amended--
                            (i) in paragraph (1)(A)(i), by striking 
                        ``or (6)(A)'' and inserting ``(6)(A), or (7)''; 
                        and
                            (ii) by adding at the end the following:
            ``(7) Submission of information of how value-based payments 
        will be used.--For an MA plan for a plan year beginning on or 
        after January 1, 2011, the information described in this 
        paragraph is a description of how the organization offering the 
        plan will use any value-based payments that the organization 
        received under section 1860E-4 with respect to the plan for the 
        year preceding the year in which such information is 
        submitted.''.
                    (B) Reasonable cost contracts.--Section 1876(h) (42 
                U.S.C. 1395mm(h)), as amended by subsection (c)(2), is 
                amended by adding at the end the following new 
                paragraph:
    ``(8) Not later than July 1 of each year (beginning in 2010), any 
eligible entity with a reasonable cost reimbursement contract under 
this subsection that received a value-based payment under section 
1860E-4 with respect to the contract for the preceding year shall 
submit to the Secretary a report containing a description of how the 
organization will use such payments under the contract.''.
    (e) ESRD Providers and Facilities.--
            (1) Voluntary submission of quality data.--Section 1881(b) 
        (42 U.S.C. 1395rr(b)) is amended by adding at the end the 
        following new paragraph:
            ``(14) By not later than July 31, 2006, the Secretary shall 
        establish procedures under which providers of services and 
        renal dialysis facilities that receive payments under paragraph 
        (12) or (13) may submit to the Secretary data that permits the 
        measurement of health outcomes and other indices of quality.''.
            (2) Reduction in case-mix adjusted prospective payment 
        amount in order to fund program.--Section 1881(b)(12) (42 
        U.S.C. 1395rr(b)(12)) is amended--
                    (A) by redesignating subparagraph (G) as 
                subparagraph (H); and
                    (B) by inserting after subparagraph (F) the 
                following new subparagraph:
            ``(G)(i) In the case of any payment made under this 
        paragraph for an item or service furnished on or after January 
        1, 2007, such payment shall be reduced by the applicable 
        percent. The preceding sentence shall not apply to a payment 
        for an item or service furnished by a provider of services or a 
        renal dialysis facility that is excluded from the program under 
        section 1860E-5 by reason of subsection (a)(3) of such section 
        at the time the item or service is furnished.
            ``(ii) For purposes of clause (i), the term `applicable 
        percent' means--
                    ``(I) for 2007, 1.0 percent;
                    ``(II) for 2008, 1.25 percent;
                    ``(III) for 2009, 1.5 percent;
                    ``(IV) for 2010, 1.75 percent; and
                    ``(V) for 2011 and each subsequent year, 2.0 
                percent.''.
            (3) Value-based purchasing under the demonstration of 
        bundled case-mix adjusted payment system for ESRD services.--
        Section 623(e) of the Medicare Prescription Drug, Improvement, 
        and Modernization Act of 2003 (42 U.S.C. 1395rr note) is 
        amended by adding at the end the following new paragraph:
            ``(7) Value-based purchasing program.--As part of the 
        demonstration project under this subsection, the Secretary 
        shall, beginning January 1, 2007, implement a value-based 
        purchasing program for providers and facilities participating 
        in the demonstration project. The Secretary shall implement 
        such value-based purchasing program in a similar manner as the 
        ESRD provider and facility value-based purchasing program is 
        implemented under section 1860E-5 of the Social Security Act, 
        including the funding of such program.''.
    (f) Home Health Agencies.--
            (1) Update for home health agencies that submit quality 
        data.--Section 1895(b)(3)(B) (42 U.S.C.fff(b)(3)(B)) is 
        amended--
                    (A) in clause (ii)(IV), by inserting ``subject to 
                clause (v),'' after ``subsequent year,''; and
                    (B) by adding at the end the following new clause:
                            ``(v) Adjustment if quality data not 
                        submitted.--
                                    ``(I) Adjustment.--For purposes of 
                                clause (ii)(IV), for 2007 and each 
                                subsequent year, in the case of a home 
                                health agency that does not submit data 
                                in accordance with subclause (II) with 
                                respect to such a year, the home health 
                                market basket percentage increase 
                                applicable under such clause for such 
                                year shall be reduced by 2 percentage 
                                points. Such reduction shall apply only 
                                with respect to the year involved, and 
                                the Secretary shall not take into 
                                account such reduction in computing the 
                                prospective payment amount under this 
                                section for a subsequent year.
                                    ``(II) Submission of quality 
                                data.--For 2007 and each subsequent 
                                year, each home health agency shall 
                                submit to the Secretary such data that 
                                the Secretary determines is appropriate 
                                for the measurement of health care 
                                quality, including data necessary for 
                                the operation of the home health agency 
                                value-based purchasing program under 
                                section 1860E-6. Such data shall be 
                                submitted in a form and manner, and at 
                                a time, specified by the Secretary for 
                                purposes of this clause.
                                    ``(III) Public availability of data 
                                submitted.--The Secretary shall 
                                establish procedures for making data 
                                submitted under subclause (II) 
                                available to the public in a clear and 
                                understandable form. Such procedures 
                                shall ensure that a home health agency 
                                has the opportunity to review the data 
                                that is to be made public with respect 
                                to the agency prior to such data being 
                                made public.''.
            (2) Reduction in standard prospective payment amount for 
        agencies that submit quality data in order to fund program.--
        Section 1895(b)(3) (42 U.S.C. 1395fff(b)(3)) is amended by 
        adding at the end the following new subparagraph:
                    ``(D) Reduction in order to fund value-based 
                purchasing program.--
                            ``(i) In general.--For 2008 and each 
                        subsequent year, in the case of a home health 
                        agency that complies with the submission 
                        requirements under section 1895(b)(3)(B)(v)(II) 
                        for the year, the standard prospective payment 
                        amount (or amounts) otherwise applicable under 
                        this paragraph for the year shall be reduced by 
                        the applicable percent.
                            ``(ii) Applicable percent.--For purposes of 
                        clause (i), the term `applicable percent' 
                        means--
                                    ``(I) for 2008, 1.0 percent;
                                    ``(II) for 2009, 1.25 percent;
                                    ``(III) for 2010, 1.5 percent;
                                    ``(IV) for 2011, 1.75 percent; and
                                    ``(V) for 2012 and each subsequent 
                                year, 2.0 percent.''.
    (g) Skilled Nursing Facilities.--
            (1) Requirement for skilled nursing facilities to report 
        functional capacity of medicare residents upon admission and 
        discharge.--Section 1819(b) (42 U.S.C. 1395i-3(b)) is amended 
        by adding at the end the following new paragraph:
            ``(9) Reporting functional capacity at admission and 
        discharge.--
                    ``(A) In general.--On and after October 1, 2006, a 
                skilled nursing facility must submit a report to the 
                Secretary on the functional capacity of each resident 
                who is entitled to benefits under this part at the time 
                of--
                            ``(i) the admission of such resident; and
                            ``(ii) the discharge of such resident.
                    ``(B) Timeframe.--A report required under 
                subparagraph (A) shall be submitted within 10 days of 
                the admission or discharge, as the case may be.''.
            (2) Voluntary submission of skilled nursing facility 
        quality data.--Section 1888(e)(4)(E) (42 U.S.C. 
        1395yy(e)(4)(E)) is amended--
                    (A) in clause (ii)(IV), by inserting ``subject to 
                clause (iii),'' after ``subsequent fiscal year,''; and
                    (B) by adding at the end the following new clause:
                            ``(iii) Adjustment if quality data not 
                        submitted.--
                                    ``(I) Adjustment.--For purposes of 
                                clause (ii)(IV), for fiscal year 2009 
                                and each subsequent fiscal year, in the 
                                case of a skilled nursing facility that 
                                does not submit data in accordance with 
                                subclause (II) with respect to such a 
                                fiscal year, the skilled nursing 
                                facility market basket percentage 
                                change applicable under such clause for 
                                such fiscal year shall be reduced by 2 
                                percentage points. Such reduction shall 
                                apply only with respect to the fiscal 
                                year involved, and the Secretary shall 
                                not take into account such reduction in 
                                computing the Federal per diem rate 
                                under this section for a subsequent 
                                fiscal year.
                                    ``(II) Submission of quality 
                                data.--For fiscal year 2008 and each 
                                subsequent fiscal year, each skilled 
                                nursing facility shall submit to the 
                                Secretary such data that the Secretary 
                                determines, after conducting a study in 
                                consultation with the entities 
                                described in subsections (c)(1), 
                                (c)(2), and (d) of section 1860E-1, is 
                                appropriate for the measurement of 
                                health outcomes and other indices of 
                                quality. Such data shall be submitted 
                                in a form and manner, and at a time, 
                                specified by the Secretary for purposes 
                                of this clause.
                                    ``(III) Public availability of data 
                                submitted.--The Secretary shall 
                                establish procedures for making data 
                                submitted under subclause (II) 
                                available to the public in a clear and 
                                understandable form. Such procedures 
                                shall ensure that a facility has the 
                                opportunity to review the data that is 
                                to be made public with respect to the 
                                facility prior to such data being made 
                                public.''.
    (h) Conforming References to Previous Part E.--Any reference in law 
(in effect before the date of the enactment of this Act) to part E of 
title XVIII of the Social Security Act is deemed a reference to part F 
of such title (as in effect after such date).

SEC. 6111. PHASE-OUT OF RISK ADJUSTMENT BUDGET NEUTRALITY IN 
              DETERMINING THE AMOUNT OF PAYMENTS TO MEDICARE ADVANTAGE 
              ORGANIZATIONS.

    (a) In General.--Section 1853 (42 U.S.C. 1395w-23) is amended--
            (1) in subsection (j)(1)--
                    (A) in subparagraph (A)--
                            (i) by inserting ``(or, beginning with 
                        2007, \1/12\ of the applicable amount 
                        determined under subsection (k)(1))'' after 
                        ``1853(c)(1)''; and
                            (ii) by inserting ``(for years before 
                        2007)'' after ``adjusted as appropriate'';
                    (B) in subparagraph (B), by inserting ``(for years 
                before 2007)'' after ``adjusted as appropriate''; and
            (2) by adding at the end the following new subsection:
    ``(k) Determination of Applicable Amount for Purposes of 
Calculating the Benchmark Amounts.--
            ``(1) Applicable amount defined.--For purposes of 
        subsection (j), subject to paragraph (2), the term `applicable 
        amount' means for an area--
                    ``(A) for 2007--
                            ``(i) if such year is not specified under 
                        subsection (c)(1)(D)(ii), an amount equal to 
                        the amount specified in subsection (c)(1)(C) 
                        for the area for 2006--
                                    ``(I) first adjusted by the 
                                rescaling factor for 2006 for the area 
                                (as made available by the Secretary in 
                                the announcement of the rates on April 
                                4, 2005, under subsection (b)(1), but 
                                excluding any national adjustment 
                                factors for coding intensity and risk 
                                adjustment budget neutrality that were 
                                included in such factor); and
                                    ``(II) then increased by the 
                                national per capita MA growth 
                                percentage, described in subsection 
                                (c)(6) for that succeeding year, but 
                                not taking into account any adjustment 
                                under subparagraph (C) of such 
                                subsection for a year before 2004;
                            ``(ii) if such year is specified under 
                        subsection (c)(1)(D)(ii), an amount equal to 
                        the greater of--
                                    ``(I) the amount determined under 
                                clause (i) for the area for the year; 
                                or
                                    ``(II) the amount specified in 
                                subsection (c)(1)(D) for the area for 
                                the year; and
                    ``(B) for a subsequent year--
                            ``(i) if such year is not specified under 
                        subsection (c)(1)(D)(ii), an amount equal to 
                        the amount determined under this paragraph for 
                        the area for the previous year, increased by 
                        the national per capita MA growth percentage, 
                        described in subsection (c)(6) for that 
                        succeeding year, but not taking into account 
                        any adjustment under subparagraph (C) of such 
                        subsection for a year before 2004; and
                            ``(ii) if such year is specified under 
                        subsection (c)(1)(D)(ii), an amount equal to 
                        the greater of--
                                    ``(I) the amount determined under 
                                clause (i) for the area for the year; 
                                or
                                    ``(II) the amount specified in 
                                subsection (c)(1)(D) for the area for 
                                the year.
            ``(2) Adjustment.--
                    ``(A) In general.--Except as provided in 
                subparagraph (D), in the case of 2007 through 2010, the 
                applicable amount determined under paragraph (1) shall 
                be increased by a factor equal to 1 plus the product 
                of--
                            ``(i) the percent determined under 
                        subparagraph (B) for the year; and
                            ``(ii) the applicable percent for the year 
                        under subparagraph (C).
                    ``(B) Percent determined.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(i), subject to clause (ii), 
                        the percent determined under this subparagraph 
                        for a year is a percent equal to a fraction--
                                    ``(I) the numerator of which is an 
                                amount equal to--
                                            ``(aa) the Secretary's 
                                        estimate of the total payments 
                                        that would have been made under 
                                        this part in the year if all 
                                        the monthly payment amounts for 
                                        all MA plans were equal to \1/
                                        12\ of the annual MA capitation 
                                        rate under subsection (c)(1) 
                                        for the area and year; minus
                                            ``(bb) the Secretary's 
                                        estimate of the total payments 
                                        that would have been made under 
                                        this part in the year if all 
                                        the monthly payment amounts for 
                                        all MA plans were equal to \1/
                                        12\ of the MA area-specific 
                                        non-drug monthly benchmark 
                                        amount under subsection (j) for 
                                        the area and year; and
                                    ``(II) the denominator of which is 
                                equal to the total amount estimated for 
                                the year under subclause (I)(bb).
                            ``(ii) Requirements.--In estimating the 
                        amounts under clause (i), the Secretary--
                                    ``(I) shall--
                                            ``(aa) use a complete set 
                                        of the most recent and 
                                        representative Medicare 
                                        Advantage risk scores under 
                                        subsection (a)(3) that are 
                                        available from the risk 
                                        adjustment model announced for 
                                        the year;
                                            ``(bb) adjust the risk 
                                        scores to reflect changes in 
                                        treatment and coding practices 
                                        in the fee-for-service sector;
                                            ``(cc) adjust the risk 
                                        scores for differences in 
                                        coding patterns between 
                                        Medicare Advantage plans and 
                                        providers under part A and B to 
                                        the extent that the Secretary 
                                        has identified such 
                                        differences;
                                            ``(dd) as necessary, adjust 
                                        the risk scores for late data 
                                        submitted by Medicare Advantage 
                                        organizations;
                                            ``(ee) as necessary, adjust 
                                        the risk scores for lagged 
                                        cohorts; and
                                            ``(ff) as necessary, adjust 
                                        the risk scores for changes in 
                                        enrollment in Medicare 
                                        Advantage plans during the 
                                        year; and
                                    ``(II) may take into account the 
                                estimated health risk of enrollees in 
                                preferred provider organization plans 
                                (including MA regional plans) for the 
                                year.
                        In order to make the adjustment required under 
                        item (cc) and to ensure payment accuracy, the 
                        Secretary shall conduct an analysis of the 
                        differences described in such item. The 
                        Secretary shall complete such analysis by a 
                        date necessary to ensure that the results of 
                        such analysis are incorporated into the payment 
                        rates for a year not later than 2008. In 
                        conducting such analysis, the Secretary shall 
                        use data submitted with respect to 2004 and 
                        subsequent years, as available.
                    ``(C) Applicable percent.--For purposes of 
                subparagraph (A)(ii), the term `applicable percent' 
                means--
                            ``(i) for 2007, 55 percent;
                            ``(ii) for 2008, 40 percent;
                            ``(iii) for 2009, 25 percent; and
                            ``(iv) for 2010, 5 percent.
                    ``(D) Termination of adjustment.--The Secretary 
                shall not make any adjustment under subparagraph (A) in 
                a year if the amount estimated under subparagraph 
                (B)(i)(I)(bb) for the year is equal to or greater than 
                the amount estimated under subparagraph (B)(i)(I)(aa) 
                for the year.
            ``(3) No additional adjustments.--
                    ``(A) In general.--Except for the adjustment 
                provided for in paragraph (2), the Secretary may not 
                make any adjustment to the applicable amount determined 
                in paragraph (1) for any year.
                    ``(B) Rule of construction.--Nothing in this 
                subsection shall be construed to limit the authority of 
                the Secretary to risk adjust the amount under 
                subsection (c)(1)(D) pursuant to clause (i) of such 
                subsection.''.
    (b) Refinements to Health Status Adjustment.--Section 1853(a)(1)(C) 
(42 U.S.C. 1395w-23) is amended by inserting after the first sentence 
the following new sentence: ``In applying such adjustment for health 
status to such payment amounts, the Secretary shall ensure that such 
adjustment reflects changes in treatment and coding practices in the 
fee-for-service sector and reflects differences in coding patterns 
between Medicare Advantage plans and providers under part A and B to 
the extent that the Secretary has identified such differences.''.

SEC. 6112. ELIMINATION OF MEDICARE ADVANTAGE REGIONAL PLAN 
              STABILIZATION FUND.

    (a) Elimination.--
            (1) In General.--Subsection (e) of section 1858 (42 U.S.C. 
        1395w-27a) is repealed.
            (2) Conforming Amendment.--Section 1858(f)(1) (42 U.S.C. 
        1395w-27a(f)(1)) is amended by striking ``subject to subsection 
        (e),''.
            (3) Effective Date.--The amendments made by this subsection 
        shall take effect as if included in the enactment of section 
        221(c) of the Medicare Prescription Drug, Improvement, and 
        Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2181).
    (b) Timeframe for Part A and B Payments.--Notwithstanding sections 
1816(c) and 1842(c)(2) of the Social Security Act or any other 
provision of law--
            (1) any payment from the Federal Hospital Insurance Trust 
        Fund under section 1817 of the Social Security Act (42 U.S.C. 
        1395i) or from the Federal Supplementary Medical Insurance 
        Trust Fund under section 1841 of such Act (42 U.S.C. 1395t) for 
        claims submitted under part A or B of title XVIII of such Act 
        for items and services furnished under such part A or B, 
        respectively, that would otherwise be payable during the period 
        beginning on September 22, 2006, and ending on September 30, 
        2006, shall be paid on the first business day of October 2006; 
        and
            (2) no interest or late penalty shall be paid to an entity 
        or individual for any delay in a payment by reason of the 
        application of paragraph (1).

SEC. 6113. RURAL PACE PROVIDER GRANT PROGRAM.

    (a) Definitions.--In this section:
            (1) CMS.--The term ``CMS'' means the Centers for Medicare & 
        Medicaid Services.
            (2) Eligible participant.--The term ``eligible 
        participant'' means a PACE program eligible individual (as 
        defined in sections 1894(a)(5) and 1934(a)(5) of the Social 
        Security Act (42 U.S.C. 1395eee(a)(5); 1396u-4(a)(5))).
            (3) PACE program.--The term ``PACE program'' has the 
        meaning given that term in sections 1894(a)(2) and 1934(a)(2) 
        of the Social Security Act (42 U.S.C. 1395eee(a)(2); 1396u-
        4(a)(2)).
            (4) PACE provider.--The term ``PACE provider'' has the 
        meaning given that term in section 1894(a)(3) or 1934(a)(3) of 
        the Social Security Act (42 U.S.C. 1395eee(a)(3); 1396u-
        4(a)(3)).
            (5) Rural area.--The term ``rural area'' has the meaning 
        given that term in section 1886(d)(2)(D) of the Social Security 
        Act (42 U.S.C. 1395ww(d)(2)(D)).
            (6) Rural pace pilot site.--The term ``rural PACE pilot 
        site'' means a PACE provider that has been approved to provide 
        services in a geographic service area that is, in whole or in 
        part, a rural area, and that has received a site development 
        grant under this section.
            (7) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
    (b) Site Development Grants and Technical Assistance Program.--
            (1) Site development grants.--
                    (A) In general.--The Secretary shall establish a 
                process and criteria to award site development grants 
                to qualified PACE providers that have been approved to 
                serve a geographic service area that is, in whole or in 
                part, a rural area.
                    (B) Amount per award.--A site development grant 
                awarded under subparagraph (A) to any individual rural 
                PACE pilot site shall not exceed $750,000.
                    (C) Number of awards.--Not more than 15 rural PACE 
                pilot sites shall be awarded a site development grant 
                under subparagraph (A).
                    (D) Use of funds.--Funds made available under a 
                site development grant awarded under subparagraph (A) 
                may be used for the following expenses only to the 
                extent such expenses are incurred in relation to 
                establishing or delivering PACE program services in a 
                rural area:
                            (i) Feasibility analysis and planning.
                            (ii) Interdisciplinary team development.
                            (iii) Development of a provider network, 
                        including contract development.
                            (iv) Development or adaptation of claims 
                        processing systems.
                            (v) Preparation of special education and 
                        outreach efforts required for the PACE program.
                            (vi) Development of expense reporting 
                        required for calculation of outlier payments or 
                        reconciliation processes.
                            (vii) Development of any special quality of 
                        care or patient satisfaction data collection 
                        efforts.
                            (viii) Establishment of a working capital 
                        fund to sustain fixed administrative, facility, 
                        or other fixed costs until the provider reaches 
                        sufficient enrollment size.
                            (ix) Startup and development costs incurred 
                        prior to the approval of the rural PACE pilot 
                        site's PACE provider application by CMS.
                            (x) Any other efforts determined by the 
                        rural PACE pilot site to be critical to its 
                        successful startup, as approved by the 
                        Secretary.
                    (E) Appropriation.--
                            (i) In general.--Out of funds in the 
                        Treasury not otherwise appropriated, there are 
                        appropriated to the Secretary to carry out this 
                        subsection for the period of fiscal years 2006 
                        through 2007, $7,500,000.
                            (ii) Availability.--Funds appropriated 
                        under clause (i) shall remain available for 
                        expenditure through fiscal year 2010.
            (2) Technical assistance program.--The Secretary shall 
        establish a technical assistance program to provide--
                    (A) outreach and education to State agencies and 
                provider organizations interested in establishing PACE 
                programs in rural areas; and
                    (B) technical assistance necessary to support rural 
                PACE pilot sites.
    (c) Cost Outlier Protection for Rural Pace Pilot Sites.--
            (1) Establishment of fund for reimbursement of outlier 
        costs.--
                    (A) In general.--Notwithstanding any other 
                provision of law, the Secretary shall establish an 
                outlier fund to reimburse rural PACE pilot sites for 
                outlier costs (as defined in subparagraph (B)) incurred 
                for eligible participants who reside in a rural area in 
                accordance with the expense payment specified in 
                subparagraph (C).
                    (B) Outlier costs defined.--
                            (i) In general.--In subparagraph (A), the 
                        term ``outlier costs'' means the inpatient and 
                        related physician and ancillary costs in excess 
                        of $50,000 incurred within a given 12-month 
                        period for an eligible participant who resides 
                        in a rural area.
                            (ii) Inclusion in only 1 period.--Outlier 
                        costs may not be included in more than one 12-
                        month period for purposes of calculating an 
                        outlier expense payment under subparagraph (C).
                    (C) Outlier expense payment.--
                            (i) Payment for outlier costs.--Subject to 
                        clause (ii), in the case of a rural PACE pilot 
                        site that has incurred outlier costs for an 
                        eligible participant, the rural PACE pilot site 
                        shall receive an outlier expense payment equal 
                        to 80 percent of such costs.
                            (ii) Limitations.--
                                    (I) Costs incurred per eligible 
                                participant.--The total amount of 
                                outlier expense payments made under 
                                clause (i) to a rural PACE pilot site 
                                for outlier costs incurred with respect 
                                to an eligible participant shall not 
                                exceed $100,000 for the 12-month period 
                                used to calculate the payment.
                                    (II) Costs incurred per provider.--
                                No rural PACE pilot site may receive 
                                more than $500,000 in total outlier 
                                expense payments in a 12-month period.
                                    (III) Limitation of outlier cost 
                                reimbursement period.--A rural PACE 
                                pilot site shall only receive outlier 
                                expense payments under this 
                                subparagraph with respect to outlier 
                                costs incurred during the first 3 years 
                                of the site's operation.
                    (D) Requirement to access risk reserves prior to 
                payment.--A rural PACE pilot site shall access and 
                exhaust any risk reserves held or arranged for the 
                provider (other than revenue or reserves maintained to 
                satisfy the requirements of section 460.80(c) of title 
                42, Code of Federal Regulations) and any working 
                capital established through a site development grant 
                awarded under subsection (b)(1), prior to receiving any 
                payment from the outlier fund.
                    (E) Appropriation.--
                            (i) In general.--Out of funds in the 
                        Treasury not otherwise appropriated, there are 
                        appropriated to the Secretary to carry out this 
                        subsection for the period of fiscal years 2006 
                        through 2007, $10,000,000.
                            (ii) Availability.--Funds appropriated 
                        under clause (i) shall remain available for 
                        expenditure through fiscal year 2010.
    (d) Evaluation of PACE Providers Serving Rural Service Areas.--Not 
later than 60 months after the date of enactment of this Act, the 
Secretary shall submit a report to Congress containing an evaluation of 
the experience of rural PACE pilot sites.
    (e) Amounts in Addition to Payments under Social Security Act.--Any 
amounts paid under the authority of this section to a PACE provider 
shall be in addition to payments made to the provider under section 
1894 or 1934 of the Social Security Act (42 U.S.C. 1395eee; 1396u-4).

SEC. 6114. WAIVER OF PART B LATE ENROLLMENT PENALTY FOR CERTAIN 
              INTERNATIONAL VOLUNTEERS.

    (a) In General.--
            (1) Waiver of penalty.--Section 1839(b)(42 U.S.C. 1395r(b)) 
        is amended in the second sentence by inserting the following 
        before the period at the end: ``or months for which the 
        individual can demonstrate that the individual was an 
        individual described in section 1837(k)(3)''.
            (2) Special enrollment period.--
                    (A) In general.--Section 1837 (42 U.S.C. 1395p) is 
                amended by adding at the end the following new 
                subsection:
    ``(k)(1) In the case of an individual who--
            ``(A) at the time the individual first satisfies paragraph 
        (1) or (2) of section 1836, is described in paragraph (3), and 
        has elected not to enroll (or to be deemed enrolled) under this 
        section during the individual's initial enrollment period; or
            ``(B) has terminated enrollment under this section during a 
        month in which the individual is described in paragraph (3),
there shall be a special enrollment period described in paragraph (2).
    ``(2) The special enrollment period referred to in paragraph (1) is 
the 6-month period beginning on the first day of the month which 
includes the date that the individual is no longer described in 
paragraph (3).
    ``(3) For purposes of paragraph (1), an individual described in 
this paragraph is an individual that is serving as a volunteer outside 
of the United States through a program--
            ``(A) that covers at least a 12-month period; and
            ``(B) that is sponsored by an organization described in 
        section 501(c)(3) of the Internal Revenue Code of 1986 and 
        exempt from taxation under section 501(a) of such Code.''.
                    (B) Coverage period.--Section 1838 (42 U.S.C. 
                1395q) is amended by adding at the end the following 
                new subsection:
    ``(f) Notwithstanding subsection (a), in the case of an individual 
who enrolls during a special enrollment period pursuant to section 
1837(k), the coverage period shall begin on the first day of the month 
following the month in which the individual so enrolls.''.
    (b) Effective Date.--The amendment made by subsection (a)(1) shall 
apply to months beginning with January 2007 and the amendments made by 
subsection (a)(2) shall take effect on January 1, 2007.

SEC. 6115. DELIVERY OF SERVICES AT FEDERALLY QUALIFIED HEALTH CENTERS.

    (a) Coverage.--
            (1) In general.--Section 1861(aa)(3) (42 U.S.C. 
        1395x(aa)(3)) is amended--
                    (A) in subparagraph (A), by striking ``, and'' and 
                inserting ``and services described in subsections (qq) 
                and (vv); and'';
                    (B) in subparagraph (B), by striking ``sections 
                329, 330, and 340'' and inserting ``section 330''; and
                    (C) in the flush matter at the end, by inserting 
                ``by the center or by a health care professional under 
                contract with the center'' after ``outpatient of a 
                Federally qualified health center''.
            (2) Consolidated billing.--The first sentence of section 
        1842(b)(6)(F) (42 U.S.C. 1395u(b)(6)(F)) is amended--
                    (A) by striking ``and (G)'' and inserting ``(G)''; 
                and
                    (B) by inserting before the period at the end the 
                following: ``, and (H) in the case of services 
                described in section 1861(aa)(3) that are furnished by 
                a health care professional under contract with a 
                Federally qualified health center, payment shall be 
                made to the center''.
    (b) Technical Corrections.--Clauses (i) and (ii)(II) of section 
1861(aa)(4)(A) (42 U.S.C. 1395x(aa)(4)(A)) are each amended by striking 
``(other than subsection (h))''.
    (c) Effective Dates.--The amendments made by this section shall 
apply to services furnished on or after January 1, 2006.

     TITLE VII--COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                    Subtitle A--Education Provisions

                          CHAPTER 1--EDUCATION

SEC. 7101. PROVISIONAL GRANT ASSISTANCE PROGRAM.

    (a) Amendment.--Subpart 1 of part A of title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1070a) is amended by adding at the end 
the following:

``SEC. 401A. PROVISIONAL GRANT ASSISTANCE PROGRAM.

    ``(a) Grants.--
            ``(1) In general.--From amounts appropriated under 
        subsection (e) for a fiscal year and subject to subsection (b), 
        the Secretary shall award grants to students (which shall be 
        known as `ProGAP awards') in the same manner as the Secretary 
        awards grants to students under section 401, except that--
                    ``(A) at the beginning of each award year, the 
                Secretary shall establish a maximum and minimum award 
                level based on amounts made available under subsection 
                (e);
                    ``(B) the Secretary shall only award grants under 
                this section to students eligible for a grant under 
                section 401 for the award year; and
                    ``(C) when determining eligibility for the awards, 
                the Secretary shall consider only those students who 
                are eligible for a grant under section 401, as of June 
                30 of the award year for which the determination is 
                made.
            ``(2) Students with the greatest need.--The Secretary shall 
        ensure grants are awarded under this section to students with 
        the greatest need as determined in accordance with section 471.
    ``(b) Cost of Attendance Limitation.--A grant awarded under this 
section for an award year shall be awarded in an amount that does not 
exceed--
            ``(1) the student's cost of attendance for the award year; 
        less
            ``(2) an amount equal to the expected family contribution 
        for that student for the award year.
    ``(c) Supplement Not Supplant.--Grants awarded from funds made 
available under subsection (e) shall be used to supplement, and not 
supplant, other Federal, State, or institutional grant funds.
    ``(d) Use of Excess Funds.--
            ``(1) 15 percent or less.--If, at the end of a fiscal year, 
        the funds available for making grant payments under this 
        section exceed the amount necessary to make the grant payments 
        required under this section to eligible students by 15 percent 
        or less, then all of the excess funds shall remain available 
        for making grant payments under this section during the next 
        succeeding fiscal year.
            ``(2) More than 15 percent.--If, at the end of a fiscal 
        year, the funds available for making grant payments under this 
        section exceed the amount necessary to make the grant payments 
        required under this section to eligible students by more than 
        15 percent, then all of such funds shall remain available for 
        making such grant payments but grant payments may be made under 
        this paragraph only with respect to awards for that fiscal 
        year.''.
    ``(e) Authorization and Appropriation of Funds.--There are 
authorized to be appropriated, and there are appropriated, out of any 
money in the Treasury not otherwise appropriated, for the Department of 
Education to carry out this section and section 401B--
            ``(1) $1,897,000,000 for fiscal year 2006;
            ``(2) $1,901,000,000 for fiscal year 2007;
            ``(3) $1,899,000,000 for fiscal year 2008;
            ``(4) $1,898,000,000 for fiscal year 2009; and
            ``(5) $1,897,000,000 for fiscal year 2010.
    ``(f) Sunset Provision.--This section shall be effective with 
respect to amounts appropriated for fiscal year 2006 and each of the 4 
succeeding fiscal years.''.
    (b) Sense of the Senate.--It is the sense of the Senate that the 
amounts appropriated to carry out sections 401A and 401B of the Higher 
Education Act of 1965 are the result of the savings generated by the 
amendments made by this chapter.

SEC. 7102. NATIONAL SMART GRANTS.

    Subpart 1 of part A of title IV of the Higher Education Act of 1965 
(20 U.S.C. 1070a) is further amended by adding after section 401A (as 
added by section 7101):

``SEC. 401B. NATIONAL SMART GRANTS.

    ``(a) Findings.--Congress makes the following findings:
            ``(1) If the United States is to remain a world leader in 
        the global economy, its college students must have the training 
        they need to compete for the best jobs of the 21st century.
            (2) The United States intelligence community faces major 
        shortages in foreign languages critical to national security, 
        and will also require major incentives to fill projected 
        workforce needs.
            ``(3) Increasingly, the best jobs of the 21st century will 
        require baccalaureate degrees in the sciences, mathematics, 
        technology, engineering, and foreign languages critical to 
        national security, or be generated by people who have such 
        degrees.
            ``(4) Congress should establish a National Science and 
        Mathematics Access to Retain Talent (SMART) grant program to 
        meet the goals described in paragraphs (1) through (3).
    ``(b) Purpose.--The purpose of this section is to increase the 
number of postsecondary students from low-income backgrounds who are 
enrolled in studies leading to baccalaureate degrees in physical, life, 
or computer sciences, mathematics, technology, engineering, and foreign 
languages critical to national security.
    ``(c) Grants Authorized.--From amounts appropriated under section 
401A(c) for a fiscal year, the Secretary shall award grants to eligible 
students to assist the eligible students in paying their college 
education expenses.
    ``(d) Designation.--A grant under this section shall be known as a 
`National Science and Mathematics Access to Retain Talent Grant' or a 
`National SMART Grant'.
    ``(e) Definition of Eligible Student.--In this section the term 
`eligible student' means a student who, for the academic year for which 
the determination is made--
            ``(1) is eligible for a Federal Pell Grant; and
            ``(2) is in the student's 3rd or 4th year at an institution 
        of higher education majoring in--
                    ``(A) mathematics, science, technology, or 
                engineering (as determined by the Secretary pursuant to 
                regulations); or
                    ``(B) a foreign language that the Secretary, in 
                consultation with the Director of National 
                Intelligence, determines is critical to the national 
                security of the United States.
    ``(f) Grant Amount.--The Secretary shall award a grant under this 
section in an amount that does not exceed $1,500 for an academic year.
    ``(g) Funding Rule.--The Secretary shall use not more than 
$450,000,000 of the funds appropriated under section 401A(c) for each 
of the fiscal years 2006 through 2010 to carry out this section.
    ``(h) Unobligated Funds Available for Federal Grant Assistance.--
The Secretary shall make any funds made available under subsection (g) 
for a fiscal year that remain unobligated at the end of the fiscal year 
available to carry out section 401A.
    ``(i) Matching Assistance.--An institution of higher education may, 
from funds provided from private sources, provide additional assistance 
to a student receiving a grant under this section, except that the 
total assistance provided under this title to a student shall not 
exceed the student's cost of attendance.''.

SEC. 7103. LOAN LIMITS.

    (a) Federal Insurance Limits.--Section 425(a)(1)(A) of the Higher 
Education Act of 1965 (20 U.S.C. 1075(a)(1)(A)) is amended--
            (1) in clause (i)(I), by striking ``$2,625'' and inserting 
        ``$3,500''; and
            (2) in clause (ii)(I), by striking ``$3,500'' and inserting 
        ``$4,500''.
    (b) Guarantee Limits.--Section 428(b)(1)(A) of the Higher Education 
Act of 1965 (20 U.S.C. 1078(b)(1)(A)) is amended--
            (1) in clause (i)(I), by striking ``$2,625'' and inserting 
        ``$3,500''; and
            (2) in clause (ii)(I), by striking ``$3,500'' and inserting 
        ``$4,500''.
    (c) Federal PLUS Loans.--Section 428B of the Higher Education Act 
of 1965 (20 U.S.C. 1078-2) is amended--
            (1) in subsection (a)(1)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``Parents'' and inserting ``A graduate or 
                professional student or the parents'';
                    (B) in subparagraph (A), by striking ``the 
                parents'' and inserting ``the graduate or professional 
                student or the parents''; and
                    (C) in subparagraph (B), by striking ``the 
                parents'' and inserting ``the graduate or professional 
                student or the parents'';
            (2) in subsection (b), by striking ``any parent'' and 
        inserting ``any graduate or professional student or any 
        parent'';
            (3) in subsection (c)(2), by striking ``parent'' and 
        inserting ``graduate or professional student or parent''; and
            (4) in subsection (d)(1), by striking ``the parent'' and 
        inserting ``the graduate or professional student or the 
        parent''.
    (d) Unsubsidized Stafford Loans for Graduate or Professional 
Students.--Section 428H(d)(2) of the Higher Education Act of 1965 (20 
U.S.C. 1078-8(d)(2)) is amended--
            (1) in subparagraph (C), by striking ``$10,000'' and 
        inserting ``$12,000''; and
            (2) in subparagraph (D)--
                    (A) in clause (i), by striking ``$5,000'' and 
                inserting ``$7,000''; and
                    (B) in clause (ii), by striking ``$5,000'' and 
                inserting ``$7,000''.

SEC. 7104. PLUS LOAN INTEREST RATES AND ZERO SPECIAL ALLOWANCE PAYMENT.

    (a) PLUS Loans.--Section 427A(l)(2) of the Higher Education Act of 
1965 (20 U.S.C. 1077a(l)(2)) is amended by striking ``7.9 percent'' and 
inserting ``8.5 percent''.
    (b) Conforming Amendments for Special Allowances.--
            (1) Amendments.--Subparagraph (I) of section 438(b)(2) of 
        the Higher Education Act of 1965 (20 U.S.C. 1087-1(b)(2)) is 
        amended--
                    (A) in clause (iv), by striking ``, subject to 
                clause (vi) of this subparagraph'';
                    (B) in clause (v), by striking ``July 1, 2006'' 
                each place it appears and inserting ``April 1, 2006''; 
                and
                    (C) by striking clauses (vi) and (vii) and 
                inserting the following:
                            ``(vi) Recapture of excess interest.--
                                    ``(I) Excess credited.--With 
                                respect to a loan on which the 
                                applicable interest rate is determined 
                                under subsection (k) or (l) of section 
                                427A and for which the first 
                                disbursement of principal is made on or 
                                after April 1, 2006, if the applicable 
                                interest rate for any 3-month period 
                                exceeds the special allowance support 
                                level applicable to such loan under 
                                this subparagraph for such period, then 
                                an adjustment shall be made by 
                                calculating the excess interest in the 
                                amount computed under subclause (II) of 
                                this clause, and by crediting the 
                                excess interest to the Government not 
                                less often than annually.
                                    ``(II) Calculation of excess.--The 
                                amount of any adjustment of interest on 
                                a loan to be made under this subsection 
                                for any quarter shall be equal to--
                                            ``(aa) the applicable 
                                        interest rate minus the special 
                                        allowance support level 
                                        determined under this 
                                        subparagraph; multiplied by
                                            ``(bb) the average daily 
                                        principal balance of the loan 
                                        (not including unearned 
                                        interest added to principal) 
                                        during such calendar quarter; 
                                        divided by
                                            ``(cc) four.
                                    ``(III) Special allowance support 
                                level.--For purposes of this clause, 
                                the term `special allowance support 
                                level' means, for any loan, a number 
                                expressed as a percentage equal to the 
                                sum of the rates determined under 
                                subclauses (I) and (III) of clause (i), 
                                and applying any substitution rules 
                                applicable to such loan under clauses 
                                (ii), (iii), and (iv) in determining 
                                such sum.''.
            (2) Effective date.--The amendments made by this subsection 
        shall not apply with respect to any special allowance payment 
        made under section 438 of the Higher Education Act of 1965 (20 
        U.S.C 1087-1) before April 1, 2006.

SEC. 7105. REDUCTION OF LENDER INSURANCE REIMBURSEMENT RATES.

    (a) Amendment.--Subparagraph (G) of section 428(b)(1) of the Higher 
Education Act of 1965 (20 U.S.C. 1078(b)(1)) is amended to read as 
follows:
                    ``(G) insures 97 percent of the unpaid principal of 
                loans insured under the program;''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to any loan made, insured, or guaranteed under part 
B of title IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et 
seq.) for which the first disbursement is made on or after January 1, 
2006.

SEC. 7106. GUARANTY AGENCY ORIGINATION FEE.

    (a) Amendment.--Section 428(b)(1)(H) of the Higher Education Act of 
1965 (20 U.S.C. 1078(b)(1)(H)) is amended to read as follows:
                    ``(H) provides for the collection, and the deposit 
                in the Federal Fund established under section 422A(a), 
                of a guaranty agency origination fee of 1.0 percent of 
                each disbursement of the proceeds of the loan, which 
                fee may be provided from funds in the guaranty agency's 
                operating fund under section 422B or from other non-
                Federal funds;''.
    (b) Effective Date.--The amendment made by subsection (a) shall be 
effective with respect to any loan disbursed under part B of title IV 
of the Higher Education Act of 1965 on or after April 1, 2006.

SEC. 7107. DEFERMENT OF STUDENT LOANS FOR MILITARY SERVICE.

    (a) Federal Family Education Loans.--Section 428(b)(1)(M) of the 
Higher Education Act of 1965 (20 U.S.C. 1078(b)(1)(M)) is amended--
            (1) by striking ``or'' at the end of clause (ii);
            (2) by redesignating clause (iii) as clause (iv); and
            (3) by inserting after clause (ii) the following new 
        clause:
                            ``(iii) not in excess of 3 years during 
                        which the borrower--
                                    ``(I) is serving on active duty 
                                during a war or other military 
                                operation or national emergency; or
                                    ``(II) is performing qualifying 
                                National Guard duty during a war or 
                                other military operation or national 
                                emergency; or''.
    (b) Direct Loans.--Section 455(f)(2) of the Higher Education Act of 
1965 (20 U.S.C. 1087e(f)(2)) is amended--
            (1) by redesignating subparagraph (C) as subparagraph (D); 
        and
            (2) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) not in excess of 3 years during which the 
                borrower--
                            ``(i) is serving on active duty during a 
                        war or other military operation or national 
                        emergency; or
                            ``(ii) is performing qualifying National 
                        Guard duty during a war or other military 
                        operation or national emergency; or''.
    (c) Perkins Loans.--Section 464(c)(2)(A) of the Higher Education 
Act of 1965 (20 U.S.C. 1087dd(c)(2)(A)) is amended--
            (1) by redesignating clauses (iii) and (iv) as clauses (iv) 
        and (v), respectively; and
            (2) by inserting after clause (ii) the following new 
        clause:
                            ``(iii) not in excess of 3 years during 
                        which the borrower--
                                    ``(I) is serving on active duty 
                                during a war or other military 
                                operation or national emergency; or
                                    ``(II) is performing qualifying 
                                National Guard duty during a war or 
                                other military operation or national 
                                emergency;''.
    (d) Definitions.--Section 481 of the Higher Education Act of 1965 
(20 U.S.C. 1088) is amended by adding at the end the following new 
subsection:
    ``(d) Definitions for Military Deferments.--For purposes of parts 
B, D, and E of this title:
            ``(1) Active duty.--The term `active duty' has the meaning 
        given such term in section 101(d)(1) of title 10, United States 
        Code, except that such term does not include active duty for 
        training or attendance at a service school.
            ``(2) Military operation.--The term `military operation' 
        means a contingency operation as such term is defined in 
        section 101(a)(13) of title 10, United States Code.
            ``(3) National emergency.--The term `national emergency' 
        means the national emergency by reason of certain terrorist 
        attacks declared by the President on September 14, 2001, or 
        subsequent national emergencies declared by the President by 
        reason of terrorist attacks.
            ``(4) Serving on active duty.--The term `serving on active 
        duty during a war or other military operation or national 
        emergency' means service by an individual who is--
                    ``(A) a Reserve of an Armed Force ordered to active 
                duty under section 12301(a), 12301(g), 12302, 12304, or 
                12306 of title 10, United States Code, or any retired 
                member of an Armed Force ordered to active duty under 
                section 688 of such title, for service in connection 
                with a war or other military operation or national 
                emergency, regardless of the location at which such 
                active duty service is performed; and
                    ``(B) any other member of an Armed Force on active 
                duty in connection with such emergency or subsequent 
                actions or conditions who has been assigned to a duty 
                station at a location other than the location at which 
                such member is normally assigned.
            ``(5) Qualifying national guard duty.--The term `qualifying 
        National Guard duty during a war or other military operation or 
        national emergency' means service as a member of the National 
        Guard on full-time National Guard duty (as defined in section 
        101(d)(5) of title 10, United States Code) under a call to 
        active service authorized by the President or the Secretary of 
        Defense for a period of more than 30 consecutive days under 
        section 502(f) of title 32, United States Code, in connection 
        with a war, other military operation, or a national emergency 
        declared by the President and supported by Federal funds.''.
    (e) Rule of Construction.--Nothing in the amendments made by this 
section shall be construed to authorize any refunding of any repayment 
of a loan.
    (f) Effective Date.--The amendments made by this section shall 
apply with respect to loans for which the first disbursement is made on 
or after July 1, 2001.

SEC. 7108. RECOVERY THROUGH CONSOLIDATION.

    Section 428(c) of the Higher Education Act of 1965 (20 U.S.C 
1078(c)) is amended--
            (1) in paragraph (2)(A)--
                    (A) by inserting ``(i)'' after ``including''; and
                    (B) by inserting before the semicolon at the end 
                the following: ``and (ii) requirements establishing 
                procedures to preclude consolidation lending from being 
                an excessive proportion of guaranty agency recoveries 
                on defaulted loans under this part'';
            (2) in paragraph (2)(D), by striking ``paragraph (6)'' and 
        inserting ``paragraph (6)(A)''; and
            (3) in paragraph (6)--
                    (A) by inserting ``(A)'' before ``For the purposes 
                of paragraph (2)(D),'';
                    (B) by redesignating subparagraphs (A) and (B) as 
                clauses (i) and (ii), respectively; and
                    (C) by adding at the end the following new 
                subparagraphs:
            ``(B) Guaranty agency obligations.--A guaranty agency 
        shall--
                    ``(i) on or after October 1, 2006--
                            ``(I) not charge the borrower collection 
                        costs in an amount in excess of 18.5 percent of 
                        the outstanding principal and interest of a 
                        defaulted loan that is paid off through 
                        consolidation by the borrower under this title; 
                        and
                            ``(II) remit to the Secretary a portion of 
                        the collection charge under subclause (I) equal 
                        to 8.5 percent of the outstanding principal and 
                        interest of such defaulted loan; and
                    ``(ii) on and after October 1, 2009, remit to the 
                Secretary the entire amount charged under clause (i)(I) 
                with respect to each defaulted loan that is paid off 
                with excess consolidation proceeds.
                    ``(C) Excess consolidation proceeds.--For purposes 
                of subparagraph (B), the term `excess consolidation 
                proceeds' means, with respect to any guaranty agency 
                for any Federal fiscal year beginning on or after 
                October 1, 2009, the proceeds of consolidation of 
                defaulted loans under this title that exceed 45 percent 
                of the agency's total collections on defaulted loans in 
                such Federal fiscal year.''.

SEC. 7109. SINGLE HOLDER RULE.

    Subparagraph (A) of section 428C(b)(1) of the Higher Education Act 
of 1965 (20 U.S.C. 1078-3(b)(1)) is amended by striking ``and (i)'' and 
all that follows through ``so selected for consolidation)''.

SEC. 7110. DEFAULT REDUCTION PROGRAM.

    Section 428F(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 
1078-6(a)(1)) is amended--
            (1) in subparagraph (A), by striking ``consecutive payments 
        for 12 months'' and inserting ``9 payments made within 20 days 
        of the due date during 10 consecutive months'';
            (2) by redesignating subparagraph (C) as subparagraph (D); 
        and
            (3) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) A guaranty agency may charge the borrower and 
                retain collection costs in an amount not to exceed 18.5 
                percent of the outstanding principal and interest at 
                the time of sale of a loan rehabilitated under 
                subparagraph (A).''.

SEC. 7111. REQUIREMENTS FOR DISBURSEMENTS OF STUDENT LOANS.

    Section 428G of the Higher Education Act of 1965 (20 U.S.C. 1078-7) 
is amended--
            (1) in subsection (a)(3), by adding at the end the 
        following: ``Notwithstanding section 422(d) of the Higher 
        Education Amendments of 1998, this paragraph shall be effective 
        beginning on the date of enactment of the Higher Education 
        Amendments of 2005.''; and
            (2) in subsection (b)(1), by adding at the end the 
        following: ``Notwithstanding section 422(d) of the Higher 
        Education Amendments of 1998, the second sentence of this 
        paragraph shall be effective beginning on the date of enactment 
        of the Higher Education Amendments of 2005.''.

SEC. 7112. SPECIAL INSURANCE AND REINSURANCE RULES.

    (a) Repeal.--Section 428I of the Higher Education Act of 1965 (20 
U.S.C. 1078-9) is repealed.
    (b) Conforming Amendments.--Part A of title IV of the Higher 
Education Act of 1965 (20 U.S.C.1070 et seq.) is amended--
            (1) in section 428(c)(1)--
                    (A) by striking subparagraph (D); and
                    (B) by redesignating subparagraphs (E) and (F) as 
                subparagraphs (D) and (E), respectively; and
            (2) in section 438(b)(5), by striking the matter following 
        subparagraph (B).

SEC. 7113. SCHOOL AS LENDER MORATORIUM.

    Section 435(d)(2) of the Higher Education Act of 1965 (20 U.S.C. 
1085(d)(2)) is amended--
            (1) in subparagraph (E), by striking ``and'' after the 
        semicolon; and
            (2) by inserting before the matter following subparagraph 
        (F) (as amended by section 7390) the following:
                    ``(G) shall have met the requirements of 
                subparagraphs (A) through (F), and made loans under 
                this part, on or before August 31, 2005;
                    ``(H) shall hold each loan the eligible institution 
                makes under this part to a student enrolled at the 
                eligible institution until the student enters into a 
                grace period described in section 427(a)(2)(B) or 
                428(b)(7);
                    ``(I) shall use the proceeds from the sale of a 
                loan made under this part, for need based grant aid 
                programs, except that such proceeds--
                            ``(i) shall not be used to provide a grant 
                        to a student for an academic year in an amount 
                        that is more than the student's cost of 
                        attendance for the academic year; and
                            ``(ii) shall supplement and not supplant 
                        other Federal, State, and institutional grant 
                        aid; and
                    ``(J) shall not be a foundation or alumni 
                organization;''.

SEC. 7114. PERMANENT REDUCTION OF SPECIAL ALLOWANCE PAYMENTS FOR LOANS 
              FROM THE PROCEEDS OF TAX EXEMPT ISSUES.

    (a) Technical Clarification.--The matter preceding paragraph (1) of 
section 2 of the Taxpayer-Teacher Protection Act of 2004 (Public Law 
108-409; 118 Stat. 2299) is amended by inserting ``of the Higher 
Education Act of 1965'' after ``Section 438(b)(2)(B)''. The amendment 
made by the preceding sentence shall be effective as if enacted on 
October 30, 2004.
    (b) Amendment.--Section 438(b)(2)(B) of the Higher Education Act of 
1965 (20 U.S.C. 1087-1(b)(2)(B)) is amended--
            (1) in clause (iv), by striking ``and before January 1, 
        2006,''; and
            (2) in clause (v)(II)--
                    (A) in item (aa), by striking ``and before January 
                1, 2006,'';
                    (B) in item (bb), by striking ``and before January 
                1, 2006,''; and
                    (C) in item (cc), by striking ``and before January 
                1, 2006,''.

SEC. 7115. SPECIAL ALLOWANCES.

    (a) Origination Fees.--Paragraph (2) of section 438(c) of the 
Higher Education Act of 1965 (20 U.S.C. 1087-1(c)) is amended--
            (1) by striking the designation and heading of such 
        paragraph and inserting the following:
            ``(2) Amount of origination fees.--
                    ``(A) In general.--''; and
            (2) by adding at the end the following new subparagraph:
                    ``(B) Subsequent reductions.--Subparagraph (A) 
                shall be applied to loans made under this part (other 
                than loans made under sections 428C and 439(o)) by 
                substituting `2.50 percent' for `3.0 percent' with 
                respect to loans for which the first disbursement of 
                principal is made on or after July 1, 2007.''.
    (b) Loan Fees From Lenders.--
            (1) Amendment.--Paragraph (2) of section 438(d)(2) of the 
        Higher Education Act of 1965 (20 U.S.C. 1087-1(d)) is amended 
        to read as follows:
            ``(2) Amount of loan fees.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), with respect to any loan made under 
                this part for which the first disbursement was made on 
                or after October 1, 1993, the amount of the loan fee 
                that shall be deducted under paragraph (1) shall be 
                equal to 0.50 percent of the principal amount of the 
                loan.
                    ``(B) Consolidation loans.--With respect to any 
                loan made under section 428C on or after April 1, 2006, 
                the amount of the loan fee that shall be deducted under 
                paragraph (1) shall be equal to 1.0 percent of the 
                principal amount of the loan.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply with respect to any loan made, insured, or 
        guaranteed under part B of title IV of the Higher Education Act 
        of 1965 (20 U.S.C. 1071 et seq.) for which the first 
        disbursement is made on or after April 1, 2006.

SEC. 7116. ORIGINATION FEE.

    Section 455(c) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(c)) is amended--
            (1) by striking ``shall'' and inserting ``is authorized 
        to''; and
            (2) by striking ``4.0 percent of the principal amount of 
        loan'' and inserting ``not less than 1 percent and not more 
        than 3 percent of the principal amount of the loan, except that 
        the Secretary shall charge the borrower of a Federal Direct 
        PLUS Loan an origination fee of 4.0 percent of the principal 
        amount of the loan. Beginning on July 1, 2007, the preceding 
        sentence shall be applied by substituting `2.5 percent' for `3 
        percent'''.

SEC. 7117. INCOME CONTINGENT REPAYMENT FOR PUBLIC SECTOR EMPLOYEES.

    Section 455(e) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(e)) is amended by adding at the end the following:
            ``(7) Repayment plan for public sector employees.--
                    ``(A) In general.--The Secretary shall forgive the 
                balance due on any loan made under this part or section 
                428C(b)(5) for a borrower--
                            ``(i) who has made 120 payments on such 
                        loan pursuant to income contingent repayment; 
                        and
                            ``(ii) who is employed, and was employed 
                        for the 10-year period in which the borrower 
                        made the 120 payments described in clause (i), 
                        in a public sector job.
                    ``(B) Public sector job.--In this paragraph, the 
                term `public sector job' means a full-time job in 
                emergency management, government, public safety, law 
                enforcement, public health, education (including early 
                childhood education), or public interest legal services 
                (including prosecution or public defense).
            ``(8) Return to standard repayment.--A borrower who is 
        repaying a loan made under this part pursuant to income 
        contingent repayment may choose, at any time, to terminate 
        repayment pursuant to income contingent repayment and repay 
        such loan under the standard repayment plan.''.

SEC. 7118. FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS.

    (a) Amendments.--Section 475 of the Higher Education Act of 1965 
(20 U.S.C. 1087oo) is amended--
            (1) in subsection (g)(2)(D), by striking ``$2,200'' and 
        inserting ``$3,000''; and
            (2) in subsection (h), by striking ``35'' and inserting 
        ``20''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to determinations of need for periods of enrollment 
beginning on or after July 1, 2007.

SEC. 7119. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITHOUT 
              DEPENDENTS OTHER THAN A SPOUSE.

    (a) Amendments.--Section 476 of the Higher Education Act of 1965 
(20 U.S.C.1087pp) is amended--
            (1) in subsection (b)(1)(A)(iv)--
                    (A) in subclause (I), by striking ``$5,000'' and 
                inserting ``$6,050'';
                    (B) in subclause (II), by striking ``$5,000'' and 
                inserting ``$6,050''; and
                    (C) in subclause (III), by striking ``$8,000'' and 
                inserting ``$9,700''; and
            (2) in subsection (c)(4), by striking ``35'' and inserting 
        ``20''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to determinations of need for periods of enrollment 
beginning on or after July 1, 2007.

SEC. 7120. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITH DEPENDENTS 
              OTHER THAN A SPOUSE.

    (a) Amendment.--Section 477(c)(4) of the Higher Education Act of 
1965 (20 U.S.C. 1087qq(c)(4)) is amended by striking ``12'' and 
inserting ``7''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to determinations of need for periods of enrollment 
beginning on or after July 1, 2007.

SEC. 7121. REGULATIONS; UPDATED TABLES.

    Section 478(b) of the Higher Education Act of 1965 (20 U.S.C. 
1087rr(b)) is amended--
            (1) in paragraph (1), by adding at the end the following: 
        ``For the 2007-2008 academic year, the Secretary shall revise 
        the tables in accordance with this paragraph, except that the 
        Secretary shall increase the amounts contained in the table in 
        section 477(b)(4) by a percentage equal to the greater of the 
        estimated percentage increase in the Consumer Price Index (as 
        determined under the preceding sentence) or 5 percent.''; and
            (2) in paragraph (2), by striking ``2000-2001'' and 
        inserting ``2007-2008''.

SEC. 7122. SIMPLIFIED NEED TEST AND AUTOMATIC ZERO IMPROVEMENTS.

    (a) Amendments.--Section 479 of the Higher Education Act of 1965 
(20 U.S.C. 1087ss) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (A), by striking clause 
                        (i) and inserting the following:
                            ``(i) the student's parents--
                                    ``(I) file, or are eligible to 
                                file, a form described in paragraph 
                                (3);
                                    ``(II) certify that the parents are 
                                not required to file a Federal income 
                                tax return; or
                                    ``(III) received, or the student 
                                received, benefits at some time during 
                                the previous 12-month period under a 
                                means-tested Federal benefit program as 
                                defined under subsection (d); and''; 
                                and
                            (ii) in subparagraph (B), by striking 
                        clause (i) and inserting the following:
                            ``(i) the student (and the student's 
                        spouse, if any)--
                                    ``(I) files, or is eligible to 1 
                                file, a form described in paragraph 
                                (3);
                                    ``(II) certifies that the student 
                                (and the student's spouse, if any) is 
                                not required to file a Federal income 
                                tax return; or
                                    ``(III) received benefits at some 
                                time during the previous 12-month 
                                period under a means-tested Federal 
                                benefit program as defined under 
                                subsection (d); and''; and
                    (B) in the matter preceding subparagraph (A) of 
                paragraph (3), by striking ``A student or family files 
                a form described in this subsection, or subsection (c), 
                as the case maybe, if the student or family, 
                respectively, files'' and inserting ``In the case of an 
                independent student, the student, or in the case of a 
                dependent student, the family, files a form described 
                in this subsection, or subsection (c), as the case may 
                be, if the student or family, as appropriate, files'';
            (2) in subsection (c)--
                    (A) in paragraph (1)--
                            (i) by striking subparagraph (A) and 
                        inserting the following:
                    ``(A) the student's parents--
                            ``(i) file, or are eligible to file, a form 
                        described in subsection (b)(3);
                            ``(ii) certify that the parents are not 
                        required to file a Federal income tax return; 
                        or
                            ``(iii) received, or the student received, 
                        benefits at some time during the previous 12-
                        month period under a means-tested Federal 
                        benefit program as defined under subsection 
                        (d); and''; and
                            (ii) by striking subparagraph (B) and 
                        inserting the following:
                    ``(B) the sum of the adjusted gross income of the 
                parents is less than or equal to $20,000; or''; and
                    (B) in paragraph (2)--
                            (i) by striking subparagraph (A) and 
                        inserting the following:
                    ``(A) the student (and the student's spouse, if 
                any)--
                            ``(i) files, or is eligible to file, a form 
                        described in subsection (b)(3);
                            ``(ii) certifies that the student (and the 
                        student's spouse, if any) is not required to 
                        file a Federal income tax return; or
                            ``(iii) received benefits at some time 
                        during the previous 12-month period under a 
                        means-tested Federal benefit program as defined 
                        under subsection (d); and''; and
                            (ii) by striking subparagraph (B) and 
                        inserting the following:
                    ``(B) the sum of the adjusted gross income of the 
                student and spouse (if appropriate) is less than or 
                equal to $20,000.''; and
            (3) by adding at the end the following:
    ``(d) Definitions.--In this section:
            ``(1) Means-tested federal benefit program.--In this 
        section, the term ``means-tested Federal benefit program'' 
        means a mandatory spending program of the Federal Government, 
        other than a program under this title, in which eligibility for 
        the program's benefits, or the amount of such benefits, are 
        determined on the basis of income or resources of the 
        individual or family seeking the benefit, and may include such 
        programs as--
                    ``(A) the supplemental security income program 
                under title XVI of the Social Security Act (42 U.S.C. 
                1381 et seq.);
                    ``(B) the food stamp program under the Food Stamp 
                Act of 1977 (7 U.S.C. 2011 et seq.);
                    ``(C) the free and reduced price school lunch 
                program established under the Richard B. Russell 
                National School Lunch Act (42 U.S.C. 1751 et seq.);
                    ``(D) the program of block grants for States for 
                temporary assistance for needy families established 
                under part A of title IV of the Social Security Act (42 
                U.S.C. 601 et seq.);
                    ``(E) the special supplemental nutrition program 
                for women, infants, and children established by section 
                17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786); 
                and
                    ``(F) other programs identified by the 
                Secretary.''.
    (b) Evaluation of simplified needs test.--
            (1) Eligibility guidelines.--The Secretary of Education 
        shall regularly evaluate the impact of the eligibility 
        guidelines in subsections (b)(1)(A)(i), (b)(1)(B)(i), 
        (c)(1)(A), and (c)(2)(A) of section 479 of the Higher Education 
        Act of 1965 (20 U.S.C. 1087ss(b)(1)(A)(i), (b)(1)(B)(i), 
        (c)(1)(A), and (c)(2)(A)).
            (2) Means-tested federal benefit program.--For each 3-year 
        period, the Secretary of Education shall evaluate the impact of 
        including the receipt of benefits by a student or parent under 
        a means-tested Federal benefit program (as defined in section 
        479(d) of the Higher Education Act of 1965 (20 U.S.C. 
        1087ss(d)) as a factor in determining eligibility under 
        subsections (b) and (c) of section 479 of the Higher Education 
        Act of 1965 (20 U.S.C. 1087ss(b) and (c)).

SEC. 7123. LOAN FORGIVENESS FOR TEACHERS.

    Section 3(b)(3) of the Taxpayer-Teacher Protection Act of 2004 (20 
U.S.C. 1078-10 note) is amended by striking ``, and before October 1, 
2005''.

SEC. 7124. EFFECTIVE DATE.

    Except as otherwise provided in this chapter or the amendments made 
by this chapter, the amendments made by this chapter shall take effect 
on July 1, 2006.

         CHAPTER 2--HURRICANE KATRINA HIGHER EDUCATION RECOVERY

SEC. 7151. SHORT TITLE.

    This chapter may be cited as the ``Hurricane Katrina Higher 
Education Recovery Act''.

SEC. 7152. DEFINITIONS.

    In this chapter:
            (1) Affected borrower.--The term ``affected borrower'' 
        means an individual who--
                    (A) was in repayment, but not in deferment, on a 
                loan made, insured, or guaranteed under part B, D, or E 
                of the Higher Education Act of 1965 (20 U.S.C. 1071 et 
                seq., 1087a et seq., 1087aa et seq.) on August 22, 
                2005, or enters or entered repayment after August 22, 
                2005 and before June 30, 2006; and
                    (B)(i) lives or lived, as of August 22, 2005, in a 
                county or parish of Alabama, Louisiana, or 
                Mississippi--
                            (I) in which a major disaster has been 
                        declared in accordance with section 401 of the 
                        Robert T. Stafford Disaster Relief and 
                        Emergency Assistance Act (42 U.S.C. 5170) as a 
                        result of Hurricane Katrina; and
                            (II) which the President has determined 
                        warrants individual assistance from the Federal 
                        Government; or
                    (ii) worked, as of August 22, 2005, in a county or 
                parish described in clause (i).
            (2) Affected institution.--
                    (A) In general.--The term ``affected institution'' 
                means an institution of higher education, as defined in 
                section 101 or 102 of the Higher Education Act of 1965 
                (20 U.S.C. 1001, 1002), that--
                            (i) is located in an area in which a major 
                        disaster has been declared in accordance with 
                        section 401 of the Robert T. Stafford Disaster 
                        Relief and Emergency Assistance Act due to the 
                        effects of Hurricane Katrina; and
                            (ii) is impacted by Hurricane Katrina.
                    (B) Length of time.--In determining eligibility for 
                assistance under this chapter, the Secretary, using 
                consistent, objective criteria, shall determine the 
                time period for which an institution of higher 
                education is an affected institution.
                    (C) Special rule.--An organizational unit of an 
                affected institution that is not impacted by Hurricane 
                Katrina shall not be considered as part of such 
                affected institution for purposes of receiving 
                assistance under this chapter.
            (3) Affected student.--The term ``affected student'' means 
        a student who was enrolled on August 29, 2005 in an affected 
        institution.
            (4) Distance education.--
                    (A) In general.--The term ``distance education'' 
                means a course or program that uses 1 or more of the 
                technologies described in subparagraph (B) to--
                            (i) deliver instruction to students who are 
                        separated from the instructor; and
                            (ii) support regular and substantive 
                        interaction between the students and the 
                        instructor, either synchronously or 
                        asynchronously.
                    (B) Inclusions.--For the purposes of subparagraph 
                (A), the technologies used may include--
                            (i) the Internet;
                            (ii) one-way and two-way transmissions 
                        through open broadcast, closed circuit, cable, 
                        microwave, broadband lines, fiber optics, 
                        satellite, or wireless communications devices;
                            (iii) audio conferencing; or
                            (iv) video cassette, DVDs, and CD-ROMs, 
                        provided that they are used in a course in 
                        conjunction with the technologies listed in 
                        clauses (i) through (iii).
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Education.

SEC. 7153. WAIVER AUTHORITY AND MODIFICATIONS TO CERTAIN PROVISIONS OF 
              THE HIGHER EDUCATION ACT OF 1965.

    (a) Waiver of Institutional Repayment.--Notwithstanding any other 
provision of law, including requirements related to cash management, an 
affected institution shall not be required to return any funds received 
by the affected institution for, or on behalf of, its students under 
subparts 1 and 3 of part A and parts B, C, D, and E of title IV of the 
Higher Education Act of 1965 (20 U.S.C. 1070, 1070b et seq., 1071 et 
seq., 1087a et seq., 1087aa et seq., 42 U.S.C. 2751 et seq.) during the 
2005-2006 academic year.
    (b) Waiver of Student Return of Assistance.--Notwithstanding any 
other provision of law, an affected student who, as of the date of 
enactment of this Act, received assistance under subpart 1 or 3 of part 
A or parts B, C, D, or E of title IV of the Higher Education Act of 
1965 for attendance at an affected institution of higher education 
during the 2005-2006 academic year, shall not be required to return 
such assistance.
    (c) Affected Students Who Do Not Enroll in Another Institution and 
Borrowers in Grace Periods or Deferment.--With respect to a loan made, 
insured, or guaranteed under part B, D, or E of title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1071 et seq., 1087a et seq., 1087aa et 
seq.)--
            (1) an affected student who does not enroll in another 
        institution of higher education shall be retained in in-school 
        status during the period beginning on August 22, 2005, and 
        ending on June 30, 2006; and
            (2) a borrower in a grace period or in deferment as of 
        August 22, 2005 who satisfies the requirement described in 
        clause (i) or clause (ii) of section 201(1)(B) shall be 
        retained in such status, without documentation or action by the 
        borrower, until June 30, 2006.
    (d) Discharge or Cancellation of Loans.--The Secretary shall--
            (1) discharge all loan amounts under parts B and D of title 
        IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq., 
        1087a et seq.) disbursed to, or on behalf of, an affected 
        student for attendance at an affected institution of higher 
        education during the 2005-2006 academic year;
            (2) reimburse lenders for the purpose of discharging any 
        loan amounts disbursed to, or on behalf of, a student under 
        part B of title IV of the Higher Education Act of 1965 (20 
        U.S.C. 1071 et seq.), for attendance at an affected institution 
        of higher education during the 2005-2006 academic year; and
            (3) cancel any loan under part E of title IV of the Higher 
        Education Act of 1965 (20 U.S.C. 1087aa et seq.) disbursed to a 
        student for attendance at an affected institution of higher 
        education during the 2005-2006 academic year.
    (e) Aggregate and Annual Limits.--In the case of an affected 
student, any grant or loan assistance under title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1070 et seq.) that such student 
received, or was to have received, for a program of study at an 
affected institution of higher education during the 2005-2006 academic 
year shall not count against such student's annual or aggregate grant 
or loan limits for receipt of aid under such title.
    (f) Forbearance.--Notwithstanding the provisions of part B, D, or E 
of title IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et 
seq., 1087a et seq., 1087aa et seq.), a lender, the Secretary, or an 
institution of higher education is authorized to provide not more than 
1 year of forbearance to an affected borrower without documentation.
    (g) Professional Judgment.--A financial aid administrator shall be 
considered to be making an adjustment in accordance with section 
479A(a) of the Higher Education Act of 1965 (20 U.S.C. 1087tt(a)) if 
the financial aid administrator makes the adjustment with respect to 
the calculation of the expected student or parent contribution (or 
both) for an affected student, or for a student or a parent who resides 
or resided on August 22, 2005, or was employed on August 22, 2005, in 
an area in which a major disaster has been declared in accordance with 
section 401 of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act due to the effects of Hurricane Katrina. The financial 
aid administrator shall adequately document the need for the 
adjustment.
    (h) Modification of Part A of Title II Grants Authorized.--The 
Secretary is authorized to approve modifications to the requirements 
for Teacher Quality Enhancement Grants for States and Partnerships 
under part A of title II of the Higher Education Act of 1965 (20 U.S.C. 
1021 et seq.), at the request of the grantee--
            (1) to assist States and local educational agencies to 
        recruit and retain highly qualified teachers in a school 
        district located in an area in which a major disaster has been 
        declared in accordance with section 401 of the Robert T. 
        Stafford Disaster Relief and Emergency Assistance Act due to 
        the effects of Hurricane Katrina; and
            (2) to assist institutions of higher education, as defined 
        in section 101 of such Act (20 U.S.C. 1001), located in such 
        area to recruit and retain faculty necessary to prepare 
        teachers and provide professional development.
    (i) Waiver Authority To Modify Authorized Uses of TRIO, GEAR-UP, 
Part A or B of Title III, and Other Grants.--The Secretary is 
authorized to modify the required and allowable uses of funds under 
chapters 1 and 2 of subpart 2 of part A of title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1070a et seq., 1070a-21 et seq.), 
under part A or B of title III (20 U.S.C. 1057 et seq., 1060 et seq.), 
and under any other competitive grant program, at the request of an 
affected institution or other grantee, with respect to affected 
institutions and other grantees located in an area in which a major 
disaster has been declared in accordance with section 401 of the Robert 
T. Stafford Disaster Relief and Emergency Assistance Act due to the 
effects of Hurricane Katrina.
    (j) Authority To Extend or Waive Reporting Requirements Under 
Section 131(a).--The Secretary is authorized to extend reporting 
deadlines or waive reporting requirements under section 131(a) of the 
Higher Education Act of 1965 (20 U.S.C. 1015(a)) for an affected 
institution.
    (k) Distance Education.--The Secretary may waive the restrictions 
of subparagraphs (A) and (B) of section 102(a)(3) of the Higher 
Education Act of 1965 (20 U.S.C. 1002(a)(3)(A) and (B)) with respect to 
an institution of higher education, other than a foreign institution, 
that offers education or training programs through distance education 
and is otherwise eligible to participate in programs authorized under 
title IV of such Act (20 U.S.C. 1070 et seq.), if such institution 
exceeds such restrictions described in such subparagraphs due to the 
enrollment of affected students.

SEC. 7154. GENERAL WAIVER AUTHORITY AND REQUIRED CONSULTATION.

    (a) Waiver Authority.--
            (1) In general.--Notwithstanding any other provision of 
        law, the Secretary may waive or modify any statutory provision 
        of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) or 
        any regulation implementing such Act as the Secretary 
        determines necessary in connection with a major disaster that 
        has been declared in accordance with section 401 of the Robert 
        T. Stafford Disaster Relief and Emergency Assistance Act due to 
        the effects of Hurricane Katrina.
            (2) Actions authorized.--In carrying out paragraph (1), the 
        Secretary is authorized to waive or modify any provision 
        described in paragraph (1) as the Secretary determines 
        necessary to ensure that--
                    (A) administrative requirements placed on affected 
                students, affected borrowers, institutions of higher 
                education, lenders, guaranty agencies and grantees are 
                minimized to the extent possible without impairing the 
                integrity of the higher education programs under the 
                Higher Education Act of 1965, to ease the burden on 
                such participants; or
                    (B) institutions of higher education, lenders, 
                guaranty agencies, and other entities participating in 
                the student financial assistance programs under title 
                IV of the Higher Education Act of 1965 (20 U.S.C. 1070 
                et seq.), that serve an area in which a major disaster 
                has been declared in accordance with section 401 of the 
                Robert T. Stafford Disaster Relief and Emergency 
                Assistance Act due to the effects of Hurricane Katrina, 
                may be granted temporary relief from requirements that 
                are rendered infeasible or unreasonable due to the 
                effects of Hurricane Katrina, including due diligence 
                requirements and reporting deadlines.
    (b) Construction.--Nothing in this section shall be construed to 
allow the Secretary to waive or modify any applicable statutory or 
regulatory requirements prohibiting discrimination in a program or 
activity, or in employment or contracting, under existing law (in 
existence on the date of the Secretary's action).
    (c) Consultation.--Prior to granting any waiver or modification 
under this section, the Secretary shall consult with the Committee on 
Health, Education, Labor, and Pensions and the Committee on 
Appropriations of the Senate and the Committee on Education and the 
Workforce and the Committee on Appropriations of the House of 
Representatives with respect to waivers or modifications under this 
section.

SEC. 7155. NOTICE OF WAIVERS, MODIFICATIONS, OR EXTENSIONS.

    Notwithstanding section 437 of the General Education Provisions Act 
(20 U.S.C. 1232) and section 553 of title 5, United States Code, the 
Secretary shall make publicly available the waivers, modifications, or 
extensions granted under section 7153 or 7154.

SEC. 7156. REGULATORY REQUIREMENTS INAPPLICABLE.

    Sections 482(c) and 492 of the Higher Education Act of 1965 (20 
U.S.C. 1089(c), 1098a), section 437 of the General Education Provisions 
Act (20 U.S.C. 1232), and section 553 of title 5, United States Code, 
shall not apply to this chapter.

SEC. 7157. DEPARTMENT OF EDUCATION INSPECTOR GENERAL AUDIT AND REPORT.

    (a) In General.--The Inspector General of the Department of 
Education (referred to in this section as the ``Inspector General'') 
shall conduct an audit and investigation of each program carried out by 
the Department of Education that includes response and recovery 
activities related to Hurricane Katrina.
    (b) Weekly Report.--Not less frequently than once a week, the 
Inspector General shall provide a report to the Committee on Health, 
Education, Labor, and Pensions and the Committee on Appropriations of 
the Senate and the Committee on Education and the Workforce and the 
Committee on Appropriations of the House of Representatives listing the 
audits and investigations initiated pursuant to subsection (a).
    (c) Status Report.--Not later than 6 months after the date of 
enactment of this Act, and biannually thereafter until the audits and 
investigations described in subsection (a) are complete, the Inspector 
General shall report to the Committee on Health, Education, Labor, and 
Pensions and the Committee on Appropriations of the Senate and the 
Committee on Education and the Workforce and the Committee on 
Appropriations of the House of Representatives on the full status of 
the activities of the Inspector General under this section.
    (d) Cooperative Ventures.--In carrying out this section, the 
Inspector General is encouraged to enter into cooperative ventures with 
Inspectors General of other Federal agencies.

SEC. 7158. SUNSET PROVISION.

    Except as otherwise provided in this chapter, the provisions of 
this chapter shall be effective for the period beginning on the date of 
enactment of this Act and ending on September 30, 2006.

       Subtitle B--Pension Benefit Guaranty Corporation Premiums

SEC. 7201. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
              1974.

    (a) Flat-Rate Premiums.--
            (1) Single-employer plans.--Section 4006(a)(3)(A)(i) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1306(a)(3)(A)(i)) is amended to read as follows:
            ``(i) in the case of a single-employer plan, an amount 
        equal to--
                    ``(I) for plan years beginning after December 31, 
                1990, and before January 1, 2006, $19, or
                    ``(II) except as provided in subparagraph (F), for 
                plan years beginning after December 31, 2005, $46.75,
        plus the additional premium (if any) determined under 
        subparagraph (E) for each individual who is a participant in 
        such plan during the plan year;''.
            (2) Multiemployer plans.--Section 4006(a)(3)(A) of such Act 
        (29 U.S.C. 1306(a)(3)(A)) is amended--
                    (A) in clause (iii), by--
                            (i) inserting ``and before January 1, 
                        2006,'' after ``Act of 1980,''; and
                            (ii) striking the period at the end and 
                        inserting ``, or''; and
                    (B) by adding at the end the following:
                            ``(iv) in the case of a multiemployer plan 
                        an amount equal to the following for each 
                        individual who is a participant in such plan 
                        during the applicable plan year:
                                    ``(I) $8.00 for plan years 
                                beginning in 2006.
                                    ``(II) For plan years after 
                                December 31, 2006, the amount 
                                determined under subparagraph (G).
            (3) Indexing of flat-rate premiums.--
                    (A) Single-employer premiums.--Section 4006(a)(3) 
                of such Act (29 U.S.C. 1306(a)(3)), as amended by this 
                Act, is amended by adding at the end the following:
                    ``(F) Indexing of single-employer flat-rate 
                premiums.--
                            ``(i) In general.--In the case of any plan 
                        year beginning after 2006, the adjusted amount 
                        under clause (ii) shall be substituted for the 
                        dollar amount under clause (i)(II) of 
                        subparagraph (A), if such adjusted amount is 
                        greater than such dollar amount.
                            ``(ii) Adjusted amount.--The adjusted 
                        amount for the dollar amount in clause (i)(II) 
                        of subparagraph (A) for any plan year is the 
                        product derived by multiplying such dollar 
                        amount by the ratio of--
                                    ``(I) the national average wage 
                                index (as defined in section 209(k)(1) 
                                of the Social Security Act) for the 
                                first of the 2 calendar years preceding 
                                the calendar year in which the plan 
                                year begins, to
                                    ``(II) the national average wage 
                                index (as so defined) for 2004.
                        If the amount determined under this clause is 
                        not a multiple of $1, such product shall be 
                        rounded to the nearest multiple of $1.''.
                    (B) Multiemployer premiums--Section 4006(a)(3) of 
                such Act (29 U.S.C. 1306(a)(3)), as amended by this 
                Act, is amended by adding at the end the following:
                    ``(G) Indexing of multiemployer flat-rate 
                premiums.--The amount determined under this 
                subparagraph is the product derived by multiplying 
                $8.00 by the ratio of--
                            ``(i) the national average wage index (as 
                        defined in section 209(k)(1) of the Social 
                        Security Act) for the first of the 2 calendar 
                        years preceding the calendar year in which the 
                        plan year begins, to
                            ``(ii) the national average wage index (as 
                        defined in subparagraph (F)) for 2004.
                If the amount determined under this clause is not a 
                multiple of $1, such product shall be rounded to the 
                nearest multiple of $1.''.
    (b) Premium Rate for Certain Terminated Single-employer Plans.--
Section 4006(a) of such Act (29 U.S.C. 1306(a)) is amended by adding at 
the end the following:
            ``(7) Premium rate for certain terminated single-employer 
        plans.--
                    ``(A) In general.--If there is a termination of a 
                single-employer plan under clause (ii) or (iii) of 
                section 4041(c)(2)(B) or section 4042, there shall be 
                payable to the corporation, with respect to each 
                applicable 12-month period, a premium at a rate equal 
                to $1,250 multiplied by the number of individuals who 
                were participants in the plan immediately before the 
                termination date. Such premium shall be in addition to 
                any other premium under this section.
                    ``(B) Special rule for plans terminated in 
                bankruptcy reorganization.--Subparagraph (A) shall not 
                apply to a single-employer plan terminated under 
                section 4041(c)(2)(B)(ii) or under section 4042 during 
                pendency of any bankruptcy reorganization proceeding 
                under chapter 11 of title 11, United States Code, (or 
                under any similar law of a State or political 
                subdivision of a State) until the plan sponsor emerges 
                from bankruptcy.
                    ``(C) Applicable 12-month period.--For purposes of 
                subparagraph (A)--
                            ``(i) In general.--The term `applicable 12-
                        month period' means--
                                    ``(I) the 12-month period beginning 
                                with the first month following the 
                                month in which the termination date 
                                occurs, and
                                    ``(II) each of the first two 12-
                                month periods immediately following the 
                                period described in subclause (I).
                            ``(ii) Plans terminated in bankruptcy 
                        reorganization.--In the case of a plan 
                        described under subparagraph (B), the 12-month 
                        period described in clause (i)(I) shall be the 
                        12-month period beginning with the first month 
                        following the month which includes the date the 
                        plan sponsor emerges from bankruptcy.
                    ``(D) Coordination with section 4007.--For purposes 
                of section 4007--
                            ``(i) premiums under this paragraph shall 
                        be due within 30 days after the beginning of 
                        any applicable 12-month period,
                            ``(ii) the fifth sentence of section 
                        4007(a) shall not apply, and
                            ``(iii) the designated payor under section 
                        4007(e)(1)(A) shall be the contributing sponsor 
                        immediately before the termination date.''.
    (c) Conforming Amendment.--Section 4006(a)(3)(B) of such Act (29 
U.S.C. 1306(a)(3)(B)) is amended by striking ``subparagraph (A)(iii)'' 
and inserting ``clause (iii) or (iv) of subparagraph (A)''.
    (d) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2005.
            (2) Special rule for plans terminated in bankruptcy.--The 
        amendment made by subsection (b) shall not apply to a 
        termination of a single-employer plan that is terminated during 
        the pendency of any bankruptcy reorganization proceeding under 
        chapter 11 of title 11, United States Code (or under any 
        similar law of a State or political subdivision of a State), if 
        the proceeding is pursuant to a bankruptcy filing occurring 
        before October 18, 2005.
            (3) Special rule if subsequent savings enacted.--The 
        amendments made by this section shall not take effect if, after 
        the date of enactment of this Act and before January 1, 2006, a 
        Federal law is enacted which--
                    (A) provides for decreases in Federal outlays which 
                in the aggregate are not less than the decreases in 
                Federal outlays by reason of the amendments made by 
                this section; and
                    (B) specifically provides that such decreases are 
                to be in lieu of the decreases in Federal outlays by 
                reason of the amendments made by this section.

              Subtitle C--Higher Education Reauthorization

       CHAPTER 1--SHORT TITLE; REFERENCES; GENERAL EFFECTIVE DATE

SEC. 7301. SHORT TITLE.

    (a) Short Title.--This subtitle may be cited as the ``Higher 
Education Amendments of 2005''.

SEC. 7302. REFERENCES.

    Except as otherwise expressly provided, whenever in this subtitle 
an amendment or repeal is expressed in terms of an amendment to, or 
repeal of, a section or other provision, the reference shall be 
considered to be made to a section or other provision of the Higher 
Education Act of 1965 (20 U.S.C. 1001 et seq.).

SEC. 7303. GENERAL EFFECTIVE DATE.

    Except as otherwise provided in this subtitle or the amendments 
made by this subtitle, the amendments made by this subtitle shall take 
effect on July 1, 2006.

                     CHAPTER 2--GENERAL PROVISIONS

SEC. 7311. ADDITIONAL DEFINITIONS.

    (a) Amendment.--Section 103 (20 U.S.C. 1003) is amended--
            (1) by redesignating paragraphs (1) through (16) as 
        paragraphs (2) through (17), respectively; and
            (2) by inserting before paragraph (2) (as redesignated by 
        paragraph (1)) the following:
            ``(1) Authorizing committees.--The term `authorizing 
        committees' means the Committee on Health, Education, Labor, 
        and Pensions of the Senate and the Committee on Education and 
        the Workforce of the House of Representatives.''.
    (b) Conforming Amendments.--The Act (20 U.S.C. 1001 et seq.) is 
amended--
            (1) in section 131(a)(3)(B) (20 U.S.C. 1015(a)(3)(B)), by 
        striking ``Committee on Labor and Human Resources of the Senate 
        and the Committee on Education and the Workforce of the House 
        of Representatives'' and inserting ``authorizing committees'';
            (2) in section 141(d)(4)(B) (20 U.S.C. 1018(d)(4)(B)), by 
        striking ``Committee on Education and the Workforce of the 
        House of Representatives and the Committee on Labor and Human 
        Resources of the Senate'' and inserting ``authorizing 
        committees'';
            (3) in section 207(c)(1) (20 U.S.C. 1027(c)(1)), by 
        striking ``Committee on Labor and Human Resources of the Senate 
        and the Committee on Education and the Workforce of the House 
        of Representatives'' and inserting ``authorizing committees'';
            (4) in section 401(f)(3) (20 U.S.C. 1070a(f)(3)), by 
        striking ``to the Committee on Appropriations'' and all that 
        follows through ``House of Representatives'' and inserting ``to 
        the Committee on Appropriations of the Senate, the Committee on 
        Appropriations of the House of Representatives, and the 
        authorizing committees'';
            (5) in section 428 (20 U.S.C. 1078)--
                    (A) in subsection (c)(9)(K), by striking ``House 
                Committee on Education and the Workforce and the Senate 
                Committee on Labor and Human Resources'' and inserting 
                ``authorizing committees'';
                    (B) in the matter following paragraph (2) of 
                subsection (g), by striking ``Committee on Labor and 
                Human Resources of the Senate and the Committee on 
                Education and the Workforce of the House of 
                Representatives'' and inserting ``authorizing 
                committees''; and
                    (C) in subsection (n)(4), ``Committee on Education 
                and the Workforce of the House of Representatives and 
                the Committee on Labor and Human Resources of the 
                Senate'' and inserting ``authorizing committees'';
            (6) in section 428A (20 U.S.C. 1078-1)--
                    (A) in the matter preceding subparagraph (A) of 
                subsection (a)(4), by striking ``Committee on Labor and 
                Human Resources of the Senate and the Committee on 
                Education and the Workforce of the House of 
                Representatives'' and inserting ``authorizing 
                committees''; and
                    (B) in subsection (c)--
                            (i) in the matter preceding subparagraph 
                        (A) of paragraph (2), by striking 
                        ``Chairperson'' and all that follows through 
                        ``House of Representatives'' and inserting 
                        ``Chairpersons and Ranking Members of the 
                        authorizing committees'';
                            (ii) in paragraph (3), by striking 
                        ``Chairperson'' and all that follows through 
                        ``House of Representatives'' and inserting 
                        ``Chairpersons and Ranking Members of the 
                        authorizing committees''; and
                            (iii) in paragraph (5), by striking 
                        ``Chairperson'' and all that follows through 
                        ``House of Representatives'' and inserting 
                        ``Chairpersons and Ranking Members of the 
                        authorizing committees'';
            (7) in section 432 (20 U.S.C. 1082)--
                    (A) in subsection (f)(1)(C), by striking ``the 
                Committee on Education and the Workforce of the House 
                of Representatives or the Committee on Labor and Human 
                Resources of the Senate'' and inserting ``either of the 
                authorizing committees''; and
                    (B) in the matter following subparagraph (D) of 
                subsection (n)(3), by striking ``Committee on Education 
                and the Workforce of the House of Representatives and 
                the Committee on Labor and Human Resources of the 
                Senate'' and inserting ``authorizing committees'';
            (8) in section 437(c)(1) (20 U.S.C. 1087(c)(1)), by 
        striking ``Committee on Education and the Workforce of the 
        House of Representatives and the Committee on Labor and Human 
        Resources of the Senate'' and inserting ``authorizing 
        committees'';
            (9) in section 439 (20 U.S.C. 1087-2)--
                    (A) in subsection (d)(1)(E)(iii), by striking 
                ``advise the Chairman'' and all that follows through 
                ``House of Representatives'' and inserting ``advise the 
                Chairpersons and Ranking Members of the authorizing 
                committees'';
                    (B) in subsection (r)--
                            (i) in paragraph (3), by striking ``inform 
                        the Chairman'' and all that follows through 
                        ``House of Representatives,'' and inserting 
                        ``inform the Chairpersons and Ranking Members 
                        of the authorizing committees'';
                            (ii) in paragraph (5)(B), by striking 
                        ``plan, to the Chairman'' and all that follows 
                        through ``Education and Labor'' and inserting 
                        ``plan, to the Chairpersons and Ranking Members 
                        of the authorizing committees'';
                            (iii) in paragraph (6)(B)--
                                    (I) by striking ``plan, to the 
                                Chairman'' and all that follows through 
                                ``House of Representatives'' and 
                                inserting ``plan, to the Chairpersons 
                                and Ranking Members of the authorizing 
                                committees''; and
                                    (II) by striking ``Chairmen and 
                                ranking minority members of such 
                                Committees'' and inserting 
                                ``Chairpersons and Ranking Members of 
                                the authorizing committees'';
                            (iv) in paragraph (8)(C), by striking 
                        ``implemented to the Chairman'' and all that 
                        follows through ``House of Representatives, 
                        and'' and inserting ``implemented to the 
                        Chairpersons and Ranking Members of the 
                        authorizing committees, and to''; and
                            (v) in the matter preceding subparagraph 
                        (A) of paragraph (10), by striking ``days to 
                        the Chairman'' and all that follows through 
                        ``Education and Labor'' and inserting ``days to 
                        the Chairpersons and Ranking Members of the 
                        authorizing committees''; and
                    (C) in subsection (s)(2)--
                            (i) in the matter preceding clause (i) of 
                        subparagraph (A), by striking ``Treasury and to 
                        the Chairman'' and all that follows through 
                        ``House of Representatives'' and inserting 
                        ``Treasury and to the Chairpersons and Ranking 
                        Members of the authorizing committees''; and
                            (ii) in subparagraph (B), by striking 
                        ``Treasury and to the Chairman'' and all that 
                        follows through ``House of Representatives'' 
                        and inserting ``Treasury and to the 
                        Chairpersons and Ranking Members of the 
                        authorizing committees'';
            (10) in section 455(b)(8)(B) (20 U.S.C. 1087e(b)(8)(B)), by 
        striking ``Committee on Labor and Human Resources of the Senate 
        and the Committee on Education and the Workforce of the House 
        of Representatives'' and inserting ``authorizing committees'';
            (11) in section 482(d) (20 U.S.C. 1089(d)), by striking 
        ``Committee on Labor and Human Resources of the Senate and the 
        Committee on Education and Labor of the House of 
        Representatives'' and inserting ``authorizing committees'';
            (12) in section 483(c) (20 U.S.C. 1090(c)), by striking 
        ``Committee on Labor and Human Resources of the Senate and the 
        Committee on Education and the Workforce of the House of 
        Representatives'' and inserting ``authorizing committees'';
            (13) in section 485 (20 U.S.C. 1092)--
                    (A) in subsection (f)(5)(A), by striking 
                ``Committee on Education and the Workforce of the House 
                of Representatives and the Committee on Labor and Human 
                Resources of the Senate'' and inserting ``authorizing 
                committees''; and
                    (B) in subsection (g)(4)(B), by striking 
                ``Committee on Education and the Workforce of the House 
                of Representatives and the Committee on Labor and Human 
                Resources of the Senate'' and inserting ``authorizing 
                committees'';
            (14) in section 486 (20 U.S.C. 1093)--
                    (A) in subsection (e), by striking ``Committee on 
                Labor and Human Resources of the Senate and the 
                Committee on Education and the Workforce of the House 
                of Representatives'' and inserting ``authorizing 
                committees''; and
                    (B) in subsection (f)(3)--
                            (i) in the matter preceding clause (i) of 
                        subparagraph (A), by striking ``Committee on 
                        Labor and Human Resources of the Senate and the 
                        Committee on Education and the Workforce of the 
                        House of Representatives'' and inserting 
                        ``authorizing committees''; and
                            (ii) in the matter preceding clause (i) of 
                        subparagraph (B), by striking ``Committee on 
                        Labor and Human Resources of the Senate and the 
                        Committee on Education and the Workforce of the 
                        House of Representatives'' and inserting 
                        ``authorizing committees'';
            (15) in section 487A(a)(5) (20 U.S.C. 1094a(a)(5)), by 
        striking ``Committee on Labor and Human Resources of the Senate 
        and the Committee on Education and the Workforce of the House 
        of Representatives'' and inserting ``authorizing committees''; 
        and
            (16) in section 498B(d) (20 U.S.C. 1099c-2(d))--
                    (A) in paragraph (1), by striking ``Committee on 
                Labor and Human Resources of the Senate and the 
                Committee on Education and the Workforce of the House 
                of Representatives'' and inserting ``authorizing 
                committees''; and
                    (B) in paragraph (2), by striking ``Committee on 
                Labor and Human Resources of the Senate and the 
                Committee on Education and the Workforce of the House 
                of Representatives'' and inserting ``authorizing 
                committees''.

SEC. 7312. GENERAL DEFINITION OF INSTITUTION OF HIGHER EDUCATION.

    Section 101 (20 U.S.C. 1001) is amended--
            (1) in subsection (a)(3), by inserting ``, or awards a 
        degree that is acceptable for admission to a graduate or 
        professional degree program, subject to the review and approval 
        by the Secretary'' after ``such a degree''; and
            (2) by striking subsection (b)(2) and inserting the 
        following:
            ``(2) a public or nonprofit private educational institution 
        in any State that, in lieu of the requirement in subsection 
        (a)(1), admits as regular students persons--
                    ``(A) who meet the requirements of section 
                484(d)(3);
                    ``(B) who are beyond the age of compulsory school 
                attendance in the State in which the institution is 
                located; or
                    ``(C) who are dually or concurrently enrolled in 
                such institution and a secondary school.''.

SEC. 7313. DEFINITION OF INSTITUTION OF HIGHER EDUCATION FOR PURPOSES 
              OF TITLE IV PROGRAMS.

    Section 102 (20 U.S.C. 1002) is amended--
            (1) in subsection (a)--
                    (A) by striking paragraph (2)(A)(i) and inserting 
                the following:
                            ``(i) in the case of a graduate medical 
                        school located outside the United States--
                                    ``(I) at least 60 percent of those 
                                enrolled in, and at least 60 percent of 
                                the graduates of, the graduate medical 
                                school outside the United States were 
                                not persons described in section 
                                484(a)(5) in the year preceding the 
                                year for which a student is seeking a 
                                loan under part B of title IV; and
                                    ``(II) at least 60 percent of the 
                                individuals who were students or 
                                graduates of the graduate medical 
                                school outside the United States or 
                                Canada (both nationals of the United 
                                States and others) taking the 
                                examinations administered by the 
                                Educational Commission for Foreign 
                                Medical Graduates received a passing 
                                score in the year preceding the year 
                                for which a student is seeking a loan 
                                under part B of title IV; or'';
                    (B) by striking paragraph (3) and inserting the 
                following:
            ``(3) Limitations based on enrollment.--An institution 
        shall not be considered to meet the definition of an 
        institution of higher education in paragraph (1) if such 
        institution--
                    ``(A) has a student enrollment in which more than 
                25 percent of the students are incarcerated, except 
                that the Secretary may waive the limitation contained 
                in this subparagraph for a nonprofit institution that 
                provides a 2- or 4-year program of instruction (or 
                both) for which the institution awards a bachelor's 
                degree, or an associate's degree or a postsecondary 
                diploma, respectively; or
                    ``(B) has a student enrollment in which more than 
                50 percent of the students do not have a secondary 
                school diploma or its recognized equivalent, and does 
                not provide a 2- or 4-year program of instruction (or 
                both) for which the institution awards a bachelor's 
                degree or an associate's degree, respectively, except 
                that the Secretary may waive the limitation contained 
                in this subparagraph if a nonprofit institution 
                demonstrates to the satisfaction of the Secretary that 
                the institution exceeds such limitation because the 
                institution serves, through contracts with Federal, 
                State, or local government agencies, significant 
                numbers of students who do not have a secondary school 
                diploma or its recognized equivalent.'';
                    (C) by redesignating paragraphs (4), (5), and (6), 
                as paragraphs (5), (6), and (7), respectively; and
                    (D) by inserting after paragraph (3) the following:
            ``(4) Limitations based on mode of delivery.--
                    ``(A) In general.--An institution shall not be 
                considered to meet the definition of an institution of 
                higher education in paragraph (1) if such institution--
                            ``(i) offers more than 50 percent of such 
                        institution's courses by correspondence, unless 
                        the institution is an institution that meets 
                        the definition in section 3(3)(C) of the Carl 
                        D. Perkins Vocational and Technical Education 
                        Act of 1998; or
                            ``(ii) enrolls 50 percent or more of the 
                        institution's students in correspondence 
                        courses, unless the institution is an 
                        institution that meets the definition in such 
                        section 3(3)(C), except that the Secretary, at 
                        the request of such institution, may waive the 
                        applicability of this subparagraph to such 
                        institution for good cause, as determined by 
                        the Secretary in the case of an institution of 
                        higher education that provides a 2- or 4-year 
                        program of instruction (or both) for which the 
                        institution awards an associate or 
                        baccalaureate degree, respectively.
                    ``(B) Distance education program eligibility.--
                Notwithstanding subparagraph (A), an institution of 
                higher education, other than a foreign institution, 
                that offers education or training programs principally 
                through distance education shall be considered to meet 
                the definition of an institution of higher education in 
                paragraph (1) if such institution--
                            ``(i) has been evaluated and determined 
                        (before or after the date of enactment of the 
                        Higher Education Amendments of 2005) to have 
                        the capability to effectively deliver distance 
                        education programs by an accrediting agency or 
                        association that--
                                    ``(I) is recognized by the 
                                Secretary under title IV; and
                                    ``(II) has evaluation of distance 
                                education programs within the scope of 
                                its recognition, as described in 
                                section 496(n)(3);
                            ``(ii) is otherwise eligible to participate 
                        in programs authorized under title IV;
                            ``(iii) has not had its participation in 
                        programs under title IV suspended or terminated 
                        within the previous 5 years;
                            ``(iv) has not had, or failed to resolve, 
                        an audit finding or program review finding 
                        under this Act during the 2 years preceding the 
                        year for which the determination is made that, 
                        following any appeal to the Secretary, resulted 
                        in the institution being required to repay an 
                        amount that is equal to or greater than 25 
                        percent of the total funds the institution 
                        received under the programs authorized under 
                        title IV for the most recent award year; and
                            ``(v) has met the requirements of section 
                        487(d), if applicable.
                    ``(C) Definition.--
                            ``(i) In general.--In this Act, except as 
                        otherwise provided, the term `distance 
                        education' means a course or program that uses 
                        1 or more of the technologies described in 
                        clause (ii) to--
                                    ``(I) deliver instruction to 
                                students who are separated from the 
                                instructor; and
                                    ``(II) support regular and 
                                substantive interaction between the 
                                students and the instructor, either 
                                synchronously or asynchronously.
                            ``(ii) Inclusions.--For the purposes of 
                        clause (i), the technologies used may include--
                                    ``(I) the Internet;
                                    ``(II) one-way and two-way 
                                transmissions through open broadcast, 
                                closed circuit, cable, microwave, 
                                broadband lines, fiber optics, 
                                satellite, or wireless communications 
                                devices;
                                    ``(III) audio conferencing; or
                                    ``(IV) video cassette, DVDs, and 
                                CD-ROMs, provided that they are used in 
                                a course in conjunction with the 
                                technologies listed in subclauses (I) 
                                through (III).''; and
            (2) in subsection (b)(1)--
                    (A) in subparagraph (D), by inserting ``and'' after 
                the semicolon;
                    (B) in subparagraph (E), by striking ``; and'' and 
                inserting a period; and
                    (C) by striking subparagraph (F).

SEC. 7314. PROTECTION OF STUDENT SPEECH AND ASSOCIATION RIGHTS.

    Section 112 (20 U.S.C. 1011a) is amended--
            (1) in subsection (a)--
                    (A) by inserting ``(1)'' before ``It is the 
                sense''; and
                    (B) by adding at the end the following:
    ``(2) It is the sense of Congress that--
            ``(A) the diversity of institutions and educational 
        missions is one of the key strengths of American higher 
        education;
            ``(B) individual colleges and universities have different 
        missions and each institution should design its academic 
        program in accordance with its educational goals;
            ``(C) within the context of institutional mission, a 
        college should facilitate the free and open exchange of ideas;
            ``(D) students should not be intimated, harassed, 
        discouraged from speaking out, or discriminated against;
            ``(E) students should be treated equally and fairly; and
            ``(F) nothing in this paragraph shall be construed to 
        modify, change, or infringe upon any constitutionally protected 
        religious liberty, freedom, expression, or association.''; and
            (2) in subsection (b)(1), by inserting ``, provided that 
        the imposition of such sanction is done objectively and 
        fairly'' after ``higher education''.

SEC. 7315. NATIONAL ADVISORY COMMITTEE ON INSTITUTIONAL QUALITY AND 
              INTEGRITY.

    Section 114(g) (20 U.S.C. 1011c(g)) is amended by striking 
``September 30, 2004'' and inserting ``September 30, 2011''.

SEC. 7316. DRUG AND ALCOHOL ABUSE PREVENTION.

    Section 120 (20 U.S.C. 1011i) is amended by striking subsections 
(e) and (f) and inserting the following:
    ``(e) Grants Directed at Reducing Higher Education Drug and Alcohol 
Abuse.--
            ``(1) Authorization of program.--The Secretary may award 
        grants to eligible entities to enable the entities to reduce 
        the rate of drug use, underage alcohol use, and binge drinking 
        among students at institutions of higher education.
            ``(2) Applications.--An eligible entity that desires to 
        receive a grant under this subsection shall submit an 
        application to the Secretary at such time, in such manner, and 
        accompanied by such information as the Secretary may require. 
        Each application shall include--
                    ``(A) a description of how the eligible entity will 
                work to enhance an existing, or where none exists to 
                build a, statewide coalition;
                    ``(B) a description of how the eligible entity will 
                target underage students in the State;
                    ``(C) a description of how the eligible entity 
                intends to ensure that the statewide coalition is 
                actually implementing the purpose described in 
                paragraph (1) and moving toward the achievement 
                indicators described in paragraph (4);
                    ``(D) a list of the members of the statewide 
                coalition or interested parties involved in the work of 
                the eligible entity;
                    ``(E) a description of how the eligible entity 
                intends to work with State agencies on substance abuse 
                prevention and education;
                    ``(F) the anticipated impact of funds provided 
                under this subsection in reducing the rates of drug 
                abuse and underage alcohol use;
                    ``(G) outreach strategies, including ways in which 
                the eligible entity proposes to--
                            ``(i) reach out to students;
                            ``(ii) promote the purpose described in 
                        paragraph (1);
                            ``(iii) address the range of needs of the 
                        students and the surrounding communities; and
                            ``(iv) address community norms for underage 
                        students regarding drug and alcohol use; and
                    ``(H) such additional information as required by 
                the Secretary.
            ``(3) Uses of funds.--Each eligible entity that receives a 
        grant under this subsection shall use the grant funds to carry 
        out the activities described in such entity's application 
        submitted pursuant to paragraph (2).
            ``(4) Accountability.--On the date on which the Secretary 
        first publishes a notice in the Federal Register soliciting 
        applications for grants under this subsection, the Secretary 
        shall include in the notice achievement indicators for the 
        program authorized under this subsection. The achievement 
        indicators shall be designed--
                    ``(A) to measure the impact that the statewide 
                coalitions assisted under this subsection are having on 
                the institutions of higher education and the 
                surrounding communities, including changes in the 
                number of alcohol and drug-related abuse incidents of 
                any kind (including violations, physical assaults, 
                sexual assaults, reports of intimidation, disruptions 
                of school functions, disruptions of student studies, 
                mental health referrals, illnesses, or deaths);
                    ``(B) to measure the quality and accessibility of 
                the programs or information offered by the statewide 
                coalitions; and
                    ``(C) to provide such other measures of program 
                impact as the Secretary determines appropriate.
            ``(5) Supplement not supplant.--Grant funds provided under 
        this subsection shall be used to supplement, and not supplant, 
        Federal and non-Federal funds available for carrying out the 
        activities described in this subsection.
            ``(6) Definitions.--In this subsection:
                    ``(A) Eligible entity.--The term `eligible entity' 
                means a State, an institution of higher education as 
                defined in section 102, or a nonprofit entity.
                    ``(B) Institution of higher education.--The term 
                `institution of higher education' has the meaning given 
                the term in section 101(a).
                    ``(C) State.--The term `State' means each of the 50 
                States, the District of Columbia, and the Commonwealth 
                of Puerto Rico.
                    ``(D) Statewide coalition.--The term `statewide 
                coalition' means a coalition that--
                            ``(i) includes--
                                    ``(I) institutions of higher 
                                education within a State; and
                                    ``(II) a nonprofit group, a 
                                community anti-drug or underage 
                                drinking prevention coalition, or 
                                another substance abuse prevention 
                                group within a State; and
                            ``(ii) works toward lowering alcohol abuse 
                        rates by targeting underage students at 
                        institutions of higher education throughout the 
                        State and in the surrounding communities.
                    ``(E) Surrounding community.--The term `surrounding 
                community' means the community--
                            ``(i) that surrounds an institution of 
                        higher education participating in a statewide 
                        coalition;
                            ``(ii) where the students from the 
                        institution of higher education take part in 
                        the community; and
                            ``(iii) where students from the institution 
                        of higher education live in off-campus housing.
            ``(7) Administrative expenses.--Not more than 5 percent of 
        a grant awarded under this subsection may be expended for 
        administrative expenses.
            ``(8) Authorization of appropriations.--There are 
        authorized to be appropriated to carry out this subsection such 
        sums as may be necessary for fiscal year 2006 and each of the 5 
        succeeding fiscal years.''.

SEC. 7317. PRIOR RIGHTS AND OBLIGATIONS.

    Section 121(a) (20 U.S.C. 1011j(a)) is amended--
            (1) in paragraph (1), by striking ``1999'' and inserting 
        ``2006''; and
            (2) in paragraph (2), by striking ``1999'' and inserting 
        ``2006''.

SEC. 7318. COST OF HIGHER EDUCATION.

    Section 131 (20 U.S.C. 1015) is amended--
            (1) by striking subsection (b) and inserting the following:
    ``(b) College Consumer Information.--
            ``(1) In general.--The Secretary shall make available to 
        the public the information described in paragraph (2), in a 
        form that enables the public to compare the information among 
        institutions of higher education. Such information shall be 
        made available for each of the categories described in 
        paragraph (3) and updated annually.
            ``(2) Information.--The information described in this 
        paragraph is the following:
                    ``(A) Tuition and fees for a first-time, full-time 
                undergraduate student.
                    ``(B) Cost of attendance for a first-time, full-
                time undergraduate student.
                    ``(C) The average annual cost of attendance for a 
                first-time, full-time undergraduate student for the 
                preceding periods of 5 and 10 academic years preceding 
                the year for which the information is made available 
                under this subsection, or if data are not available for 
                such academic years, data for as many of such academic 
                years as are available.
                    ``(D) The percentage of full-time undergraduate 
                students receiving financial assistance, including--
                            ``(i) Federal grants;
                            ``(ii) State and local grants;
                            ``(iii) institutional grants; and
                            ``(iv) loans to students.
                    ``(E) The average amount of financial aid received 
                by students from sources described in clauses (i) 
                through (iv) of subparagraph (D).
                    ``(F) Graduation rates, as described in section 
                485(a)(1)(L).
                    ``(G) A ranking of the dollar and percentage 
                increases in tuition and fees for all institutions of 
                higher education for which data are available in each 
                of the categories described in paragraph (3).
            ``(3) Categories.--The categories described in this 
        paragraph are as follows:
                    ``(A) All institutions of higher education.
                    ``(B) 4-year public, degree-granting, institutions 
                of higher education.
                    ``(C) 2-year public, degree-granting, institutions 
                of higher education.
                    ``(D) 4-year, nonprofit, private, degree-granting 
                institutions of higher education.
                    ``(E) 2-year, nonprofit, private, degree-granting 
                institutions of higher education.
                    ``(F) 4-year, for-profit, private, degree-granting 
                institutions of higher education.
                    ``(G) 2-year, for-profit, private, degree-granting 
                institutions of higher education.
                    ``(H) Less than 2-year, for-profit, private 
                institutions of higher education.
            ``(4) Standard definitions.--In carrying out this section, 
        the Secretary shall use the standard definitions developed 
        under subsection (a)(3).''; and
            (2) in subsection (c)--
                    (A) in paragraph (1), by inserting ``be conducted 
                on an annual basis and'' after ``Such study shall'';
                    (B) in paragraph (2)--
                            (i) in subparagraph (B), by striking 
                        ``and'' after the semicolon;
                            (ii) in subparagraph (C), by striking the 
                        period and inserting a semicolon; and
                            (iii) by adding at the end the following:
                    ``(D) the average cost of attending an institution 
                of higher education, disaggregated by category, as 
                described in subsection (b)(3);
                    ``(E) the average annual cost of attending an 
                institution of higher education for the periods of 5 
                and 10 academic years preceding the year for which the 
                study is conducted (or if data are not available for 
                such academic years, data for as many of such academic 
                years as are available), disaggregated by category, as 
                described in subsection (b)(3); and
                    ``(F) the assistance provided to institutions of 
                higher education by each State.'';
                    (C) in paragraph (3)--
                            (i) in the paragraph heading, by striking 
                        ``Final'' and inserting ``Annual'';
                            (ii) by striking ``a report'' and inserting 
                        ``an annual report''; and
                            (iii) by striking ``not later than 
                        September 30, 2002'' and inserting ``and the 
                        public''; and
                    (D) by striking paragraph (4) and inserting the 
                following:
            ``(4) Higher education cost index.--The Bureau of Labor 
        Statistics, in consultation with the Commissioner of Education 
        Statistics, shall develop a higher education cost index that 
        tracks inflation changes in the relevant costs associated with 
        higher education.''.

SEC. 7319. PERFORMANCE-BASED ORGANIZATION FOR THE DELIVERY OF FEDERAL 
              STUDENT FINANCIAL ASSISTANCE.

    Section 141 (20 U.S.C. 1018) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1), by striking ``operational'' 
                and inserting ``administrative and oversight''; and
                    (B) in paragraph (2)(D), by striking ``of the 
                operational functions'' and inserting ``and 
                administration'';
            (2) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (A), by striking ``the 
                        information systems administered by the PBO, 
                        and other functions performed by the PBO'' and 
                        inserting ``the Federal student financial 
                        assistance programs authorized under title 
                        IV''; and
                            (ii) by striking subparagraph (C) and 
                        inserting the following:
                    ``(C) assist the Chief Operating Officer in 
                identifying goals for--
                            ``(i) the administration of the systems 
                        used to administer the Federal student 
                        financial assistance programs authorized under 
                        title IV; and
                            ``(ii) the updating of such systems to 
                        current technology.''; and
                    (B) in paragraph (2)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``administration of the 
                        information and financial systems that 
                        support'' and inserting ``the administration of 
                        Federal'';
                            (ii) in subparagraph (A)--
                                    (I) in the matter preceding clause 
                                (i), by striking ``of the delivery 
                                system for Federal student assistance'' 
                                and inserting ``for the Federal student 
                                assistance programs authorized under 
                                title IV'';
                                    (II) by striking clauses (i) and 
                                (ii) and inserting the following:
                            ``(i) the collection, processing, and 
                        transmission of data to students, institutions, 
                        lenders, State agencies, and other authorized 
                        parties;
                            ``(ii) the design and technical 
                        specifications for software development and 
                        procurement for systems supporting the student 
                        financial assistance programs authorized under 
                        title IV;'';
                                    (III) in clause (iii), by striking 
                                ``delivery'' and inserting 
                                ``administration'';
                                    (IV) in clause (iv)--
                                            (aa) by inserting ``the'' 
                                        after ``supporting''; and
                                            (bb) by striking ``and'' 
                                        after the semicolon;
                                    (V) in clause (v), by striking 
                                ``systems that support those 
                                programs.'' and inserting ``the 
                                administration of the Federal student 
                                assistance programs authorized under 
                                title IV; and''; and
                                    (VI) by adding at the end the 
                                following:
                            ``(vi) ensuring the integrity of the 
                        student assistance programs authorized under 
                        title IV.''; and
                            (iii) in subparagraph (B), by striking 
                        ``operations and services'' and inserting 
                        ``activities and functions''; and
            (3) in subsection (c)--
                    (A) in paragraph (1)(C)--
                            (i) in clause (iii), by striking 
                        ``information and delivery''; and
                            (ii) in clause (iv)--
                                    (I) by striking ``Developing an'' 
                                and inserting ``Developing''; and
                                    (II) by striking ``delivery and 
                                information system'' and inserting 
                                ``systems'';
                    (B) in paragraph (2)--
                            (i) in subparagraph (A), by inserting 
                        ``the'' after ``PBO and''; and
                            (ii) in subparagraph (B), by striking 
                        ``Officer'' and inserting ``Officers''; and
                    (C) in paragraph (3), by inserting ``students,'' 
                after ``consult with'';
            (4) in subsection (d)--
                    (A) in paragraph (1), by striking the second 
                sentence; and
                    (B) in paragraph (5)--
                            (i) in subparagraph (B), by striking 
                        ``paragraph (2)'' and inserting ``paragraph 
                        (4)''; and
                            (ii) in subparagraph (C), by striking 
                        ``this'';
            (5) in subsection (f)--
                    (A) in paragraph (2), by striking ``to borrowers'' 
                and inserting ``to students, borrowers,''; and
                    (B) in paragraph (3)(A), by striking ``(1)(A)'' and 
                inserting ``(1)'';
            (6) in subsection (g)(3), by striking ``not more than 25'';
            (7) in subsection (h), by striking ``organizational 
        effectiveness'' and inserting ``effectiveness'';
            (8) by striking subsection (i);
            (9) by redesignating subsection (j) as subsection (i); and
            (10) in subsection (i) (as redesignated by paragraph (9)), 
        by striking ``, including transition costs''.

SEC. 7320. PROCUREMENT FLEXIBILITY.

    Section 142 (20 U.S.C. 1018a) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) by striking ``for information systems 
                        supporting the programs authorized under title 
                        IV''; and
                            (ii) by striking ``and'' after the 
                        semicolon;
                    (B) in paragraph (2), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(3) through the Chief Operating Officer--
                    ``(A) to the maximum extent practicable, utilize 
                procurement systems that streamline operations, improve 
                internal controls, and enhance management; and
                    ``(B) assess the efficiency of such systems and 
                assess such systems' ability to meet PBO 
                requirements.'';
            (2) by striking subsection (c)(2) and inserting the 
        following:
            ``(2) Fee for service arrangements.--The Chief Operating 
        Officer shall, when appropriate and consistent with the 
        purposes of the PBO, acquire services related to the functions 
        set forth in section 141(b)(2) from any entity that has the 
        capability and capacity to meet the requirements set by the 
        PBO. The Chief Operating Officer is authorized to pay fees that 
        are equivalent to those paid by other entities to an 
        organization that provides services that meet the requirements 
        of the PBO, as determined by the Chief Operating Officer.'';
            (3) in subsection (d)(2)(B), by striking ``on Federal 
        Government contracts'';
            (4) in subsection (g)--
                    (A) in paragraph (4)(A)--
                            (i) in the subparagraph heading, by 
                        striking ``Sole source.--'' and inserting 
                        ``Single-source basis.--''; and
                            (ii) by striking ``sole-source'' and 
                        inserting ``single-source''; and
                    (B) in paragraph (7), by striking ``sole-source'' 
                and inserting ``single-source'';
            (5) in subsection (h)(2)(A), by striking ``sole-source'' 
        and inserting ``single-source''; and
            (6) in subsection (l), by striking paragraph (3) and 
        inserting the following:
            ``(3) Single-source basis.--The term `single-source basis', 
        with respect to an award of a contract, means that the contract 
        is awarded to a source after soliciting an offer or offers 
        from, and negotiating with, only such source (although such 
        source is not the only source in the marketplace capable of 
        meeting the need) because such source is the most advantageous 
        source for purposes of the award.''.

                 CHAPTER 3--TEACHER QUALITY ENHANCEMENT

SEC. 7331. TEACHER QUALITY ENHANCEMENT GRANTS FOR STATES AND 
              PARTNERSHIPS.

    Part A of title II (20 U.S.C. 1021 et seq.) is amended to read as 
follows:

      ``PART A--TEACHER QUALITY ENHANCEMENT GRANTS FOR STATES AND 
                              PARTNERSHIPS

``SEC. 201. PURPOSES; DEFINITIONS.

    ``(a) Purposes.--The purposes of this part are to--
            ``(1) improve student achievement;
            ``(2) improve the quality of the current and future 
        teaching force by improving the preparation of prospective 
        teachers and enhancing professional development activities;
            ``(3) hold institutions of higher education accountable for 
        preparing highly qualified teachers; and
            ``(4) recruit qualified individuals, including minorities 
        and individuals from other occupations, into the teaching 
        force.
    ``(b) Definitions.--In this part:
            ``(1) Arts and sciences.--The term `arts and sciences' 
        means--
                    ``(A) when referring to an organizational unit of 
                an institution of higher education, any academic unit 
                that offers 1 or more academic majors in disciplines or 
                content areas corresponding to the academic subject 
                areas in which teachers provide instruction; and
                    ``(B) when referring to a specific academic subject 
                area, the disciplines or content areas in which 
                academic majors are offered by the arts and sciences 
                organizational unit.
            ``(2) Children from low-income families.--The term 
        `children from low-income families' means children as described 
        in section 1124(c)(1)(A) of the Elementary and Secondary 
        Education Act of 1965.
            ``(3) Early childhood education program.--The term `early 
        childhood education program' means a Head Start program or an 
        Early Head Start program carried out under the Head Start Act 
        (42 U.S.C. 9831 et seq.), a State licensed or regulated child 
        care program or school, or a State prekindergarten program that 
        serves children from birth through kindergarten and that 
        addresses the children's cognitive (including language, early 
        literacy, and pre-numeracy), social, emotional, and physical 
        development.
            ``(4) Early childhood educator.--The term `early childhood 
        educator' means an individual with primary responsibility for 
        the education of children in an early childhood education 
        program.
            ``(5) Educational service agency.--The term `educational 
        service agency' has the meaning given such term in section 9101 
        of the Elementary and Secondary Education Act of 1965.
            ``(6) Exemplary teacher.--The term `exemplary teacher' has 
        the meaning given such term in section 9101 of the Elementary 
        and Secondary Education Act of 1965.
            ``(7) High-need local educational agency.--The term `high-
        need local educational agency' means a local educational agency 
        or educational service agency--
                    ``(A)(i) that serves not fewer than 10,000 children 
                from low-income families;
                    ``(ii) for which not less than 20 percent of the 
                children served by the agency are children from low-
                income families; or
                    ``(iii) with a total of less than 600 students in 
                average daily attendance at the schools that are served 
                by the agency and all of whose schools are designated 
                with a school locale code of 7 or 8, as determined by 
                the Secretary; and
                    ``(B)(i) for which there is a high percentage of 
                teachers not teaching in the academic subject areas or 
                grade levels in which the teachers were trained to 
                teach; or
                    ``(ii) for which there is a high teacher turnover 
                rate or a high percentage of teachers with emergency, 
                provisional, or temporary certification or licensure.
            ``(8) Highly qualified.--The term `highly qualified' has 
        the meaning given such term in section 9101 of the Elementary 
        and Secondary Education Act of 1965 and, with respect to 
        special education teachers, in section 602 of the Individuals 
        with Disabilities Education Act.
            ``(9) Professional development.--The term `professional 
        development' has the meaning given such term in section 9101 of 
        the Elementary and Secondary Education Act of 1965.
            ``(10) Scientifically based reading research.--The term 
        `scientifically based reading research' has the meaning given 
        such term in section 1208 of the Elementary and Secondary 
        Education Act of 1965.
            ``(11) Scientifically based research.--The term 
        `scientifically based research' has the meaning given such term 
        in section 9101 of the Elementary and Secondary Education Act 
        of 1965.
            ``(12) Teacher mentoring.--The term `teacher mentoring' 
        means mentoring of teachers through an established or 
        implemented program--
                    ``(A) that includes qualifications for mentors;
                    ``(B) that provides training for mentors;
                    ``(C) that provides regular and ongoing 
                opportunities for mentors and mentees to observe each 
                other's teaching methods in classroom settings during 
                the school day;
                    ``(D) in which the mentoring is provided by a 
                colleague who teaches in the same field, grade, or 
                subject as the mentee; and
                    ``(E) that includes--
                            ``(i) common planning time or regularly 
                        scheduled collaboration with teachers in the 
                        teachers' same field, grade, or subject area; 
                        and
                            ``(ii) additional professional development 
                        opportunities.
            ``(13) Teaching skills.--The term `teaching skills' means 
        the ability to--
                    ``(A) increase student achievement;
                    ``(B) effectively convey and explain academic 
                subject matter;
                    ``(C) employ strategies that--
                            ``(i) are based on scientifically based 
                        research;
                            ``(ii) are specific to academic subject 
                        matter; and
                            ``(iii) focus on identification and 
                        tailoring of academic instruction to students' 
                        specific learning needs, particularly students 
                        with disabilities, students who are limited 
                        English proficient, and students who are gifted 
                        and talented;
                    ``(D) conduct ongoing assessment of student 
                learning;
                    ``(E) effectively manage a classroom;
                    ``(F) communicate and work with parents and 
                guardians, and involve parents and guardians in their 
                children's education; and
                    ``(G) in the case of an early childhood educator, 
                use age appropriate strategies and practices for 
                children in early childhood education programs.

``SEC. 202. STATE GRANTS.

    ``(a) In General.--From amounts made available under section 
209(a)(1) for a fiscal year, the Secretary is authorized to award 
grants under this section, on a competitive basis, to eligible States 
to enable the eligible States to carry out the activities described in 
subsections (d) and (e).
    ``(b) Eligible State.--
            ``(1) Definition.--In this part, the term `eligible State' 
        means--
                    ``(A) the Governor of a State; or
                    ``(B) in the case of a State for which the 
                constitution or law of such State designates another 
                individual, entity, or agency in the State to be 
                responsible for teacher certification or licensure and 
                preparation activity, such individual, entity, or 
                agency.
            ``(2) Consultation.--The Governor or the individual, 
        entity, or agency designated under paragraph (1)(B) shall 
        consult with the Governor, State board of education, State 
        educational agency, State agency for higher education, or other 
        applicable State entities (including the State agency 
        responsible for early childhood education), as appropriate, 
        with respect to the activities assisted under this section, 
        including the development of the grant application and 
        implementation of the activities.
            ``(3) Construction.--Nothing in this subsection shall be 
        construed to negate or supersede the legal authority under 
        State law of any State agency, State entity, or State public 
        official over programs that are under the jurisdiction of the 
        agency, entity, or official.
    ``(c) Application.--To be eligible to receive a grant under this 
section, an eligible State shall submit an application to the Secretary 
that--
            ``(1) meets the requirement of this section;
            ``(2) demonstrates that the eligible State is in full 
        compliance with--
                    ``(A) sections 206(b) and 207; and
                    ``(B) if applicable, sections 207(b) and 208, as 
                such sections were in effect on the day before the date 
                of enactment of the Higher Education Amendments of 
                2005;
            ``(3) includes a description of how the eligible State 
        intends to use funds provided under this section;
            ``(4) includes measurable objectives for the use of the 
        funds provided under this section;
            ``(5) describes how funded activities will--
                    ``(A) reduce shortages, if any, of--
                            ``(i) highly qualified general and special 
                        education teachers, including in low-income 
                        urban and rural areas and in high-need academic 
                        subject areas; and
                            ``(ii) fully competent early childhood 
                        educators; and
                    ``(B) be consistent with State, local, and other 
                education reform activities that promote effective 
                teaching skills and student academic achievement and 
                consistent with State early learning standards for 
                early childhood education programs, including how 
                funded activities will support carrying out the 
                applicable requirements of the eligible State under 
                sections 1111 and 1119 of the Elementary and Secondary 
                Education Act of 1965, and section 612(a)(14) of the 
                Individuals with Disabilities Education Act;
            ``(6) contains an assurance that the eligible State will 
        carry out each of the intended uses of grant funds described in 
        paragraph (3);
            ``(7) describes the eligible State's--
                    ``(A) current capacity to measure the effectiveness 
                of teacher preparation programs and professional 
                development activities within the State using available 
                statewide data;
                    ``(B) activities to enhance or expand the 
                integration of existing data systems to better measure 
                the effectiveness of teacher preparation programs and 
                professional development activities within the State; 
                or
                    ``(C) if such data systems do not exist, plans for 
                the development of an integrated statewide data system 
                to measure the effectiveness of teacher preparation 
                programs and professional development activities within 
                the State using available statewide data; and
            ``(8) contains such other information and assurances as the 
        Secretary may require.
    ``(d) Required Uses of Funds.--An eligible State that receives a 
grant under this section shall use the grant funds to reform teacher 
preparation requirements, to coordinate with State activities under 
section 2113(c) of the Elementary and Secondary Education Act of 1965 
and subsections (a) and (b) of section 654 of the Individuals with 
Disabilities Education Act, and to ensure that current and prospective 
teachers are highly qualified, by carrying out each of the following 
activities:
            ``(1) Reforms.--Ensuring that all teacher preparation 
        programs in the State are preparing current or prospective 
        teachers to become highly qualified, to understand 
        scientifically based research and its applicability, and to use 
        technology effectively, including use of instructional 
        techniques to improve student academic achievement, by 
        assisting such programs--
                    ``(A) in retraining faculty;
                    ``(B) in designing (or redesigning) teacher 
                preparation programs so that such programs--
                            ``(i) are based on rigorous academic 
                        content and scientifically based research 
                        (including scientifically based reading 
                        research), and aligned with challenging State 
                        academic content standards;
                            ``(ii) promote effective teaching skills; 
                        and
                            ``(iii) promote understanding of effective 
                        instructional strategies for students with 
                        special needs, including students with 
                        disabilities, students who are limited English 
                        proficient, and students who are gifted and 
                        talented;
                    ``(C) in ensuring collaboration with departments, 
                programs, or units outside of the teacher preparation 
                program in relevant academic content areas to ensure a 
                successful combination of training in both teaching and 
                such content;
                    ``(D) in developing high-quality, rigorous clinical 
                experiences (that include student teaching experience) 
                in which students participate while enrolled in a 
                teacher preparation program, lasting not less than 1 
                term, through dissemination of best practices, 
                technical assistance, or other relevant activities; and
                    ``(E) in collecting and using data, in 
                collaboration with institutions of higher education, 
                schools, and local educational agencies, on teacher 
                retention rates, by school, to evaluate and strengthen 
                the effectiveness of the State's teacher support 
                system.
            ``(2) Certification or licensure requirements.--Reforming 
        teacher certification or licensure requirements to ensure 
        that--
                    ``(A) teachers have the academic content knowledge 
                and teaching skills in the academic subject areas that 
                the teachers teach that are necessary to help students 
                meet challenging State student academic achievement 
                standards, as required under section 1111(b)(1) of the 
                Elementary and Secondary Education Act of 1965;
                    ``(B) such requirements are aligned with 
                challenging State academic content standards, as 
                required under section 1111(b)(1) of the Elementary and 
                Secondary Education Act of 1965;
                    ``(C) teacher certification and licensure 
                assessments are--
                            ``(i) used for purposes for which such 
                        assessments are valid and reliable;
                            ``(ii) consistent with relevant, 
                        professional, and technical standards; and
                            ``(iii) aligned with the reporting 
                        requirements of sections 205 and 206; and
                    ``(D) such requirements for high-need academic 
                subject areas (such as reading, mathematics, science, 
                and foreign language, including less commonly taught 
                languages) and high-need areas (such as special 
                education, language instruction educational programs, 
                and early childhood education) exist and reflect 
                qualifications to help students meet high standards, 
                which may include the development of a State test for 
                such areas.
            ``(3) Evaluation.--
                    ``(A) Annual evaluation.--An eligible State that 
                receives a grant under this section shall evaluate 
                annually the effectiveness of teacher preparation 
                programs and professional development activities within 
                the State. To the extent practicable, such evaluation 
                shall examine--
                            ``(i) teachers' contributions to improving 
                        student academic achievement, as measured by 
                        State academic assessments required under 
                        section 1111(b)(3) of the Elementary and 
                        Secondary Education Act of 1965; and
                            ``(ii) teacher mastery of the academic 
                        subject matter the teachers teach.
                    ``(B) Public reporting.--The eligible State shall 
                make the information described in subparagraph (A) 
                widely available through public means, such as posting 
                on the Internet, distribution to the media, and 
                distribution through public agencies, except such 
                reporting shall not be made in a case in which the 
                reporting of the data would reveal personally 
                identifiable information about a teacher or student.
                    ``(C) Better measurement of effectiveness.--
                            ``(i) In general.--An eligible State that 
                        receives a grant under this section and does 
                        not have the capacity to measure the 
                        effectiveness of teacher preparation programs 
                        and professional development activities within 
                        the State using available statewide data, shall 
                        use a portion of funds received under this 
                        section to enhance or expand the integration of 
                        existing data systems, as described in 
                        subsection (c)(7)(B), or develop an integrated 
                        statewide data system, as described in 
                        subsection (c)(7)(C), to better measure and 
                        provide information that will improve the 
                        effectiveness of teacher preparation programs 
                        on student learning and achievement, and the 
                        impact of pre-service and ongoing professional 
                        development on teacher placement and retention.
                            ``(ii) Technical quality; student privacy; 
                        funds from other sources.--In carrying out 
                        clause (i), the eligible State shall ensure--
                                    ``(I) the technical quality of the 
                                data system to maximize the validity, 
                                reliability, and accessibility of the 
                                data;
                                    ``(II) that student privacy is 
                                protected and that individually 
                                identifiable information about 
                                students, their achievements, and their 
                                families remains confidential, in 
                                accordance with the Family Educational 
                                Rights and Privacy Act of 1974; and
                                    ``(III) that funds provided under 
                                this section are used to supplement 
                                State efforts to enhance or expand the 
                                integration of existing data systems or 
                                to develop an integrated statewide data 
                                system.
    ``(e) Allowable Uses of Funds.--An eligible State that receives a 
grant under this section may use the grant funds to reform teacher 
preparation requirements, to coordinate with State activities under 
section 2113(c) of the Elementary and Secondary Education Act of 1965 
and subsections (a) and (b) of section 654 of the Individuals with 
Disabilities Education Act, and to ensure that current and future 
teachers are highly qualified, by carrying out any of the following 
activities:
            ``(1) Alternatives to traditional preparation for teaching 
        and state certification or licensure.--Providing prospective 
        teachers with alternative routes to State certification or 
        licensure and alternative route programs to become highly 
        qualified teachers through--
                    ``(A) innovative approaches that reduce unnecessary 
                barriers to State certification or licensure while 
                producing highly qualified teachers;
                    ``(B) a selective means for admitting individuals 
                into such programs that includes passage of State 
                approved teacher examinations in appropriate subject 
                areas;
                    ``(C) programs that help prospective teachers 
                develop effective teaching skills and strategies 
                through knowledge of research-based information on the 
                learning process and learning practices;
                    ``(D) programs that provide support to teachers 
                during the teachers' initial years in the profession; 
                and
                    ``(E) alternative routes to State certification or 
                licensure of teachers for qualified individuals, 
                including mid-career professionals from other 
                occupations, paraprofessionals, former military 
                personnel, and recent college graduates with records of 
                academic distinction.
            ``(2) Innovative programs.--Planning and implementing 
        innovative programs to enhance the ability of institutions of 
        higher education, including charter colleges of education, or 
        university and local educational agency partnership schools, to 
        prepare highly qualified teachers, which programs shall--
                    ``(A) permit flexibility in the manner in which the 
                institution of higher education meets State 
                requirements as long as graduates, during the 
                graduates' initial years in the profession, increase 
                student academic achievement;
                    ``(B) provide a description in the application of 
                long-term data gathered from teachers' performance over 
                multiple years in the classroom regarding the teachers' 
                ability to increase student academic achievement;
                    ``(C) ensure high-quality preparation of teachers 
                from underrepresented groups;
                    ``(D) create performance measures that can be used 
                to document the effectiveness of innovative methods for 
                preparing highly qualified teachers; and
                    ``(E) develop frameworks for exemplary induction 
                programs informed by research and best practices.
            ``(3) Teacher recruitment and retention.--Undertaking 
        activities that develop and implement effective mechanisms to 
        ensure that local educational agencies and schools are able to 
        recruit and retain highly qualified teachers, which may include 
        the following activities:
                    ``(A) Performance based compensation.--Assisting 
                local educational agencies in developing--
                            ``(i) performance systems that reward 
                        teachers who increase student academic 
                        achievement and take on additional 
                        responsibilities, such as teacher mentoring and 
                        serving as master teachers; and
                            ``(ii) strategies that provide differential 
                        and bonus pay in high-need local educational 
                        agencies to recruit and retain--
                                    ``(I) principals;
                                    ``(II) highly qualified teachers 
                                who teach in high-need academic subject 
                                areas (such as reading, mathematics, 
                                science, and foreign language, 
                                including less commonly taught 
                                languages);
                                    ``(III) highly qualified teachers 
                                who teach in schools identified for 
                                school improvement under section 
                                1116(b) of the Elementary and Secondary 
                                Education Act of 1965;
                                    ``(IV) highly qualified special 
                                education teachers;
                                    ``(V) highly qualified teachers 
                                specializing in teaching children who 
                                are limited English proficient; and
                                    ``(VI) highly qualified teachers in 
                                low-income urban and rural schools or 
                                districts.
                    ``(B) Additional mechanisms.--Developing and 
                implementing effective mechanisms to ensure that local 
                educational agencies and schools are able to--
                            ``(i) address needs identified with respect 
                        to--
                                    ``(I) underrepresented groups;
                                    ``(II) high-need academic subject 
                                areas (such as reading, mathematics, 
                                science, and foreign language, 
                                including less commonly taught 
                                languages);
                                    ``(III) high-need areas (such as 
                                special education, language instruction 
                                educational programs for limited 
                                English proficient students, and early 
                                childhood education);
                                    ``(IV) high-need communities, such 
                                as rural and urban areas; and
                                    ``(V) high-need schools, including 
                                schools with high rates of teacher 
                                turnover;
                            ``(ii) offer teacher mentoring for new 
                        teachers during such teachers' initial years of 
                        teaching; and
                            ``(iii) provide access to ongoing 
                        professional development and innovative 
                        training opportunities for teachers and 
                        administrators.
                    ``(C) Teacher advancement.--Assisting local 
                educational agencies in developing teacher advancement 
                and retention initiatives that promote professional 
                growth and emphasize multiple career paths (such as 
                paths to becoming a highly qualified mentor teacher or 
                exemplary teacher) and pay differentiation.
                    ``(D) Recruit qualified professionals.--Developing 
                recruitment programs or assisting local educational 
                agencies in--
                            ``(i) recruiting qualified professionals 
                        from other fields, including highly qualified 
                        paraprofessionals (as defined in section 2102 
                        of the Elementary and Secondary Education Act 
                        of 1965); and
                            ``(ii) providing such professionals with 
                        alternative routes to teacher certification or 
                        licensure.
                    ``(E) Underrepresented populations.--Providing 
                increased opportunities for minorities, individuals 
                with disabilities, and other individuals 
                underrepresented in the teaching profession to become 
                highly qualified teachers.
                    ``(F) Rural education recruitment and retention 
                programs.--Making grants to rural school districts, or 
                a consortia of rural school districts, to implement--
                            ``(i) teacher recruitment strategies, which 
                        may include tuition assistance, student loan 
                        forgiveness, housing assistance, bonus pay, and 
                        other effective approaches;
                            ``(ii) teacher retention strategies, such 
                        as mentoring programs and ongoing opportunities 
                        for professional growth and advancement; and
                            ``(iii) partnerships with institutions of 
                        higher education designed to--
                                    ``(I) prepare beginning teachers to 
                                teach; and
                                    ``(II) assist teachers (including 
                                teachers who teach multiple subjects) 
                                to become highly qualified.
            ``(4) Teacher scholarships and support.--Providing--
                    ``(A) scholarships to help students, such as 
                individuals who have been accepted by, or who are 
                enrolled in, a program of undergraduate education or 
                initial teacher preparation at an institution of higher 
                education, pay the costs of tuition, room, board, and 
                other expenses of completing a teacher preparation 
                program, if--
                            ``(i) the Secretary establishes such 
                        requirements as the Secretary determines 
                        necessary to ensure that recipients of 
                        scholarships under this section who complete 
                        teacher preparation programs--
                                    ``(I) subsequently teach in an 
                                early childhood education program or a 
                                high-need local educational agency for 
                                a period of time equivalent to the 
                                period of time for which the recipient 
                                received scholarship assistance, plus 
                                an additional 1 year; or
                                    ``(II) repay the amount of the 
                                scholarship if the recipient does not 
                                teach as described in subclause (I); 
                                and
                            ``(ii) the eligible State provides an 
                        assurance that the eligible State will recruit 
                        minority students to become highly qualified 
                        teachers;
                    ``(B) support services, if needed, to enable 
                scholarship recipients to complete postsecondary 
                education programs, or to move from a career outside of 
                the field of education into a teaching career; and
                    ``(C) follow-up services to former scholarship 
                recipients during the recipients' initial years of 
                teaching.
            ``(5) Teacher removal.--Developing and implementing 
        effective mechanisms to ensure that local educational agencies 
        and schools are able to expeditiously remove incompetent or 
        unqualified teachers consistent with procedures to ensure due 
        process for the teachers.
            ``(6) Teacher effectiveness.--Developing--
                    ``(A) systems to measure the effectiveness of 
                teacher preparation programs and professional 
                development programs; and
                    ``(B) strategies to document gains in student 
                academic achievement or increases in teacher mastery of 
                the academic subject matter the teachers teach, as a 
                result of such programs.
            ``(7) Early childhood educators.--Developing strategies to 
        improve and expand teacher preparation programs for early 
        childhood educators to teach in early childhood education 
        programs.
            ``(8) Professional development.--Developing and enhancing 
        high-quality professional development, instructional materials, 
        and relevant educational materials.
            ``(9) Technology.--Assisting teachers to use technology 
        effectively, including use for instructional techniques and the 
        collection, management, and analysis of data to improve 
        teaching, learning, and decision making for the purpose of 
        increasing student academic achievement.
            ``(10) Areas of instructional shortage.--Increasing the 
        number of--
                    ``(A) teachers in the classroom providing 
                instruction in high-need academic subject areas (such 
                as reading, mathematics, science, and foreign language, 
                including less commonly taught languages) and high-need 
                areas (such as special education, language instruction 
                educational programs for limited English proficient 
                students, and early childhood education); and
                    ``(B) special education faculty dedicated to 
                preparing highly qualified special education teachers 
                at institutions of higher education.
            ``(11) Technical assistance.--Providing technical 
        assistance to low-performing programs of teacher preparation 
        within institutions of higher education identified under 
        section 207(a).
            ``(12) Evaluation support.--Performing data collection, 
        evaluation, and reporting to meet the requirements of 
        subsection (d)(3).
            ``(13) Professional advancement.--Developing a professional 
        advancement system to--
                    ``(A) initiate or enhance a system in which highly 
                qualified teachers who pursue advanced licensure levels 
                are required to demonstrate increased competencies and 
                undertake increased responsibilities for increased 
                compensation as the teachers progress through levels 
                established by the State; or
                    ``(B) provide opportunities for professional 
                growth, including through--
                            ``(i) a nationally recognized advance 
                        credentialing system; or
                            ``(ii) special certification in advanced 
                        placement or international baccalaureate 
                        content, teaching gifted and talented students, 
                        and pedagogy.
    ``(f) Supplement, Not Supplant.--Funds made available under this 
section shall be used to supplement, and not supplant, other Federal, 
State, and local funds that would otherwise be expended to carry out 
activities under this section.

``SEC. 203. PARTNERSHIP GRANTS.

    ``(a) Grants.--From amounts made available under section 209(a)(2) 
for a fiscal year, the Secretary is authorized to award grants under 
this section, on a competitive basis, to eligible partnerships to 
enable the eligible partnerships to carry out the activities described 
in subsections (e) and (f).
    ``(b) Definitions.--
            ``(1) Eligible partnership.--
                    ``(A) In general.--In this part, the term `eligible 
                partnership' means an entity that shall include--
                            ``(i) a partner institution;
                            ``(ii) a school of arts and sciences;
                            ``(iii) a high-need local educational 
                        agency and a school or a consortium of schools 
                        served by the agency; and
                            ``(iv) at least 1 individual or entity 
                        described in subparagraph (B).
                    ``(B) Additional individuals and entities.--In this 
                part, the term `eligible partnership' means an entity 
                that shall include at least 1 of the following:
                            ``(i) A Governor.
                            ``(ii) A State educational agency.
                            ``(iii) A State board of education.
                            ``(iv) A State agency for higher education.
                            ``(v) A school or department within the 
                        partner institution focusing on education, 
                        psychology, human development, or a department 
                        with comparable expertise in the disciplines of 
                        teaching, learning, and child and adolescent 
                        development.
                            ``(vi) An institution of higher education 
                        or a department within such institution, not 
                        described in subparagraph (A).
                            ``(vii) A public charter school.
                            ``(viii) A public or private elementary 
                        school or secondary school.
                            ``(ix) A public or private nonprofit 
                        educational organization.
                            ``(x) A business.
                            ``(xi) A science-, mathematics-, or 
                        technology-oriented entity.
                            ``(xii) An early childhood education 
                        program.
                            ``(xiii) A teacher organization.
                            ``(xiv) An educational service agency.
                            ``(xv) A consortium of local educational 
                        agencies.
                            ``(xvi) A nonprofit telecommunications 
                        entity.
            ``(2) Partner institution.--In this section, the term 
        `partner institution' means an institution of higher education, 
        which may include a 2-year institution of higher education 
        offering a dual program with a 4-year institution of higher 
        education, that has a teacher preparation program--
                    ``(A) whose graduates exhibit strong performance on 
                State-determined qualifying assessments for new 
                teachers through--
                            ``(i) demonstrating that 80 percent or more 
                        of the graduates of the program who intend to 
                        enter the field of teaching have passed all of 
                        the applicable State qualification assessments 
                        for new teachers, which shall include an 
                        assessment of each prospective teacher's 
                        subject matter knowledge in the content area in 
                        which the teacher intends to teach; or
                            ``(ii) being ranked among the highest-
                        performing teacher preparation programs in the 
                        State as determined by the State--
                                    ``(I) using criteria consistent 
                                with the requirements for the State 
                                report card under section 206(b); and
                                    ``(II) using the State report card 
                                on teacher preparation required under 
                                section 206(b), after the first 
                                publication of such report card and for 
                                every year thereafter; or
                    ``(B) that requires all the students of the program 
                to meet high academic standards and participate in 
                intensive clinical experience, and--
                            ``(i) in the case of secondary school 
                        candidates, to successfully complete--
                                    ``(I) a major or its equivalent in 
                                coursework in the academic subject area 
                                in which the candidate intends to 
                                teach; or
                                    ``(II) a related major in the 
                                academic subject area in which the 
                                candidate intends to teach;
                            ``(ii) in the case of elementary school 
                        candidates, to successfully complete--
                                    ``(I) an academic major or its 
                                equivalent in coursework in the arts 
                                and sciences; or
                                    ``(II) a major in elementary 
                                education with a significant amount of 
                                coursework in the arts and sciences; 
                                and
                            ``(iii) in the case of early childhood 
                        educators, to become fully competent and meet 
                        degree requirements, as established by the 
                        State.
    ``(c) Application.--Each eligible partnership desiring a grant 
under this section shall submit an application to the Secretary at such 
time, in such manner, and accompanied by such information as the 
Secretary may require. Each such application shall contain--
            ``(1) a needs assessment of all the partners with respect 
        to the preparation, induction, and professional development of 
        early childhood educators, general and special education 
        teachers, and principals;
            ``(2) a description of the extent to which the teacher 
        preparation program of the eligible partnership prepares new 
        teachers with effective teaching skills;
            ``(3) a description of how the eligible partnership will 
        coordinate with other teacher preparation or professional 
        development programs, including those funded under the 
        Elementary and Secondary Education Act of 1965 and the 
        Individuals with Disabilities Education Act, and how the 
        activities of the eligible partnership will be consistent with 
        State, local, and other education reform activities that 
        promote student achievement;
            ``(4) a resource assessment that describes the resources 
        available to the eligible partnership, the intended use of the 
        grant funds (including a description of how the grant funds 
        will be fairly distributed), and the commitment of the 
        resources of the eligible partnership to the activities 
        assisted under this part, including financial support, faculty 
        participation, time commitments, and continuation of the 
        activities when the grant period ends;
            ``(5) a description of--
                    ``(A) how the eligible partnership will meet the 
                purposes of this part;
                    ``(B) how the eligible partnership will carry out 
                the activities required under subsection (e) and any 
                permissible activities under subsection (f);
                    ``(C) the eligible partnership's evaluation plan 
                pursuant to section 205(b);
                    ``(D) how the eligible partnership will align the 
                teacher preparation program with the challenging 
                student academic achievement standards, State early 
                learning standards for early childhood education 
                programs (where applicable), and challenging academic 
                content standards, established by the State in which 
                the partnership is located;
                    ``(E) how faculty of the teacher preparation 
                program at the partner institution will serve, over the 
                period of the grant, with highly qualified teachers in 
                the classrooms of the high-need local educational 
                agency included in the eligible partnership;
                    ``(F) how the eligible partnership will ensure that 
                teachers, principals, and superintendents in all 
                schools (including private schools, as appropriate) 
                located in the geographic areas served by an eligible 
                partnership under this section are provided information 
                about the activities carried out with funds under this 
                section, including through electronic means;
                    ``(G) how the eligible partnership will design, 
                implement, or enhance the clinical program component, 
                including promoting close supervision of student 
                teachers by faculty of the teacher preparation program 
                and mentor teachers while in the program and during the 
                student teachers' initial years of teaching if hired by 
                schools included in the eligible partnership;
                    ``(H) how the eligible partnership will develop or 
                enhance an induction program that includes high-quality 
                professional development to support new teachers during 
                the teachers' initial years of teaching that includes 
                teacher mentoring and collaborating with teachers in 
                the same grade, department, or field; and
                    ``(I) how the eligible partnership will collect, 
                analyze, use, and disseminate data on the retention of 
                all teachers in schools located in the geographic areas 
                served by the eligible partnership to evaluate the 
                effectiveness of its teacher support system; and
            ``(6) an assurance that the eligible partnership will carry 
        out each of the activities described in paragraph (5).
    ``(d) Consultation.--
            ``(1) In general.--Members of an eligible partnership that 
        receives a grant under this section shall engage in regular 
        consultation throughout the development and implementation of 
        programs and activities under this section.
            ``(2) Regular communication.--To ensure timely and 
        meaningful consultation, regular communication shall occur 
        among all members of the eligible partnership, including the 
        high-need local educational agency. Such communication shall 
        continue throughout the implementation of the grant and the 
        assessment of programs and activities under this section.
            ``(3) Written consent.--The Secretary may approve changes 
        in grant activities only if a written consent signed by all 
        members of the eligible partnership is submitted to the 
        Secretary.
    ``(e) Required Uses of Funds.--An eligible partnership that 
receives a grant under this section shall use the grant funds to carry 
out each of the following activities:
            ``(1) Reforms.--Ensuring that each teacher preparation 
        program and each early childhood educator preparation program, 
        where applicable, of the eligible partnership that is assisted 
        under this section addresses the needs identified in the needs 
        assessment of the partnership and is preparing current or 
        prospective teachers to be highly qualified, and, where 
        applicable, early childhood educators to be fully competent, to 
        understand scientifically based research and its applicability, 
        and to use technology effectively, including use of 
        instructional techniques to improve student academic 
        achievement, and in the case of early childhood educators, 
        techniques to improve children's cognitive, social, emotional, 
        and physical development, by assisting such programs--
                    ``(A) in retraining faculty;
                    ``(B) in designing (or redesigning) teacher 
                preparation programs so that such programs--
                            ``(i) are based on rigorous academic 
                        content and scientifically based research 
                        (including scientifically based reading 
                        research), and aligned with challenging State 
                        academic content standards, as required under 
                        section 1111(b)(1) of the Elementary and 
                        Secondary Education Act of 1965, and for early 
                        childhood educators, aligned with State early 
                        learning standards;
                            ``(ii) promote effective teaching skills;
                            ``(iii) promote understanding of effective 
                        instructional strategies for students with 
                        special needs, including students with 
                        disabilities, students who are limited English 
                        proficient, students who are gifted and 
                        talented, and children in early childhood 
                        education programs; and
                            ``(iv) promote high-quality mathematics, 
                        science, and foreign language instruction, 
                        where applicable;
                    ``(C) in ensuring collaboration with departments, 
                programs, or units outside of the teacher preparation 
                program in all academic content areas to ensure a 
                successful combination of training in both teaching and 
                such content; and
                    ``(D) in developing high-quality, rigorous clinical 
                experiences, lasting not less than 1 term, through 
                dissemination of best practices, technical assistance, 
                or other relevant activities.
            ``(2) Clinical experience and interaction.--Improving 
        sustained and high-quality preservice clinical experiences, 
        including--
                    ``(A) providing teacher mentoring; and
                    ``(B) substantially increasing interaction between 
                faculty at institutions of higher education and new and 
                experienced teachers, principals, and other 
                administrators at elementary schools or secondary 
                schools, and providing support, including preparation 
                time and release time, for such interaction.
            ``(3) Support programs for new teachers.--Creating a 
        program to support new teachers during the initial years of 
        teaching (for not less than 1 year and not more than 3 years). 
        Such program shall promote effective teaching skills and may 
        include the following components:
                    ``(A) Development of skills in educational 
                interventions based on scientifically based research.
                    ``(B) Development of knowledge of scientifically 
                based research on teaching and learning.
                    ``(C) Inclusion of faculty who model the 
                integration of research and practice in the classroom.
                    ``(D) Opportunities for--
                            ``(i) high-quality teacher mentoring; and
                            ``(ii) additional professional development, 
                        dissemination of evidence-based research on 
                        educational practices, and professional 
                        development activities.
                    ``(E) Interdisciplinary collaboration among 
                exemplary teachers, faculty, researchers, and other 
                staff who prepare new teachers in the learning process 
                and the assessment of learning.
    ``(f) Allowable Uses of Funds.--An eligible partnership that 
receives a grant under this section may use the grant funds to carry 
out any of the following activities that address the needs identified 
in the needs assessment:
            ``(1) Alternatives to traditional preparation for teaching 
        and state certification or licensure.--The activity described 
        in section 202(e)(1).
            ``(2) Dissemination and coordination.--Broadly 
        disseminating information on effective practices used by the 
        eligible partnership, and coordinating with the recruitment and 
        training activities of the Governor, State board of education, 
        State agency for higher education, State agency responsible for 
        early childhood education, and State educational agency, as 
        appropriate.
            ``(3) Innovative programs.--Developing innovative programs 
        designed to provide graduates of programs funded under this 
        title with opportunities to continue their education through 
        supports and opportunities to improve instructional practices 
        in the initial years of teaching, including the following:
                    ``(A) Internships.--
                            ``(i) Teacher preparation enhancement 
                        internship.--Developing a 1-year paid 
                        internship program for students who have 
                        completed an initial teacher preparation 
                        program, or alternative routes to State 
                        certification or licensure program, to enable 
                        such students to develop the skills and 
                        experience necessary for success in teaching, 
                        including providing intensive clinical training 
                        and combining in-service instruction in teacher 
                        methods and assessments with classroom 
                        observations, experiences, and practices. Such 
                        interns shall have a reduced teaching load and 
                        a mentor for assistance in the classroom.
                            ``(ii) Mid-career professional 
                        internships.--Developing a 1-year paid 
                        internship program for mid-career professionals 
                        from other occupations, former military 
                        personnel, and recent college graduates from 
                        fields other than teacher preparation with 
                        records of academic distinction to enable such 
                        individuals to develop the skills and 
                        experience necessary for success in teaching, 
                        including providing intensive clinical training 
                        and combining in-service instruction in teacher 
                        methods and assessments with classroom 
                        observations, experiences, and practices. Such 
                        interns shall have a reduced teaching load and 
                        a mentor for assistance in the classroom.
                    ``(B) Residency programs for new teachers.--
                Supporting teachers in a residency program that 
                provides an induction period for all new general 
                education and special education teachers that 
                includes--
                            ``(i) a forum for information sharing among 
                        prospective teachers, teachers, principals, 
                        administrators, and participating faculty in 
                        the partner institution; and
                            ``(ii) the application of scientifically 
                        based research on teaching and learning 
                        generated by entities such as the Institute of 
                        Education Sciences, and the National Research 
                        Council of the National Academies.
                    ``(C) Pathways for paraprofessionals to enter 
                teaching.--Creating intensive programs to provide the 
                coursework and clinical experiences needed by highly 
                qualified paraprofessionals, as defined in section 2102 
                of the Elementary and Secondary Education Act of 1965, 
                to qualify for State teacher certification or licensure 
                to become highly qualified teachers.
            ``(4) Managerial and leadership skills.--Developing and 
        implementing proven mechanisms to provide principals and 
        superintendents with effective managerial, leadership, 
        curricula, and instructional skills that result in increased 
        student academic achievement.
            ``(5) Teacher scholarships and support.--Providing--
                    ``(A) scholarships to help students, such as 
                individuals who have been accepted by, or who are 
                enrolled in, a program of undergraduate education at an 
                institution of higher education, pay the costs of 
                tuition, room, board, and other expenses of completing 
                a teacher preparation program, if--
                            ``(i) the Secretary establishes such 
                        requirements as the Secretary determines 
                        necessary to ensure that recipients of 
                        scholarships under this paragraph who complete 
                        teacher preparation programs--
                                    ``(I) subsequently teach in a high-
                                need local educational agency for a 
                                period of time equivalent to the period 
                                of time for which the recipient 
                                received the scholarship assistance, 
                                plus an additional 1 year; or
                                    ``(II) repay the amount of the 
                                scholarship if the recipient does not 
                                teach as described in subclause (I); 
                                and
                            ``(ii) the eligible partnership provides an 
                        assurance that the eligible partnership will 
                        recruit minority students to become highly 
                        qualified teachers;
                    ``(B) support services, if needed, to enable 
                scholarship recipients to complete postsecondary 
                education programs, or to transition from a career 
                outside of the field of education into a teaching 
                career; and
                    ``(C) follow-up services for former scholarship 
                recipients during the recipients' initial years of 
                teaching.
            ``(6) Coordination with community colleges.--
                    ``(A) Teacher preparation programs.--Coordinating 
                with 2-year institutions of higher education to 
                implement teacher preparation programs, including 
                through distance learning, for the purposes of allowing 
                prospective teachers--
                            ``(i) to obtain a bachelor's degree and 
                        State certification or licensure; and
                            ``(ii) to become highly qualified teachers.
                    ``(B) Professional development.--Coordinating with 
                2-year institutions of higher education to provide 
                professional development that--
                            ``(i) improves the academic content 
                        knowledge of teachers in the academic subject 
                        areas in which the teachers are certified or 
                        licensed to teach, or in which the teachers are 
                        working toward certification or licensure to 
                        teach; and
                            ``(ii) promotes effective teaching skills.
            ``(7) Clinical experience in science, mathematics, and 
        technology.--Creating opportunities for clinical experience and 
        training for teachers and prospective teachers through 
        participation with professionals in business, research, and 
        work environments in areas relating to science, mathematics, 
        and technology, including opportunities for using laboratory 
        equipment.
            ``(8) Professional development.--Creating opportunities for 
        enhanced and ongoing professional development for experienced 
        general education and special education teachers, early 
        childhood educators, principals, administrators, and faculty.
            ``(9) Technology.--The activity described in section 
        202(e)(9).
            ``(10) Areas of instructional shortage.--Increasing the 
        number of--
                    ``(A) teachers in the classroom providing 
                instruction in high-need academic subject areas (such 
                as reading, mathematics, science, and foreign language, 
                including less commonly taught languages), and high-
                need areas (such as special education, language 
                instruction educational programs for limited English 
                proficient students, and early childhood education);
                    ``(B) special education faculty dedicated to 
                preparing highly qualified special education teachers 
                at institutions of higher education; and
                    ``(C) faculty at institutions of higher education 
                with expertise in instruction of students who are 
                limited English proficient.
            ``(11) Improving instruction.--Improving instruction by--
                    ``(A) improving understanding and instruction in 
                core academic subjects and other, specialized courses, 
                such as geography, American history and government, and 
                world history; and
                    ``(B) creating externships for teachers and 
                prospective teachers for field experience and training 
                through participation in business, research, and work 
                environments in high-need academic subject areas (such 
                as reading, mathematics, science, and foreign language, 
                including less commonly taught languages) and high-need 
                areas (such as special education, language instruction 
                educational programs for limited English proficient 
                students, and early childhood education).
            ``(12) Graduate programs.--Developing, in collaboration 
        with departments, programs, or units of both academic content 
        and teacher education within a partner institution, master's 
        degree programs that meet the demonstrated needs of teachers in 
        the high-need local educational agency participating in the 
        eligible partnership for content expertise and teaching skills.
            ``(13) Literacy teacher training.--Establishing and 
        implementing a program that strengthens content knowledge and 
        teaching skills of secondary school teachers in literacy that--
                    ``(A) provides teacher training and stipends for 
                literacy coaches who train classroom teachers to 
                implement literacy programs;
                    ``(B) develops or redesigns rigorous research-based 
                curricula that are aligned with challenging State 
                academic content standards, as required under section 
                1111(b)(1) of the Elementary and Secondary Education 
                Act of 1965, and with postsecondary standards for 
                reading and writing;
                    ``(C) provides training and stipends for teachers 
                to tutor students with intense individualized reading, 
                writing, and subject matter instruction during or 
                beyond the school day;
                    ``(D) provides opportunities for teachers to plan 
                and assess instruction with other teachers, school 
                leaders, and faculty at institutions of higher 
                education; and
                    ``(E) establishes an evaluation and accountability 
                plan for activities conducted under this paragraph to 
                measure the impact of such activities.
    ``(g) Construction.--Nothing in this section shall be construed to 
prohibit an eligible partnership from using grant funds to coordinate 
with the activities of eligible partnerships in other States or on a 
regional basis through Governors, State boards of education, State 
educational agencies, State agencies responsible for early childhood 
education, local educational agencies, or State agencies for higher 
education.
    ``(h) Supplement, Not Supplant.--Funds made available under this 
section shall be used to supplement, and not supplant, other Federal, 
State, and local funds that would otherwise be expended to carry out 
activities under this section.

``SEC. 204. ADMINISTRATIVE PROVISIONS.

    ``(a) Duration; Number of Awards; Payments.--
            ``(1) Duration.--
                    ``(A) Eligible states.--Grants awarded to eligible 
                States under this part shall be awarded for a period 
                not to exceed 3 years.
                    ``(B) Eligible partnerships.--Grants awarded to 
                eligible partnerships under this part shall be awarded 
                for a period of 5 years.
            ``(2) Number of awards.--An eligible partnership may not 
        receive more than 1 grant during a 5-year period. Nothing in 
        this title shall be construed to prohibit an individual member, 
        that can demonstrate need, of an eligible partnership that 
        receives a grant under this title from entering into another 
        eligible partnership consisting of new members and receiving a 
        grant with such other eligible partnership before the 5-year 
        period described in the preceding sentence applicable to the 
        eligible partnership with which the individual member has first 
        partnered has expired.
            ``(3) Payments.--The Secretary shall make annual payments 
        of grant funds awarded under this part.
    ``(b) Peer Review.--
            ``(1) Panel.--The Secretary shall provide the applications 
        submitted under this part to a peer review panel for 
        evaluation. With respect to each application, the peer review 
        panel shall initially recommend the application for funding or 
        for disapproval.
            ``(2) Priority.--In recommending applications to the 
        Secretary for funding under this part, the panel shall--
                    ``(A) with respect to grants under section 202, 
                give priority to eligible States--
                            ``(i) that have innovative reforms to hold 
                        institutions of higher education with teacher 
                        preparation programs accountable for preparing 
                        teachers to become highly qualified and have 
                        effective teaching skills;
                            ``(ii) that have innovative efforts aimed 
                        at reducing the shortage of highly qualified 
                        general and special education teachers, 
                        including in low-income urban and rural areas 
                        and in high-need academic subject areas (such 
                        as reading, mathematics, science, and foreign 
                        language, including less commonly taught 
                        languages); and
                            ``(iii) whose awards promote an equitable 
                        geographic distribution of grants among rural 
                        and urban areas; and
                    ``(B) with respect to grants under section 203, 
                give priority--
                            ``(i) to applications from broad-based 
                        eligible partnerships that involve businesses 
                        and community organizations; and
                            ``(ii) to eligible partnerships so that the 
                        awards promote an equitable geographic 
                        distribution of grants among rural and urban 
                        areas.
            ``(3) Secretarial selection.--The Secretary shall 
        determine, based on the peer review process, which applications 
        shall receive funding and the amounts of the grants. In 
        determining grant amounts, the Secretary shall take into 
        account the total amount of funds available for all grants 
        under this part and the types of activities proposed to be 
        carried out.
    ``(c) Matching Requirements.--
            ``(1) State grants.--Each eligible State receiving a grant 
        under section 202 shall provide, from non-Federal sources, an 
        amount equal to 50 percent of the amount of the grant (in cash 
        or in kind) to carry out the activities supported by the grant.
            ``(2) Partnership grants.--Each eligible partnership 
        receiving a grant under section 203 shall provide, from non-
        Federal sources (in cash or in kind), an amount equal to 25 
        percent of the amount of the grant for the first year of the 
        grant, 35 percent of the amount of the grant for the second 
        year of the grant, and 50 percent of the amount of the grant 
        for each succeeding year of the grant.
    ``(d) Limitation on Administrative Expenses.--An eligible State or 
eligible partnership that receives a grant under this part may use not 
more than 2 percent of the grant funds for purposes of administering 
the grant.
    ``(e) Additional Activities.--The Secretary shall use funds repaid 
pursuant to section 202(e)(4)(A)(i)(II) or section 203(f)(5)(A)(i)(II) 
to carry out additional activities under section 202 or 203, 
respectively.

``SEC. 205. ACCOUNTABILITY AND EVALUATION.

    ``(a) State Grant Accountability Report.--An eligible State that 
receives a grant under section 202 shall submit an annual 
accountability report to the Secretary and the authorizing committees. 
Such report shall include a description of the degree to which the 
eligible State, in using funds provided under such section, has made 
progress in meeting the purposes of this part and substantial progress 
in meeting the following goals, as applicable:
            ``(1) Student academic achievement.--Increasing student 
        academic achievement for all students as defined by the 
        eligible State.
            ``(2) Raising standards.--Raising the State academic 
        standards required to enter the teaching profession as a highly 
        qualified teacher, and where applicable, as a fully competent 
        early childhood educator.
            ``(3) Initial certification or licensure.--Improving the 
        pass rates and scaled scores for initial State teacher 
        certification or licensure, or increasing the numbers of 
        qualified individuals being certified or licensed as teachers 
        through alternative routes to State certification or licensure 
        programs.
            ``(4) Percentage of highly qualified teachers.--Providing 
        data on the progress of the State towards meeting the highly 
        qualified teacher requirements under section 1119(a)(2) of the 
        Elementary and Secondary Education Act of 1965.
            ``(5) Decreasing teacher shortages.--Decreasing shortages 
        of--
                    ``(A) highly qualified teachers in--
                            ``(i) low-income urban and rural areas;
                            ``(ii) high-need academic subject areas 
                        (such as reading, mathematics, science, and 
                        foreign language, including less commonly 
                        taught languages);
                            ``(iii) special education; and
                            ``(iv) high-need areas (such as special 
                        education, language instruction educational 
                        programs for limited English proficient 
                        students, and early childhood education); and
                    ``(B) fully competent early childhood educators.
            ``(6) Increasing opportunities for professional 
        development.--Increasing opportunities for enhanced and ongoing 
        professional development that--
                    ``(A) improves the academic content knowledge of 
                teachers in the academic subject areas in which the 
                teachers are certified or licensed to teach or in which 
                the teachers are working toward certification or 
                licensure to teach; and
                    ``(B) promotes effective teaching skills.
    ``(b) Eligible Partnership Evaluation.--Each eligible partnership 
submitting an application for a grant under section 203 shall establish 
and include in such application, an evaluation plan that includes 
strong performance objectives. The plan shall include objectives and 
measures for increasing--
            ``(1) student achievement for all students as measured by 
        the eligible partnership;
            ``(2) teacher retention in the first 3 years of a teacher's 
        career;
            ``(3) improvement in the pass rates and scaled scores for 
        initial State certification or licensure of teachers;
            ``(4) the percentage of highly qualified teachers hired by 
        the high-need local educational agency participating in the 
        eligible partnership; and
            ``(5) the percentage of--
                    ``(A) highly qualified teachers among 
                underrepresented groups, in high-need academic subject 
                areas (such as reading, mathematics, science, and 
                foreign language, including less commonly taught 
                languages), in high-need areas (such as special 
                education, language instruction educational programs 
                for limited English proficient students, and early 
                childhood education), and in high-need schools;
                    ``(B) elementary school, middle school, and 
                secondary school classes taught by teachers who are 
                highly qualified;
                    ``(C) early childhood education program classes 
                taught by providers who are fully competent; and
                    ``(D) highly qualified special education teachers.
    ``(c) Revocation of Grant.--
            ``(1) Eligible states.--If the Secretary determines that an 
        eligible State is not making substantial progress in meeting 
        the purposes, goals, objectives, and measures, as appropriate, 
        by the end of the second year of a grant under this part, then 
        the grant payment shall not be made for the third year of the 
        grant.
            ``(2) Eligible partnerships.--If the Secretary determines 
        that an eligible partnership is not making substantial progress 
        in meeting the purposes, goals, objectives, and measures, as 
        appropriate, by the end of the third year of a grant under this 
        part, then the grant payments shall not be made for any 
        succeeding year of the grant.
    ``(d) Evaluation and Dissemination.--The Secretary shall evaluate 
the activities funded under this part and report the Secretary's 
findings regarding the activities to the authorizing committees. The 
Secretary shall broadly disseminate--
            ``(1) successful practices developed by eligible States and 
        eligible partnerships under this part; and
            ``(2) information regarding such practices that were found 
        to be ineffective.

``SEC. 206. ACCOUNTABILITY FOR PROGRAMS THAT PREPARE TEACHERS.

    ``(a) Institutional and Program Report Cards on the Quality of 
Teacher Preparation.--
            ``(1) Report card.--Each institution of higher education 
        that conducts a traditional teacher preparation program or 
        alternative routes to State certification or licensure program 
        and that enrolls students receiving Federal assistance under 
        this Act shall report annually to the State and the general 
        public, in a uniform and comprehensible manner that conforms 
        with the definitions and methods established by the Secretary, 
        both for traditional teacher preparation programs and 
        alternative routes to State certification or licensure 
        programs, the following information:
                    ``(A) Pass rates and scaled scores.--For the most 
                recent year for which the information is available for 
                those students who took the assessments and are 
                enrolled in the traditional teacher preparation program 
                or alternative routes to State certification or 
                licensure program, and for those who have taken the 
                assessments and have completed the traditional teacher 
                preparation program or alternative routes to State 
                certification or licensure program during the 2-year 
                period preceding such year, for each of the assessments 
                used for teacher certification or licensure by the 
                State in which the program is located--
                            ``(i) the percentage of students who have 
                        completed 100 percent of the nonclinical 
                        coursework and taken the assessment who pass 
                        such assessment;
                            ``(ii) the percentage of all such students 
                        who passed each such assessment;
                            ``(iii) the percentage of students taking 
                        an assessment who completed the teacher 
                        preparation program after enrolling in the 
                        program, which shall be made available widely 
                        and publicly by the State;
                            ``(iv) the average scaled score for all 
                        students who took each such assessment;
                            ``(v) a comparison of the program's pass 
                        rates with the average pass rates for programs 
                        in the State; and
                            ``(vi) a comparison of the program's 
                        average scaled scores with the average scaled 
                        scores for programs in the State.
                    ``(B) Program information.--The criteria for 
                admission into the program, the number of students in 
                the program (disaggregated by race and gender), the 
                average number of hours of supervised clinical 
                experience required for those in the program, the 
                number of full-time equivalent faculty and students in 
                the supervised clinical experience, and the total 
                number of students who have been certified or licensed 
                as teachers, disaggregated by subject and area of 
                certification or licensure.
                    ``(C) Statement.--In States that require approval 
                or accreditation of teacher preparation programs, a 
                statement of whether the institution's program is so 
                approved or accredited, and by whom.
                    ``(D) Designation as low-performing.--Whether the 
                program has been designated as low-performing by the 
                State under section 207(a).
                    ``(E) Use of technology.--A description of the 
                activities that prepare teachers to effectively 
                integrate technology into curricula and instruction and 
                effectively use technology to collect, manage, and 
                analyze data in order to improve teaching, learning, 
                and decision making for the purpose of increasing 
                student academic achievement.
            ``(2) Report.--Each eligible partnership receiving a grant 
        under section 203 shall report annually on the progress of the 
        eligible partnership toward meeting the purposes of this part 
        and the objectives and measures described in section 205(b).
            ``(3) Fines.--The Secretary may impose a fine not to exceed 
        $25,000 on an institution of higher education for failure to 
        provide the information described in this subsection in a 
        timely or accurate manner.
            ``(4) Special rule.--In the case of an institution of 
        higher education that conducts a traditional teacher 
        preparation program or alternative routes to State 
        certification or licensure program and has fewer than 10 scores 
        reported on any single initial teacher certification or 
        licensure assessment during an academic year, the institution 
        shall collect and publish information, as required under 
        paragraph (1)(A), with respect to an average pass rate and 
        scaled score on each State certification or licensure 
        assessment taken over a 3-year period.
    ``(b) State Report Card on the Quality of Teacher Preparation.--
            ``(1) In general.--Each State that receives funds under 
        this Act shall provide to the Secretary, annually, in a uniform 
        and comprehensible manner that conforms with the definitions 
        and methods established by the Secretary, a State report card 
        on the quality of teacher preparation in the State, both for 
        traditional teacher preparation programs and for alternative 
        routes to State certification or licensure programs, which 
        shall include not less than the following:
                    ``(A) A description of reliability and validity of 
                the teacher certification and licensure assessments, 
                and any other certification and licensure requirements, 
                used by the State.
                    ``(B) The standards and criteria that prospective 
                teachers must meet in order to attain initial teacher 
                certification or licensure and to be certified or 
                licensed to teach particular academic subject areas or 
                in particular grades within the State.
                    ``(C) A description of how the assessments and 
                requirements described in subparagraph (A) are aligned 
                with the State's challenging academic content standards 
                required under section 1111(b)(1) of the Elementary and 
                Secondary Education Act of 1965 and State early 
                learning standards for early childhood education 
                programs.
                    ``(D) For each of the assessments used by the State 
                for teacher certification or licensure--
                            ``(i) for each institution of higher 
                        education located in the State and each entity 
                        located in the State that offers an alternative 
                        route for teacher certification or licensure, 
                        the percentage of students at such institution 
                        or entity who have completed 100 percent of the 
                        nonclinical coursework and taken the assessment 
                        who pass such assessment;
                            ``(ii) the percentage of all such students 
                        at all such institutions taking the assessment 
                        who pass such assessment; and
                            ``(iii) the percentage of students taking 
                        an assessment who completed the teacher 
                        preparation program after enrolling in the 
                        program, which shall be made available widely 
                        and publicly by the State.
                    ``(E) A description of alternative routes to State 
                certification or licensure in the State (including any 
                such routes operated by entities that are not 
                institutions of higher education), if any, including, 
                for each of the assessments used by the State for 
                teacher certification or licensure--
                            ``(i) the percentage of individuals 
                        participating in such routes, or who have 
                        completed such routes during the 2-year period 
                        preceding the date of the determination, who 
                        passed each such assessment; and
                            ``(ii) the average scaled score of 
                        individuals participating in such routes, or 
                        who have completed such routes during the 
                        period preceding the date of the determination, 
                        who took each such assessment.
                    ``(F) A description of the State's criteria for 
                assessing the performance of teacher preparation 
                programs within institutions of higher education in the 
                State. Such criteria shall include indicators of the 
                academic content knowledge and teaching skills of 
                students enrolled in such programs.
                    ``(G) For each teacher preparation program in the 
                State, the criteria for admission into the program, the 
                number of students in the program, disaggregated by 
                race and gender (except that such disaggregation shall 
                not be required in a case in which the number of 
                students in a category is insufficient to yield 
                statistically reliable information or the results would 
                reveal personally identifiable information about an 
                individual student), the average number of hours of 
                supervised clinical experience required for those in 
                the program, and the number of full-time equivalent 
                faculty, adjunct faculty, and students in supervised 
                clinical experience.
                    ``(H) For the State as a whole, and for each 
                teacher preparation program in the State, the number of 
                teachers prepared, in the aggregate and reported 
                separately by--
                            ``(i) area of certification or licensure;
                            ``(ii) academic major; and
                            ``(iii) subject area for which the teacher 
                        has been prepared to teach.
                    ``(I) Using the data generated under subparagraphs 
                (G) and (H), a description of the extent to which 
                teacher preparation programs are helping to address 
                shortages of highly qualified teachers, by area of 
                certification or licensure, subject, and specialty, in 
                the State's public schools, including those areas 
                described in section 205(a)(5).
                    ``(J) A description of the activities that prepare 
                teachers to effectively integrate technology into 
                curricula and instruction and effectively use 
                technology to collect, manage, and analyze data in 
                order to improve teaching, learning, and decision 
                making for the purpose of increasing student academic 
                achievement.
            ``(2) Prohibition against creating a national list.--The 
        Secretary shall not create a national list or ranking of 
        States, institutions, or schools using the scaled scores 
        provided under this subsection.
    ``(c) Report of the Secretary on the Quality of Teacher 
Preparation.--
            ``(1) Report card.--The Secretary shall provide to 
        Congress, and publish and make widely available, a report card 
        on teacher qualifications and preparation in the United States, 
        including all the information reported in subparagraphs (A) 
        through (J) of subsection (b)(1). Such report shall identify 
        States for which eligible States and eligible partnerships 
        received a grant under this part. Such report shall be so 
        provided, published, and made available annually.
            ``(2) Report to congress.--The Secretary shall prepare and 
        submit a report to Congress that contains the following:
                    ``(A) A comparison of States' efforts to improve 
                the quality of the current and future teaching force.
                    ``(B) A comparison of eligible partnerships' 
                efforts to improve the quality of the current and 
                future teaching force.
                    ``(C) The national mean and median scaled scores 
                and pass rate on any standardized test that is used in 
                more than 1 State for teacher certification or 
                licensure.
            ``(3) Special rule.--In the case of a teacher preparation 
        program with fewer than 10 scores reported on any single 
        initial teacher certification or licensure assessment during an 
        academic year, the Secretary shall collect and publish 
        information, and make publicly available, with respect to an 
        average pass rate and scaled score on each State certification 
        or licensure assessment taken over a 3-year period.
    ``(d) Coordination.--The Secretary, to the extent practicable, 
shall coordinate the information collected and published under this 
part among States for individuals who took State teacher certification 
or licensure assessments in a State other than the State in which the 
individual received the individual's most recent degree.

``SEC. 207. STATE FUNCTIONS.

    ``(a) State Assessment.--In order to receive funds under this Act, 
a State shall have in place a procedure to identify and assist, through 
the provision of technical assistance, low-performing programs of 
teacher preparation. Such State shall provide the Secretary an annual 
list of such low-performing teacher preparation programs that includes 
an identification of those programs at risk of being placed on such 
list. Such levels of performance shall be determined solely by the 
State and may include criteria based on information collected pursuant 
to this part. Such assessment shall be described in the report under 
section 206(b).
    ``(b) Termination of Eligibility.--Any program of teacher 
preparation from which the State has withdrawn the State's approval, or 
terminated the State's financial support, due to the low performance of 
the program based upon the State assessment described in subsection 
(a)--
            ``(1) shall be ineligible for any funding for professional 
        development activities awarded by the Department;
            ``(2) shall not be permitted to accept or enroll any 
        student that receives aid under title IV in the institution's 
        teacher preparation program; and
            ``(3) shall provide transitional support, including 
        remedial services if necessary, for students enrolled at the 
        institution at the time of termination of financial support or 
        withdrawal of approval.
    ``(c) Negotiated Rulemaking.--If the Secretary develops any 
regulations implementing subsection (b)(2), the Secretary shall submit 
such proposed regulations to a negotiated rulemaking process, which 
shall include representatives of States, institutions of higher 
education, and educational and student organizations.
    ``(d) Application of the Requirements.--The requirements of this 
section shall apply to both traditional teacher preparation programs 
and alternative routes to State certification and licensure programs.

``SEC. 208. GENERAL PROVISIONS.

    ``(a) Methods.--In complying with sections 206 and 207, the 
Secretary shall ensure that States and institutions of higher education 
use fair and equitable methods in reporting and that the reporting 
methods do not allow identification of individuals.
    ``(b) Special Rule.--For each State that does not use content 
assessments as a means of ensuring that all teachers teaching in core 
academic subjects within the State are highly qualified not later than 
the end of the 2005-2006 school year, as required under section 1119 of 
the Elementary and Secondary Education Act of 1965, and that each 
person employed as a special education teacher in the State who teaches 
elementary school, middle school, or secondary school is highly 
qualified by such deadline, as required under section 612(a)(14)(C) of 
the Individuals with Disabilities Education Act,--
            ``(1) the Secretary shall, to the extent practicable, 
        collect data comparable to the data required under this part 
        from States, local educational agencies, institutions of higher 
        education, or other entities that administer such assessments 
        to teachers or prospective teachers; and
            ``(2) notwithstanding any other provision of this part, the 
        Secretary shall use such data to carry out requirements of this 
        part related to assessments, pass rates, and scaled scores.
    ``(c) Limitations.--
            ``(1) Federal control prohibited.--Nothing in this title 
        shall be construed to permit, allow, encourage, or authorize 
        any Federal control over any aspect of any private, religious, 
        or home school, whether or not a home school is treated as a 
        private school or home school under State law. This section 
        shall not be construed to prohibit private, religious, or home 
        schools from participation in programs or services under this 
        title.
            ``(2) No change in state control encouraged or required.--
        Nothing in this title shall be construed to encourage or 
        require any change in a State's treatment of any private, 
        religious, or home school, whether or not a home school is 
        treated as a private school or home school under State law.
            ``(3) National system of teacher certification or licensure 
        prohibited.--Nothing in this title shall be construed to 
        permit, allow, encourage, or authorize the Secretary to 
        establish or support any national system of teacher 
        certification or licensure.
    ``(d) Release of Information to Teacher Preparation Programs.--
            ``(1) In general.--For the purpose of improving teacher 
        preparation programs, a State educational agency shall provide 
        to a teacher preparation program, upon the request of the 
        teacher preparation program, any and all pertinent education-
        related information that--
                    ``(A) may enable the teacher preparation program to 
                evaluate the effectiveness of the program's graduates 
                or the program itself; and
                    ``(B) is possessed, controlled, or accessible by 
                the State educational agency.
            ``(2) Content of information.--The information described in 
        paragraph (1)--
                    ``(A) shall include an identification of specific 
                individuals who graduated from the teacher preparation 
                program to enable the teacher preparation program to 
                evaluate the information provided to the program from 
                the State educational agency with the program's own 
                data about the specific courses taken by, and field 
                experiences of, the individual graduates; and
                    ``(B) may include--
                            ``(i) kindergarten through grade 12 
                        academic achievement and demographic data, 
                        without revealing personally identifiable 
                        information about an individual student, for 
                        students who have been taught by graduates of 
                        the teacher preparation program; and
                            ``(ii) teacher effectiveness evaluations 
                        for teachers who graduated from the teacher 
                        preparation program.

``SEC. 209. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) In General.--There are authorized to be appropriated to carry 
out this part such sums as may be necessary for fiscal year 2006 and 
each of the 5 succeeding fiscal years, of which--
            ``(1) 50 percent shall be available for each fiscal year to 
        award grants under section 202; and
            ``(2) 50 percent shall be available for each fiscal year to 
        award grants under section 203.
    ``(b) Special Rule.--If the Secretary determines that there is an 
insufficient number of meritorious applications for grants under 
section 202 or 203 to justify awarding the full amount described in 
paragraph (1) or (2) of subsection (a), respectively, the Secretary 
may, after funding the meritorious applications, use the remaining 
funds for grants under the other such section.''.

                      CHAPTER 4--INSTITUTIONAL AID

SEC. 7341. PROGRAM PURPOSE.

    Section 311 (20 U.S.C. 1057) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1), by striking ``351'' and 
                inserting ``391''; and
                    (B) in paragraph (3)(F), by inserting ``, including 
                services that will assist in the education of special 
                populations'' before the period; and
            (2) in subsection (c)--
                    (A) in paragraph (6), by inserting ``, including 
                innovative, customized, remedial education and English 
                language instruction courses designed to help retain 
                students and move the students rapidly into core 
                courses and through program completion'' before the 
                period;
                    (B) by redesignating paragraphs (7) through (12) as 
                paragraphs (8) through (13), respectively;
                    (C) by inserting after paragraph (6) the following:
            ``(7) Education or counseling services designed to improve 
        the financial literacy and economic literacy of students or the 
        students' parents.''; and
                    (D) in the matter preceding subparagraph (A) of 
                paragraph (13) (as redesignated by subparagraph (B)), 
                by striking ``subsection (c)'' and inserting 
                ``subsection (b) and section 391''.

SEC. 7342. DEFINITIONS; ELIGIBILITY.

    Section 312 (20 U.S.C. 1058) is amended--
            (1) in subsection (b)(1)(A), by striking ``subsection (c) 
        of this section'' and inserting ``subsection (d)''; and
            (2) in subsection (d)(2), by striking ``subdivision'' and 
        inserting ``paragraph''.

SEC. 7343. AMERICAN INDIAN TRIBALLY CONTROLLED COLLEGES AND 
              UNIVERSITIES.

    Section 316 (20 U.S.C. 1059c) is amended--
            (1) by striking subsection (b)(3) and inserting the 
        following:
            ``(3) Tribal college or university.--The term `Tribal 
        College or University' means an institution that--
                    ``(A) qualifies for funding under the Tribally 
                Controlled College or University Assistance Act of 1978 
                (25 U.S.C. 1801 et seq.) or the Navajo Community 
                College Assistance Act of 1978 (25 U.S.C. 640a note); 
                or
                    ``(B) is cited in section 532 of the Equity in 
                Educational Land-Grant Status Act of 1994 (7 U.S.C. 301 
                note).'';
            (2) in subsection (c)(2)--
                    (A) in subparagraph (B), by inserting before the 
                semicolon at the end the following: ``and the 
                acquisition of real property adjacent to the campus of 
                the institution'';
                    (B) by redesignating subparagraphs (G), (H), (I), 
                (J), (K), and (L) as subparagraphs (H), (I), (J), (K), 
                (L), and (N), respectively;
                    (C) by inserting after subparagraph (F) the 
                following:
                    ``(G) education or counseling services designed to 
                improve the financial literacy and economic literacy of 
                students or parents of students;'';
                    (D) in subparagraph (L) (as redesignated by 
                subparagraph (B)), by striking ``and'' after the 
                semicolon;
                    (E) by inserting after subparagraph (L) (as 
                redesignated by subparagraph (B)) the following:
                    ``(M) developing or improving facilities for 
                Internet use or other distance learning academic 
                instruction capabilities; and''; and
                    (F) in subparagraph (N) (as redesignated by 
                subparagraph (B)), by striking ``subparagraphs (A) 
                through (K)'' and inserting ``subparagraphs (A) through 
                (M)''; and
            (3) by striking subsection (d) and inserting the following:
    ``(d) Application, Plan, and Allocation.--
            ``(1) Institutional eligibility.--To be eligible to receive 
        assistance under this section, a Tribal College or University 
        shall be an eligible institution under section 312(b).
            ``(2) Application.--
                    ``(A) In general.--A Tribal College or University 
                desiring to receive assistance under this section shall 
                submit an application to the Secretary at such time, 
                and in such manner, as the Secretary may reasonably 
                require.
                    ``(B) Streamlined process.--The Secretary shall 
                establish application requirements in such a manner as 
                to simplify and streamline the process for applying for 
                grants.
            ``(3) Allocations to institutions.--
                    ``(A) Construction grants.--
                            ``(i) In general.--Of the amount 
                        appropriated to carry out this section for any 
                        fiscal year, the Secretary may reserve 30 
                        percent for the purpose of awarding 1-year 
                        grants of not less than $1,000,000 to address 
                        construction, maintenance, and renovation needs 
                        at eligible institutions.
                            ``(ii) Preference.--In providing grants 
                        under clause (i), the Secretary shall give 
                        preference to eligible institutions that have 
                        not yet received an award under this section.
                    ``(B) Allotment of remaining funds.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the Secretary shall distribute the 
                        remaining funds appropriated for any fiscal 
                        year to each eligible institution as follows:
                                    ``(I) 60 percent of the remaining 
                                appropriated funds shall be distributed 
                                among the eligible Tribal Colleges and 
                                Universities on a pro rata basis, based 
                                on the respective Indian student counts 
                                (as defined in section 2(a) of the 
                                Tribally Controlled College or 
                                University Assistance Act of 1978 (25 
                                U.S.C. 1801(a)) of the Tribal Colleges 
                                and Universities; and
                                    ``(II) the remaining 40 percent 
                                shall be distributed in equal shares to 
                                the eligible Tribal Colleges and 
                                Universities.
                            ``(ii) Minimum grant.--The amount 
                        distributed to a Tribal College or University 
                        under clause (i) shall not be less than 
                        $500,000.
            ``(4) Special rules.--
                    ``(A) Concurrent funding.--For the purposes of this 
                part, no Tribal College or University that is eligible 
                for and receives funds under this section shall 
                concurrently receive funds under other provisions of 
                this part or part B.
                    ``(B) Exemption.--Section 313(d) shall not apply to 
                institutions that are eligible to receive funds under 
                this section.''.

SEC. 7344. ALASKA NATIVE AND NATIVE HAWAIIAN-SERVING INSTITUTIONS.

    Section 317(c)(2) (20 U.S.C. 1059d(c)(2)) is amended--
            (1) in subparagraph (G), by striking ``and'' after the 
        semicolon;
            (2) in subparagraph (H), by striking the period and 
        inserting ``; and''; and
            (3) by adding at the end the following:
                    ``(I) education or counseling services designed to 
                improve the financial literacy and economic literacy of 
                students or the students' parents.''.

SEC. 7345. NATIVE AMERICAN-SERVING, NONTRIBAL INSTITUTIONS.

    (a) Grant Program Authorized.--Part A of title III (20 U.S.C. 1057 
et seq.) is amended by adding at the end the following:

``SEC. 318. NATIVE AMERICAN-SERVING, NONTRIBAL INSTITUTIONS.

    ``(a) Program Authorized.--The Secretary shall provide grants and 
related assistance to Native American-serving, nontribal institutions 
to enable such institutions to improve and expand their capacity to 
serve Native Americans.
    ``(b) Definitions.--In this section:
            ``(1) Native american.--The term `Native American' means an 
        individual who is of a tribe, people, or culture that is 
        indigenous to the United States.
            ``(2) Native american-serving, nontribal institution.--The 
        term `Native American-serving, nontribal institution' means an 
        institution of higher education that, at the time of 
        application--
                    ``(A) has an enrollment of undergraduate students 
                that is not less than 10 percent Native American 
                students; and
                    ``(B) is not a Tribal College or University (as 
                defined in section 316).
    ``(c) Authorized Activities.--
            ``(1) Types of activities authorized.--Grants awarded under 
        this section shall be used by Native American-serving, 
        nontribal institutions to assist such institutions to plan, 
        develop, undertake, and carry out activities to improve and 
        expand such institutions' capacity to serve Native Americans.
            ``(2) Examples of authorized activities.--Such programs may 
        include--
                    ``(A) the purchase, rental, or lease of scientific 
                or laboratory equipment for educational purposes, 
                including instructional and research purposes;
                    ``(B) renovation and improvement in classroom, 
                library, laboratory, and other instructional 
                facilities;
                    ``(C) support of faculty exchanges, and faculty 
                development and faculty fellowships to assist faculty 
                in attaining advanced degrees in the faculty's field of 
                instruction;
                    ``(D) curriculum development and academic 
                instruction;
                    ``(E) the purchase of library books, periodicals, 
                microfilm, and other educational materials;
                    ``(F) funds and administrative management, and 
                acquisition of equipment for use in strengthening funds 
                management;
                    ``(G) the joint use of facilities such as 
                laboratories and libraries; and
                    ``(H) academic tutoring and counseling programs and 
                student support services.
    ``(d) Application Process.--
            ``(1) Institutional eligibility.--A Native American-
        serving, nontribal institution desiring to receive assistance 
        under this section shall submit to the Secretary such 
        enrollment data as may be necessary to demonstrate that the 
        institution is a Native American-serving, nontribal 
        institution, along with such other information and data as the 
        Secretary may by regulation require.
            ``(2) Applications.--
                    ``(A) Permission to submit applications.--Any 
                institution that is determined by the Secretary to be a 
                Native American-serving, nontribal institution may 
                submit an application for assistance under this section 
                to the Secretary.
                    ``(B) Simplified and streamlined format.--The 
                Secretary shall, to the extent possible, prescribe a 
                simplified and streamlined format for applications 
                under this section that takes into account the limited 
                number of institutions that are eligible for assistance 
                under this section.
                    ``(C) Content.--An application submitted under 
                subparagraph (A) shall include--
                            ``(i) a 5-year plan for improving the 
                        assistance provided by the Native American-
                        serving, nontribal institution to Native 
                        Americans; and
                            ``(ii) such other information and 
                        assurances as the Secretary may require.
            ``(3) Special rules.--
                    ``(A) Eligibility.--No Native American-serving, 
                nontribal institution that receives funds under this 
                section shall concurrently receive funds under other 
                provisions of this part or part B.
                    ``(B) Exemption.--Section 313(d) shall not apply to 
                institutions that are eligible to receive funds under 
                this section.
                    ``(C) Distribution.--In awarding grants under this 
                section, the Secretary shall, to the extent possible 
                and consistent with the competitive process under which 
                such grants are awarded, ensure maximum and equitable 
                distribution among all eligible institutions.''.
    (b) Authorization of Appropriations.--Section 399 (20 U.S.C. 1068h) 
is amended by adding at the end the following:
    ``(c) Minimum Grant Amount.--The minimum amount of a grant under 
this title shall be $200,000.''.

SEC. 7346. PART B DEFINITIONS.

    Section 322(4) (20 U.S.C. 1061(4)) is amended by inserting ``, in 
consultation with the Commissioner for Education Statistics'' before 
``and the Commissioner''.

SEC. 7347. GRANTS TO INSTITUTIONS.

    Section 323(a) (20 U.S.C. 1062(a)) is amended--
            (1) in the matter preceding paragraph (1), by striking 
        ``360(a)(2)'' and inserting ``399(a)(2)'';
            (2) by redesignating paragraphs (7) through (12) as 
        paragraphs (8) through (13), respectively; and
            (3) by inserting after paragraph (6) the following:
            ``(7) Education or counseling services designed to improve 
        the financial literacy and economic literacy of students or the 
        students' parents.''.

SEC. 7348. ALLOTMENTS TO INSTITUTIONS.

    Section 324 (20 U.S.C. 1063) is amended by adding at the end the 
following:
    ``(h) Special Rule on Eligibility.--Notwithstanding any other 
provision of this section, a part B institution shall not receive an 
allotment under this section unless the part B institution provides, on 
an annual basis, data indicating that the part B institution--
            ``(1) enrolled Federal Pell Grant recipients in the 
        preceding academic year;
            ``(2) in the preceding academic year, has graduated 
        students from a program of academic study that is licensed or 
        accredited by a nationally recognized accrediting agency or 
        association recognized by the Secretary pursuant to part H of 
        title IV where appropriate; and
            ``(3) where appropriate, has graduated students who, within 
        the past 5 years, enrolled in graduate or professional 
        school.''.

SEC. 7349. PROFESSIONAL OR GRADUATE INSTITUTIONS.

    Section 326 (20 U.S.C. 1063b) is amended--
            (1) in subsection (c)--
                    (A) in paragraph (2), by inserting ``, and for the 
                acquisition and development of real property that is 
                adjacent to the campus for such construction, 
                maintenance, renovation, or improvement'' after 
                ``services'';
                    (B) by redesignating paragraphs (5) through (7) as 
                paragraphs (7) through (9), respectively;
                    (C) by inserting after paragraph (4) the following:
            ``(5) tutoring, counseling, and student service programs 
        designed to improve academic success;
            ``(6) education or counseling services designed to improve 
        the financial literacy and economic literacy of students or the 
        students' parents;'';
                    (D) in paragraph (7) (as redesignated by 
                subparagraph (B)), by striking ``establish or improve'' 
                and inserting ``establishing or improving'';
                    (E) in paragraph (8) (as redesignated by 
                subparagraph (B))--
                            (i) by striking ``assist'' and inserting 
                        ``assisting''; and
                            (ii) by striking ``and'' after the 
                        semicolon;
                    (F) in paragraph (9) (as redesignated by 
                subparagraph (B)), by striking the period and inserting 
                ``; and''; and
                    (G) by adding at the end the following:
            ``(10) other activities proposed in the application 
        submitted under subsection (d) that--
                    ``(A) contribute to carrying out the purposes of 
                this part; and
                    ``(B) are approved by the Secretary as part of the 
                review and acceptance of such application.'';
            (2) in subsection (e)--
                    (A) in paragraph (1)--
                            (i) by inserting a colon after ``the 
                        following'';
                            (ii) in subparagraph (Q), by striking 
                        ``and'' at the end;
                            (iii) in subparagraph (R), by striking the 
                        period and inserting a semicolon; and
                            (iv) by adding at the end the following:
                    ``(S) Alabama State University qualified graduate 
                program;
                    ``(T) Coppin State University qualified graduate 
                program; and
                    ``(U) Prairie View A & M University qualified 
                graduate program.'';
                    (B) in paragraph (2), by inserting ``in law or'' 
                after ``instruction''; and
                    (C) in paragraph (3)--
                            (i) by striking ``1998'' and inserting 
                        ``2006''; and
                            (ii) by striking ``(Q) and (R)'' and 
                        inserting ``(S), (T), and (U)'';
            (3) in subsection (f)--
                    (A) in paragraph (1), by striking ``(P)'' and 
                inserting ``(R)''; and
                    (B) in paragraph (3)--
                            (i) by striking subparagraphs (A) and (B) 
                        and inserting the following:
                    ``(A) The amount of non-Federal funds for the 
                fiscal year for which the determination is made that 
                the institution or program listed in subsection (e)--
                            ``(i) allocates from institutional 
                        resources;
                            ``(ii) secures from non-Federal sources, 
                        including amounts appropriated by the State and 
                        amounts from the private sector; and
                            ``(iii) will utilize to match Federal funds 
                        awarded for the fiscal year for which the 
                        determination is made under this section to the 
                        institution or program.
                    ``(B) The number of students enrolled in the 
                qualified graduate programs of the eligible institution 
                or program, for which the institution or program 
                received and allocated funding under this section in 
                the preceding year.'';
                            (ii) in subparagraph (C), by striking ``(or 
                        the equivalent) enrolled in the eligible 
                        professional or graduate school'' and all that 
                        follows through the period and inserting 
                        ``enrolled in the qualified programs or 
                        institutions listed in paragraph (1).'';
                            (iii) in subparagraph (D)--
                                    (I) by striking ``students'' and 
                                inserting ``Black American students or 
                                minority students''; and
                                    (II) by striking ``institution'' 
                                and inserting ``institution or 
                                program''; and
                            (iv) by striking subparagraph (E) and 
                        inserting the following:
                    ``(E) The percentage that the total number of Black 
                American students and minority students who receive 
                their first professional, master's, or doctoral degrees 
                from the institution or program in the academic year 
                preceding the academic year for which the determination 
                is made, represents of the total number of Black 
                American students and minority students in the United 
                States who receive their first professional, master's, 
                or doctoral degrees in the professions or disciplines 
                related to the course of study at such institution or 
                program, respectively, in the preceding academic 
                year.''; and
            (4) in subsection (g), by striking ``1998'' and inserting 
        ``2006''.

SEC. 7350. AUTHORIZATION OF APPROPRIATIONS.

    Subsection (a) of section 399 (20 U.S.C. 1068h) is amended to read 
as follows:
    ``(a) Authorizations.--
            ``(1) Part a.--(A) There are authorized to be appropriated 
        to carry out part A (other than section 316) such sums as may 
        be necessary for fiscal year 2006 and each of the 5 succeeding 
        fiscal years.
            ``(B) There are authorized to be appropriated to carry out 
        section 316 such sums as may be necessary for fiscal year 2006 
        and each of the 5 succeeding fiscal years.
            ``(C) There are authorized to be appropriated to carry out 
        section 317 such sums as may be necessary for fiscal year 2006 
        and each of the 5 succeeding fiscal years.
            ``(D) There are authorized to be appropriated to carry out 
        section 318 such sums as may be necessary for fiscal year 2006 
        and each of the 5 succeeding fiscal years.
            ``(2) Part b.--(A) There are authorized to be appropriated 
        to carry out part B (other than section 326) such sums as may 
        be necessary for fiscal year 2006 and each of the 5 succeeding 
        fiscal years.
            ``(B) There are authorized to be appropriated to carry out 
        section 326 such sums as may be necessary for fiscal year 2006 
        and each of the 5 succeeding fiscal years.
            ``(3) Part c.--There are authorized to be appropriated to 
        carry out part C such sums as may be necessary for fiscal year 
        2006 and each of the 5 succeeding fiscal years.
            ``(4) Part d.--(A) There are authorized to be appropriated 
        to carry out part D (other than section 345(7), but including 
        section 347) such sums as may be necessary for fiscal year 2006 
        and each of the 5 succeeding fiscal years.
            ``(B) There are authorized to be appropriated to carry out 
        section 345(7) such sums as may be necessary for fiscal year 
        2006 and each of the 5 succeeding fiscal years.
            ``(5) Part e.--There are authorized to be appropriated to 
        carry out part E such sums as may be necessary for fiscal year 
        2006 and each of the 5 succeeding fiscal years.''.

SEC. 7351. TECHNICAL CORRECTIONS.

    Title III (20 U.S.C. 1051 et seq.) is further amended--
            (1) in section 342(5)(C) (20 U.S.C. 1066a(5)(C)), by 
        striking ``,,'' and inserting ``,'';
            (2) in section 343(e) (20 U.S.C. 1066b(e)), by inserting 
        ``Sale of Qualified Bonds.--'' before ``Notwithstanding'';
            (3) in the matter preceding clause (i) of section 365(9)(A) 
        (20 U.S.C. 1067k(9)(A)), by striking ``support'' and inserting 
        ``supports'';
            (4) in section 391(b)(7)(E) (20 U.S.C. 1068(b)(7)(E)), by 
        striking ``subparagraph (E)'' and inserting ``subparagraph 
        (D)'';
            (5) in the matter preceding subparagraph (A) of section 
        392(b)(2) (20 U.S.C. 1068a(b)(2)), by striking ``eligible 
        institutions under part A institutions'' and inserting 
        ``eligible institutions under part A''; and
            (6) in the matter preceding paragraph (1) of section 396 
        (20 U.S.C. 1068e), by striking ``360'' and inserting ``399''.

                     CHAPTER 5--STUDENT ASSISTANCE

   Subchapter A--Grants to Students in Attendance at Institutions of 
                            Higher Education

SEC. 7361. FEDERAL PELL GRANTS.

    Section 401 (20 U.S.C. 1070a) is amended--
            (1) in subsection (a)(1)--
                    (A) in the first sentence, by striking ``2004'' and 
                inserting ``2012''; and
                    (B) in the second sentence, by striking ``,,'' and 
                inserting ``,'';
            (2) in subsection (b)--
                    (A) by striking paragraph (2)(A) and inserting the 
                following:
    ``(2)(A) the amount of the Federal Pell Grant for a student 
eligible under this part shall be--
            ``(i) $5,100 for academic year 2006-2007;
            ``(ii) $5,400 for academic year 2007-2008;
            ``(iii) $5,700 for academic year 2008-2009;
            ``(iv) $6,000 for academic year 2009-2010; and
            ``(v) $6,300 for academic year 2010-2011,
less an amount equal to the amount determined to be the expected family 
contribution with respect to that student for that year.'';
                    (B) by striking paragraph (3);
                    (C) by redesignating paragraphs (4) through (8) as 
                paragraphs (3) through (7), respectively;
                    (D) in paragraph (4) (as redesignated by 
                subparagraph (C)), by striking ``$400, except'' and all 
                that follows through the period and inserting ``10 
                percent of the maximum basic grant level specified in 
                the appropriate Appropriation Act for such academic 
                year, except that a student who is eligible for a 
                Federal Pell Grant in an amount that is equal to or 
                greater than 5 percent of such level but less than 10 
                percent of such level shall be awarded a Federal Pell 
                grant in the amount of 10 percent of such level.''; and
                    (E) by striking paragraph (5) (as redesignated by 
                subparagraph (C)) and inserting the following:
    ``(5) In the case of a student who is enrolled, on at least a half-
time basis and for a period of more than 1 academic year in a 2-year or 
4-year program of instruction for which an institution of higher 
education awards an associate or baccalaureate degree, the Secretary 
shall allow such student to receive not more than 2 Federal Pell Grants 
during a single award year to permit such student to accelerate the 
student's progress toward a degree by attending additional sessions. In 
the case of a student receiving more than 1 Federal Pell Grant in a 
single award year, the total amount of Federal Pell Grants awarded to 
such student for the award year may exceed the maximum basic grant 
level specified in the appropriate Appropriation Act for such award 
year.''; and
            (3) in subsection (c), by adding at the end the following:
    ``(5) The period of time during which a student may receive Federal 
Pell Grants shall not exceed 18 semesters, or an equivalent period of 
time as determined by the Secretary pursuant to regulations, which 
period shall--
            ``(A) be determined without regard to whether the student 
        is enrolled on a full-time basis during any portion of the 
        period of time; and
            ``(B) include any period of time for which the student 
        received a Federal Pell Grant prior to the date of enactment of 
        the Higher Education Amendments of 2005.''.

SEC. 7362. FEDERAL TRIO PROGRAMS.

    (a) Program Authority; Authorization of Appropriations.--Section 
402A (20 U.S.C. 1070a-11) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (2)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``4'' and inserting ``5'';
                            (ii) by striking subparagraph (A); and
                            (iii) by redesignating subparagraphs (B) 
                        and (C) as subparagraphs (A) and (B), 
                        respectively; and
                    (B) by striking paragraph (3) and inserting the 
                following:
            ``(3) Minimum grants.--Unless the institution or agency 
        requests a smaller amount, an individual grant authorized under 
        this chapter shall be awarded in an amount that is not less 
        than $200,000, except that an individual grant authorized under 
        section 402G shall be awarded in an amount that is not less 
        than $170,000.'';
            (2) in subsection (c)--
                    (A) in paragraph (2), by striking ``service 
                delivery'' and inserting ``high quality service 
                delivery, as determined under subsection (f),'';
                    (B) in paragraph (3)(B), by striking ``is not 
                required to'' and inserting ``shall not''; and
                    (C) in paragraph (5), by striking ``campuses'' and 
                inserting ``different campuses'';
            (3) in subsection (e), by striking ``(g)(2)'' each place 
        the term occurs and inserting ``(h)(4)'';
            (4) by redesignating subsections (f) and (g) as subsections 
        (g) and (h), respectively;
            (5) by inserting after subsection (e) the following:
    ``(f) Outcome Criteria.--
            ``(1) In general.--The Secretary, by regulation, shall 
        establish outcome criteria for measuring, annually and for 
        longer periods, the quality and effectiveness of programs 
        authorized under this chapter.
            ``(2) Use for prior experience determination.--The outcome 
        criteria under paragraph (1) shall be used to evaluate the 
        programs provided by a recipient of a grant under this chapter, 
        and the Secretary shall determine an eligible entity's prior 
        experience of high quality service delivery, as required in 
        subsection (c)(2), based on the outcome criteria.
            ``(3) Consideration of relevant data.--The outcome criteria 
        under this subsection shall take into account data pertaining 
        to secondary school completion, postsecondary education 
        enrollment, and postsecondary education completion for low-
        income students, first generation college students, and 
        individuals with disabilities, in the schools and institutions 
        of higher education served by the program to be evaluated.
            ``(4) Contents of outcome criteria.--The outcome criteria 
        shall include the following:
                    ``(A) For programs authorized under section 402B, 
                whether the eligible entity met or exceeded the 
                entity's objectives established in the entity's 
                application for such program regarding--
                            ``(i) the delivery of service to a total 
                        number of students served by the program;
                            ``(ii) the continued secondary school 
                        enrollment of such students;
                            ``(iii) the graduation of such students 
                        from secondary school; and
                            ``(iv) the enrollment of such students in 
                        an institution of higher education.
                    ``(B) For programs authorized under section 402C, 
                whether the eligible entity met or exceeded its 
                objectives for such program regarding--
                            ``(i) the delivery of service to a total 
                        number of students served by the program, as 
                        agreed upon by the entity and the Secretary for 
                        the period;
                            ``(ii) such students' school performance, 
                        as measured by the grade point average, or its 
                        equivalent;
                            ``(iii) such students' academic 
                        performance, as measured by standardized tests, 
                        including tests required by the students' 
                        State;
                            ``(iv) the retention in, and graduation 
                        from, secondary school of such students; and
                            ``(v) the enrollment of such students in an 
                        institution of higher education.
                    ``(C) For programs authorized under section 402D--
                            ``(i) whether the eligible entity met or 
                        exceeded the entity's objectives regarding the 
                        retention in postsecondary education of the 
                        students served by the program;
                            ``(ii)(I) in the case of an entity that is 
                        an institution of higher education offering a 
                        baccalaureate degree, the extent to which the 
                        entity met or exceeded the entity's objectives 
                        regarding such students' completion of the 
                        degree programs in which such students were 
                        enrolled; or
                            ``(II) in the case of an entity that is an 
                        institution of higher education that does not 
                        offer a baccalaureate degree, the extent to 
                        which the entity met or exceeded the entity's 
                        objectives regarding--
                                    ``(aa) the completion of a degree 
                                or certificate by such students; and
                                    ``(bb) the transfer of such 
                                students to institutions of higher 
                                education that offer baccalaureate 
                                degrees;
                            ``(iii) whether the entity met or exceeded 
                        the entity's objectives regarding the delivery 
                        of service to a total number of students, as 
                        agreed upon by the entity and the Secretary for 
                        the period; and
                            ``(iv) whether the applicant met or 
                        exceeded the entity's objectives regarding such 
                        students remaining in good academic standing.
                    ``(D) For programs authorized under section 402E, 
                whether the entity met or exceeded the entity's 
                objectives for such program regarding--
                            ``(i) the delivery of service to a total 
                        number of students, as agreed upon by the 
                        entity and the Secretary for the period;
                            ``(ii) the provision of appropriate 
                        scholarly and research activities for the 
                        students served by the program;
                            ``(iii) the acceptance and enrollment of 
                        such students in graduate programs; and
                            ``(iv) the attainment of doctoral degrees 
                        by former program participants.
                    ``(E) For programs authorized under section 402F, 
                whether the entity met or exceeded the entity's 
                objectives for such program regarding--
                            ``(i) the enrollment of students without a 
                        secondary school diploma or its recognized 
                        equivalent, who were served by the program, in 
                        programs leading to such diploma or equivalent;
                            ``(ii) the enrollment of secondary school 
                        graduates who were served by the program in 
                        programs of postsecondary education;
                            ``(iii) the delivery of service to a total 
                        number of students, as agreed upon by the 
                        entity and the Secretary for the period; and
                            ``(iv) the provision of assistance to 
                        students served by the program in completing 
                        financial aid applications and college 
                        admission applications.'';
            (6) in subsection (g) (as redesignated by paragraph (4))--
                    (A) in the first sentence, by striking 
                ``$700,000,000 for fiscal year 1999'' and all that 
                follows through the period and inserting ``such sums as 
                may be necessary for fiscal year 2006 and each of the 5 
                succeeding fiscal years.''; and
                    (B) by striking the fourth sentence; and
            (7) in subsection (h) (as redesignated by paragraph (4))--
                    (A) by redesignating paragraphs (1) through (4) as 
                paragraphs (3) through (6), respectively;
                    (B) by inserting before paragraph (3) (as 
                redesignated by subparagraph (A)) the following:
            ``(1) Different campus.--The term `different campus' means 
        a site of an institution of higher education that--
                    ``(A) is geographically apart from the main campus 
                of the institution;
                    ``(B) is permanent in nature; and
                    ``(C) offers courses in educational programs 
                leading to a degree, certificate, or other recognized 
                educational credential.
            ``(2) Different population.--The term `different 
        population' means a group of individuals, with respect to whom 
        an eligible entity desires to serve through an application for 
        a grant under this chapter, that--
                    ``(A) is separate and distinct from any other 
                population that the entity has applied for a grant 
                under this chapter to serve; or
                    ``(B) while sharing some of the same needs as 
                another population that the eligible entity has applied 
                for a grant under this chapter to serve, has distinct 
                needs for specialized services.'';
                    (C) in paragraph (5) (as redesignated by 
                subparagraph (A))--
                            (i) in subparagraph (A), by striking ``or'' 
                        after the semicolon;
                            (ii) in subparagraph (B), by striking the 
                        period at the end and inserting ``; or''; and
                            (iii) by adding at the end the following:
                    ``(C) was a member of a reserve component of the 
                Armed Forces called to active duty for a period of more 
                than 180 days.''; and
                    (D) in paragraph (6), by striking ``subparagraph 
                (A) or (B) of paragraph (3)'' and inserting 
                ``subparagraph (A), (B), or (C) of paragraph (5)''.
    (b) Talent Search.--Section 402B (20 U.S.C. 1070a-12) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1), by striking ``to identify 
                qualified youths with potential for education at the 
                postsecondary level and to encourage such youths'' and 
                inserting ``to encourage eligible youths'';
                    (B) in paragraph (2), by inserting ``, and 
                facilitate the application for,'' after ``the 
                availability of''; and
                    (C) in paragraph (3), by striking ``, but who have 
                the ability to complete such programs, to reenter'' and 
                inserting ``to enter or reenter, and complete'';
            (2) by redesignating subsection (c) as subsection (d);
            (3) by striking subsection (b) and inserting the following:
    ``(b) Required Services.--Any project assisted under this section 
shall provide--
            ``(1) academic tutoring, or connections to high quality 
        academic tutoring services, to enable students to complete 
        secondary or postsecondary courses, which may include 
        instruction in reading, writing, study skills, mathematics, 
        science, and other subjects;
            ``(2) advice and assistance in secondary course selection 
        and, if applicable, initial postsecondary course selection;
            ``(3) assistance in preparing for college entrance 
        examinations and completing college admission applications;
            ``(4)(A) information on both the full range of Federal 
        student financial aid programs (including Federal Pell Grant 
        awards and loan forgiveness) and resources for locating public 
        and private scholarships; and
            ``(B) assistance in completing financial aid applications, 
        including the Free Application for Federal Student Aid 
        described in section 483(a);
            ``(5) guidance on and assistance in--
                    ``(A) secondary school reentry;
                    ``(B) alternative education programs for secondary 
                school dropouts that lead to the receipt of a regular 
                secondary school diploma;
                    ``(C) entry into general educational development 
                (GED) programs; or
                    ``(D) postsecondary education; and
            ``(6) education or counseling services designed to improve 
        the financial literacy and economic literacy of students or 
        their parents, including financial planning for postsecondary 
        education.
    ``(c) Permissible Services.--Any project assisted under this 
section may provide services such as--
            ``(1) personal and career counseling or activities;
            ``(2) information and activities designed to acquaint 
        youths with the range of career options available to the 
        youths;
            ``(3) exposure to the campuses of institutions of higher 
        education, as well as cultural events, academic programs, and 
        other sites or activities not usually available to 
        disadvantaged youth;
            ``(4) workshops and counseling for families of students 
        served;
            ``(5) mentoring programs involving elementary or secondary 
        school teachers or counselors, faculty members at institutions 
        of higher education, students, or any combination of such 
        persons; and
            ``(6) programs and activities as described in subsection 
        (b) or paragraphs (1) through (5) of this subsection that are 
        specially designed for students who are limited English 
        proficient, students with disabilities, students who are 
        homeless children and youths (as such term is defined in 
        section 725 of the McKinney-Vento Homeless Assistance Act (42 
        U.S.C. 11434a)), or students who are in foster care or are 
        aging out of the foster care system.''; and
            (4) in the matter preceding paragraph (1) of subsection (d) 
        (as redesignated by paragraph (2)), by striking ``talent search 
        projects under this chapter'' and inserting ``projects under 
        this section''.
    (c) Upward Bound.--Section 402C (20 U.S.C. 1070a-13) is amended--
            (1) by striking subsection (b) and inserting the following:
    ``(b) Required Services.--Any project assisted under this section 
shall provide--
            ``(1) academic tutoring to enable students to complete 
        secondary or postsecondary courses, which may include 
        instruction in reading, writing, study skills, mathematics, 
        science, and other subjects;
            ``(2) advice and assistance in secondary and postsecondary 
        course selection;
            ``(3) assistance in preparing for college entrance 
        examinations and completing college admission applications;
            ``(4)(A) information on both the full range of Federal 
        student financial aid programs (including Federal Pell Grant 
        awards and loan forgiveness) and resources for locating public 
        and private scholarships; and
            ``(B) assistance in completing financial aid applications, 
        including the Free Application for Federal Student Aid 
        described in section 483(a);
            ``(5) guidance on and assistance in--
                    ``(A) secondary school reentry;
                    ``(B) alternative education programs for secondary 
                school dropouts that lead to the receipt of a regular 
                secondary school diploma;
                    ``(C) entry into general educational development 
                (GED) programs; or
                    ``(D) postsecondary education; and
            ``(6) education or counseling services designed to improve 
        the financial literacy and economic literacy of students, 
        including financial planning for postsecondary education.'';
            (2) in subsection (c)--
                    (A) in the subsection heading, by striking 
                ``Required Services'' and inserting ``Additional 
                Required Services for Multiple-Year Grant Recipients''; 
                and
                    (B) by striking ``upward bound project assisted 
                under this chapter'' and inserting ``project assisted 
                under this section'';
            (3) by redesignating subsections (d) and (e) as subsections 
        (e) and (f), respectively;
            (4) by inserting after subsection (c) the following:
    ``(d) Permissible Services.--Any project assisted under this 
section may provide such services as--
            ``(1) exposure to cultural events, academic programs, and 
        other activities not usually available to disadvantaged youth;
            ``(2) information, activities and instruction designed to 
        acquaint youths participating in the project with the range of 
        career options available to the youths;
            ``(3) on-campus residential programs;
            ``(4) mentoring programs involving elementary school or 
        secondary school teachers or counselors, faculty members at 
        institutions of higher education, students, or any combination 
        of such persons;
            ``(5) work-study positions where youth participating in the 
        project are exposed to careers requiring a postsecondary 
        degree;
            ``(6) special services to enable veterans to make the 
        transition to postsecondary education; and
            ``(7) programs and activities as described in subsection 
        (b), subsection (c), or paragraphs (1) through (6) of this 
        subsection that are specially designed for students who are 
        limited English proficient, students with disabilities, 
        students who are homeless children and youths (as such term is 
        defined in section 725 of the McKinney-Vento Homeless 
        Assistance Act (42 U.S.C. 11434a)), or students who are in 
        foster care or are aging out of the foster care system.'';
            (5) in the matter preceding paragraph (1) of subsection (e) 
        (as redesignated by paragraph (3)), by striking ``upward bound 
        projects under this chapter'' and inserting ``projects under 
        this section''; and
            (6) in subsection (f) (as redesignated by paragraph (3))--
                    (A) by striking ``during June, July, and August'' 
                each place the term occurs and inserting ``during the 
                summer school recess, for a period not to exceed 3 
                months''; and
                    (B) by striking ``(b)(10)'' and inserting 
                ``(d)(5)''.
    (d) Student Support Services.--Section 402D (20 U.S.C. 1070a-14) is 
amended--
            (1) in subsection (a)--
                    (A) in paragraph (2), by striking ``and'' after the 
                semicolon;
                    (B) by striking paragraph (3) and inserting the 
                following:
            ``(3) to foster an institutional climate supportive of the 
        success of low-income and first generation college students, 
        students with disabilities, students who are limited English 
        proficient, students who are homeless children and youths (as 
        such term is defined in section 725 of the McKinney-Vento 
        Homeless Assistance Act (42 U.S.C. 11434a)), and students who 
        are in foster care or are aging out of the foster care 
        system.''; and
                    (C) by adding at the end the following:
            ``(4) to improve the financial literacy and economic 
        literacy of students, including--
                    ``(A) basic personal income, household money 
                management, and financial planning skills; and
                    ``(B) basic economic decisionmaking skills.'';
            (2) by redesignating subsections (c) and (d) as subsections 
        (d) and (e);
            (3) by striking subsection (b) and inserting the following:
    ``(b) Required Services.--A project assisted under this section 
shall provide--
            ``(1) academic tutoring to enable students to complete 
        postsecondary courses, which may include instruction in 
        reading, writing, study skills, mathematics, science, and other 
        subjects;
            ``(2) advice and assistance in postsecondary course 
        selection;
            ``(3)(A) information on both the full range of Federal 
        student financial aid programs (including Federal Pell Grant 
        awards and loan forgiveness) and resources for locating public 
        and private scholarships; and
            ``(B) assistance in completing financial aid applications, 
        including the Free Application for Federal Student Aid 
        described in section 483(a);
            ``(4) education or counseling services designed to improve 
        the financial literacy and economic literacy of students, 
        including financial planning for postsecondary education;
            ``(5) activities designed to assist students participating 
        in the project in securing college admission and financial 
        assistance for enrollment in graduate and professional 
        programs; and
            ``(6) activities designed to assist students enrolled in 2-
        year institutions of higher education in securing admission and 
        financial assistance for enrollment in a 4-year program of 
        postsecondary education.
    ``(c) Permissible Services.--A project assisted under this section 
may provide services such as--
            ``(1) consistent, individualized personal, career, and 
        academic counseling, provided by assigned counselors;
            ``(2) information, activities, and instruction designed to 
        acquaint youths participating in the project with the range of 
        career options available to the students;
            ``(3) exposure to cultural events and academic programs not 
        usually available to disadvantaged students;
            ``(4) activities designed to acquaint students 
        participating in the project with the range of career options 
        available to the students;
            ``(5) mentoring programs involving faculty or upper class 
        students, or a combination thereof;
            ``(6) securing temporary housing during breaks in the 
        academic year for students who are homeless children and youths 
        (as such term is defined in section 725 of the McKinney-Vento 
        Homeless Assistance Act (42 U.S.C. 11434a)) or were formerly 
        homeless children and youths and students who are in foster 
        care or are aging out of the foster care system; and
            ``(7) programs and activities as described in subsection 
        (b) or paragraphs (1) through (5) of this subsection that are 
        specially designed for students who are limited English 
        proficient, students with disabilities, students who are 
        homeless children and youths (as such term is defined in 
        section 725 of the McKinney-Vento Homeless Assistance Act (42 
        U.S.C. 11434a)) or were formerly homeless children and youths, 
        or students who are in foster care or are aging out of the 
        foster care system.'';
            (4) in subsection (d)(1) (as redesignated by paragraph 
        (2)), by striking ``subsection (b)'' and inserting ``subsection 
        (c)''; and
            (5) in the matter preceding paragraph (1) of subsection (e) 
        (as redesignated by paragraph (2)), by striking ``student 
        support services projects under this chapter'' and inserting 
        ``projects under this section''.
    (e) Postbaccalaureate Achievement Program Authority.--Section 402E 
(20 U.S.C. 1070a-15) is amended--
            (1) in subsection (b)--
                    (A) in the subsection heading, by inserting 
                ``Required'' before ``Services'';
                    (B) in the matter preceding paragraph (1), by 
                striking ``A postbaccalaureate achievement project 
                assisted under this section may provide services such 
                as--'' and inserting ``A project assisted under this 
                section shall provide--'';
                    (C) in paragraph (5), by inserting ``and'' after 
                the semicolon;
                    (D) in paragraph (6), by striking the semicolon and 
                inserting a period; and
                    (E) by striking paragraphs (7) and (8);
            (2) by redesignating subsections (c) through (f) as 
        subsections (d) through (g), respectively;
            (3) by inserting after subsection (b) the following:
    ``(c) Permissible Services.--A project assisted under this section 
may provide services such as--
            ``(1) education or counseling services designed to improve 
        the financial literacy and economic literacy of students or 
        their parents, including financial planning for postsecondary 
        education;
            ``(2) mentoring programs involving faculty members at 
        institutions of higher education, students, or any combination 
        of such persons; and
            ``(3) exposure to cultural events and academic programs not 
        usually available to disadvantaged students.'';
            (4) in the matter preceding paragraph (1) of subsection (d) 
        (as redesignated by paragraph (2)), by striking 
        ``postbaccalaureate achievement'';
            (5) in the matter preceding paragraph (1) of subsection (f) 
        (as redesignated by paragraph (2)), by striking 
        ``postbaccalaureate achievement project'' and inserting 
        ``project under this section''; and
            (6) in subsection (g) (as redesignated by paragraph (2))--
                    (A) by striking ``402A(f)'' and inserting 
                ``402A(g)''; and
                    (B) by striking ``1993 through 1997'' and inserting 
                ``2006 through 2010''.
    (f) Educational Opportunity Centers.--Section 402F (20 U.S.C. 
1070a-16) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1), by striking ``and'' after the 
                semicolon;
                    (B) in paragraph (2), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(3) to improve the financial literacy and economic 
        literacy of students, including--
                    ``(A) basic personal income, household money 
                management, and financial planning skills; and
                    ``(B) basic economic decisionmaking skills.''; and
            (2) in subsection (b)--
                    (A) by redesignating paragraphs (5) through (10) as 
                paragraphs (6) through (11), respectively;
                    (B) by inserting after paragraph (4) the following:
            ``(5) education or counseling services designed to improve 
        the financial literacy and economic literacy of students;'';
                    (C) by striking paragraph (7) (as redesignated by 
                subparagraph (A)) and inserting the following:
            ``(7) individualized personal, career, and academic 
        counseling;''; and
                    (D) by striking paragraph (11) (as redesignated by 
                subparagraph (A)) and inserting the following:
            ``(11) programs and activities as described in paragraphs 
        (1) through (10) that are specially designed for students who 
        are limited English proficient, students with disabilities, or 
        students who are homeless children and youths (as such term is 
        defined in section 725 of the McKinney-Vento Homeless 
        Assistance Act (42 U.S.C. 11434a)), or programs and activities 
        for students who are in foster care or are aging out of the 
        foster care system.''.
    (g) Staff Development Activities.--Section 402G(b)(3) (20 U.S.C. 
1070a-17(b)(3)) is amended by inserting ``, including strategies for 
recruiting and serving students who are homeless children and youths 
(as such term is defined in section 725 of the McKinney-Vento Homeless 
Assistance Act (42 U.S.C. 11434a)) and students who are in foster care 
or are aging out of the foster care system'' before the period at the 
end.
    (h) Reports, Evaluations, and Grants for Project Improvement and 
Dissemination.--Section 402H (20 U.S.C. 1070a-18) is amended--
            (1) by striking the section heading and inserting 
        ``reports, evaluations, and grants for project improvement and 
        dissemination.'';
            (2) by redesignating subsections (a) through (c) as 
        subsections (b) through (d), respectively; and
            (3) by inserting before subsection (b) (as redesignated by 
        paragraph (2)) the following:
    ``(a) Report to Congress.--At least once every 2-year period, the 
Secretary shall prepare and submit to Congress a report on the outcomes 
achieved by the programs authorized under this chapter. Such report 
shall include a statement for the preceding fiscal year specifying--
            ``(1) the number of grants awarded during each fiscal year, 
        and the number of individuals served by the programs carried 
        out under such grants;
            ``(2) the number of entities that received grants during 
        the fiscal year, including the number of entities that--
                    ``(A) received a grant to carry out a program under 
                this chapter for the fiscal year; and
                    ``(B) had not received funding for that particular 
                program during the previous grant cycle;
            ``(3) a comparison of the number and percentage of grant 
        awards made to entities described in paragraph (2), with the 
        number of such entities funded through discretionary grant 
        competitions conducted by the Secretary under this chapter in 
        the 3 grant cycles preceding the fiscal year;
            ``(4) information on the number of individuals served in 
        each program authorized under this chapter; and
            ``(5) information on the outcomes achieved by each program 
        authorized under this chapter, including the outcome criteria 
        described in section 402A(f) for each program.''.

SEC. 7363. GAINING EARLY AWARENESS AND READINESS FOR UNDERGRADUATE 
              PROGRAMS.

    (a) Early Intervention and College Awareness Program Authorized.--
Section 404A (20 U.S.C. 1070a-21) is amended--
            (1) by striking subsection (a) and inserting the following:
    ``(a) Program Authorized.--The Secretary is authorized, in 
accordance with the requirements of this chapter, to establish a 
program that encourages eligible entities to provide support to 
eligible low-income students to assist the students in obtaining a 
secondary school diploma (or its recognized equivalent) and to prepare 
for and succeed in postsecondary education, by providing--
            ``(1) financial assistance, academic support, additional 
        counseling, mentoring, outreach, and supportive services to 
        middle school and secondary school students to reduce--
                    ``(A) the risk of such students dropping out of 
                school; or
                    ``(B) the need for remedial education for such 
                students at the postsecondary level; and
            ``(2) information to students and their parents about the 
        advantages of obtaining a postsecondary education and the 
        college financing options for the students and their 
        parents.'';
            (2) by striking subsection (b)(2)(A) and inserting the 
        following:
                    ``(A) give priority to eligible entities that have 
                a prior, demonstrated commitment to early intervention 
                leading to college access through collaboration and 
                replication of successful strategies;''; and
            (3) by striking subsection (c)(2) and inserting the 
        following:
            ``(2) a partnership--
                    ``(A) consisting of--
                            ``(i) 1 or more local educational agencies; 
                        and
                            ``(ii) 1 or more degree granting 
                        institutions of higher education; and
                    ``(B) which may include not less than 2 other 
                community organizations or entities, such as 
                businesses, professional organizations, State agencies, 
                institutions or agencies sponsoring programs authorized 
                under subpart 4, or other public or private agencies or 
                organizations.''.
    (b) Requirements.--Section 404B (20 U.S.C. 1070a-22) is amended--
            (1) by striking subsection (a) and inserting the 
        following:--
    ``(a) Funding Rules.--
            ``(1) Distribution.--In awarding grants from the amount 
        appropriated under section 404G for a fiscal year, the 
        Secretary shall take into consideration--
                    ``(A) the geographic distribution of such awards; 
                and
                    ``(B) the distribution of such awards between urban 
                and rural applicants.
            ``(2) Special rule.--The Secretary shall annually 
        reevaluate the distribution of funds described in paragraph (1) 
        based on number, quality, and promise of the applications.'';
            (2) by striking subsections (b), (e), and (f);
            (3) by redesignating subsections (c), (d), and (g) as 
        subsections (b), (c), and (d), respectively; and
            (4) by adding at the end the following:
    ``(e) Supplement, Not Supplant.--Grant funds awarded under this 
chapter shall be used to supplement, and not supplant, other Federal, 
State, and local funds that would otherwise be expended to carry out 
activities assisted under this chapter.''.
    (c) Application.--Section 404C (20 U.S.C. 1070a-23) is amended--
            (1) in the section heading, by striking ``eligible entity 
        plans'' and inserting ``applications'';
            (2) in subsection (a)--
                    (A) in the subsection heading, by striking ``Plan'' 
                and inserting ``Application'';
                    (B) in paragraph (1)--
                            (i) by striking ``a plan'' and inserting 
                        ``an application''; and
                            (ii) by striking the second sentence; and
                    (C) by striking paragraph (2) and inserting the 
                following:
            ``(2) Contents.--Each application submitted pursuant to 
        paragraph (1) shall be in such form, contain or be accompanied 
        by such information or assurances, and be submitted at such 
        time as the Secretary may require. Each such application shall, 
        at a minimum--
                    ``(A) describe the activities for which assistance 
                under this chapter is sought, including how the 
                eligible entity will carry out the required activities 
                described in section 404D(a);
                    ``(B) describe how the eligible agency will meet 
                the requirements of section 404E;
                    ``(C) provide assurances that adequate 
                administrative and support staff will be responsible 
                for coordinating the activities described in section 
                404D;
                    ``(D) ensure that activities assisted under this 
                chapter will not displace an employee or eliminate a 
                position at a school assisted under this chapter, 
                including a partial displacement such as a reduction in 
                hours, wages or employment benefits;
                    ``(E) describe, in the case of an eligible entity 
                described in section 404A(c)(2), how the eligible 
                entity will define the cohorts of the students served 
                by the eligible entity pursuant to section 404B(d), and 
                how the eligible entity will serve the cohort through 
                grade 12, including--
                            ``(i) how vacancies in the program under 
                        this chapter will be filled; and
                            ``(ii) how the eligible entity will serve 
                        students attending different secondary schools;
                    ``(F) describe how the eligible entity will 
                coordinate programs with other existing Federal, State, 
                or local programs to avoid duplication and maximize the 
                number of students served;
                    ``(G) provide such additional assurances as the 
                Secretary determines necessary to ensure compliance 
                with the requirements of this chapter; and
                    ``(H) provide information about the activities that 
                will be carried out by the eligible entity to support 
                systemic changes from which future cohorts of students 
                will benefit.'';
            (3) in the matter preceding subparagraph (A) of subsection 
        (b)(1)--
                    (A) by striking ``a plan'' and inserting ``an 
                application''; and
                    (B) by striking ``such plan'' and inserting ``such 
                application''; and
            (4) in subsection (c)(1), by striking the semicolon at the 
        end and inserting ``including--
                    ``(A) the amount contributed to a student 
                scholarship fund established under section 404E; and
                    ``(B) the amount of the costs of administering the 
                scholarship program under section 404E;''.
    (d) Activities.--Section 404D (20 U.S.C. 1070a-24) is amended to 
read as follows:

``SEC. 404D. ACTIVITIES.

    ``(a) Required Activities.--Each eligible entity receiving a grant 
under this chapter shall carry out the following:
            ``(1) Provide information regarding financial aid for 
        postsecondary education to participating students in the cohort 
        described in subsection 404B(d)(1)(A).
            ``(2) Encourage student enrollment in rigorous and 
        challenging curricula and coursework, in order to reduce the 
        need for remedial coursework at the postsecondary level.
            ``(3) Support activities designed to improve the number of 
        participating students who--
                    ``(A) obtain a secondary school diploma; and
                    ``(B) complete applications for and enroll in a 
                program of postsecondary education.
            ``(4) In the case of an eligible entity described in 
        section 404A(c)(1), provide for the scholarships described in 
        section 404E.
    ``(b) Optional Activities for States and Partnerships.--An eligible 
entity that receives a grant under this chapter may use grant funds to 
carry out 1 or more of the following activities:
            ``(1) Providing tutoring and supporting mentors, including 
        adults or former participants of a program under this chapter, 
        for eligible students.
            ``(2) Conducting outreach activities to recruit priority 
        students described in subsection (d) to participate in program 
        activities.
            ``(3) Providing supportive services to eligible students.
            ``(4) Supporting the development or implementation of 
        rigorous academic curricula, which may include college 
        preparatory, Advanced Placement, or International Baccalaureate 
        programs, and providing participating students access to 
        rigorous core courses that reflect challenging State academic 
        standards.
            ``(5) Supporting dual or concurrent enrollment programs 
        between the secondary school and institution of higher 
        education partners of an eligible entity described in section 
        404A(c)(2), and other activities that support participating 
        students in--
                    ``(A) meeting challenging academic standards;
                    ``(B) successfully applying for postsecondary 
                education;
                    ``(C) successfully applying for student financial 
                aid; and
                    ``(D) developing graduation and career plans.
            ``(6) Providing support for scholarships described in 
        section 404E.
            ``(7) Introducing eligible students to institutions of 
        higher education, through trips and school-based sessions.
            ``(8) Providing an intensive extended school day, school 
        year, or summer program that offers--
                    ``(A) additional academic classes; or
                    ``(B) assistance with college admission 
                applications.
            ``(9) Providing other activities designed to ensure 
        secondary school completion and postsecondary education 
        enrollment of at-risk children, such as--
                    ``(A) the identification of at-risk children;
                    ``(B) after-school and summer tutoring;
                    ``(C) assistance to at-risk children in obtaining 
                summer jobs;
                    ``(D) academic counseling;
                    ``(E) volunteer and parent involvement;
                    ``(F) encouraging former or current participants of 
                a program under this chapter to serve as peer 
                counselors;
                    ``(G) skills assessments;
                    ``(H) personal counseling;
                    ``(I) family counseling and home visits;
                    ``(J) staff development; and
                    ``(K) programs and activities described in this 
                subsection that are specially designed for students who 
                are limited English proficient.
            ``(10) Enabling eligible students to enroll in Advanced 
        Placement or International Baccalaureate courses, or college 
        entrance examination preparation courses.
            ``(11) Providing services to eligible students in the 
        participating cohort described in section 404B(d)(1)(A), 
        through the first year of attendance at an institution of 
        higher education.
    ``(c) Additional Optional Activities for States.--In addition to 
the required activities described in subsection (a) and the optional 
activities described in subsection (b), an eligible entity described in 
section 404A(c)(1) receiving funds under this chapter may use grant 
funds to carry out 1 or more of the following activities:
            ``(1) Providing technical assistance to--
                    ``(A) middle schools or secondary schools that are 
                located within the State; or
                    ``(B) partnerships described in section 404A(c)(2) 
                that are located within the State.
            ``(2) Providing professional development opportunities to 
        individuals working with eligible cohorts of students described 
        in section 404B(d)(1)(A).
            ``(3) Providing strategies and activities that align 
        efforts in the State to prepare eligible students for attending 
        and succeeding in postsecondary education, which may include 
        the development of graduation and career plans.
            ``(4) Disseminating information on the use of 
        scientifically based research and best practices to improve 
        services for eligible students.
            ``(5)(A) Disseminating information on effective coursework 
        and support services that assist students in obtaining the 
        goals described in subparagraph (B)(ii).
            ``(B) Identifying and disseminating information on best 
        practices with respect to--
                    ``(i) increasing parental involvement; and
                    ``(ii) preparing students, including students with 
                disabilities and students who are limited English 
                proficient, to succeed academically in, and prepare 
                financially for, postsecondary education.
            ``(6) Working to align State academic standards and 
        curricula with the expectations of postsecondary institutions 
        and employers.
            ``(7) Developing alternatives to traditional secondary 
        school that give students a head start on attaining a 
        recognized postsecondary credential (including an industry 
        certificate, an apprenticeship, or an associate's or a 
        bachelor's degree), including school designs that give students 
        early exposure to college-level courses and experiences and 
        allow students to earn transferable college credits or an 
        associate's degree at the same time as a secondary school 
        diploma.
            ``(8) Creating community college programs for drop-outs 
        that are personalized drop-out recovery programs that allow 
        drop-outs to complete a regular secondary school diploma and 
        begin college-level work.
    ``(d) Priority Students.--For eligible entities not using a cohort 
approach, the eligible entity shall treat as priority students any 
student in middle or secondary school who is eligible--
            ``(1) to be counted under section 1124(c) of the Elementary 
        and Secondary Education Act of 1965;
            ``(2) for free or reduced price meals under the Richard B. 
        Russell National School Lunch Act;
            ``(3) for assistance under a State program funded under 
        part A or E of title IV of the Social Security Act (42 U.S.C. 
        601 et seq., 670 et seq.); or
            ``(4) for assistance under subtitle B of title VII of the 
        McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et 
        seq.).
    ``(e) Allowable Providers.--In the case of eligible entities 
described in section 404A(c)(1), the activities required by this 
section may be provided by service providers such as community-based 
organizations, schools, institutions of higher education, public and 
private agencies, nonprofit and philanthropic organizations, 
businesses, institutions and agencies sponsoring programs authorized 
under subpart 4, and other organizations the State determines 
appropriate.''.
    (e) Scholarship Component.--Section 404E (20 U.S.C. 1070a-25) is 
amended--
            (1) by striking subsections (e) and (f);
            (2) by redesignating subsections (b), (c), and (d) as 
        subsections (d), (f), and (g), respectively;
            (3) by inserting after subsection (a) the following:
    ``(b) Limitation.--
            ``(1) In general.--Subject to paragraph (2), each eligible 
        entity described in section 404A(c)(1) that receives a grant 
        under this chapter shall use not less than 25 percent and not 
        more than 50 percent of the grant funds for activities 
        described in section 404D(c), with the remainder of such funds 
        to be used for a scholarship program under this section.
            ``(2) Exception.--Notwithstanding paragraph (1), the 
        Secretary may allow an eligible entity to use more than 50 
        percent of grant funds received under this chapter for such 
        activities, if the eligible entity demonstrates that the 
        eligible entity has another means of providing the students 
        with the financial assistance described in this section and 
        describes such means in the application submitted under section 
        404C.
    ``(c) Notification of Eligibility.--Each eligible entity providing 
scholarships under this section shall provide information on the 
eligibility requirements for the scholarships to all participating 
students upon the students' entry into the programs assisted under this 
chapter.'';
            (4) in subsection (d) (as redesignated by paragraph (2)), 
        by striking ``the lesser of'' and all that follows through the 
        period at the end of paragraph (2) and inserting ``the minimum 
        Federal Pell Grant award under section 401 for such award 
        year.'';
            (5) by inserting after subsection (d) (as redesignated by 
        paragraph (2) and amended by paragraph (4)) the following:
    ``(e) Portability of Assistance.--
            ``(1) In general.--Each eligible entity described in 
        section 404A(c)(1) that receives a grant under this chapter 
        shall create or organize a trust for each cohort described in 
        section 404B(d)(1)(A) for which the grant is sought in the 
        application submitted by the entity, which trust shall be an 
        amount that is not less than the minimum scholarship amount 
        described in subsection (d), multiplied by the number of 
        students participating in the cohort.
            ``(2) Requirement for portability.--Funds contributed to 
        the trust for a cohort shall be available to a student in the 
        cohort when the student has--
                    ``(A) completed a secondary school diploma, its 
                recognized equivalent, or other recognized alternative 
                standard for individuals with disabilities; and
                    ``(B) enrolled in an institution of higher 
                education.
            ``(3) Qualified educational expenses.--Funds available to 
        an eligible student from a trust may be used for--
                    ``(A) tuition, fees, books, supplies, and equipment 
                required for the enrollment or attendance of the 
                eligible student at an institution of higher education; 
                and
                    ``(B) in the case of an eligible student with 
                special needs, expenses for special needs services 
                which are incurred in connection with such enrollment 
                or attendance.
            ``(4) Return of funds.--
                    ``(A) Redistribution.--
                            ``(i) In general.--Trust funds that are not 
                        used by an eligible student within 6 years of 
                        the student's scheduled completion of secondary 
                        school may be redistributed by the eligible 
                        entity to other eligible students.
                            ``(ii) Return of excess to the secretary.--
                        If, after meeting the requirements of paragraph 
                        (1) and, if applicable, redistributing excess 
                        funds in accordance with clause (i), an 
                        eligible entity has funds remaining, the 
                        eligible entity shall return excess funds to 
                        the Secretary for distribution to other 
                        grantees under this chapter.
                    ``(B) Nonparticipating entity.--Notwithstanding 
                subparagraph (A), in the case of an eligible entity 
                described in section 404A(c)(1)(A) that does not 
                receive assistance under this subpart for 6 fiscal 
                years, the eligible entity shall return any trust funds 
                not awarded or obligated to eligible students to the 
                Secretary for distribution to other grantees under this 
                chapter.''; and
            (6) in subsection (g) (as redesignated by paragraph (2))--
                    (A) in paragraph (2), by striking ``1993'' and 
                inserting ``2000''; and
                    (B) in paragraph (4), by striking ``early 
                intervention component required under section 404D'' 
                and inserting ``activities required under section 
                404D(a)''.
    (f) Repeal of 21st Century Scholar Certificates.--Chapter 2 of 
subpart 2 of part A of title IV (20 U.S.C. 1070a-21 et seq.) is further 
amended--
            (1) by striking section 404F; and
            (2) by redesignating sections 404G and 404H as sections 
        404F and 404G, respectively.
    (g) Authorization of Appropriations.--Section 404G (as redesignated 
by subsection (f)) (20 U.S.C. 1070a-28) is amended by striking 
``$200,000,000 for fiscal year 1999'' and all that follows through the 
period and inserting ``such sums as may be necessary for fiscal year 
2006 and each of the 5 succeeding fiscal years.''.
    (h) Conforming Amendments.--Chapter 2 of subpart 2 of part A of 
title IV (20 U.S.C. 1070a-21 et seq.) is further amended--
            (1) in section 404A(b)(1), by striking ``404H'' and 
        inserting ``404G'';
            (2) in section 404B(a)(1), by striking ``404H'' and 
        inserting ``404G''; and
            (3) in section 404F(c) (as redesignated by subsection 
        (f)(2)), by striking ``404H'' and inserting ``404G''.

SEC. 7364. ACADEMIC ACHIEVEMENT INCENTIVE SCHOLARSHIPS.

    Chapter 3 of subpart 2 of part A of title IV (20 U.S.C. 1070a-31 et 
seq.) is repealed.

SEC. 7365. FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS.

    (a) Appropriations Authorized.--Section 413A(b)(1) (20 U.S.C. 
1070b(b)(1)) is amended by striking ``$675,000,000 for fiscal year 
1999'' and all that follows through the period and inserting ``such 
sums as may be necessary for fiscal year 2006 and each of the 5 
succeeding fiscal years.''.
    (b) Allocation of Funds.--
            (1) Allocation of funds.--Section 413D (20 U.S.C. 1070b-3) 
        is amended--
                    (A) by striking subsection (a)(4); and
                    (B) in subsection (c)(3)(D), by striking ``$450'' 
                and inserting ``$600''.
            (2) Technical correction.--Section 413D(a)(1) (20 U.S.C. 
        1070b-3(a)(1)) is amended by striking ``such institution'' and 
        all that follows through the period and inserting ``such 
        institution received under subsections (a) and (b) of this 
        section for fiscal year 1999 (as such subsections were in 
        effect with respect to allocations for such fiscal year).''.

SEC. 7366. LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP PROGRAM.

    (a) Appropriations Authorized.--Section 415A(b)(1) (20 U.S.C. 
1070c(b)(1)) is amended to read as follows:
            ``(1) In general.--There are authorized to be appropriated 
        to carry out this subpart such sums as may be necessary for 
        fiscal year 2006 and each of the 5 succeeding fiscal years.''.
    (b) Applications.--Section 415C(b) (20 U.S.C. 1070c-2(b)) is 
amended--
            (1) in the matter preceding subparagraph (A) of paragraph 
        (2), by striking ``not in excess of $5,000 per academic year'' 
        and inserting ``not to exceed the lesser of $12,500 or the 
        student's cost of attendance per academic year''; and
            (2) by striking paragraph (10) and inserting the following:
            ``(10) provides notification to eligible students that such 
        grants are--
                    ``(A) Leveraging Educational Assistance Partnership 
                grants; and
                    ``(B) funded by the Federal Government, the State, 
                and other contributing partners.''.
    (c) Grants for Access and Persistence.--Section 415E (20 U.S.C. 
1070c-3a) is amended to read as follows:

``SEC. 415E. GRANTS FOR ACCESS AND PERSISTENCE.

    ``(a) Purpose.--It is the purpose of this section to expand college 
access and increase college persistence by making allotments to States 
to enable the States to--
            ``(1) expand and enhance partnerships with institutions of 
        higher education, early information and intervention, 
        mentoring, or outreach programs, private corporations, 
        philanthropic organizations, and other interested parties in 
        order to--
                    ``(A) carry out activities under this section; and
                    ``(B) provide coordination and cohesion among 
                Federal, State, and local governmental and private 
                efforts that provide financial assistance to help low-
                income students attend an institution of higher 
                education;
            ``(2) provide need-based grants for access and persistence 
        to eligible low-income students;
            ``(3) provide early notification to low-income students of 
        the students' eligibility for financial aid; and
            ``(4) encourage increased participation in early 
        information and intervention, mentoring, or outreach programs.
    ``(b) Allotments to States.--
            ``(1) In general.--
                    ``(A) Authorization.--From sums reserved under 
                section 415A(b)(2) for each fiscal year, the Secretary 
                shall make an allotment to each State that submits an 
                application for an allotment in accordance with 
                subsection (c) to enable the State to pay the Federal 
                share, as described in paragraph (2), of the cost of 
                carrying out the activities under subsection (d).
                    ``(B) Determination of allotment.--In making 
                allotments under subparagraph (A), the Secretary shall 
                consider the following:
                            ``(i) Continuation of award.--If a State 
                        continues to meet the specifications 
                        established in such State's application under 
                        subsection (c), the Secretary shall make an 
                        allotment to such State that is not less than 
                        the allotment made to such State for the 
                        previous fiscal year.
                            ``(ii) Priority.--The Secretary shall give 
                        priority in making allotments to States that 
                        meet the requirements described in paragraph 
                        (2)(A)(ii).
            ``(2) Federal share.--
                    ``(A) In general.--The Federal share under this 
                section shall be determined in accordance with the 
                following:
                            ``(i) If a State applies for an allotment 
                        under this section in partnership with--
                                    ``(I) any number of degree granting 
                                institutions of higher education in the 
                                State whose combined full-time 
                                enrollment represents less than a 
                                majority of all students attending 
                                institutions of higher education in the 
                                State; and
                                    ``(II)(aa) philanthropic 
                                organizations that are located in, or 
                                that provide funding in, the State; or
                                    ``(bb) private corporations that 
                                are located in, or that do business in, 
                                the State,
                        then the Federal share of the cost of carrying 
                        out the activities under subsection (d) shall 
                        be equal to 50 percent.
                            ``(ii) If a State applies for an allotment 
                        under this section in partnership with--
                                    ``(I) any number of degree granting 
                                institutions of higher education in the 
                                State whose combined full-time 
                                enrollment represents a majority of all 
                                students attending institutions of 
                                higher education in the State; and
                                    ``(II)(aa) philanthropic 
                                organizations that are located in, or 
                                that provide funding in, the State; or
                                    ``(bb) private corporations that 
                                are located in, or that do business in, 
                                the State,
                        then the Federal share of the cost of carrying 
                        out the activities under subsection (d) shall 
                        be equal to 57 percent.
                    ``(B) Non-federal share.--
                            ``(i) In general.--The non-Federal share 
                        under this section may be provided in cash or 
                        in kind, fully evaluated and in accordance with 
                        this subparagraph.
                            ``(ii) In kind contribution.--For the 
                        purpose of calculating the non-Federal share 
                        under this section, an in kind contribution is 
                        a non-cash award that has monetary value, such 
                        as provision of room and board and 
                        transportation passes, and that helps a student 
                        meet the cost of attendance.
                            ``(iii) Effect on need analysis.--For the 
                        purpose of calculating a student's need in 
                        accordance with part F of this title, an in-
                        kind contribution described in clause (ii) 
                        shall not be considered an asset or income.
    ``(c) Application for Allotment.--
            ``(1) In general.--
                    ``(A) Submission.--A State that desires to receive 
                an allotment under this section on behalf of a 
                partnership described in paragraph (3) shall submit an 
                application to the Secretary at such time, in such 
                manner, and containing such information as the 
                Secretary may require.
                    ``(B) Content.--An application submitted under 
                subparagraph (A) shall include the following:
                            ``(i) A description of the State's plan for 
                        using the allotted funds.
                            ``(ii) Assurances that the State will 
                        provide the non-Federal share from State, 
                        institutional, philanthropic, or private funds, 
                        of not less than the required share of the cost 
                        of carrying out the activities under subsection 
                        (d), as determined under subsection (b), in 
                        accordance with the following:
                                    ``(I) The State shall specify the 
                                methods by which non-Federal share 
                                funds will be paid and include 
                                provisions designed to ensure that 
                                funds provided under this section will 
                                be used to supplement, and not 
                                supplant, Federal and non-Federal funds 
                                available for carrying out the 
                                activities under this title.
                                    ``(II) A State that uses non-
                                Federal funds to create or expand 
                                existing partnerships with nonprofit 
                                organizations or community-based 
                                organizations in which such 
                                organizations match State funds for 
                                student scholarships, may apply such 
                                matching funds from such organizations 
                                toward fulfilling the State's non-
                                Federal share obligation under this 
                                clause.
                            ``(iii) Assurances that early information 
                        and intervention, mentoring, or outreach 
                        programs exist within the State or that there 
                        is a plan to make such programs widely 
                        available.
                            ``(iv) A description of the organizational 
                        structure that the State has in place to 
                        administer the activities under subsection (d), 
                        including a description of the system the State 
                        will use to track the participation of students 
                        who receive grants under this section to degree 
                        completion.
                            ``(v) Assurances that the State has a 
                        method in place, such as acceptance of the 
                        automatic zero expected family contribution 
                        determination described in section 479, to 
                        identify eligible low-income students and award 
                        State grant aid to such students.
                            ``(vi) Assurances that the State will 
                        provide notification to eligible low-income 
                        students that grants under this section are--
                                    ``(I) Leveraging Educational 
                                Assistance Partnership Grants; and
                                    ``(II) funded by the Federal 
                                Government, the State, and other 
                                contributing partners.
            ``(2) State agency.--The State agency that submits an 
        application for a State under section 415C(a) shall be the same 
        State agency that submits an application under paragraph (1) 
        for such State.
            ``(3) Partnership.--In applying for an allotment under this 
        section, the State agency shall apply for the allotment in 
        partnership with--
                    ``(A) not less than 1 public and 1 private degree 
                granting institution of higher education that are 
                located in the State, if applicable;
                    ``(B) new or existing early information and 
                intervention, mentoring, or outreach programs located 
                in the State; and
                    ``(C) not less than 1--
                            ``(i) philanthropic organization located 
                        in, or that provides funding in, the State; or
                            ``(ii) private corporation located in, or 
                        that does business in, the State.
            ``(4) Roles of partners.--
                    ``(A) State agency.--A State agency that is in a 
                partnership receiving an allotment under this section--
                            ``(i) shall--
                                    ``(I) serve as the primary 
                                administrative unit for the 
                                partnership;
                                    ``(II) provide or coordinate non-
                                Federal share funds, and coordinate 
                                activities among partners;
                                    ``(III) encourage each institution 
                                of higher education in the State to 
                                participate in the partnership;
                                    ``(IV) make determinations and 
                                early notifications of assistance as 
                                described under subsection (d)(2); and
                                    ``(V) annually report to the 
                                Secretary on the partnership's progress 
                                in meeting the purpose of this section; 
                                and
                            ``(ii) may provide early information and 
                        intervention, mentoring, or outreach programs.
                    ``(B) Degree granting institutions of higher 
                education.--A degree granting institution of higher 
                education that is in a partnership receiving an 
                allotment under this section--
                            ``(i) shall--
                                    ``(I) recruit and admit 
                                participating qualified students and 
                                provide such additional institutional 
                                grant aid to participating students as 
                                agreed to with the State agency;
                                    ``(II) provide support services to 
                                students who receive grants for access 
                                and persistence under this section and 
                                are enrolled at such institution; and
                                    ``(III) assist the State in the 
                                identification of eligible students and 
                                the dissemination of early 
                                notifications of assistance as agreed 
                                to with the State agency; and
                            ``(ii) may provide funding for early 
                        information and intervention, mentoring, or 
                        outreach programs or provide such services 
                        directly.
                    ``(C) Programs.--An early information and 
                intervention, mentoring, or outreach program that is in 
                a partnership receiving an allotment under this section 
                shall provide direct services, support, and information 
                to participating students.
                    ``(D) Philanthropic organization or private 
                corporation.--A philanthropic organization or private 
                corporation that is in a partnership receiving an 
                allotment under this section shall provide funds for 
                grants for access and persistence for participating 
                students, or provide funds or support for early 
                information and intervention, mentoring, or outreach 
                programs.
    ``(d) Authorized Activities.--
            ``(1) In general.--
                    ``(A) Establishment of partnership.--Each State 
                receiving an allotment under this section shall use the 
                funds to establish a partnership to award grants for 
                access and persistence to eligible low-income students 
                in order to increase the amount of financial assistance 
                such students receive under this subpart for 
                undergraduate education expenses.
                    ``(B) Amount of grants.--
                            ``(i) Partnerships with institutions 
                        serving less than a majority of students in the 
                        state.--
                                    ``(I) In general.--In the case 
                                where a State receiving an allotment 
                                under this section is in a partnership 
                                described in subsection (b)(2)(A)(i), 
                                the amount of a grant for access and 
                                persistence awarded by such State shall 
                                be not less than the amount that is 
                                equal to the average undergraduate 
                                tuition and mandatory fees at 4-year 
                                public institutions of higher education 
                                in the State where the student resides 
                                (less any other Federal or State 
                                sponsored grant amount, work study 
                                amount, and scholarship amount received 
                                by the student), and such amount shall 
                                be used toward the cost of attendance 
                                at an institution of higher education 
                                located in the State.
                                    ``(II) Cost of attendance.--A State 
                                that has a program, apart from the 
                                partnership under this section, of 
                                providing eligible low-income students 
                                with grants that are equal to the 
                                average undergraduate tuition and 
                                mandatory fees at 4-year public 
                                institutions of higher education in the 
                                State, may increase the amount of 
                                grants for access and persistence 
                                awarded by such State up to an amount 
                                that is equal to the average cost of 
                                attendance at 4-year public 
                                institutions of higher education in the 
                                State (less any other Federal or State 
                                sponsored grant amount, work study 
                                amount, and scholarship amount received 
                                by the student).
                            ``(ii) Partnerships with institutions 
                        serving the majority of students in the 
                        state.--In the case where a State receiving an 
                        allotment under this section is in a 
                        partnership described in subsection 
                        (b)(2)(A)(ii), the amount of a grant for access 
                        and persistence awarded by such State shall be 
                        not more than an amount that is equal to the 
                        average cost of attendance at 4-year public 
                        institutions of higher education in the State 
                        where the student resides (less any other 
                        Federal or State sponsored grant amount, 
                        college work study amount, and scholarship 
                        amount received by the student), and such 
                        amount shall be used by the student to attend 
                        an institution of higher education located in 
                        the State.
                    ``(C) Special rules.--
                            ``(i) Partnership institutions.--A State 
                        receiving an allotment under this section may 
                        restrict the use of grants for access and 
                        persistence under this section by awarding the 
                        grants only to students attending institutions 
                        of higher education that are participating in 
                        the partnership.
                            ``(ii) Out-of-State institutions.--If a 
                        State provides grants through another program 
                        under this subpart to students attending 
                        institutions of higher education located in 
                        another State, such agreement may also apply to 
                        grants awarded under this section.
            ``(2) Early notification.--
                    ``(A) In general.--Each State receiving an 
                allotment under this section shall annually notify low-
                income students, such as students who are eligible to 
                receive a free lunch under the school lunch program 
                established under the Richard B. Russell National 
                School Lunch Act, in grade 7 through grade 12 in the 
                State, of the students' potential eligibility for 
                student financial assistance, including a grant for 
                access and persistence, to attend an institution of 
                higher education.
                    ``(B) Content of notice.--The notification under 
                subparagraph (A)--
                            ``(i) shall include--
                                    ``(I) information about early 
                                information and intervention, 
                                mentoring, or outreach programs 
                                available to the student;
                                    ``(II) information that a student's 
                                candidacy for a grant for access and 
                                persistence is enhanced through 
                                participation in an early information 
                                and intervention, mentoring, or 
                                outreach program;
                                    ``(III) an explanation that student 
                                and family eligibility and 
                                participation in other Federal means-
                                tested programs may indicate 
                                eligibility for a grant for access and 
                                persistence and other student aid 
                                programs;
                                    ``(IV) a nonbinding estimation of 
                                the total amount of financial aid a 
                                low-income student with a similar 
                                income level may expect to receive, 
                                including an estimation of the amount 
                                of a grant for access and persistence 
                                and an estimation of the amount of 
                                grants, loans, and all other available 
                                types of aid from the major Federal and 
                                State financial aid programs;
                                    ``(V) an explanation that in order 
                                to be eligible for a grant for access 
                                and persistence, at a minimum, a 
                                student shall--
                                            ``(aa) meet the requirement 
                                        under paragraph (3);
                                            ``(bb) graduate from 
                                        secondary school; and
                                            ``(cc) enroll at an 
                                        institution of higher education 
                                        that is a partner in the 
                                        partnership or qualifies under 
                                        subsection (d)(1)(C)(ii);
                                    ``(VI) information on any 
                                additional requirements (such as a 
                                student pledge detailing student 
                                responsibilities) that the State may 
                                impose for receipt of a grant for 
                                access and persistence under this 
                                section; and
                                    ``(VII) instructions on how to 
                                apply for a grant for access and 
                                persistence and an explanation that a 
                                student is required to file a Free 
                                Application for Federal Student Aid 
                                authorized under section 483(a) to be 
                                eligible for such grant and assistance 
                                from other Federal and State financial 
                                aid programs; and
                            ``(ii) may include a disclaimer that grant 
                        awards for access and persistence are 
                        contingent upon--
                                    ``(I) a determination of the 
                                student's financial eligibility at the 
                                time of the student's enrollment at an 
                                institution of higher education that is 
                                a partner in the partnership or 
                                qualifies under subsection 
                                (d)(1)(C)(ii);
                                    ``(II) annual Federal and State 
                                appropriations; and
                                    ``(III) other aid received by the 
                                student at the time of the student's 
                                enrollment at such institution of 
                                higher education.
            ``(3) Eligibility.--In determining which students are 
        eligible to receive grants for access and persistence, the 
        State shall ensure that each such student meets not less than 1 
        of the following:
                    ``(A) Meets not less than 2 of the following 
                criteria, with priority given to students meeting all 
                of the following criteria:
                            ``(i) Has an expected family contribution 
                        equal to zero (as described in section 479) or 
                        a comparable alternative based upon the State's 
                        approved criteria in section 415C(b)(4).
                            ``(ii) Has qualified for a free lunch, or 
                        at the State's discretion a reduced price 
                        lunch, under the school lunch program 
                        established under the Richard B. Russell 
                        National School Lunch Act.
                            ``(iii) Qualifies for the State's maximum 
                        undergraduate award, as authorized under 
                        section 415C(b).
                            ``(iv) Is participating in, or has 
                        participated in, a Federal, State, 
                        institutional, or community early information 
                        and intervention, mentoring, or outreach 
                        program, as recognized by the State agency 
                        administering activities under this section.
                    ``(B) Is receiving, or has received, a grant for 
                access and persistence under this section, in 
                accordance with paragraph (5).
            ``(4) Grant award.--Once a student, including those 
        students who have received early notification under paragraph 
        (2) from the State, applies for admission to an institution 
        that is a partner in the partnership, files a Free Application 
        for Federal Student Aid and any related existing State form, 
        and is determined eligible by the State under paragraph (3), 
        the State shall--
                    ``(A) issue the student a preliminary award 
                certificate for a grant for access and persistence with 
                tentative award amounts; and
                    ``(B) inform the student that payment of the grant 
                for access and persistence award amounts is subject to 
                certification of enrollment and award eligibility by 
                the institution of higher education.
            ``(5) Duration of award.--An eligible student that receives 
        a grant for access and persistence under this section shall 
        receive such grant award for each year of such student's 
        undergraduate education in which the student remains eligible 
        for assistance under this title, including pursuant to section 
        484(c), and remains financially eligible as determined by the 
        State, except that the State may impose reasonable time limits 
        to degree completion.
    ``(e) Use of Funds for Administrative Costs Prohibited.--A State 
that receives an allotment under this section shall not use any of the 
allotted funds to pay administrative costs associated with any of the 
authorized activities described in subsection (d).
    ``(f) Statutory and Regulatory Relief for Institutions of Higher 
Education.--The Secretary may grant, upon the request of an institution 
of higher education that is in a partnership described in subsection 
(b)(2)(A)(ii) and that receives an allotment under this section, a 
waiver for such institution from statutory or regulatory requirements 
that inhibit the ability of the institution to successfully and 
efficiently participate in the activities of the partnership.
    ``(g) Applicability Rule.--The provisions of this subpart which are 
not inconsistent with this section shall apply to the program 
authorized by this section.
    ``(h) Maintenance of Effort Requirement.--Each State receiving an 
allotment under this section for a fiscal year shall provide the 
Secretary with an assurance that the aggregate amount expended per 
student or the aggregate expenditures by the State, from funds derived 
from non-Federal sources, for the authorized activities described in 
subsection (d) for the preceding fiscal year were not less than the 
amount expended per student or the aggregate expenditure by the State 
for the activities for the second preceding fiscal year.
    ``(i) Special Rule.--Notwithstanding subsection (h), for purposes 
of determining a State's share of the cost of the authorized activities 
described in subsection (d), the State shall consider only those 
expenditures from non-Federal sources that exceed the State's total 
expenditures for need-based grants, scholarships, and work-study 
assistance for fiscal year 1999 (including any such assistance provided 
under this subpart).
    ``(j) Continuation and Transition.--For the 2-year period that 
begins on the date of enactment of the Higher Education Amendments of 
2005, the Secretary shall continue to award grants under section 415E 
of the Higher Education Act of 1965 as such section existed on the day 
before the date of enactment of such Act to States that choose to apply 
for grants under such predecessor section.
    ``(k) Reports.--Not later than 3 years after the date of enactment 
of the Higher Education Amendments of 2005 and annually thereafter, the 
Secretary shall submit a report describing the activities and the 
impact of the partnerships under this section to the authorizing 
committees.''.

SEC. 7367. SPECIAL PROGRAMS FOR STUDENTS WHOSE FAMILIES ARE ENGAGED IN 
              MIGRANT AND SEASONAL FARMWORK.

    Section 418A (20 U.S.C. 1070d-2) is amended--
            (1) in subsection (a), by adding ``(including providing 
        outreach and technical assistance)'' after ``maintain and 
        expand'';
            (2) in subsection (b)--
                    (A) in paragraph (1)(B)(i), by striking ``parents'' 
                and inserting ``immediate family'';
                    (B) in paragraph (3)(B), by inserting ``(including 
                preparation for college entrance examinations)'' after 
                ``college program'';
                    (C) in paragraph (5), by striking ``weekly'';
                    (D) in paragraph (7), by striking ``and'' after the 
                semicolon;
                    (E) in paragraph (8), by striking the period at the 
                end and inserting ``; and''; and
                    (F) by adding at the end the following:
            ``(9) other activities to improve persistence and retention 
        in postsecondary education.'';
            (3) in subsection (c)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (B)--
                                    (I) in the matter preceding clause 
                                (i), by inserting ``to improve 
                                placement, persistence, and retention 
                                in postsecondary education'' after 
                                ``services''; and
                                    (II) in clause (i), by striking 
                                ``and career'' and inserting ``career, 
                                and economic education or personal 
                                finance'';
                            (ii) in subparagraph (E), by striking 
                        ``and'' after the semicolon;
                            (iii) by redesignating subparagraph (F) as 
                        subparagraph (G); and
                            (iv) by inserting after subparagraph (E) 
                        the following:
            ``(F) internships; and''; and
                    (B) in paragraph (2)--
                            (i) in subparagraph (A), by striking 
                        ``and'' after the semicolon;
                            (ii) in subparagraph (B), by striking the 
                        period at the end and inserting ``, and 
                        coordinating such services, assistance, and aid 
                        with other non-program services, assistance, 
                        and aid, including services, assistance, and 
                        aid provided by community-based organizations, 
                        which may include mentoring and guidance; 
                        and''; and
                            (iii) by adding at the end the following:
                    ``(C) for students attending 2-year institutions of 
                higher education, encouraging the students to transfer 
                to 4-year institutions of higher education, where 
                appropriate, and monitoring the rate of transfer of 
                such students.'';
            (4) in subsection (e), by striking ``section 402A(c)(1)'' 
        and inserting ``section 402A(c)(2)'';
            (5) in subsection (f)--
                    (A) in paragraph (1), by striking ``$150,000'' and 
                inserting ``$180,000''; and
                    (B) in paragraph (2), by striking ``$150,000'' and 
                inserting ``$180,000''; and
            (6) in subsection (h)--
                    (A) in paragraph (1), by striking ``$15,000,000 for 
                fiscal year 1999'' and all that follows through the 
                period and inserting ``such sums as may be necessary 
                for fiscal year 2006 and each of the 5 succeeding 
                fiscal years.''; and
                    (B) in paragraph (2), by striking ``$5,000,000 for 
                fiscal year 1999'' and all that follows through the 
                period and inserting ``such sums as may be necessary 
                for fiscal year 2006 and each of the 5 succeeding 
                fiscal years.''.

SEC. 7368. ROBERT C. BYRD HONORS SCHOLARSHIP PROGRAM.

    (a) Eligibility of Scholars.--Section 419F(a) (20 U.S.C. 1070d-
36(a)) is amended by inserting ``(or a home school, whether treated as 
a home school or a private school under State law)'' after ``private or 
public secondary school''.
    (b) Authorization of Appropriations.--Section 419K (20 U.S.C. 
1070d-41) is amended by striking ``$45,000,000 for fiscal year 1999'' 
and all that follows through the period and inserting ``such sums as 
may be necessary for fiscal year 2006 and each of the 5 succeeding 
fiscal years.''.

SEC. 7369. CHILD CARE ACCESS MEANS PARENTS IN SCHOOL.

    (a) Minimum Grant.--Section 419N(b)(2)(B) (20 U.S.C. 
1070e(b)(2)(B)) is amended--
            (1) by striking ``A grant'' and inserting the following:
                            ``(i) In general.--Except as provided in 
                        clause (ii), a grant''; and
            (2) by adding at the end the following:
                            ``(ii) Increase trigger.--For any fiscal 
                        year for which the amount appropriated under 
                        the authority of subsection (g) is equal to or 
                        greater than $20,000,000, a grant under this 
                        section shall be awarded in an amount that is 
                        not less than $30,000.''.
    (b) Definition of Low-Income Student.--Paragraph (7) of section 
419N(b) (20 U.S.C. 1070e(b)) is amended to read as follows:
            ``(7) Definition of low-income student.--For the purpose of 
        this section, the term `low-income student' means a student 
        who--
                    ``(A) is eligible to receive a Federal Pell Grant 
                for the fiscal year for which the determination is 
                made; or
                    ``(B) would otherwise be eligible to receive a 
                Federal Pell Grant for the fiscal year for which the 
                determination is made, except that the student fails to 
                meet the requirements of--
                            ``(i) section 401(c)(1) because the student 
                        is enrolled in a graduate or first professional 
                        course of study; or
                            ``(ii) section 484(a)(5) because the 
                        student is in the United States for a temporary 
                        purpose.''.
    (c) Authorization of Appropriations.--Section 419N(g) (20 U.S.C. 
1070e(g)) is amended by striking ``$45,000,000 for fiscal year 1999'' 
and all that follows through the period and inserting ``such sums as 
may be necessary for fiscal year 2006 and each of the 5 succeeding 
fiscal years.''.

SEC. 7370. LEARNING ANYTIME ANYWHERE PARTNERSHIPS.

    Subpart 8 of part A of title IV (20 U.S.C. 1070f et seq.) is 
repealed.

          Subchapter B--Federal Family Education Loan Program

SEC. 7381. EXTENSION OF AUTHORITIES.

    (a) Federal Insurance Limitations.--Section 424(a) (20 U.S.C. 
1074(a)) is amended--
            (1) by striking ``2004'' and inserting ``2012''; and
            (2) by striking ``2008'' and inserting ``2016''.
    (b) Guaranteed Loans.--Section 428(a)(5) (20 U.S.C. 1078(a)(5)) is 
amended--
            (1) by striking ``2004'' and inserting ``2012''; and
            (2) by striking ``2008'' and inserting ``2016''.
            (3) Consolidation loans.--Section 428C(e) (20 U.S.C. 1078-
        3(e)) is amended by striking ``2004'' and inserting ``2012''.

SEC. 7382. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST COSTS.

    Section 428 (20 U.S.C. 1078) is amended--
            (1) in subsection (b)(1)--
                    (A) in subparagraph (N)--
                            (i) in clause (i), by striking ``or'' after 
                        the semicolon; and
                            (ii) by striking clause (ii) and inserting 
                        the following:
                            ``(ii) in the case of a student who is 
                        studying outside the United States in a program 
                        of study abroad that is approved for credit by 
                        the home institution at which such student is 
                        enrolled, and only after verification of the 
                        student's enrollment by the lender or guaranty 
                        agency, are, at the request of the student, 
                        disbursed directly to the student by the means 
                        described in clause (i), unless such student 
                        requests that the check be endorsed, or the 
                        funds transfer be authorized, pursuant to an 
                        authorized power-of-attorney; or
                            ``(iii) in the case of a student who is 
                        studying outside the United States in a program 
                        of study at an eligible foreign institution, 
                        are, at the request of the foreign institution, 
                        disbursed directly to the student, only after 
                        verification of the student's enrollment by the 
                        lender or guaranty agency by the means 
                        described in clause (i);''; and
                    (B) in subparagraph (Y)(i)(III), by inserting ``, 
                except that, if requested by an institution of higher 
                education, the lender shall confirm such status through 
                use of the National Student Loan Data System'' before 
                the semicolon; and
            (2) in subsection (c)(2)(H)(i), by striking ``preclaims'' 
        and inserting ``default aversion''.

SEC. 7383. FEDERAL CONSOLIDATION LOANS.

    Section 428C(b)(1) (20 U.S.C. 1078-3(b)(1)) is amended--
            (1) in subparagraph (E), by striking ``and'' after the 
        semicolon;
            (2) by redesignating subparagraph (F) as subparagraph (G); 
        and
            (3) by inserting after subparagraph (E) the following:
                    ``(F) that the lender will disclose, in a clear and 
                conspicuous manner, to borrowers who consolidate loans 
                made under part E of this title--
                            ``(i) that once the borrower adds the 
                        borrower's Federal Perkins Loan to a Federal 
                        Consolidation Loan, the borrower will lose all 
                        interest-free periods that would have been 
                        available, such as those periods when no 
                        interest accrues on the Federal Perkins Loan 
                        while the borrower is enrolled in school at 
                        least half-time, during the grace period, and 
                        during periods when the borrower's student loan 
                        repayments are deferred;
                            ``(ii) that the borrower will no longer be 
                        eligible for loan forgiveness of Federal 
                        Perkins Loans under any provision of section 
                        465; and
                            ``(iii) the occupations described in 
                        section 465(a)(2), individually and in detail, 
                        for which the borrower will lose eligibility 
                        for Federal Perkins Loan forgiveness; and''.

SEC. 7384. DEFAULT REDUCTION PROGRAM.

    Section 428F (20 U.S.C. 1078-6) is amended by adding at the end the 
following:
    ``(c) Financial and Economic Literacy.--Where appropriate as 
determined by the institution of higher education in which a borrower 
is enrolled, each program described in subsection (b) shall include 
making available financial and economic education materials for the 
borrower, including making the materials available before, during, or 
after rehabilitation of a loan.''.

SEC. 7385. REQUIREMENTS FOR DISBURSEMENT OF STUDENT LOANS.

    Section 428G(e) (20 U.S.C. 1078-7(e)) is amended by striking ``, 
made to a student to cover the cost of attendance at an eligible 
institution outside the United States''.

SEC. 7386. REPORTS TO CREDIT BUREAUS AND INSTITUTIONS OF HIGHER 
              EDUCATION.

    Section 430A(a) (20 U.S.C. 1080a(a)) is amended--
            (1) in the first sentence, by striking ``with credit bureau 
        organizations'' and inserting ``with each consumer reporting 
        agency that compiles and maintains files on consumers on a 
        nationwide basis (as defined in section 603(p) of the Fair 
        Credit Reporting Act (15 U.S.C. 1681a(p))'';
            (2) by redesignating paragraphs (1), (2), and (3) as 
        paragraphs (2), (4), and (5), respectively;
            (3) by inserting before paragraph (2) (as redesignated by 
        paragraph (2)), the following:
            ``(1) the type of loan made, insured, or guaranteed under 
        this title;'';
            (4) by inserting after paragraph (2) (as redesignated by 
        paragraph (2)), the following:
            ``(3) information concerning the repayment status of the 
        loan, which information shall be included in the file of the 
        borrower, except that nothing in this subsection shall be 
        construed to affect any otherwise applicable provision of the 
        Fair Credit Reporting Act (15 U.S.C. 1681 et seq.)'';
            (5) in paragraph (4) (as redesignated by paragraph (2)), by 
        striking ``and'' after the semicolon;
            (6) in paragraph (5) (as redesignated by paragraph (2)), by 
        striking the period and inserting ``; and''; and
            (7) by adding at the end the following:
            ``(6) any other information required to be reported by 
        Federal law.''.

SEC. 7387. COMMON FORMS AND FORMATS.

    Section 432(m)(1)(D)(i) (20 U.S.C. 1082(m)(1)(D)(i)) is amended by 
adding at the end the following: ``Unless otherwise notified by the 
Secretary, each institution of higher education that participates in 
the program under this part or part D may use a master promissory note 
for loans under this part and part D.''.

SEC. 7388. STUDENT LOAN INFORMATION BY ELIGIBLE BORROWERS.

    Section 433 (20 U.S.C. 1083) is amended by adding at the end the 
following:
    ``(f) Borrower Information and Privacy.--Each entity participating 
in a program under this part that is subject to subtitle A of title V 
of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et seq.) shall only use, 
release, disclose, sell, transfer, or give student information, 
including the name, address, social security number, or amount borrowed 
by a borrower or a borrower's parent, in accordance with the provisions 
of such subtitle.
    ``(g) Loan Benefit Disclosures.--
            ``(1) In general.--Each eligible lender, holder, or 
        servicer of a loan made, insured, or guaranteed under this part 
        shall provide the borrower with information on the loan benefit 
        repayment options the lender, holder, or servicer offer, 
        including information on reductions in interest rates--
                    ``(A) by repaying the loan by automatic payroll or 
                checking account deduction;
                    ``(B) by completing a program of on-time repayment; 
                and
                    ``(C) under any other interest rate reduction 
                program.
            ``(2) Information.--Such borrower information shall 
        include--
                    ``(A) any limitations on such options;
                    ``(B) explicit information on the reasons a 
                borrower may lose eligibility for such an option;
                    ``(C) examples of the impact the interest rate 
                reductions will have on a borrower's time for repayment 
                and amount of repayment;
                    ``(D) upon the request of the borrower, the effect 
                the reductions in interest rates will have with respect 
                to the borrower's payoff amount and time for repayment; 
                and
                    ``(E) information on borrower recertification 
                requirements.''.

SEC. 7389. CONSUMER EDUCATION INFORMATION.

    Part B of title IV (20 U.S.C. 1071 et seq.) is amended by inserting 
after section 433 (20 U.S.C. 1083) the following:

``SEC. 433A. CONSUMER EDUCATION INFORMATION.

    ``Each guaranty agency participating in a program under this part 
working with the institutions of higher education served by such 
guaranty agency (or in the case of an institution of higher education 
that provides loans exclusively through part D, the institution working 
with a guaranty agency or with the Secretary) shall develop and make 
available a quality educational program and materials to provide 
training for students in budgeting and financial management, including 
debt management and other aspects of financial literacy, such as the 
cost of using very high interest loans to pay for postsecondary 
education, particularly as budgeting and financial management relates 
to student loan programs authorized by this title. Nothing in this 
section shall be construed to prohibit a guaranty agency from using an 
existing program or existing materials to meet the requirement of this 
section. The activities described in this section shall be considered 
default reduction activities for the purposes of section 422.''.

SEC. 7390. DEFINITION OF ELIGIBLE LENDER.

    Section 435(d)(2) (20 U.S.C. 1085(d)(2)) is amended by striking 
subparagraph (F) and inserting the following:
                    ``(F) shall use the proceeds from special allowance 
                payments, interest payments from borrowers, proceeds 
                from the sale of a loan made, insured, or guaranteed 
                under this part, and all other proceeds related to such 
                a loan that are furnished to the eligible institution 
                or any entity affiliated (directly or indirectly) with 
                the eligible institution, for need based grant 
                programs, except that such payments and proceeds may be 
                used for reasonable reimbursement for direct 
                administrative expenses;''.

SEC. 7390A. REPAYMENT BY THE SECRETARY OF LOANS OF BANKRUPT, DECEASED, 
              OR DISABLED BORROWERS; TREATMENT OF BORROWERS ATTENDING 
              SCHOOLS THAT FAIL TO PROVIDE A REFUND, ATTENDING CLOSED 
              SCHOOLS, OR FALSELY CERTIFIED AS ELIGIBLE TO BORROW.

    Section 437 (20 U.S.C. 1087) is amended--
            (1) in the section heading, by striking ``closed schools or 
        falsely certified as eligible to borrow'' and inserting 
        ``schools that fail to provide a refund, attending closed 
        schools, or falsely certified as eligible to borrow''; and
            (2) in the first sentence of subsection (c)(1), by 
        inserting ``or was falsely certified as a result of a crime of 
        identity theft'' after ``falsely certified by the eligible 
        institution''.

               Subchapter C--Federal Work-Study Programs

SEC. 7391. AUTHORIZATION OF APPROPRIATIONS.

    Section 441(b) (42 U.S.C. 2751(b)) is amended by striking 
``$1,000,000 for fiscal year 1999'' and all that follows through the 
period and inserting ``such sums as may be necessary for fiscal year 
2006 and each of the 5 succeeding fiscal years.''.

SEC. 7392. ALLOWANCE FOR BOOKS AND SUPPLIES.

    Section 442(c)(4)(D) (42 U.S.C. 2752(c)(4)(D)) is amended by 
striking ``$450'' and inserting ``$600''.

SEC. 7393. GRANTS FOR FEDERAL WORK-STUDY PROGRAMS.

    Section 443(b)(2) (42 U.S.C. 2753(b)(2)) is amended--
            (1) by striking subparagraph (A);
            (2) by redesignating subparagraphs (B) and (C) as 
        subparagraphs (A) and (B), respectively; and
            (3) in subparagraph (A) (as redesignated by paragraph (2)), 
        by striking ``this subparagraph if'' and all that follows 
        through ``institution;'' and inserting ``this subparagraph if--
                            ``(i) the Secretary determines that 
                        enforcing this subparagraph would cause 
                        hardship for students at the institution; or
                            ``(ii) the institution certifies to the 
                        Secretary that 15 percent or more of its total 
                        full-time enrollment participates in community 
                        service activities described in section 441(c) 
                        or tutoring and literacy activities described 
                        in subsection (d) of this section;''.

SEC. 7394. JOB LOCATION AND DEVELOPMENT PROGRAMS.

    Section 446(a)(1) (42 U.S.C. 2756(a)(1)) is amended by striking 
``$50,000'' and inserting ``$75,000''.

SEC. 7395. WORK COLLEGES.

    Section 448 (42 U.S.C. 2756b) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1), by striking ``under 
                subsection (f)'' and inserting ``for this section under 
                section 441(b)''; and
                    (B) in paragraph (2)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``pursuant to subsection (f)'' 
                        and inserting ``for this section under section 
                        441(b)'';
                            (ii) by redesignating subparagraphs (C) 
                        through (F) as subparagraphs (D) through (G), 
                        respectively; and
                            (iii) by inserting after subparagraph (B) 
                        the following:
                    ``(C) support existing and new model student 
                volunteer community service projects associated with 
                local institutions of higher education, such as 
                operating drop-in resource centers that are staffed by 
                students and that link people in need with the 
                resources and opportunities necessary to become self-
                sufficient;'';
            (2) in subsection (c), by striking ``by subsection (f) to 
        use funds under subsection (b)(1)'' and inserting ``for this 
        section under section 441(b) or to use funds under subsection 
        (b)(1),''; and
            (4) by striking subsection (f).

       Subchapter D--William D. Ford Federal Direct Loan Program

SEC. 7401. FUNDS FOR ADMINISTRATIVE EXPENSES.

    Section 458 (20 U.S.C. 1087h) is amended--
            (1) in subsection (a)(1), in the matter following 
        subparagraph (B), by striking ``$617,000,000'' and all that 
        follows through the period and inserting ``$904,000,000 in 
        fiscal year 2006, $943,000,000 in fiscal year 2007, 
        $983,000,000 in fiscal year 2008, $1,023,000,000 in fiscal year 
        2009, $1,064,000,000 in fiscal year 2010, and $1,106,000,000 in 
        fiscal year 2011.''; and
            (2) in subsection (c)(1), by striking subparagraphs (A) 
        through (E) and inserting the following:
                    ``(A) for fiscal year 2006, shall not exceed 
                $271,000,000;
                    ``(B) for fiscal year 2007, shall not exceed 
                $293,000,000;
                    ``(C) for fiscal year 2008, shall not exceed 
                $315,000,000;
                    ``(D) for fiscal year 2009, shall not exceed 
                $336,000,000;
                    ``(E) for fiscal year 2010, shall not exceed 
                $356,000,000; and
                    ``(F) for fiscal year 2011, shall not exceed 
                $378,000,000.''.

                  Subchapter E--Federal Perkins Loans

SEC. 7411. PROGRAM AUTHORITY.

    Section 461(b) (20 U.S.C. 1087aa(b)) is amended--
            (1) in paragraph (1), by striking ``$250,000,000 for fiscal 
        year 1999'' and all that follows through the period and 
        inserting ``such sums as may be necessary for fiscal year 2006 
        and each of the 5 succeeding fiscal years.''; and
            (2) in paragraph (2),--
                    (A) by striking ``fiscal year 2003'' and inserting 
                ``fiscal year 2012''; and
                    (B) by striking ``October 1, 2003'' and inserting 
                ``October 1, 2012''.

SEC. 7412. TERMS OF LOANS.

    Section 464 (20 U.S.C. 1087dd) is amended--
            (1) in subsection (b)(1), by striking ``for an additional 
        loan under this part'' and inserting ``for additional aid under 
        this title''; and
            (2) in subsection (e), by striking ``written''.

SEC. 7413. CANCELLATION OF LOANS FOR CERTAIN PUBLIC SERVICE.

    Section 465(a) (20 U.S.C. 1087ee(a)) is amended--
            (1) in paragraph ( 2)--
                    (A) in subparagraph (B), by striking ``Head Start 
                Act which'' and inserting ``Head Start Act, or in a 
                prekindergarten or child care program that is licensed 
                or regulated by the State, that'';
                    (B) in subparagraph (H), by striking ``or'' after 
                the semicolon;
                    (C) in subparagraph (I), by striking the period and 
                inserting a semicolon; and
                    (D) by inserting before the matter following 
                subparagraph (I) (as amended by subparagraph (C)) the 
                following:
            ``(J) as a full-time faculty member at a Tribal College or 
        University, as that term is defined in section 316;
            ``(K) as a librarian, if the librarian has a master's 
        degree in library science and is employed in--
                    ``(i) an elementary school or secondary school that 
                is eligible for assistance under title I of the 
                Elementary and Secondary Education Act of 1965; or
                    ``(ii) a public library that serves a geographic 
                area that contains 1 or more schools eligible for 
                assistance under title I of the Elementary and 
                Secondary Education Act of 1965; or
            ``(L) as a full-time speech language therapist, if the 
        therapist has a master's degree and is working exclusively with 
        schools that are eligible for assistance under title I of the 
        Elementary and Secondary Education Act of 1965.''; and
            (2) in paragraph (3)(A)(i), by striking ``or (I)'' and 
        inserting ``(I), (J), (K), or (L)''.

SEC. 7414. FEDERAL CAPITAL CONTRIBUTION RECOVERY.

    Section 466 (20 U.S.C. 1087ff) is amended--
            (1) in subsection (a)--
                    (A) by striking ``2003'' each place it appears and 
                inserting ``2011''; and
                    (B) by striking ``2004'' and inserting ``2012''; 
                and
            (2) in subsection (c), by striking ``2004'' and inserting 
        ``2012''.

                      Subchapter F--Need Analysis

SEC. 7421. COST OF ATTENDANCE.

    Section 472 (20 U.S.C. 1087ll) is amended--
            (1) by striking paragraph (4) and inserting the following:
            ``(4) for less than half-time students (as determined by 
        the institution), tuition and fees and an allowance for only--
                    ``(A) books, supplies, and transportation (as 
                determined by the institution);
                    ``(B) dependent care expenses (determined in 
                accordance with paragraph (8)); and
                    ``(C) room and board costs (determined in 
                accordance with paragraph (3)), except that a student 
                may receive an allowance for such costs under this 
                subparagraph for not more than 3 semesters or the 
                equivalent, of which not more than 2 semesters or the 
                equivalent may be consecutive;'';
            (2) in paragraph (11), by striking ``and'' after the 
        semicolon;
            (3) in paragraph (12), by striking the period and inserting 
        ``; and''; and
            (4) by adding at the end the following:
            ``(13) at the option of the institution, for a student in a 
        program requiring professional licensure or certification, the 
        one time cost of obtaining the first professional credentials 
        (as determined by the institution).''.

SEC. 7422. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.

    The third sentence of section 479A(a) (20 U.S.C. 1087tt(a)) is 
amended--
            (1) by inserting ``or an independent student'' after 
        ``family member''; and
            (2) by inserting ``a change in housing status that results 
        in homelessness,'' after ``under section 487,''.

SEC. 7423. DEFINITIONS.

    (a) Definitions.--Section 480 (20 U.S.C. 1087vv) is amended--
            (1) in subsection (f)--
                    (A) in paragraph (1), by inserting ``qualified 
                education benefits (except as provided in paragraph 
                (3)),'' after ``tax shelters,''; and
                    (B) by adding at the end the following:
    ``(3) A qualified education benefit shall not be considered an 
asset of a student for purposes of section 475.
    ``(4) In determining the value of assets in a determination of need 
under this title (other than for subpart 4 of part A), the value of a 
qualified education benefit shall be--
            ``(A) the refund value of any tuition credits or 
        certificates purchased under a qualified education benefit; and
            ``(B) in the case of a program in which contributions are 
        made to an account that is established for the purpose of 
        meeting the qualified higher education expenses of the 
        designated beneficiary of the account, the current balance of 
        such account.
    ``(5) In this subsection:
            ``(A) Qualified education benefit.--The term `qualified 
        education benefit' means--
                    ``(i) a qualified tuition program (as defined in 
                section 529(b)(1)(A) of the Internal Revenue Code of 
                1986) or other prepaid tuition plan offered by a State; 
                and
                    ``(ii) a Coverdell education savings account (as 
                defined in section 530(b)(1) of the Internal Revenue 
                Code of 1986).
            ``(B) Qualified higher education expenses.--The term 
        `qualified higher education expenses' has the meaning given the 
        term in section 529(e) of the Internal Revenue Code of 1986.''; 
        and
            (2) in subsection (j)--
                    (A) in the subsection heading, by striking ``; 
                Tuition Prepayment Plans'';
                    (B) by striking paragraph (2);
                    (C) by redesignating paragraph (3) as paragraph 
                (2); and
                    (D) by inserting after paragraph (2) (as 
                redesignated by subparagraph (C)) the following 
                paragraph:
    ``(3) Notwithstanding paragraph (1) and section 472, assistance not 
received under this title may be excluded from both estimated financial 
assistance and cost of attendance, if that assistance is designated by 
the State providing that assistance to offset a specific component of 
the cost of attendance. If that assistance is excluded from estimated 
financial assistance or cost of attendance, that assistance shall be 
excluded from both calculations.''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to determinations of need under part F of title IV 
for academic years beginning on or after July 1, 2006.

    Subchapter G--General Provisions Relating to Student Assistance

SEC. 7431. DEFINITIONS.

    Section 481 (20 U.S.C. 1088) is amended--
            (1) in the second sentence of subsection (a)(2), by 
        inserting ``and that measures program length in credit hours or 
        clock hours'' after ``baccalaureate degree''; and
            (2) in subsection (b), by adding at the end the following:
    ``(3) For purposes of this title, the term `eligible program' 
includes an instructional program that utilizes direct assessment of 
student learning or recognizes the direct assessment of student 
learning by others, if such assessment is consistent with the 
accreditation of the institution or program utilizing the results of 
the assessment, in lieu of credit hours or clock hours as the measure 
of student learning. In the case of a program being determined eligible 
for the first time under this paragraph, such determination shall be 
made by the Secretary before such program is considered to be an 
eligible program.''.

SEC. 7432. COMPLIANCE CALENDAR.

    Section 482 (20 U.S.C. 1089) is amended by adding at the end the 
following:
    ``(a) Compliance Calendar.--Prior to the beginning of each award 
year, the Secretary shall provide to institutions of higher education a 
list of all the reports and disclosures required under this Act. The 
list shall include--
            ``(1) the date each report or disclosure is required to be 
        completed and to be submitted, made available, or disseminated;
            ``(2) the required recipients of each report or disclosure;
            ``(3) any required method for transmittal or dissemination 
        of each report or disclosure;
            ``(4) a description of the content of each report or 
        disclosure sufficient to allow the institution to identify the 
        appropriate individuals to be assigned the responsibility for 
        such report or disclosure;
            ``(5) references to the statutory authority, applicable 
        regulations, and current guidance issued by the Secretary 
        regarding each report or disclosure; and
            ``(6) any other information which is pertinent to the 
        content or distribution of the report or disclosure.''.

SEC. 7433. FORMS AND REGULATIONS.

    Section 483 (20 U.S.C. 1090) is amended--
            (1) by striking subsections (a) and (b), and inserting the 
        following:
    ``(a) Common Financial Aid Form Development and Processing.--
            ``(1) In general.--The Secretary, in cooperation with 
        representatives of agencies and organizations involved in 
        student financial assistance, shall produce, distribute, and 
        process free of charge common financial reporting forms as 
        described in this subsection to be used to determine the need 
        and eligibility of a student for financial assistance under 
        parts A through E of this title (other than under subpart 4 of 
        part A). The forms shall be made available to applicants in 
        both paper and electronic formats and shall be referred to 
        (except as otherwise provided in this subsection) as the `Free 
        Application for Federal Student Aid', or `FAFSA'.
            ``(2) Paper format.--
                    ``(A) In general.--Subject to subparagraph (C), the 
                Secretary shall produce, distribute, and process common 
                forms in paper format to meet the requirements of 
                paragraph (1). The Secretary shall develop a common 
                paper form for applicants who do not meet the 
                requirements of or do not wish to use the process 
                described in subparagraph (B).
                    ``(B) EZ fafsa.--
                            ``(i) In general.--The Secretary shall 
                        develop and use a simplified paper application 
                        form, to be known as the `EZ FAFSA', to be used 
                        for applicants meeting the requirements under 
                        section 479(c).
                            ``(ii) Reduced data requirements.--The EZ 
                        FAFSA shall permit an applicant to submit for 
                        purposes of determining financial need and 
                        eligibility, only the data elements required to 
                        make a determination of student eligibility and 
                        whether the applicant meets the requirements of 
                        section 479(c).
                            ``(iii) State data.--The Secretary shall 
                        include on the EZ FAFSA such data items as may 
                        be necessary to award State financial 
                        assistance, as provided under paragraph (5), 
                        except the Secretary shall not include a 
                        State's data if that State does not permit its 
                        applicants for State assistance to use the EZ 
                        FAFSA.
                            ``(iv) Free availability and processing.--
                        The provisions of paragraph (6) shall apply to 
                        the EZ FAFSA, and the data collected by means 
                        of the EZ FAFSA shall be available to 
                        institutions of higher education, guaranty 
                        agencies, and States in accordance with 
                        paragraph (9).
                            ``(v) Testing.--The Secretary shall conduct 
                        appropriate field testing on the EZ FAFSA.
                    ``(C) Phasing out the full paper form for students 
                who do not meet the requirements of the ez fafsa.--
                            ``(i) In general.--The Secretary shall make 
                        all efforts to encourage all applicants to 
                        utilize the electronic forms described in 
                        paragraph (3).
                            ``(ii) Phaseout of full paper fafsa.--Not 
                        later than 5 years after the date of enactment 
                        of the Higher Education Amendments of 2005, to 
                        the extent practicable, the Secretary shall 
                        phase out the printing of the long paper form 
                        created under subparagraph (A) and used by 
                        applicants who do not meet the requirements of 
                        the EZ FAFSA described in subparagraph (B).
                            ``(iii) Availability of full paper fafsa.--
                                    ``(I) In general.--Both prior to 
                                and after the phaseout described in 
                                clause (ii), the Secretary shall 
                                maintain on the Internet printable 
                                versions of the paper forms described 
                                in subparagraphs (A) and (B).
                                    ``(II) Accessibility.--The 
                                printable versions described in 
                                subclause (I) shall be made easily 
                                accessible and downloadable to students 
                                on the same Web site used to provide 
                                students with the common electronic 
                                forms described in paragraph (3).
                                    ``(III) Submission of forms.--The 
                                Secretary shall conduct a study to 
                                determine the feasibility of using 
                                downloaded forms to ensure sufficient 
                                quality to meet the processing 
                                requirements of this section. Following 
                                the completion of the study, the 
                                Secretary shall enable, to the extent 
                                practicable, students to submit a form 
                                described in this clause that is 
                                downloaded from the Internet and 
                                printed, in order to meet the filing 
                                requirements of this section and to 
                                receive financial assistance under this 
                                title.
                            ``(iv) Use of savings.--
                                    ``(I) In general.--The Secretary 
                                shall utilize any realized savings 
                                accrued by phasing out the full paper 
                                FAFSA and moving more applicants to the 
                                common electronic forms, to improve 
                                access to the electronic forms for 
                                applicants meeting the requirements of 
                                section 479(c).
                                    ``(II) Report.--The Secretary shall 
                                report annually to the authorizing 
                                committees on--
                                            ``(aa) the steps taken to 
                                        improve access to the common 
                                        electronic forms for applicants 
                                        meeting the requirements of 
                                        section 479(c); and
                                            ``(bb) the phaseout of the 
                                        long common paper form 
                                        described in subparagraph (A).
            ``(3) Electronic format.--
                    ``(A) In general.--The Secretary shall produce, 
                distribute, and process common forms in electronic 
                format and make such forms available through a broadly 
                accessible website to meet the requirements of 
                paragraph (1). The Secretary shall develop common 
                electronic forms for applicants who do not meet the 
                requirements of subparagraph (B). The Secretary shall 
                include on the common electronic forms space for 
                information that needs to be submitted from the 
                applicant to be eligible for State financial 
                assistance, as provided under paragraph (5), except the 
                Secretary shall not require applicants to complete data 
                required by any State other than the applicant's State 
                of residence. The Secretary shall use all available 
                technology to ensure that a student using a common 
                electronic form answers only the minimum number of 
                questions necessary.
                    ``(B) Simplified electronic applications.--
                            ``(i) In general.--The Secretary shall 
                        develop and use a simplified electronic 
                        application form to be used by applicants 
                        meeting the requirements of section 479(c) and 
                        an additional, separate simplified electronic 
                        application form to be used by applicants 
                        meeting the requirements under section 479(b).
                            ``(ii) Reduced data requirements.--The 
                        simplified electronic application forms shall 
                        permit an applicant to submit for purposes of 
                        determining financial need and eligibility, 
                        only the data elements required to make a 
                        determination of student eligibility and 
                        whether the applicant meets the requirements of 
                        subsection (b) or (c) of section 479.
                            ``(iii) State data.--The Secretary shall 
                        include on the simplified electronic 
                        application forms such data items as may be 
                        necessary to award State financial assistance, 
                        as provided under paragraph (5), except the 
                        Secretary shall not require applicants to 
                        complete data required by any State other than 
                        the applicant's State of residence and shall 
                        not include a State's data if such State does 
                        not permit its applicants for State assistance 
                        to use the simplified electronic application 
                        form described in this subparagraph.
                            ``(iv) Free availability and processing.--
                        The provisions of paragraph (6) shall apply to 
                        the simplified electronic application forms, 
                        and the data collected by means of the 
                        simplified electronic application forms shall 
                        be available to institutions of higher 
                        education, guaranty agencies, and States in 
                        accordance with paragraph (9).
                            ``(v) Testing.--The Secretary shall conduct 
                        appropriate field testing on the forms 
                        developed under this subparagraph.
                    ``(C) Use of forms.--Nothing in this subsection 
                shall be construed to prohibit the use of the forms 
                developed by the Secretary pursuant to this paragraph 
                by an eligible institution, eligible lender, a guaranty 
                agency, a State grant agency, a private computer 
                software provider, a consortium of such entities, or 
                such other entity as the Secretary may designate. Data 
                collected by the forms shall be used only for the 
                application, award, and administration of aid awarded 
                under this title, State aid, or aid awarded by eligible 
                institutions or such entities as the Secretary may 
                designate. No data collected by such electronic version 
                of the forms shall be used for making final aid awards 
                under this title until such data have been processed by 
                the Secretary or a contractor or designee of the 
                Secretary, except as may be permitted under this title.
                    ``(D) Privacy.--The Secretary shall ensure that 
                data collection under this paragraph complies with 
                section 552a of title 5, United States Code, and that 
                any entity using the electronic version of the forms 
                developed by the Secretary pursuant to this paragraph 
                shall maintain reasonable and appropriate 
                administrative, technical, and physical safeguards to 
                ensure the integrity and confidentiality of the 
                information, and to protect against security threats, 
                or unauthorized uses or disclosures of the information 
                provided on the electronic version of the forms.
                    ``(E) Signature.--Notwithstanding any other 
                provision of this Act, the Secretary may permit an 
                electronic form under this paragraph to be submitted 
                without a signature, if a signature is subsequently 
                submitted by the applicant or if the applicant uses a 
                personal identification number provided by the 
                Secretary under subparagraph (F).
                    ``(F) Personal identification numbers authorized.--
                The Secretary is authorized to assign to applicants 
                personal identification numbers--
                            ``(i) to enable the applicants to use such 
                        numbers as a signature for purposes of 
                        completing a form under this paragraph; and
                            ``(ii) for any purpose determined by the 
                        Secretary to enable the Secretary to carry out 
                        this title.
            ``(4) Streamlined reapplication process.--
                    ``(A) In general.--The Secretary shall develop 
                streamlined reapplication forms and processes, 
                including both paper and electronic reapplication 
                processes, consistent with the requirements of this 
                subsection, for an applicant who applies for financial 
                assistance under this title in the next succeeding 
                academic year subsequent to an academic year in which 
                such applicant applied for financial assistance under 
                this title.
                    ``(B) Mechanisms for reapplication.--The Secretary 
                shall develop appropriate mechanisms to support 
                reapplication.
                    ``(C) Identification of updated data.--The 
                Secretary shall determine, in cooperation with States, 
                institutions of higher education, and agencies and 
                organizations involved in student financial assistance, 
                the data elements that can be updated from the previous 
                academic year's application.
                    ``(D) Reduced data authorized.--Nothing in this 
                title shall be construed as limiting the authority of 
                the Secretary to reduce the number of data elements 
                required of reapplicants.
                    ``(E) Zero family contribution.--Applicants 
                determined to have a zero family contribution pursuant 
                to section 479(c) shall not be required to provide any 
                financial data in a replication form, except that which 
                is necessary to determine eligibility under such 
                section.
            ``(5) State requirements.--
                    ``(A) In general.--Except as provided in paragraphs 
                (2)(B)(iii), (3)(A), and (3)(B)(iii), the Secretary 
                shall include on the forms developed under this 
                subsection, such State-specific data items as the 
                Secretary determines are necessary to meet State 
                requirements for need-based State aid. Such items shall 
                be selected in consultation with State agencies in 
                order to assist in the awarding of State financial 
                assistance in accordance with the terms of this 
                subsection, except as provided in paragraphs 
                (2)(B)(iii), (3)(A), and (3)(B)(iii). The number of 
                such data items shall not be less than the number 
                included on the form for the 2005-2006 award year 
                unless a State notifies the Secretary that the State no 
                longer requires those data items for the distribution 
                of State need-based aid.
                    ``(B) Annual review.--The Secretary shall conduct 
                an annual review process to determine which data items 
                the States require to award need-based State aid.
                    ``(C) Encourage use of forms.--The Secretary shall 
                encourage States to take such steps as are necessary to 
                encourage the use of simplified application forms, 
                including those described in paragraphs (2)(B) and 
                (3)(B), for applicants who meet the requirements of 
                subsection (b) or (c) of section 479.
                    ``(D) Federal register notice.--The Secretary shall 
                publish, on an annual basis, a notice in the Federal 
                Register requiring States to inform the Secretary--
                            ``(i) if the State plans to use the FAFSA 
                        to collect data to determine eligibility for 
                        State need-based financial aid;
                            ``(ii) of the State-specific data that the 
                        State requires for delivery of State need-based 
                        financial aid; and
                            ``(iii) if the State agency is unable to 
                        permit applicants to utilize the simplified 
                        application forms described in paragraph (2)(B) 
                        or (3)(B).
                    ``(E) State notification to the secretary.--
                            ``(i) In general.--Each State agency shall 
                        notify the Secretary--
                                    ``(I) whether the State permits an 
                                applicant to file a form described in 
                                paragraph (2)(B) or (3)(B) for purposes 
                                of determining eligibility for State 
                                need-based financial aid; and
                                    ``(II) of the State-specific data 
                                that the State requires for delivery of 
                                State need-based financial aid.
                            ``(ii) Acceptance of forms.--If a State 
                        does not permit an applicant to file a form 
                        described in paragraph (2)(B) or (3)(B) for 
                        purposes of determining eligibility for State 
                        need-based financial aid, then the State shall 
                        notify the Secretary if it is not permitted to 
                        do so because of State law or agency policy. 
                        The notification shall include an 
                        acknowledgment that State-specific questions 
                        will not be included on a form described in 
                        paragraph (2)(B) or (3)(B).
                            ``(iii) Lack of notification by the 
                        state.--If a State does not notify the 
                        Secretary pursuant to clause (i), the Secretary 
                        shall--
                                    ``(I) permit residents of that 
                                State to complete simplified 
                                application forms under paragraphs 
                                (2)(B) and (3)(B); and
                                    ``(II) not require any resident of 
                                such State to complete any data 
                                previously required by that State under 
                                this section.
                    ``(F) Restriction.--The Secretary shall not require 
                applicants to complete any financial or non-financial 
                data that are not required by the applicant's State, 
                except as may be required for applicants who use the 
                paper forms described in subparagraphs (A) and (B) of 
                paragraph (2).
            ``(6) Charges to students and parents for use of forms 
        prohibited.--The common financial reporting forms prescribed by 
        the Secretary under this subsection shall be produced, 
        distributed, and processed by the Secretary, and no parent or 
        student shall be charged a fee by the Secretary, a contractor, 
        a third-party servicer or private software provider, or any 
        other public or private entity for the collection, processing, 
        or delivery of financial aid through the use of such forms. The 
        need and eligibility of a student for financial assistance 
        under parts A through E (other than under subpart 4 of part A) 
        may be determined only by using a form developed by the 
        Secretary pursuant to this subsection. No student may receive 
        financial assistance under parts A through E (other than under 
        subpart 4 of part A), except by use of a form developed by the 
        Secretary pursuant to this subsection. No data collected on a 
        paper or electronic form or other document that the Secretary 
        determines was created to replace a form prescribed under this 
        subsection and therefore violates the integrity of a simplified 
        and free financial aid application process and for which a fee 
        is charged shall be used to complete the form prescribed under 
        this subsection. No person, commercial entity, or other entity 
        shall request, obtain, or utilize an applicant's personal 
        identification number assigned under paragraph (3)(F) for 
        purposes of submitting an application on an applicant's behalf.
            ``(7) Application processing cycle.--The Secretary shall--
                    ``(A) enable students to submit forms created under 
                this subsection in order to meet the filing 
                requirements of this section and in order to receive 
                financial assistance from programs under this title; 
                and
                    ``(B) enable students to submit forms created under 
                this subsection and initiate the processing of such 
                forms under this subsection, as early as practicable 
                prior to January 1 of the student's planned year of 
                enrollment.
            ``(8) Early estimates.--The Secretary shall permit an 
        applicant to complete a form described in this subsection in 
        the years prior to enrollment in order to obtain from the 
        Secretary a nonbinding estimate of the applicant's expected 
        family contribution, as defined in section 473. Such applicant 
        shall be permitted to update information submitted on a form 
        described in this subsection using the process required under 
        paragraph (4).
            ``(9) Distribution of data.--Institutions of higher 
        education, guaranty agencies, and States shall receive, without 
        charge, the data collected by the Secretary using the form 
        developed pursuant to this subsection for the purposes of 
        processing loan applications and determining need and 
        eligibility for institutional and State financial aid awards. 
        Entities designated by institutions of higher education, 
        guaranty agencies, or States to receive such data shall be 
        subject to all the requirements of this section, unless such 
        requirements are waived by the Secretary.
            ``(10) Third party servicers and private software 
        providers.--To the extent practicable and in a timely manner, 
        the Secretary shall provide, to private organizations and 
        consortia that develop software used by institutions of higher 
        education for the administration of funds under this title, all 
        the necessary specifications that the organizations and 
        consortia must meet for the software the organizations and 
        consortia develop, produce, and distribute (including any 
        diskette, modem, or network communications) which are so used. 
        The specifications shall contain record layouts for required 
        data. The Secretary shall develop in advance of each processing 
        cycle an annual schedule for providing such specifications. The 
        Secretary, to the extent practicable, shall use means of 
        providing such specifications, including conferences and other 
        meetings, outreach, and technical support mechanisms (such as 
        training and printed reference materials). The Secretary shall, 
        from time to time, solicit from such organizations and 
        consortia means of improving the support provided by the 
        Secretary.
            ``(11) Parent's social security number and birth date.--The 
        Secretary is authorized to include on the form developed under 
        this subsection space for the social security number and birth 
        date of parents of dependent students seeking financial 
        assistance under this title.'';
            (2) by redesignating subsections (c) through (e) as 
        subsections (b) through (d), respectively;
            (3) in subsection (c) (as redesignated by paragraph (2)), 
        by striking ``that is authorized'' and all that follows through 
        the period at the end and inserting ``or other appropriate 
        provider of technical assistance and information on 
        postsecondary educational services that is authorized under 
        section 663(a) of the Individuals with Disabilities Education 
        Act. Not later than 2 years after the date of enactment of the 
        Higher Education Amendments of 2005, the Secretary shall test 
        and implement, to the extent practicable, a toll-free telephone 
        based system to permit applicants who meet the requirements of 
        479(c) to submit an application over such system.''; and
            (4) by striking subsection (d) (as redesignated by 
        paragraph (2)) and inserting the following:
    ``(d) Assistance in Preparation of Financial Aid Application.--
            ``(1) Preparation authorized.--Notwithstanding any 
        provision of this Act, an applicant may use a preparer for 
        consultative or preparation services for the completion of the 
        common financial reporting forms described in subsection (a) if 
        the preparer satisfies the requirements of this subsection.
            ``(2) Preparer identification.--Any common financial 
        reporting form required to be made under this title shall 
        include the name, signature, address or employer's address, 
        social security number or employer identification number, and 
        organizational affiliation of the preparer of such common 
        financial reporting form.
            ``(3) Additional requirements.--A preparer that provides 
        consultative or preparation services pursuant to this 
        subsection shall--
                    ``(A) clearly inform individuals upon initial 
                contact (including advertising in clear and conspicuous 
                language on the website of the preparer, including by 
                providing a link directly to the website described in 
                subsection (a)(3), if the preparer provides such 
                services through a website) that the common financial 
                reporting forms that are required to determine 
                eligibility for financial assistance under parts A 
                through E (other than subpart 4 of part A) may be 
                completed for free via paper or electronic forms 
                provided by the Secretary;
                    ``(B) refrain from producing or disseminating any 
                form other than the forms produced by the Secretary 
                under subsection (a); and
                    ``(C) not charge any fee to any individual seeking 
                such services who meets the requirements of subsection 
                (b) or (c) of section 479.
            ``(4) Special rule.--Nothing in this Act shall be construed 
        to limit preparers of the common financial reporting forms 
        required to be made under this title who meet the requirements 
        of this subsection from collecting source information from a 
        student or parent, including Internal Revenue Service tax 
        forms, in providing consultative and preparation services in 
        completing the forms.''.

SEC. 7434. STUDENT ELIGIBILITY.

    Section 484 (20 U.S.C. 1091) is amended--
            (1) in subsection (d), by adding at the end the following:
            ``(4) The student shall be determined by the institution of 
        higher education as having the ability to benefit from the 
        education or training offered by the institution of higher 
        education, upon satisfactory completion of 6 credit hours or 
        the equivalent coursework that are applicable toward a degree 
        or certificate offered by the institution of higher 
        education.'';
            (2) by striking subsection (l) and inserting the following:
    ``(l) Courses Offered Through Distance Education.--
            ``(1) Relation to correspondence courses.--
                    ``(A) In general.--A student enrolled in a course 
                of instruction at an institution of higher education 
                that is offered principally through distance education 
                and leads to a recognized certificate, or associate, 
                baccalaureate, or graduate degree, conferred by such 
                institution, shall not be considered to be enrolled in 
                correspondence courses.
                    ``(B) Exception.--An institution of higher 
                education referred to in subparagraph (A) shall not 
                include an institution or school described in section 
                3(3)(C) of the Carl D. Perkins Vocational and Technical 
                Education Act of 1998.
            ``(2) Restriction or reductions of financial aid.--A 
        student's eligibility to receive grants, loans, or work 
        assistance under this title shall be reduced if a financial aid 
        officer determines under the discretionary authority provided 
        in section 479A that distance education results in a 
        substantially reduced cost of attendance to such student.
            ``(3) Special rule.--For award years prior to the date of 
        enactment of this subsection, the Secretary shall not take any 
        compliance, disallowance, penalty, or other action against a 
        student or an eligible institution when such action arises out 
        of such institution's prior award of student assistance under 
        this title if the institution demonstrates to the satisfaction 
        of the Secretary that its course of instruction would have been 
        in conformance with the requirements of this subsection.
            ``(4) Definition.--In this subsection, the term `distance 
        education' has the meaning given the term in section 102.''; 
        and
            (3) in subsection (r)--
                    (A) in the matter preceding the table, by inserting 
                ``of a controlled substance, while such student is 
                enrolled in an institution of higher education and 
                receiving financial assistance under this title,'' 
                after ``the possession'';
                    (B) in the column heading of the first table, by 
                inserting ``while the student is enrolled in an 
                institution of higher education and receiving financial 
                assistance under this title'' after ``possession of a 
                controlled substance''; and
                    (C) by redesignating paragraph (3) as paragraph 
                (4); and
                    (D) by inserting after paragraph (2) the following:
            ``(2) Interaction with fafsa.--The Secretary shall not 
        require a student to provide information regarding the 
        student's possession of a controlled substance on the Free 
        Application for Federal Student Aid described in section 
        483(a).''.

SEC. 7435. STATUTE OF LIMITATIONS AND STATE COURT JUDGMENTS.

    Section 484A (20 U.S.C. 1091a) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1), by striking ``and'' after the 
                semicolon;
                    (B) in paragraph (2), by striking the period and 
                inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(3) in collecting any obligation arising from a loan made 
        under part E of this title, an institution of higher education 
        that has an agreement with the Secretary pursuant to section 
        463(a) shall not be subject to a defense raised by any borrower 
        based on a claim of infancy.''; and
            (2) by adding at the end the following:
    ``(d) Special Rule.--This section shall not apply in the case of a 
student who is deceased or to a deceased student's estate or the estate 
of such student's family. If a student is deceased, then the student's 
estate or the estate of the student's family shall not be required to 
repay any financial assistance under this title , including interest 
paid on the student's behalf, collection costs, or other charges 
specified in this title.''.

SEC. 7436. INSTITUTIONAL REFUNDS.

    Section 484B (20 U.S.C. 1091B) is amended--
            (1) in subsection (a)--
                    (A) in the matter preceding clause (i) of paragraph 
                (2)(A), by striking ``a leave of'' and inserting ``1 or 
                more leaves of''; and
                    (B) in paragraph (3)(C)(i), by striking ``grant or 
                loan assistance under this title'' and inserting 
                ``grant assistance under subparts 1 and 3 of part A, or 
                loan assistance under parts B, D, and E,'';
            (2) in subsection (b), by adding at the end the following:
            ``(4) Time frame.--Not later than 45 days after the date of 
        an institution's determination that a student withdrew from the 
        institution, the institution shall--
                    ``(A) return the amount required under paragraph 
                (1);
                    ``(B) notify the student of the applicable 
                requirements regarding the overpayment of grant and 
                loan assistance and
                    ``(C) notify the student of the student's 
                eligibility for post-withdrawal disbursements.'';
            (3) in subsection (c)(2), by striking ``may determine the 
        appropriate withdrawal date.'' and inserting ``may determine--
                    (A) the appropriate withdrawal date; and
                    ``(B) that the requirements of this section do not 
                apply to the student.''; and
            (4) in subsection (d)(2), by striking ``clock hours--'' and 
        all that follows through the period and inserting ``clock hours 
        scheduled to be completed by the student in that period as of 
        the day the student withdrew.''.

SEC. 7437. INSTITUTIONAL AND FINANCIAL ASSISTANCE FOR STUDENTS.

    Section 485 (20 U.S.C. 1092) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (N), by striking 
                        ``and'' after the semicolon;
            (ii) in subparagraph (O), by striking the period and 
        inserting a semicolon; and
                            (iii) by adding at the end the following:
            ``(P) student body diversity at the institution, including 
        information on the percentage of enrolled, full-time students 
        who are--
                    ``(i) male;
                    ``(ii) female;
                    ``(iii) from a low-income background; and
                    ``(iv) a self-identified member of a major racial 
                or ethnic group;
                    ``(Q) the placement in employment of, and types of 
                employment obtained by, graduates of the institution's 
                degree or certificate programs, gathered from such 
                sources as alumni surveys, student satisfaction 
                surveys, the National Survey of Student Engagement, the 
                Community College Survey of Student Engagement, State 
                data systems, or other relevant sources; and
                    ``(R) the types of graduate and professional 
                education in which graduates of the institution's 4-
                year degree programs enrolled, gathered from such 
                sources as alumni surveys, student satisfaction 
                surveys, the National Survey of Student Engagement, 
                State data systems, or other relevant sources.'';
                    (B) by striking paragraph (4) and inserting the 
                following:
            ``(4) For purposes of this section, institutions may--
                    ``(A) exclude from the information disclosed in 
                accordance with subparagraph (L) of paragraph (1) the 
                completion or graduation rates of students who leave 
                school to serve in the Armed Forces, on official church 
                missions, or with a recognized foreign aid service of 
                the Federal Government; or
                    ``(B) in cases where the students described in 
                subparagraph (A) represent 20 percent or more of the 
                certificate- or degree-seeking, full-time, 
                undergraduate students at the institution, the 
                institution may recalculate the completion or 
                graduation rates of such students by excluding from the 
                calculation described in paragraph (3) the time period 
                such students were not enrolled due to their service in 
                the Armed Forces, on official church missions, or with 
                a recognized foreign aid service of the Federal 
                Government.''; and
                    (C) by adding at the end the following:
    ``(7) The information disclosed under subparagraph (L) of paragraph 
(1), or reported under subsection (e), shall include information 
disaggregated by gender, by each major racial and ethnic subgroup, and 
by low-income background status as measured by Federal Pell Grant 
eligibility, if the number of students in such subgroup or with such 
status is sufficient to yield statistically reliable information and 
reporting would not reveal personally identifiable information about an 
individual student. If such number is not sufficient for such purposes, 
then the institution shall note that the institution enrolled too few 
of such students to so disclose or report with confidence and 
confidentiality.'';
            (2) in subsection (b), by adding at the end the following:
            ``(3) Each eligible institution shall, during the exit 
        interview required by this subsection, provide to a borrower of 
        a loan made under part B, D, or E a clear and conspicuous 
        notice describing the general effects of using a consolidation 
        loan to discharge the borrower's student loans, including--
                    ``(A) the effects of consolidation on total 
                interest to be paid, fees to be paid, and length of 
                repayment;
                    ``(B) the effects of consolidation on a borrower's 
                underlying loan benefits, including loan forgiveness, 
                cancellation, and deferment;
                    ``(C) the ability for the borrower to prepay the 
                loan, pay on a shorter schedule, and to change 
                repayment plans, and that borrower benefit programs may 
                vary among different loan holders;
                    ``(D) the tax benefits for which the borrower may 
                be eligible; and
                    ``(E) the consequences of default.'';
            (3) in subsection (d)(2)--
                    (A) by inserting ``grant assistance, as well as 
                State'' after ``describing State''; and
                    (B) by inserting ``and other means, including 
                through the Internet'' before the period at the end;
            (4) in subsection (e), by striking paragraph (3) and 
        inserting the following:
            ``(3) For purposes of this subsection, institutions may--
                    ``(A) exclude from the reporting requirements under 
                paragraphs (1) and (2) the completion or graduation 
                rates of students and student athletes who leave school 
                to serve in the Armed Forces, on official church 
                missions, or with a recognized foreign aid service of 
                the Federal Government; or
                    ``(B) in cases where the students described in 
                subparagraph (A) represent 20 percent or more of the 
                certificate- or degree-seeking, full-time, 
                undergraduate students at the institution, the 
                institution may calculate the completion or graduation 
                rates of such students by excluding from the 
                calculations described in paragraph (1) the time period 
                such students were not enrolled due to their service in 
                the Armed Forces, on official church missions, or with 
                a recognized foreign aid service of the Federal 
                Government.'';
            (5) in the matter preceding subparagraph (A) of subsection 
        (f)(1), by inserting ``, other than a foreign institution of 
        higher education,'' after ``under this title''; and
            (6) by adding at the end the following:
    ``(h) Transfer of Credit Policies.--
            ``(1) Disclosure.--Each institution of higher education 
        participating in any program under this title shall publicly 
        disclose in a readable and comprehensible manner the 
        institution's transfer of credit policies which shall include a 
        statement of the institution's current transfer of credit 
        policies that includes, at a minimum--
                    ``(A) a statement that transfer of credit shall not 
                be denied solely on the basis of the agency or 
                association that accredited such other institution of 
                higher education, if that agency or association is 
                recognized by the Secretary pursuant to section 496 to 
                be a reliable authority as to the quality of the 
                education or training offered;
                    ``(B) a list of institutions of higher education 
                with which the institution has established an 
                articulation agreement; and
                    ``(C) the percentage of students at the institution 
                who successfully transfer academic credits, updated on 
                an annual basis.
            ``(2) Rule of construction.--Nothing in this subsection 
        shall be construed to--
                    ``(A) authorize an officer or employee of the 
                Department to exercise any direction, supervision, or 
                control over the curriculum, program of instruction, 
                administration, or personnel of any institution of 
                higher education, or over any accrediting agency or 
                association;
                    ``(B) limit the application of the General 
                Education Provisions Act; or
                    ``(C) create any legally enforceable right on the 
                part of a student to require an institution of higher 
                education to accept a transfer of credit from another 
                institution.''.

SEC. 7438. NATIONAL STUDENT LOAN DATA SYSTEM.

    Section 485B(a) (20 U.S.C. 1092b(a)) is amended--
            (1) by redesignating paragraphs (6) through (10) as 
        paragraphs (7) through (11), respectively;
            (2) in paragraph (5) (as added by Public Law 101-610), by 
        striking ``effectiveness.'' and inserting ``effectiveness;''; 
        and
            (3) by redesignating paragraph (5) (as added by Public Law 
        101-234) as paragraph (6).

SEC. 7439. EARLY AWARENESS OF FINANCIAL AID ELIGIBILITY.

    Part G of title IV (20 U.S.C. 1088 et seq.) is amended by inserting 
after section 485C (20 U.S.C. 1092c) the following:

``SEC. 485D. EARLY AWARENESS OF FINANCIAL AID ELIGIBILITY.

    ``(a) In General.--The Secretary shall implement, in cooperation 
with States, institutions of higher education, secondary schools, 
middle schools, early intervention and outreach programs under this 
title, other agencies and organizations involved in student financial 
assistance and college access, public libraries, community centers, 
employers, and businesses, a comprehensive system of early financial 
aid information in order to provide students and families with early 
information about financial aid and early estimates of such students' 
eligibility for financial aid from multiple sources. Such system shall 
include the activities described in subsections (b) and (c).
    ``(b) Communication of Availability of Aid and Aid Eligibility.--
            ``(1) Students who receive benefits.--The Secretary shall--
                    ``(A) make special efforts to notify students who 
                receive or are eligible to receive benefits under 
                Federal means-tested benefit programs (including the 
                school lunch program established under the Richard B. 
                Russell National School Lunch Act (42 U.S.C. 1751 et 
                seq.), the food stamp program under the Food Stamp Act 
                of 1977 (7 U.S.C. 2011 et seq.), and other such 
                programs as determined by the Secretary) of such 
                students' potential eligibility for a maximum Federal 
                Pell Grant under subpart 1 of part A; and
                    ``(B) disseminate such informational materials as 
                the Secretary determines necessary.
            ``(2) Middle school students.--The Secretary, in 
        cooperation with States, institutions of higher education, 
        other organizations involved in college access and student 
        financial aid, middle schools, and programs under this title 
        that serve middle school students, shall make special efforts 
        to notify students and their parents of the availability of 
        financial aid under this title and, in accordance with 
        subsection (c), shall provide nonbinding estimates of grant and 
        loan aid that an individual may be eligible for under this 
        title upon completion of an application form under section 
        483(a). The Secretary shall ensure that such information is as 
        accurate as possible and that such information is provided in 
        an age-appropriate format using dissemination mechanisms 
        suitable for students in middle school.
            ``(3) Secondary school students.--The Secretary, in 
        cooperation with States, institutions of higher education, 
        other organizations involved in college access and student 
        financial aid, secondary schools, and programs under this title 
        that serve secondary school students, shall make special 
        efforts to notify students in secondary school and their 
        parents, as early as possible but not later than such students' 
        junior year of secondary school, of the availability of 
        financial aid under this title and, in accordance with 
        subsection (c), shall provide nonbinding estimates of the 
        amounts of grant and loan aid that an individual may be 
        eligible for under this title upon completion of an application 
        form under section 483(a). The Secretary shall ensure that such 
        information is as accurate as possible and that such 
        information is provided in an age-appropriate format using 
        dissemination mechanisms suitable for students in secondary 
        school.
            ``(4) Adult learners.--The Secretary, in cooperation with 
        States, institutions of higher education, other organizations 
        involved in college access and student financial aid, 
        employers, workforce investment boards and public libraries, 
        shall make special efforts to provide individuals who would 
        qualify as independent students, as defined in section 480(d), 
        with information regarding the availability of financial aid 
        under this title and, in accordance with subsection (c), with 
        nonbinding estimates of the amounts of grant and loan aid that 
        an individual may be eligible for under this title upon 
        completion of an application form under section 483(a). The 
        Secretary shall ensure that such information--
                    ``(A) is as accurate as possible;
                    ``(B) includes specific information regarding the 
                availability of financial aid for students qualified as 
                independent students, as defined in section 480(d); and
                    ``(C) uses dissemination mechanisms suitable for 
                adult learners.
            ``(5) Public awareness campaign.--Not later than 2 years 
        after the date of enactment of the Higher Education Amendments 
        of 2005, the Secretary, in coordination with States, 
        institutions of higher education, early intervention and 
        outreach programs under this title, other agencies and 
        organizations involved in student financial aid, local 
        educational agencies, public libraries, community centers, 
        businesses, employers, employment services, workforce 
        investment boards, and movie theaters, shall implement a public 
        awareness campaign in order to increase national awareness 
        regarding the availability of financial aid under this title. 
        The public awareness campaign shall disseminate accurate 
        information regarding the availability of financial aid under 
        this title and shall be implemented, to the extent practicable, 
        using a variety of media, including print, television, radio 
        and the Internet. The Secretary shall design and implement the 
        public awareness campaign based upon relevant independent 
        research and the information and dissemination strategies found 
        most effective in implementing paragraphs (1) through (4).
    ``(c) Availability of Nonbinding Estimates of Federal Financial Aid 
Eligibility.--
            ``(1) In general.--The Secretary, in cooperation with 
        States, institutions of higher education, and other agencies 
        and organizations involved in student financial aid, shall 
        provide, via a printed form and the Internet or other 
        electronic means, the capability for individuals to determine 
        easily, by entering relevant data, nonbinding estimates of 
        amounts of grant and loan aid an individual may be eligible for 
        under this title upon completion and processing of an 
        application and enrollment in an institution of higher 
        education.
            ``(2) Data elements.--The Secretary, in cooperation with 
        States, institutions of higher education, and other agencies 
        and organizations involved in student financial aid, shall 
        determine the data elements that are necessary to create a 
        simplified form that individuals can use to obtain easily 
        nonbinding estimates of the amounts of grant and loan aid an 
        individual may be eligible for under this title.
            ``(3) Qualification to use simplified application.--The 
        capability provided under this paragraph shall include the 
        capability to determine whether the individual is eligible to 
        submit a simplified application form under paragraph (2)(B) or 
        (3)(B) of section 483(a).''.

SEC. 7440. COLLEGE ACCESS INITIATIVE.

    Part G of title IV (20 U.S.C. 1088 et seq.) is further amended by 
inserting after section 485D (as added by section 7439) the following:

``SEC. 485E. COLLEGE ACCESS INITIATIVE.

    ``(a) State-by-State Information.--The Secretary shall direct each 
guaranty agency with which the Secretary has an agreement under section 
428(c) to provide to the Secretary the information necessary for the 
development of Internet Web links and access for students and families 
to a comprehensive listing of the postsecondary education opportunities 
programs, publications, Internet Web sites, and other services 
available in the States for which such agency serves as the designated 
guarantor.
    ``(b) Guaranty Agency Activities.--
            ``(1) Plan and activity required.--Each guaranty agency 
        with which the Secretary has an agreement under section 428(c) 
        shall develop a plan, and undertake the activity, necessary to 
        gather the information required under subsection (a) and to 
        make such information available to the public and to the 
        Secretary in a form and manner prescribed by the Secretary.
            ``(2) Activities.--Each guaranty agency shall undertake 
        such activities as are necessary to promote access to 
        postsecondary education for students through providing 
        information on college planning, career preparation, and paying 
        for college. The guaranty agency shall publicize such 
        information and coordinate such activities with other entities 
        that provide or distribute such information in the States for 
        which such guaranty agency serves as the designated guarantor.
            ``(3) Funding.--The activities required by this section may 
        be funded from the guaranty agency's Operating Fund established 
        pursuant to section 422B and to the extent funds remain, from 
        earnings on the restricted account established pursuant to 
        section 422(h)(4).
            ``(4) Rule of construction.--Nothing in this subsection 
        shall require a guaranty agency to duplicate any efforts 
        currently underway that meet the requirements of this 
        subsection.
    ``(c) Access to Information.--
            ``(1) Secretary's responsibility.--The Secretary shall 
        ensure the availability of the information provided, by the 
        guaranty agencies in accordance with this section, to students, 
        parents, and other interested individuals, through Web links or 
        other methods prescribed by the Secretary.
            ``(2) Guaranty agency responsibility.--The guaranty 
        agencies shall ensure that the information required by this 
        section is available without charge in printed format for 
        students and parents requesting such information.
            ``(3) Publicity.--Not later than 270 days after the date of 
        enactment of the Higher Education Amendments Act of 2005, the 
        Secretary and guaranty agencies shall publicize the 
        availability of the information required by this section, with 
        special emphasis on ensuring that populations that are 
        traditionally underrepresented in postsecondary education are 
        made aware of the availability of such information.''.

SEC. 7441. PROGRAM PARTICIPATION AGREEMENTS.

    Section 487 (20 U.S.C. 1094) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (23), by adding at the end the 
                following:
                    ``(D) An institution shall be considered in 
                compliance with the requirements of subparagraph (A) 
                for any student to whom the institution electronically 
                transmits a message containing a voter registration 
                form acceptable for use in the State in which the 
                institution is located, or an Internet address where 
                such a form can be downloaded, if such information is 
                in an electronic message devoted solely to voter 
                registration.''; and
                    (B) by adding at the end the following:
            ``(24) The institution will, as calculated in accordance 
        with subsection (g)(1), have not less than 10 percent of its 
        revenues from sources other than funds provided under this 
        title, or will be subject to the sanctions described in 
        subsection (g)(2).'';
            (2) in subsection (c)(1)(A)(i), by inserting ``, except 
        that the Secretary may modify the requirements of this clause 
        with regard to an institution outside the United States'' 
        before the semicolon at the end;
            (3) by redesignating subsections (d) and (e) as subsection 
        (e) and (f), respectively;
            (4) by inserting after subsection (c) the following:
    ``(d) Institutional Requirements for Teach-Outs.--
            ``(1) In general.--In the event the Secretary initiates the 
        limitation, suspension, or termination of the participation of 
        an institution of higher education in any program under this 
        title under the authority of subsection (c)(1)(F) or initiates 
        an emergency action for termination under the authority of 
        subsection (c)(1)(G) and its prescribed regulations, the 
        Secretary shall require that institution to prepare a teach-out 
        plan for submission to the institution's accrediting agency or 
        association in compliance with section 496(c)(4), the 
        Secretary's regulations on teach-out plans, and the standards 
        of the institution's accrediting agency or association.
            ``(2) Teach-out plan defined.--In this subsection, the term 
        `teach-out plan' means a written plan that provides for the 
        equitable treatment of students if an institution of higher 
        education ceases to operate before all students have completed 
        their program of study, and may include, if required by the 
        institution's accrediting agency or association, an agreement 
        between institutions for such a teach-out plan.''; and
            (5) by adding at the end the following:
    ``(g) Implementation of Nontitle IV Revenue Requirement.--
            ``(1) Calculation.--In carrying out subsection (a)(24), an 
        institution shall use the cash basis of accounting and count 
        the following funds as from sources of funds other than funds 
        provided under this title:
                    ``(A) Funds used by students from sources other 
                than funds received under this title to pay tuition, 
                fees, and other institutional charges to the 
                institution, provided the institution can reasonably 
                demonstrate that such funds were used for such 
                purposes.
                    ``(B) Funds used by the institution to satisfy 
                matching-fund requirements for programs under this 
                title.
                    ``(C) Funds used by a student from savings plans 
                for educational expenses established by or on behalf of 
                the student and which qualify for special tax treatment 
                under the Internal Revenue Code of 1986.
                    ``(D) Funds paid by a student, or on behalf of a 
                student by a party other than the institution, to the 
                institution for an education or training program that 
                is not eligible for funds under this title, provided 
                that the program is approved or licensed by the 
                appropriate State agency or an accrediting agency 
                recognized by the Secretary.
                    ``(E) Funds generated by the institution from 
                institutional activities that are necessary for the 
                education and training of the institution's students, 
                if such activities are--
                            ``(i) conducted on campus or at a facility 
                        under the control of the institution;
                            ``(ii) performed under the supervision of a 
                        member of the institution's faculty; and
                            ``(iii) required to be performed by all 
                        students in a specific educational program at 
                        the institution.
                    ``(F) Institutional aid, as follows:
                            ``(i) In the case of loans made by the 
                        institution, only the amount of loan repayments 
                        received by the institution during the fiscal 
                        year for which the determination is made.
                            ``(ii) In the case of scholarships provided 
                        by the institution, only those scholarship 
                        funds provided by the institution that are--
                                    ``(I) in the form of monetary aid 
                                based upon the academic achievements or 
                                financial need of students; and
                                    ``(II) disbursed during the fiscal 
                                year for which the determination is 
                                made from an established restricted 
                                account and only to the extent that the 
                                funds in that account represent 
                                designated funds from an outside source 
                                or income earned on those funds.
                            ``(iii) In the case of tuition discounts, 
                        only those tuition discounts based upon the 
                        academic achievement or financial need of 
                        students.
            ``(2) Sanctions.--
                    ``(A) Failure to meet requirement for 1 year.--In 
                addition to such other means of enforcing the 
                requirements of this title as may be available to the 
                Secretary, if an institution fails to meet the 
                requirements of subsection (a)(24) in any year, the 
                Secretary may impose 1 or both of the following 
                sanctions on the institution:
                            ``(i) Place the institution on provisional 
                        certification in accordance with section 498(h) 
                        until the institution demonstrates, to the 
                        satisfaction of the Secretary, that it is in 
                        compliance with subsection (a)(24).
                            ``(ii) Require such other increased 
                        monitoring and reporting requirements as the 
                        Secretary determines necessary until the 
                        institution demonstrates, to the satisfaction 
                        of the Secretary, that it is in compliance with 
                        subsection (a)(24).
                    ``(B) Failure to meet requirement for 2 years.--An 
                institution that fails to meet the requirements of 
                subsection (a)(24) for 2 consecutive years shall be 
                ineligible to participate in the programs authorized 
                under this title.
            ``(3) Public availability of information.--The Secretary 
        shall make publicly available, through the means described in 
        subsection (b) of section 131, any institution that fails to 
        meet the requirements of subsection (a)(24) in any year as an 
        institution that is failing to meet the minimum non-Federal 
        source of revenue requirements of such subsection (a)(24).''.

SEC. 7442. REGULATORY RELIEF AND IMPROVEMENT.

    Section 487A(b) (20 U.S.C. 1094a(b)) is amended--
            (1) in paragraph (1)-
                    (A) by striking ``1998'' and inserting ``2005'' ; 
                and
                    (B) by striking ``1999'' and inserting ``2006''; 
                and
            (2) by striking the matter preceding paragraph (2)(A) and 
        inserting the following:
            ``(2) Report.--The Secretary shall review and evaluate the 
        experience of institutions participating as experimental sites 
        and shall, on a biennial basis, submit a report based on the 
        review and evaluation to the authorizing committees. Such 
        report shall include--''; and
            (3) in paragraph (3)--
                    (A) in subparagraph (A)--
                            (i) by striking ``Upon the submission of 
                        the report required by paragraph (2), the'' and 
                        inserting ``The''; and
                            (ii) by inserting ``periodically'' after 
                        ``authorized to'';
                    (B) by striking subparagraph (B);
                    (C) by redesignating subparagraph (C) as 
                subparagraph (B); and
                    (D) in subparagraph (B) (as redesignated by 
                subparagraph (C))--
                            (i) by inserting ``, including requirements 
                        related to the award process and disbursement 
                        of student financial aid (such as innovative 
                        delivery systems for modular or compressed 
                        courses, or other innovative systems), 
                        verification of student financial aid 
                        application data, entrance and exit interviews, 
                        or other management procedures or processes as 
                        determined in the negotiated rulemaking process 
                        under section 492,'' after ``requirements in 
                        this title''; and
                            (ii) by inserting ``(other than an award 
                        rule related to an experiment in modular or 
                        compressed schedules)'' after ``award rules''; 
                        and
                            (iii) by inserting ``unless the waiver of 
                        such provisions is authorized by another 
                        provision under this title'' before the period 
                        at the end.

SEC. 7443. TRANSFER OF ALLOTMENTS.

    Section 488 (20 U.S.C. 1095) is amended in the first sentence--
            (1) in paragraph (1), by striking ``and'' after the 
        semicolon;
            (2) in paragraph (2), by striking ``413D.'' and inserting 
        ``413D; and''; and
            (3) by adding at the end ``(3) transfer 25 percent of the 
        institution's allotment under section 413D to the institution's 
        allotment under section 442.''.

SEC. 7444. WAGE GARNISHMENT REQUIREMENT.

    Section 488A(a)(1) (20 U.S.C. 1095a(a)(1)) is amended by striking 
``10 percent'' and inserting ``15 percent''.

SEC. 7445. PURPOSE OF ADMINISTRATIVE PAYMENTS.

    Section 489(b) (20 U.S.C. 1096(b)) is amended by striking 
``offsetting the administrative costs of'' and inserting 
``administering''.

SEC. 7446. ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSISTANCE.

    Section 491 (20 U.S.C. 1098) is amended--
            (1) in subsection (a)(2)--
                    (A) in subparagraph (B), by striking ``and'' after 
                the semicolon;
                    (B) in subparagraph (C), by striking the period and 
                inserting a semicolon; and
                    (C) by adding at the end the following:
                    ``(D) to provide knowledge and understanding of 
                early intervention programs, and to make 
                recommendations that will result in early awareness by 
                low- and moderate-income students and families--
                            ``(i) of their eligibility for assistance 
                        under this title; and
                            ``(ii) to the extent practicable, of their 
                        eligibility for other forms of State and 
                        institutional need-based student assistance; 
                        and
                    ``(E) to make recommendations that will expand and 
                improve partnerships among the Federal Government, 
                States, institutions of higher education, and private 
                entities to increase the awareness and the total amount 
                of need-based student assistance available to low- and 
                moderate-income students.'';
            (2) in subsection (c), by adding at the end the following:
    ``(3) The appointment of a member under subparagraph (A) or (B) of 
paragraph (1) shall be effective upon confirmation of the member by the 
Senate and publication of such appointment in the Congressional 
Record.''.
            (3) in subsection (d)(6), by striking ``, but nothing'' and 
        all that follows through ``or analyses'';
            (4) in subsection (j)--
                    (A) in paragraph (1)--
                            (i) by inserting ``and simplification'' 
                        after ``modernization'' each place the term 
                        appears; and
                            (ii) by striking ``including'' and all that 
                        follows through ``Department,''; and
                    (B) by striking paragraphs (4) and (5) and 
                inserting the following:
            ``(4) conduct a review and analysis of regulations in 
        accordance with subsection (l); and
            ``(5) conduct a study in accordance with subsection (m).'';
            (5) in subsection (k), by striking ``2004'' and inserting 
        ``2010''; and
            (6) by adding at the end the following:
    ``(l) Review and Analysis of Regulations.--
            ``(1) Recommendations.--The Advisory Committee shall make 
        recommendations to the Secretary and Congress for consideration 
        of future legislative action regarding redundant or outdated 
        regulations under this title, consistent with the Secretary's 
        requirements under section 498B.
            ``(2) Review and analysis of regulations.--The Advisory 
        Committee shall conduct a review and analysis of the 
        regulations issued under this title that are in effect at the 
        time of the review and that apply to the operations or 
        activities of participants in the programs assisted under this 
        title. The review and analysis may include a determination of 
        whether the regulation is duplicative, is no longer necessary, 
        is inconsistent with other Federal requirements, or is overly 
        burdensome. In conducting the review, the Advisory Committee 
        shall pay specific attention to evaluating ways in which 
        regulations under this title affecting institutions of higher 
        education (other than institutions described in section 
        102(a)(1)(C)), that have received in each of the 2 most recent 
        award years prior to the date of enactment of the Higher 
        Education Amendments of 2005 less than $200,000 in funds 
        through this title, may be improved, streamlined, or 
        eliminated.
            ``(3) Consultation.--
                    ``(A) In general.--In carrying out the review and 
                analysis under paragraph (2), the Advisory Committee 
                shall consult with the Secretary, relevant 
                representatives of institutions of higher education, 
                and individuals who have expertise and experience with 
                the regulations issued under this title, in accordance 
                with subparagraph (B).
                    ``(B) Review panels.--The Advisory Committee shall 
                convene not less than 2 review panels of 
                representatives of the groups involved in student 
                financial assistance programs under this title who have 
                experience and expertise in the regulations issued 
                under this title to review the regulations under this 
                title, and to provide recommendations to the Advisory 
                Committee with respect to the review and analysis under 
                paragraph (2). The panels shall be made up of experts 
                in areas such as the operations of the financial 
                assistance programs, the institutional eligibility 
                requirements for the financial assistance programs, 
                regulations not directly related to the operations or 
                the institutional eligibility requirements of the 
                financial assistance programs, and regulations for 
                dissemination of information to students about the 
                financial assistance programs.
            ``(4) Reports to congress.--The Advisory Committee shall 
        submit, not later than 2 years after the completion of the 
        negotiated rulemaking process required under section 492 
        resulting from the amendments to this Act made by the Higher 
        Education Amendments of 2005, a report to the authorizing 
        committees and the Secretary detailing the expert panels' 
        findings and recommendations with respect to the review and 
        analysis under paragraph (2).
            ``(5) Additional support.--The Secretary and the Inspector 
        General of the Department shall provide such assistance and 
        resources to the Advisory Committee as the Secretary and 
        Inspector General determine are necessary to conduct the review 
        required by this subsection.
    ``(m) Study of Innovative Pathways to Baccalaureate Degree 
Attainment.--
            ``(1) Study required.--The Advisory Committee shall conduct 
        a study of the feasibility of increasing baccalaureate degree 
        attainment rates by reducing the costs and financial barriers 
        to attaining a baccalaureate degree through innovative 
        programs.
            ``(2) Scope of study.--The Advisory Committee shall examine 
        new and existing programs that promote baccalaureate degree 
        attainment through innovative ways, such as dual or concurrent 
        enrollment programs, changes made to the Federal Pell Grant 
        program, simplification of the needs analysis process, 
        compressed or modular scheduling, articulation agreements, and 
        programs that allow 2-year institutions of higher education to 
        offer baccalaureate degrees.
            ``(3) Required aspects of the study.--In performing the 
        study described in this subsection, the Advisory Committee 
        shall examine the following aspects of such innovative 
        programs:
                    ``(A) The impact of such programs on baccalaureate 
                attainment rates.
                    ``(B) The degree to which a student's total cost of 
                attaining a baccalaureate degree can be reduced by such 
                programs.
                    ``(C) The ways in which low- and moderate-income 
                students can be specifically targeted by such programs.
                    ``(D) The ways in which nontraditional students can 
                be specifically targeted by such programs.
                    ``(E) The cost-effectiveness for the Federal 
                Government, States, and institutions of higher 
                education to implement such programs.
            ``(4) Consultation.--
                    ``(A) In general.--In performing the study 
                described in this subsection the Advisory Committee 
                shall consult with a broad range of interested parties 
                in higher education, including parents, students, 
                appropriate representatives of secondary schools and 
                institutions of higher education, appropriate State 
                administrators, administrators of dual enrollment 
                programs, and appropriate officials from the 
                Department.
                    ``(B) Congressional consultation.--The Advisory 
                Committee shall consult on a regular basis with the 
                authorizing committees in carrying out the study 
                required by this section.
            ``(5) Reports to congress.--
                    ``(A) Interim report.--The Advisory Committee shall 
                prepare and submit to the authorizing committees and 
                the Secretary 1 interim report, not later than 1 year 
                after the date of enactment of the Higher Education 
                Amendments of 2005, describing the progress that has 
                been made in conducting the study required by this 
                subsection and any preliminary findings on the topics 
                identified under paragraph (2).
                    ``(B) Final report.--The Advisory Committee shall, 
                not later than 3 years after the date of enactment of 
                the Higher Education Amendments of 2005, prepare and 
                submit to the authorizing committees and the Secretary 
                a final report on the study, including recommendations 
                for legislative, regulatory, and administrative changes 
                based on findings related to the topics identified 
                under paragraph (2).''.

SEC. 7447. REGIONAL MEETINGS.

    Section 492(a)(1) (20 U.S.C. 1098a(a)(1)) is amended by inserting 
``State student grant agencies,'' after ``institutions of higher 
education,''.

SEC. 7448. YEAR 2000 REQUIREMENTS AT THE DEPARTMENT.

    (a) Repeal.--Section 493A (20 U.S.C. 1098c) is repealed.
    (b) Redesignation.--Section 493B (20 U.S.C. 1098d) is redesignated 
as section 493A.

                    Subchapter H--Program Integrity

SEC. 7451. RECOGNITION OF ACCREDITING AGENCY OR ASSOCIATION.

    Section 496 (200 U.S.C. 1099b) is amended--
            (1) in subsection (a)--
                    (A) by striking paragraph (4) and inserting the 
                following:
            ``(4)(A) such agency or association consistently applies 
        and enforces standards that respect the stated mission of the 
        institution of higher education, including religious missions, 
        and that ensure that the courses or programs of instruction, 
        training, or study offered by the institution of higher 
        education, including distance education courses or programs, 
        are of sufficient quality to achieve, for the duration of the 
        accreditation period, the stated objective for which the 
        courses or the programs are offered; and
            ``(B) if such agency or association has or seeks to include 
        within its scope of recognition the evaluation of the quality 
        of institutions or programs offering distance education, such 
        agency or association shall, in addition to meeting the other 
        requirements of this subpart, demonstrate to the Secretary 
        that--
                    ``(i) the agency or association's standards 
                effectively address the quality of an institution's 
                distance education in the areas identified in section 
                496(a)(5), except that the agency or association shall 
                not be required to have separate standards, procedures 
                or policies for the evaluation of distance education 
                institutions or programs in order to meet the 
                requirements of this subparagraph; and
                    ``(ii) the agency or association requires an 
                institution that offers distance education to have 
                processes through which the institution establishes 
                that the student who registers in a distance education 
                course or program is the same student who participates, 
                completes and receives the academic credit;'';
                    (B) in paragraph (5), by striking subparagraph (A) 
                and inserting the following:
                    ``(A) success with respect to student achievement 
                in relation to the institution's mission, including--
                            ``(i) consideration of student academic 
                        achievement as determined by the institution;
                            ``(ii) student retention;
                            ``(iii) course and program completion;
                            ``(iv) as appropriate, State licensing 
                        examinations;
                            ``(v) as appropriate, job placement rates 
                        or enrollment in graduate or professional 
                        programs; and
                            ``(vi) as appropriate, other student 
                        performance information selected by the 
                        institution, particularly that information used 
                        by the institution to evaluate or strengthen 
                        its programs;'';
                    (C) by striking paragraph (6) and inserting the 
                following:
            ``(6) such an agency or association shall establish and 
        apply review procedures throughout the accrediting process, 
        including evaluation and withdrawal proceedings which comply 
        with due process procedures that provide for--
                    ``(A) adequate specification of requirements and 
                deficiencies at the institution of higher education or 
                program examined;
                    ``(B) an opportunity for a written response by any 
                such institution to be included, prior to final action, 
                in the evaluation and withdrawal proceedings;
                    ``(C) upon the written request of an institution, 
                an opportunity for the institution to appeal any 
                adverse action, including denial, withdrawal, 
                suspension, or termination of accreditation, or 
                placement on probation of an institution, at a hearing 
                prior to such action becoming final, before an appeals 
                panel that--
                            ``(i) shall not include current members of 
                        the agency or association's underlying 
                        decision-making body that made the adverse 
                        decision; and
                            ``(ii) is subject to a conflict of interest 
                        policy; and
                    ``(D) the right to representation by counsel for 
                such an institution during an appeal of the adverse 
                action;''; and
                    (D) by striking paragraph (8) and inserting the 
                following:
            ``(8) such agency or association shall make available to 
        the public and the State licensing or authorizing agency, and 
        submit to the Secretary, a summary of agency or association 
        actions, including--
                    ``(A) the award of accreditation or reaccreditation 
                of an institution;
                    ``(B) final denial, withdrawal, suspension, or 
                termination of accreditation, or placement on probation 
                of an institution, and any findings made in connection 
                with the action taken, together with the official 
                comments of the affected institution; and
                    ``(C) any other adverse action taken with respect 
                to an institution.''; and
            (2) in subsection (c)--
                    (A) in paragraph (1), by inserting ``, including 
                those regarding distance education'' after ``their 
                responsibilities'';
                    (B) by redesignating paragraphs (2) through (6) as 
                paragraphs (5) through (9);
                    (C) by inserting after paragraph (1) (as amended by 
                subparagraph (A)) the following:
            ``(2) ensures that the agency or association's on-site 
        evaluation for accreditation or reaccreditation includes review 
        of the Federally required information the institution or 
        program provides its current and prospective students;
            ``(3) monitors the growth of programs at institutions that 
        are experiencing significant enrollment growth;
            ``(4) requires an institution to submit a teach-out plan 
        for approval to the accrediting agency upon the occurrence of 
        any of the following events:
                    ``(A) The Department notifies the accrediting 
                agency of an action against the institution pursuant to 
                section 487(d).
                    ``(B) The accrediting agency acts to withdraw, 
                terminate, or suspend the accreditation of an 
                institution.
                    ``(C) The institution notifies the accrediting 
                agency that the institution intends to cease 
                operations.'';
                    (D) in paragraph (8) (as redesignated by 
                subparagraph (B)), by striking ``and'' after the 
                semicolon;
                    (E) in subparagraph (9) (as redesignated by 
                subparagraph (B)), by striking the period and inserting 
                ``; and''; and
                    (F) by adding at the end the following:
            ``(10) confirms, as a part of the agency or association's 
        review for accreditation or reaccreditation, that the 
        institution has transfer of credit policies--
                    ``(A) that are publicly disclosed;
                    ``(B) that do not deny transfer of credit based 
                solely on the accreditation of the sending institution, 
                if the agency or association accrediting the sending 
                institution is recognized by the Secretary pursuant to 
                this section; and
                    ``(C) in which acceptance or denial of transfer of 
                credit is decided according to criteria established in 
                guidelines developed by the institution's admissions 
                committee.''.

SEC. 7452. ADMINISTRATIVE CAPACITY STANDARD.

    Section 498 (20 U.S.C. 1099c) is amended--
            (1) in subsection (d)(1)(B), by inserting ``and'' after the 
        semicolon; and
            (2) by adding at the end the following:
    ``(k) Treatment of Teach-Outs at Additional Locations.--
            ``(1) In general.--A location of a closed institution of 
        higher education shall be eligible as an additional location of 
        an eligible institution of higher education, as defined 
        pursuant to regulations of the Secretary, for the purposes of a 
        teach-out, if such teach-out has been approved by the 
        institution's accrediting agency.
            ``(2) Special rule.--An institution of higher education 
        that conducts a teach-out through the establishment of an 
        additional location described in paragraph (1) shall be 
        permitted to establish a permanent additional location at a 
        closed institution and shall not be required--
                    ``(A) to meet the requirements of sections 
                102(b)(1)(E) and 102(c)(1)(C) for such additional 
                location; or
                    ``(B) to assume the liabilities of the closed 
                institution.''.

SEC. 7453. PROGRAM REVIEW AND DATA.

    Section 498A(b) (20 U.S.C. 1099c-1(b)) is amended--
            (1) in paragraph (4), by striking ``and'' after the 
        semicolon;
            (2) in paragraph (5) by striking the period and inserting a 
        semicolon; and
            (3) by adding at the end the following:
            ``(6) provide to an institution of higher education an 
        adequate opportunity to review and respond to any program 
        review report and relevant materials related to the report 
        before any final program review is reached;
            ``(7) review and take into consideration an institution of 
        higher education's response in any final program review; and
            ``(8) maintain and preserve at all times the 
        confidentiality of any program review report until the 
        requirements of paragraphs (6) and (7) are met, and until a 
        final program review is issued, other than to the extent 
        required to comply with paragraph (5), except that the 
        Secretary shall promptly disclose any and all program review 
        reports to the institution of higher education under review.''.

                   CHAPTER 6--DEVELOPING INSTITUTIONS

SEC. 7501. DEFINITIONS.

    Section 502(a) (20 U.S.C. 1101a(a)) is amended--
            (1) in paragraph (5)--
                    (A) in subparagraph (A), by inserting ``and'' after 
                the semicolon;
                    (B) in subparagraph (B), by striking ``; and'' and 
                inserting a period; and
                    (C) by striking subparagraph (C); and
            (2) by striking paragraph (7).

SEC. 7502. AUTHORIZED ACTIVITIES.

    Section 503(b) (20 U.S.C. 1101b(b)) is amended--
            (1) by redesignating paragraphs (6) through (14) as 
        paragraphs (8) through (16), respectively;
            (2) in paragraph (5), by inserting ``, including 
        innovative, customized remedial education and English language 
        instruction courses designed to help retain students and move 
        the students rapidly into core courses and through program 
        completion'' before the period at the end; and
            (3) by inserting after paragraph (5) the following:
            ``(6) Education or counseling services designed to improve 
        the financial literacy and economic literacy of students or the 
        students' parents.
            ``(7) Articulation agreements and student support programs 
        designed to facilitate the transfer from 2-year to 4-year 
        institutions.''.

SEC. 7503. DURATION OF GRANT.

    Section 504(a) (20 U.S.C. 1101c(a)) is amended to read as follows:
    ``(a) Award Period.--The Secretary may award a grant to a Hispanic-
serving institution under this title for 5 years.''.

SEC. 7504. POSTBACCALAUREATE OPPORTUNITIES FOR HISPANIC AMERICANS.

    (a) Establishment of Program.--Title V (20 U.S.C. 1101 et seq.) is 
amended--
            (1) by redesignating part B as part C;
            (2) by redesignating sections 511 through 518 as sections 
        521 through 528, respectively; and
            (3) by inserting after section 505 the following:

   ``PART B--PROMOTING POSTBACCALAUREATE OPPORTUNITIES FOR HISPANIC 
                               AMERICANS

``SEC. 511. PROGRAM AUTHORITY AND ELIGIBILITY.

    ``(a) Program Authorized.--Subject to the availability of funds 
appropriated to carry out this part, the Secretary shall award grants, 
on a competitive basis, to eligible institutions to enable the eligible 
institutions to carry out the authorized activities described in 
section 512.
    ``(b) Eligibility.--For the purposes of this part, an `eligible 
institution' means an institution of higher education that--
            ``(1) is a Hispanic-serving institution (as defined in 
        section 502); and
            ``(2) offers a postbaccalaureate certificate or degree 
        granting program.

``SEC. 512. AUTHORIZED ACTIVITIES.

    ``Grants awarded under this part shall be used for 1 or more of the 
following activities:
            ``(1) Purchase, rental, or lease of scientific or 
        laboratory equipment for educational purposes, including 
        instructional and research purposes.
            ``(2) Construction, maintenance, renovation, and 
        improvement in classroom, library, laboratory, and other 
        instructional facilities, including purchase or rental of 
        telecommunications technology equipment or services.
            ``(3) Purchase of library books, periodicals, technical and 
        other scientific journals, microfilm, microfiche, and other 
        educational materials, including telecommunications program 
        materials.
            ``(4) Support for needy postbaccalaureate students, 
        including outreach, academic support services, mentoring, 
        scholarships, fellowships, and other financial assistance, to 
        permit the enrollment of such students in postbaccalaureate 
        certificate and degree granting programs.
            ``(5) Support of faculty exchanges, faculty development, 
        faculty research, curriculum development, and academic 
        instruction.
            ``(6) Creating or improving facilities for Internet or 
        other distance learning academic instruction capabilities, 
        including purchase or rental of telecommunications technology 
        equipment or services.
            ``(7) Collaboration with other institutions of higher 
        education to expand postbaccalaureate certificate and degree 
        offerings.
            ``(8) Other activities proposed in the application 
        submitted pursuant to section 513 that are approved by the 
        Secretary as part of the review and acceptance of such 
        application.

``SEC. 513. APPLICATION AND DURATION.

    ``(a) Application.--Any eligible institution may apply for a grant 
under this part by submitting an application to the Secretary at such 
time and in such manner as the Secretary may require. Such application 
shall demonstrate how the grant funds will be used to improve 
postbaccalaureate education opportunities for Hispanic and low-income 
students and will lead to such students' greater financial 
independence.
    ``(b) Duration.--Grants under this part shall be awarded for a 
period not to exceed 5 years.
    ``(c) Limitation.--The Secretary may not award more than 1 grant 
under this part in any fiscal year to any Hispanic-serving 
institution.''.

SEC. 7505. APPLICATIONS.

    Section 521(b)(1)(A) (as redesignated by section 7504(a)(2)) (20 
U.S.C. 1103(b)(1)(A)) is amended by striking ``subsection (b)'' and 
inserting ``subsection (c)''.

SEC. 7506. COOPERATIVE ARRANGEMENTS.

    Section 524(a) (as redesignated by section 7504(a)(2)) (20 U.S.C. 
1103c(a)) is amended by striking ``section 503'' and inserting 
``sections 503 and 512''.

SEC. 7507. AUTHORIZATION OF APPROPRIATIONS.

    Section 528(a) (as redesignated by section 7504(a)(2)) (20 U.S.C. 
1103g(a)) is amended--
            (1) by inserting ``part A of'' after ``carry out'';
            (2) by striking ``$62,500,000 for fiscal year 1999'' and 
        all that follows through the period and inserting ``such sums 
        as may be necessary for fiscal year 2006 and each of the 5 
        succeeding fiscal years.'';
            (3) by striking ``(a) Authorizations.--There are'' and 
        inserting the following:
    ``(a) Authorizations.--
            ``(1) Part a.--There are''; and
            (4) by adding at the end the following:
            ``(2) Part b.--There are authorized to be appropriated to 
        carry out part B of this title such sums as may be necessary 
        for fiscal year 2006 and each of the 5 succeeding fiscal 
        years.''.

              CHAPTER 7--INTERNATIONAL EDUCATION PROGRAMS

SEC. 7601. FINDINGS.

    Section 601 (20 U.S.C. 1121) is amended--
            (1) in the section heading, by striking ``and purposes'' 
        and inserting ``; purposes; consultation; survey''
            (2) in subsection (a)(3), by striking ``post-Cold War'';
            (3) in subsection (b)(1)(D), by inserting ``, including 
        through linkages with overseas institutions'' before the 
        semicolon; and
            (4) by adding at the end the following:
    ``(c) Consultation.--The Secretary shall, prior to requesting 
applications for funding under this title during each grant cycle, 
consult with and receive recommendations regarding national need for 
expertise in foreign languages and world regions from the head 
official, or a designee of such head official, of the National Security 
Council, the Department of Homeland Security, the Department of 
Defense, the Department of State, the Federal Bureau of Investigation, 
the Department of Labor, and the Department of Commerce, the Director 
of National Intelligence, and other relevant agencies. These entities 
shall provide information to the Secretary regarding how the entities 
utilize expertise and resources provided by grantees under this title. 
The Secretary shall take into account such recommendations and 
information when requesting applications for funding under this title, 
and shall make available to applicants a list of areas identified as 
areas of national need.
    ``(d) Survey.--The Secretary shall assist grantees in developing a 
survey to administer to students who have participated in programs 
under this title to determine postparticipation placement. All 
grantees, where applicable, shall administer such survey not less often 
than annually and report such data to the Secretary.''.

SEC. 7602. GRADUATE AND UNDERGRADUATE LANGUAGE AND AREA CENTERS AND 
              PROGRAMS.

    Section 602 (20 U.S.C. 1122) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (2)--
                            (i) in subparagraph (G), by striking 
                        ``and'' after the semicolon;
                            (ii) in subparagraph (H), by striking the 
                        period and inserting ``; and''; and
                            (iii) by adding at the end the following:
                    ``(I) support for instructors of the less commonly 
                taught languages.''; and
                    (B) in paragraph (4)--
                            (i) by redesignating subparagraphs (C) 
                        through (E) as subparagraphs (D) through (F), 
                        respectively;
                            (ii) by inserting after subparagraph (B) 
                        the following:
                    ``(C) Programs of linkage or outreach between or 
                among--
                            ``(i) foreign language, area studies, or 
                        other international fields; and
                            ``(ii) State educational agencies or local 
                        educational agencies.''; and
                            (iii) in subparagraph (F) (as redesignated 
                        by clause (i)), by striking ``and (D)'' and 
                        inserting ``(D), and (E)'';
            (2) in subsection (b)--
                    (A) in the subsection heading, by striking 
                ``Graduate''; and
                    (B) by striking paragraph (2) and inserting the 
                following:
            ``(2) Eligible students.--A student receiving a stipend 
        described in paragraph (1) shall be engaged--
                    ``(A) in an instructional program with stated 
                performance goals for functional foreign language use 
                or in a program developing such performance goals, in 
                combination with area studies, international studies, 
                or the international aspects of a professional studies 
                program; and
                    ``(B)(i) in the case of an undergraduate student, 
                in the intermediate or advanced study of a less 
                commonly taught language; or
                    ``(ii) in the case of a graduate student, in 
                graduate study in connection with a program described 
                in subparagraph (A), including--
                            ``(I) predissertation level study;
                            ``(II) preparation for dissertation 
                        research;
                            ``(III) dissertation research abroad; or
                            ``(IV) dissertation writing.'';
            (3) by striking subsection (d) and inserting the following:
    ``(d) Allowances.--
            ``(1) Graduate level recipients.--A stipend awarded to a 
        graduate level recipient may include allowances for dependents 
        and for travel for research and study in the United States and 
        abroad.
            ``(2) Undergraduate level recipients.--A stipend awarded to 
        an undergraduate level recipient may include an allowance for 
        educational programs in the United States or educational 
        programs abroad that--
                    ``(A) are closely linked to the overall goals of 
                the recipient's course of study; and
                    ``(B) have the purpose of promoting foreign 
                language fluency and knowledge of foreign cultures.''; 
                and
            (4) by adding at the end the following:
    ``(e) Application.--Each institution or combination of institutions 
desiring a grant under this section shall submit an application to the 
Secretary at such time, in such manner, and accompanied by such 
information and assurances as the Secretary may require. Each 
application shall include an explanation of how the activities funded 
by the grant will reflect diverse perspectives and a wide range of 
views and generate debate on world regions and international affairs. 
Each application shall also describe how the applicant will address 
disputes regarding whether activities funded under the application 
reflect diverse perspectives and a wide range of views. Each 
application shall also include a description of how the applicant will 
encourage government service in areas of national need as identified by 
the Secretary.''.

SEC. 7603. UNDERGRADUATE INTERNATIONAL STUDIES AND FOREIGN LANGUAGE 
              PROGRAMS.

    Section 604 (20 U.S.C. 1124) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (2)--
                            (i) by redesignating subparagraphs (I) 
                        through (M) as subparagraphs (J) through (N), 
                        respectively; and
                            (ii) by inserting after subparagraph (H) 
                        the following:
                    ``(I) providing subgrants to undergraduate students 
                for educational programs abroad that--
                            ``(i) are closely linked to the overall 
                        goals of the program for which the grant is 
                        awarded; and
                            ``(ii) have the purpose of promoting 
                        foreign language fluency and knowledge of 
                        foreign cultures;''; and
                    (B) in paragraph (7)--
                            (i) in subparagraph (C), by striking 
                        ``and'' after the semicolon;
                            (ii) in subparagraph (D), by striking the 
                        period at the end and inserting a semicolon; 
                        and
                            (iii) by adding at the end the following:
                    ``(E) an explanation of how the activities funded 
                by the grant will reflect diverse perspectives and a 
                wide range of views and generate debate on world 
                regions and international affairs, where applicable;
                    ``(F) a description of how the applicant will 
                address disputes regarding whether the activities 
                funded under the application reflect diverse 
                perspectives and a wide range of views; and
                    ``(G) a description of how the applicant will 
                encourage government service in areas of national need 
                as identified by the Secretary.''; and
            (2) in subsection (c)--
                    (A) by striking ``Funding Support.--The Secretary'' 
                and inserting ``Funding Rules.--
            ``(1) The secretary.--The Secretary'';
                    (B) by striking ``10'' and inserting ``20''; and
                    (C) by adding at the end the following:
            ``(2) Grantees.--Of the total amount of grant funds awarded 
        to a grantee under this section, the grantee may use not more 
        than 10 percent of such funds for the activity described in 
        subsection (a)(2)(I).''.

SEC. 7604. RESEARCH; STUDIES.

    Section 605(a) (20 U.S.C. 1125(a)) is amended--
            (1) in paragraph (8), by striking ``and'' after the 
        semicolon;
            (2) in paragraph (9), by striking the period and inserting 
        a semicolon; and
            (3) by adding at the end the following:
            ``(10) evaluation of the extent to which programs assisted 
        under this title reflect diverse perspectives and a wide range 
        of views and generate debate on world regions and international 
        affairs;
            ``(11) the systematic collection, analysis, and 
        dissemination of data that contribute to achieving the purposes 
        of this part; and
            ``(12) support for programs or activities to make data 
        collected, analyzed, or disseminated under this section 
        publicly available and easy to understand.''.

SEC. 7605. TECHNOLOGICAL INNOVATION AND COOPERATION FOR FOREIGN 
              INFORMATION ACCESS.

    Section 606 (20 U.S.C. 1126) is amended--
            (1) in subsection (a)--
                    (A) by striking ``new electronic technologies'' and 
                insert ``electronic technologies'';
                    (B) by inserting ``from foreign sources'' after 
                ``disseminate information'';
                    (C) by striking ``Authority.--The Secretary'' and 
                insert ``Authority.--
            ``(1) In general.--The Secretary''; and
                    (D) by adding at the end the following:
            ``(2) Partnerships with not-for-profit educational 
        organizations.--The Secretary may award grants under this 
        section to carry out the activities authorized under this 
        section to the following:
                    ``(A) An institution of higher education.
                    ``(B) A public or nonprofit private library.
                    ``(C) A consortium of an institution of higher 
                education and 1 or more of the following:
                            ``(i) Another institution of higher 
                        education.
                            ``(ii) A library.
                            ``(iii) A not-for-profit educational 
                        organization.'';
            (2) in subsection (b)--
                    (A) in paragraph (1), by striking ``to facilitate 
                access to'' and inserting ``to acquire, facilitate 
                access to,'';
                    (B) in paragraph (2), by inserting ``or standards 
                for'' after ``means of'';
                    (C) in paragraph (6), by striking ``and'' after the 
                semicolon;
                    (D) in paragraph (7), by striking the period and 
                inserting a semicolon; and
                    (E) by adding at the end the following:
            ``(8) to establish linkages to facilitate carrying out the 
        activities described in this subsection between--
                    ``(A) the institutions of higher education, 
                libraries, and consortia receiving grants under this 
                section; and
                    ``(B) institutions of higher education, not-for-
                profit educational organizations, and libraries 
                overseas; and
            ``(9) to carry out other activities that the Secretary 
        determines are consistent with the purpose of the grants or 
        contracts awarded under this section.''; and
            (3) in subsection (c), by striking ``institution or 
        consortium'' and inserting ``institution of higher education, 
        library, or consortium''.

SEC. 7606. SELECTION OF CERTAIN GRANT RECIPIENTS.

    Section 607 (20 U.S.C. 1127) is amended--
            (1) in subsection (a), by striking ``evaluates the 
        applications for comprehensive and undergraduate language and 
        area centers and programs.'' and inserting ``evaluates--
            ``(1) the applications for comprehensive foreign language 
        and area or international studies centers and programs; and
            ``(2) the applications for undergraduate foreign language 
        and area or international studies centers and programs.''; and
            (2) in subsection (b), by adding at the end the following: 
        ``The Secretary shall also consider an applicant's record of 
        sending students into public service and an applicant's stated 
        efforts to increase the number of students that go into public 
        service.''.

SEC. 7607. AMERICAN OVERSEAS RESEARCH CENTERS.

    Section 609 (20 U.S.C. 1128a) is amended by adding at the end the 
following:
    ``(e) Application.--Each center desiring a grant under this section 
shall submit an application to the Secretary at such time, in such 
manner, and accompanied by such information and assurances as the 
Secretary may require. Each application shall include how the 
activities funded by the grant will reflect diverse perspectives and a 
wide range of views and generate debate on world regions and 
international affairs, where applicable. Each application shall also 
describe how the applicant will address disputes regarding whether the 
activities funded under the application reflect diverse perspectives 
and a wide range of views.''.

SEC. 7608. AUTHORIZATION OF APPROPRIATIONS FOR INTERNATIONAL AND 
              FOREIGN LANGUAGE STUDIES.

    Section 610 (20 U.S.C. 1128b) is amended by striking ``$80,000,000 
for fiscal year 1999'' and all that follows through the period and 
inserting ``such sums as may be necessary for fiscal year 2006 and each 
of the 5 succeeding fiscal years.''.

SEC. 7609. CENTERS FOR INTERNATIONAL BUSINESS EDUCATION.

    Section 612(f) (20 U.S.C. 1130-1(f)) is amended--
            (1) in paragraph (3), by striking ``and'' after the 
        semicolon;
            (2) in paragraph (4), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(5) assurances that activities funded by the grant will 
        reflect diverse perspectives and a wide range of views and 
        generate debate on world regions and international affairs, 
        where applicable.''.

SEC. 7610. EDUCATION AND TRAINING PROGRAMS.

    Section 613(c) (20 U.S.C. 1130a(c)) is amended by adding at the end 
the following: ``Each such application shall include an assurance that, 
where applicable, the activities funded by the grant will reflect 
diverse perspectives and a wide range of views on world regions and 
international affairs.''.

SEC. 7611. AUTHORIZATION OF APPROPRIATIONS FOR BUSINESS AND 
              INTERNATIONAL EDUCATION PROGRAMS.

    Section 614 (20 U.S.C. 1130b) is amended--
            (1) in subsection (a), by striking ``$11,000,000 for fiscal 
        year 1999'' and all that follows through ``fiscal years'' and 
        inserting ``such sums as may be necessary for fiscal year 2006 
        and each of the 5 succeeding fiscal years''; and
            (2) in subsection (b), by striking ``$7,000,000 for fiscal 
        year 1999'' and all that follows through ``fiscal years,'' and 
        inserting ``such sums as may be necessary for fiscal year 2006 
        and each of the 5 succeeding fiscal years''.

SEC. 7612. MINORITY FOREIGN SERVICE PROFESSIONAL DEVELOPMENT PROGRAM.

    Section 621 (20 U.S.C. 1131) is amended--
            (1) in subsection (c), by adding at the end the following: 
        ``Each application shall include a description of how the 
        activities funded by the grant will reflect diverse 
        perspectives and a wide range of views on world regions and 
        international affairs, where applicable.''; and
            (2) in subsection (e)--
                    (A) by striking ``Match Required.--The eligible'' 
                and inserting ``Matching Funds.--
            ``(1) In general.--Subject to paragraph (2), the 
        eligible''; and
                    (B) by adding at the end the following:
            ``(2) Waiver.--The Secretary may waive the requirement of 
        paragraph (1) for an eligible recipient if the Secretary 
        determines such waiver is appropriate.''.

SEC. 7613. INSTITUTIONAL DEVELOPMENT.

    Section 622 (20 U.S.C. 1131-1) is amended--
            (1) in subsection (a)--
                    (A) by striking ``Tribally Controlled Colleges or 
                Universities'' and inserting ``tribally controlled 
                colleges or universities''; and
                    (B) by striking ``international affairs programs.'' 
                and inserting ``international affairs, international 
                business, and foreign language study programs, 
                including the teaching of foreign languages, at such 
                colleges, universities, and institutions, respectively, 
                through increased collaboration with institutions of 
                higher education that receive funding under this 
                title.''; and
            (2) in subsection (c)--
                    (A) by striking paragraphs (1) and (3); and
                    (B) by redesignating paragraphs (2) and (4) as 
                paragraphs (1) and (2), respectively.

SEC. 7614. STUDY ABROAD PROGRAM.

    Section 623(a) (20 U.S.C. 1131a(a)) is amended--
            (1) by striking ``as defined in section 322 of this Act''; 
        and
            (2) by striking ``tribally controlled Indian community 
        colleges as defined in the Tribally Controlled Community 
        College Assistance Act of 1978'' and inserting ``tribally 
        controlled colleges or universities''.

SEC. 7615. ADVANCED DEGREE IN INTERNATIONAL RELATIONS.

    Section 624 (20 U.S.C. 1131b) is amended--
            (1) in the section heading, by striking ``masters'' and 
        inserting ``advanced'';
            (2) in the first sentence, by inserting ``, and in 
        exceptional circumstances, a doctoral degree,'' after ``masters 
        degree'';
            (3) in the second sentence, by striking ``masters degree'' 
        and inserting ``advanced degree''; and
            (4) in the fourth sentence, by striking ``United States'' 
        and inserting ``United States.''.

SEC. 7616. INTERNSHIPS.

    Section 625 (20 U.S.C. 1131c) is amended--
            (1) in subsection (a)--
                    (A) by striking ``as defined in section 322 of this 
                Act'';
                    (B) by striking ``tribally controlled Indian 
                community colleges as defined in the Tribally 
                Controlled Community College Assistance Act of 1978'' 
                and inserting ``tribally controlled colleges or 
                universities'';
                    (C) by striking ``an international'' and inserting 
                ``international,''; and
                    (D) by striking ``the United States Information 
                Agency'' and inserting ``the Department of State''; and
            (2) in subsection (c)(1)--
                    (A) in subparagraph (E), by inserting ``and'' after 
                the semicolon;
                    (B) in subparagraph (F), by striking ``; and'' and 
                inserting a period; and
                    (C) by striking subparagraph (G).

SEC. 7617. FINANCIAL ASSISTANCE.

    Part C of title VI (20 U.S.C. 1131 et seq.) is further amended--
            (1) by redesignating sections 626, 627, and 628 as sections 
        627, 628, and 629, respectively; and
            (2) by inserting after section 625 the following:

``SEC. 626. FINANCIAL ASSISTANCE.

    ``(a) Authority.--The Institute may provide financial assistance, 
in the form of summer stipends described in subsection (b) and Ralph 
Bunche scholarship assistance described in subsection (c), to needy 
students to facilitate the participation of the students in the 
Institute's programs under this part.
    ``(b) Summer Stipends.--
            ``(1) Requirements.--A student receiving a summer stipend 
        under this section shall use such stipend to defray the 
        student's cost of participation in a summer institute program 
        funded under this part, including the costs of travel, living, 
        and educational expenses necessary for the student's 
        participation in such program.
            ``(2) Amount.--A summer stipend awarded to a student under 
        this section shall not exceed $3,000 per summer.
    ``(c) Ralph Bunche Scholarship.--
            ``(1) Requirements.--A student receiving a Ralph Bunche 
        scholarship under this section--
                    ``(A) shall be a full-time student at an 
                institution of higher education who is accepted into a 
                program funded under this part; and
                    ``(B) shall use such scholarship to pay costs 
                related to the cost of attendance, as defined in 
                section 472, at the institution of higher education in 
                which the student is enrolled.
            ``(2) Amount and duration.--A Ralph Bunche scholarship 
        awarded to a student under this section shall not exceed $5,000 
        per academic year.''.

SEC. 7618. REPORT.

    Section 627 (as redesignated by section 7617(1)) (20 U.S.C. 1131d) 
is amended by striking ``annually'' and inserting ``biennially''.

SEC. 7619. GIFTS AND DONATIONS.

    Section 628 (as redesignated by section 7617(1)) (20 U.S.C. 1131e) 
is amended by striking ``annual report described in section 626'' and 
inserting ``biennial report described in section 627''.

SEC. 7620. AUTHORIZATION OF APPROPRIATIONS FOR THE INSTITUTE FOR 
              INTERNATIONAL PUBLIC POLICY.

    Section 629 (as redesignated by section 7617(1)) (20 U.S.C. 1131f) 
is amended by striking ``$10,000,000 for fiscal year 1999'' and all 
that follows through the period and inserting ``such sums as may be 
necessary for fiscal year 2006 and each of the 5 succeeding fiscal 
years.''.

SEC. 7621. DEFINITIONS.

    Section 631 (20 U.S.C. 1132) is amended--
            (1) by redesignating paragraphs (2), (3), (4), (5), (6), 
        (7), (8), and (9), as paragraphs (8), (5), (9), (2), (11), (3), 
        (7), and (4), respectively;
            (2) in paragraph (2), as redesignated by paragraph (1), by 
        striking ``comprehensive language and area center'' and 
        inserting ``comprehensive foreign language and area or 
        international studies center'';
            (3) in paragraph (11), as redesignated by paragraph (1), by 
        striking ``undergraduate language and area center'' and 
        inserting ``undergraduate foreign language and area or 
        international studies center'';
            (4) in paragraph (3), as redesignated by paragraph (1), by 
        striking the first occurrence of the term ``critical 
        languages'' and inserting ``critical foreign languages'';
            (5) in paragraph (7), as redesignated by paragraph (1), by 
        striking ``and'' after the semicolon;
            (6) in paragraph (4), as redesignated by paragraph (1), by 
        striking the period at the end and inserting a semicolon;
            (7) by inserting after paragraph (5), as redesignated by 
        paragraph (1), the following:
            ``(6) the term `historically Black college and university' 
        has the meaning given the term `part B institution' in section 
        322;''; and
            (8) by inserting after paragraph (9), as redesignated by 
        paragraph (1), the following:
            ``(10) the term `tribally controlled college or university' 
        has the meaning given the term in section 2 of the Tribally 
        Controlled College or University Assistance Act of 1978 (25 
        U.S.C. 1801); and''.

SEC. 7622. ASSESSMENT AND ENFORCEMENT.

    Part D of title VI (20 U.S.C. 1132) is amended by adding at the end 
the following:

``SEC. 632. ASSESSMENT; ENFORCEMENT; RULE OF CONSTRUCTION.

    ``(a) In General.--The Secretary is authorized to assess and ensure 
compliance with all the conditions and terms of grants provided under 
this title. If a complaint regarding activities funded under this title 
is not resolved under the process outlined in the relevant grantee's 
application, and such complaint is filed with the Department, the 
Secretary shall be notified, and is authorized, when circumstances 
warrant, to immediately suspend future funding for the grant pending 
resolution of such dispute. Such resolution shall not exceed 60 days. 
The Secretary shall take the outcomes of such complaints into account 
when determining the renewal of grants.
    ``(b) Rule of Construction.--Nothing in this title shall be 
construed to authorize the Secretary to mandate, direct, or control an 
institution of higher education's specific instructional content, 
curriculum, or program of instruction.

``SEC. 633. EVALUATION, OUTREACH, AND INFORMATION.

    ``The Secretary may use not more than 1 percent of the funds made 
available under this title to carry out program evaluation, national 
outreach, and information dissemination activities relating to the 
programs authorized under this title.''.

       CHAPTER 8--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

SEC. 7701. PURPOSE.

    Section 700(1)(B)(i) (20 U.S.C. 1133(1)(B)(i)) is amended by 
inserting ``, including those areas critical to United States national 
and homeland security needs such as mathematics, science, and 
engineering'' before the semicolon at the end.

SEC. 7702. ALLOCATION OF JACOB K. JAVITS FELLOWSHIPS.

    Section 702(a)(1) (20 U.S.C. 1134a(a)(1)) is amended to read as 
follows:
            ``(1) Appointment.--
                    ``(A) In general.--The Secretary shall appoint a 
                Jacob K. Javits Fellows Program Fellowship Board 
                (referred to in this subpart as the `Board') consisting 
                of 9 individuals representative of both public and 
                private institutions of higher education who are 
                especially qualified to serve on the Board.
                    ``(B) Qualifications.--In making appointments under 
                subparagraph (A), the Secretary shall--
                            ``(i) give due consideration to the 
                        appointment of individuals who are highly 
                        respected in the academic community;
                            ``(ii) assure that individuals appointed to 
                        the Board are broadly representative of a range 
                        of disciplines in graduate education in arts, 
                        humanities, and social sciences;
                            ``(iii) appoint members to represent the 
                        various geographic regions of the United 
                        States; and
                            ``(iv) include representatives from 
                        minority institutions, as defined in section 
                        365.''.

SEC. 7703. STIPENDS.

    Section 703(a) (20 U.S.C. 1134b(a)) is amended by striking 
``graduate fellowships'' and inserting ``Graduate Research Fellowship 
Program''.

SEC. 7704. AUTHORIZATION OF APPROPRIATIONS FOR THE JACOB K. JAVITS 
              FELLOWSHIP PROGRAM.

    Section 705 (20 U.S.C. 1134d) is amended by striking ``$30,000,000 
for fiscal year 1999'' and all that follows through the period and 
inserting ``such sums as may be necessary for fiscal year 2006 and each 
of the 5 succeeding fiscal years to carry out this subpart.''.

SEC. 7705. INSTITUTIONAL ELIGIBILITY UNDER THE GRADUATE ASSISTANCE IN 
              AREAS OF NATIONAL NEED PROGRAM.

    Section 712(b) (20 U.S.C. 1135a(b)) is amended to read as follows:
    ``(b) Designation of Areas of National Need.--After consultation 
with appropriate Federal and nonprofit agencies and organizations, 
including the National Science Foundation, the Department of Defense, 
the Department of Homeland Security, the National Academy of Sciences, 
and the Bureau of Labor Statistics, the Secretary shall designate areas 
of national need. In making such designations, the Secretary shall take 
into consideration--
            ``(1) the extent to which the interest in the area is 
        compelling;
            ``(2) the extent to which other Federal programs support 
        postbaccalaureate study in the area concerned;
            ``(3) an assessment of how the program may achieve the most 
        significant impact with available resources; and
            ``(4) an assessment of current and future professional 
        workforce needs of the United States.''.

SEC. 7706. AWARDS TO GRADUATE STUDENTS.

    Section 714 (20 U.S.C. 1135c) is amended--
            (1) in subsection (b)--
                    (A) by striking ``1999-2000'' and inserting ``2006-
                2007''; and
                    (B) by striking ``graduate fellowships'' and 
                inserting ``Graduate Research Fellowship Program''; and
            (2) in subsection (c)--
                    (A) by striking ``716(a)'' and inserting 
                ``715(a)''; and
                    (B) by striking ``714(b)(2)'' and inserting 
                ``713(b)(2)''.

SEC. 7707. ADDITIONAL ASSISTANCE FOR COST OF EDUCATION.

    Section 715(a)(1) (20 U.S.C. 1135d(a)(1)) is amended--
            (1) by striking ``1999-2000'' and inserting ``2006-2007''; 
        and
            (2) by striking ``1998-1999'' and inserting ``2005-2006''.

SEC. 7708. AUTHORIZATION OF APPROPRIATIONS FOR THE GRADUATE ASSISTANCE 
              IN AREAS OF NATIONAL NEED PROGRAM.

    Section 716 (20 U.S.C. 1135e) is amended by striking ``$35,000,000 
for fiscal year 1999'' and all that follows through the period and 
inserting ``such sums as may be necessary for fiscal year 2006 and each 
of the 5 succeeding fiscal years to carry out this subpart.''.

SEC. 7709. AUTHORIZATION OF APPROPRIATIONS FOR THE THURGOOD MARSHALL 
              LEGAL EDUCATIONAL OPPORTUNITY PROGRAM.

    Section 721(h) (20 U.S.C. 1136(h)) is amended by striking 
``$5,000,000 for fiscal year 1999'' and all that follows through the 
period and inserting ``such sums as may be necessary for fiscal year 
2006 and each of the 5 succeeding fiscal years.''.

SEC. 7710. FUND FOR THE IMPROVEMENT OF POSTSECONDARY EDUCATION.

    Section 741(a) (20 U.S.C. 1138(a)) is amended--
            (1) by striking paragraph (3) and inserting the following:
            ``(3) the establishment and continuation of institutions, 
        programs, consortia, collaborations, and other joint efforts 
        based on the technology of communications, including those 
        efforts that utilize distance education and technological 
        advancements to educate and train postsecondary students 
        (including health professionals serving medically underserved 
        populations);'';
            (2) in paragraph (7), by striking ``and'' after the 
        semicolon;
            (3) in paragraph (8), by striking the period at the end and 
        inserting a semicolon; and
            (4) by adding at the end the following:
            ``(9) the introduction of reforms in remedial education, 
        including English language instruction, to customize remedial 
        courses to student goals and help students progress rapidly 
        from remedial courses into core courses and through program 
        completion;
            ``(10) the creation of consortia that join diverse 
        institutions of higher education for the purpose of integrating 
        curricular and co-curricular interdisciplinary study; and
            ``(11) providing support and assistance to programs 
        implementing integrated education reform services in order to 
        improve secondary school graduation and college attendance and 
        completion rates for disadvantaged students.''.

SEC. 7711. SPECIAL PROJECTS.

    Section 744(c) (20 U.S.C. 1138c) is amended to read as follows:
    ``(c) Areas of National Need.--Areas of national need shall 
include, at a minimum, the following:
            ``(1) Institutional restructuring to improve learning and 
        promote productivity, efficiency, quality improvement, and cost 
        and price control.
            ``(2) Improvements in academic instruction and student 
        learning, including efforts designed to assess the learning 
        gains made by postsecondary students.
            ``(3) Articulation between 2- and 4-year institutions of 
        higher education, including developing innovative methods for 
        ensuring the successful transfer of students from 2- to 4-year 
        institutions of higher education.
            ``(4) Development, evaluation and dissemination of model 
        programs, including model core curricula that--
                    ``(A) provide students with a broad and integrated 
                knowledge base;
                    ``(B) include, at a minimum, broad survey courses 
                in English literature, American and world history, 
                American political institutions, economics, philosophy, 
                college-level mathematics, and the natural sciences; 
                and
                    ``(C) include sufficient study of a foreign 
                language to lead to reading and writing competency in 
                the foreign language.
            ``(5) International cooperation and student exchanges among 
        postsecondary educational institutions.''.

SEC. 7712. AUTHORIZATION OF APPROPRIATIONS FOR THE FUND FOR THE 
              IMPROVEMENT OF POSTSECONDARY EDUCATION.

    Section 745 (20 U.S.C. 1138d) is amended by striking ``$30,000,000 
for fiscal year 1999'' and all that follows through the period and 
inserting ``such sums as may be necessary for fiscal year 2006 and each 
of the 5 succeeding fiscal years.''.

SEC. 7713. REPEAL OF THE URBAN COMMUNITY SERVICE PROGRAM.

    Part C of title VII (20 U.S.C. 1139 et seq.) is repealed.

SEC. 7714. GRANTS AUTHORIZED FOR DEMONSTRATION PROJECTS TO ENSURE 
              STUDENTS WITH DISABILITIES RECEIVE A QUALITY HIGHER 
              EDUCATION.

    Section 762 (20 U.S.C. 1140a) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (2)--
                            (i) in subparagraph (A), by striking ``to 
                        teach students with disabilities'' and 
                        inserting ``to teach and meet the academic and 
                        programmatic needs of students with 
                        disabilities in order to improve retention and 
                        completion of postsecondary education'';
                            (ii) by redesignating subparagraphs (B) and 
                        (C) as subparagraphs (C) and (F), respectively;
                            (iii) by inserting after subparagraph (A) 
                        the following:
                    ``(B) Effective transition practices.--The 
                development of innovative and effective teaching 
                methods and strategies to ensure the successful 
                transition of students with disabilities from secondary 
                school to postsecondary education.'';
                            (iv) in subparagraph (C), as redesignated 
                        by clause (ii), by striking the period at the 
                        end and inserting ``, including data on the 
                        postsecondary education of and impact on 
                        subsequent employment of students with 
                        disabilities. Such research, information, and 
                        data shall be made publicly available and 
                        accessible.'';
                            (v) by inserting after subparagraph (C), as 
                        redesignated by clause (ii), the following:
                    ``(D) Distance learning.--The development of 
                innovative and effective teaching methods and 
                strategies to provide faculty and administrators with 
                the ability to provide accessible distance education 
                programs or classes that would enhance access of 
                students with disabilities to higher education, 
                including the use of accessible curriculum and 
                electronic communication for instruction and 
                advisement.
                    ``(E) Disability career pathways.--Training and 
                providing support to secondary and postsecondary staff 
                to encourage interest in, enhance awareness and 
                understanding of, provide educational opportunities in, 
                teach practical skills related to, and offer work-based 
                opportunities in, disability related fields, among 
                students, including students with disabilities. Such 
                training and support may include developing means to 
                offer students credit-bearing, college-level 
                coursework, and career and educational counseling.''; 
                and
                            (vi) by adding at the end the following:
                    ``(G) Accessibility of education.--Making 
                postsecondary education more accessible to students 
                with disabilities through curriculum development.''; 
                and
                    (B) in paragraph (3), by striking ``subparagraphs 
                (A) through (C)'' and inserting ``subparagraphs (A) 
                through (G)''; and
            (2) by adding at the end the following:
    ``(d) Report.--The Secretary shall prepare and disseminate a report 
reviewing the activities of the demonstration projects authorized under 
this part and providing guidance and recommendations on how successful 
projects can be replicated.''.

SEC. 7715. APPLICATIONS FOR DEMONSTRATION PROJECTS TO ENSURE STUDENTS 
              WITH DISABILITIES RECEIVE A QUALITY HIGHER EDUCATION.

    Section 763 (20 U.S.C. 1140b) is amended--
            (1) by striking paragraph (1) and inserting the following:
            ``(1) a description of how such institution plans to 
        address the activities allowed under this part;'';
            (2) in paragraph (2), by striking ``and'' after the 
        semicolon;
            (3) in paragraph (3), by striking the period at the end and 
        inserting ``; and''; and
            (4) by adding at the end the following:
            ``(4) a description of the extent to which the institution 
        will work to replicate the research based and best practices of 
        institutions of higher education with demonstrated success in 
        serving students with disabilities.''.

SEC. 7716. AUTHORIZATION OF APPROPRIATIONS FOR THE DEMONSTRATION 
              PROJECTS TO ENSURE STUDENTS WITH DISABILITIES RECEIVE A 
              QUALITY HIGHER EDUCATION.

    Section 765 (20 U.S.C. 1140d) is amended by striking ``$10,000,000 
for fiscal year 1999'' and all that follows through the period and 
inserting ``such sums as may be necessary for fiscal year 2006 and each 
of the 5 succeeding fiscal years.''.

                        CHAPTER 9--MISCELLANEOUS

SEC. 7801. MISCELLANEOUS.

    The Act (20 U.S.C. 1001 et seq.) is amended by adding at the end 
the following:

                      ``TITLE VIII--MISCELLANEOUS

           ``PART A--MATHEMATICS AND SCIENCE SCHOLARS PROGRAM

``SEC. 811. MATHEMATICS AND SCIENCE SCHOLARS PROGRAM.

    ``(a) Program Authorized.--The Secretary is authorized to award 
grants to States, on a competitive basis, to enable the States to award 
eligible students, who complete a rigorous secondary school curriculum 
in mathematics and science, scholarships for undergraduate study.
    ``(b) Eligible Students.--A student is eligible for a scholarship 
under this section if the student is a full-time undergraduate student 
in the student's first and second year of study who has completed a 
rigorous secondary school curriculum in mathematics and science.
    ``(c) Rigorous Curriculum.--Each participating State shall 
determine the requirements for a rigorous secondary school curriculum 
in mathematics and science described in subsection (b).
    ``(d) Priority for Scholarships.--The Governor of a State may set a 
priority for awarding scholarships under this section for particular 
eligible students, such as students attending schools in high-need 
areas, students who are from groups underrepresented in the fields of 
mathematics, science, and engineering, students served by local 
educational agencies that do not meet or exceed State standards in 
mathematics and science, or students with regional or geographic needs 
as determined appropriate by the Governor.
    ``(e) Amount and Duration of Scholarship.--The Secretary shall 
award a grant under this section--
            ``(1) in an amount that does not exceed $1,000; and
            ``(2) for not more than 2 years of undergraduate study.
    ``(f) Matching Requirement.--In order to receive a grant under this 
section, a State shall provide matching funds for the scholarships 
awarded under this section in an amount equal to 50 percent of the 
Federal funds received.
    ``(g) Authorization.--There are authorized to be appropriated to 
carry out this section such sums as may be necessary for fiscal year 
2006 and each of the 5 succeeding fiscal years.

              ``PART B--POSTSECONDARY EDUCATION ASSESSMENT

``SEC. 821. POSTSECONDARY EDUCATION ASSESSMENT.

    ``(a) Contract for Assessment.--The Secretary shall enter into a 
contract, with an independent, bipartisan organization with specific 
expertise in public administration and financial management, to carry 
out an independent assessment of the cost factors associated with the 
cost of tuition at institutions of higher education.
    ``(b) Timeframe.--The Secretary shall enter into the contract 
described in subsection (a) not later than 90 days after the date of 
enactment of the Higher Education Amendments of 2005.
    ``(c) Matters Assessed.--The assessment described in subsection (a) 
shall--
            ``(1) examine the key elements driving the cost factors 
        associated with the cost of tuition at institutions of higher 
        education during academic year 2000 and succeeding academic 
        years;
            ``(2) identify and evaluate measures being used to control 
        postsecondary education costs;
            ``(3) identify and evaluate effective measures that may be 
        utilized to control postsecondary education costs in the 
        future; and
            ``(4) identify systemic approaches to monitor future 
        postsecondary education cost trends and postsecondary education 
        cost control mechanisms.

 ``PART C--JOB SKILL TRAINING IN HIGH-GROWTH OCCUPATIONS OR INDUSTRIES

``SEC. 831. JOB SKILL TRAINING IN HIGH-GROWTH OCCUPATIONS OR 
              INDUSTRIES.

    ``(a) Grants Authorized.--The Secretary is authorized to award 
grants, on a competitive basis, to eligible partnerships to enable the 
eligible partnerships to provide relevant job skill training in high-
growth industries or occupations.
    ``(b) Definitions.--In this section:
            ``(1) Eligible partnership.--The term `eligible 
        partnership' means a partnership--
                    ``(A) between an institution of higher education 
                and a local board (as such term is defined in section 
                101 of the Workforce Investment Act of 1998); or
                    ``(B) if an institution of higher education is 
                located within a State that does not operate local 
                boards, between the institution of higher education and 
                a State board (as such term is defined in section 101 
                of the Workforce Investment Act of 1998).
            ``(2) Nontraditional student.--The term `nontraditional 
        student' means a student who--
                    ``(A) is independent, as defined in section 480(d);
                    ``(B) attends an institution of higher education--
                            ``(i) on less than a full-time basis;
                            ``(ii) via evening, weekend, modular, or 
                        compressed courses; or
                            ``(iii) via distance learning methods; or
                    ``(C) has delayed enrollment at an institution of 
                higher education.
            ``(3) Institution of higher education.--The term 
        `institution of higher education' means an institution of 
        higher education, as defined in section 101(b), that offers a 
        1- or 2-year program of study leading to a degree or 
        certificate.
    ``(c) Application.--
            ``(1) In general.--Each eligible partnership that desires a 
        grant under this section shall submit an application to the 
        Secretary at such time, in such manner, and accompanied by such 
        additional information as the Secretary may require.
            ``(2) Contents.--Each application submitted under paragraph 
        (1) shall include a description of--
                    ``(A) how the eligible partnership, through the 
                institution of higher education, will provide relevant 
                job skill training for students to enter high-growth 
                occupations or industries;
                    ``(B) local high-growth occupations or industries; 
                and
                    ``(C) the need for qualified workers to meet the 
                local demand of high-growth occupations or industries.
    ``(d) Award Basis.--In awarding grants under this section, the 
Secretary shall--
            ``(1) ensure an equitable distribution of grant funds under 
        this section among urban and rural areas of the United States; 
        and
            ``(2) take into consideration the capability of the 
        institution of higher education--
                    ``(A) to offer relevant, high quality instruction 
                and job skill training for students entering a high-
                growth occupation or industry;
                    ``(B) to involve the local business community and 
                to place graduates in the community in employment in 
                high-growth occupations or industries;
                    ``(C) to provide secondary students with dual-
                enrollment or concurrent enrollment options;
                    ``(D) to serve nontraditional or low-income 
                students, or adult or displaced workers; and
                    ``(E) to serve students from rural or remote 
                communities.
    ``(e) Use of Funds.--Grant funds provided under this section may be 
used--
            ``(1) to expand or create academic programs or programs of 
        training that provide relevant job skill training for high-
        growth occupations or industries;
            ``(2) to purchase equipment which will facilitate the 
        development of academic programs or programs of training that 
        provide training for high-growth occupations or industries;
            ``(3) to support outreach efforts that enable students to 
        attend institutions of higher education with academic programs 
        or programs of training focused on high-growth occupations or 
        industries;
            ``(4) to expand or create programs for distance, evening, 
        weekend, modular, or compressed learning opportunities that 
        provide relevant job skill training in high-growth occupations 
        or industries;
            ``(5) to build partnerships with local businesses in high-
        growth occupations or industries;
            ``(6) to support curriculum development related to 
        entrepreneurial training; and
            ``(7) for other uses that the Secretary determines to be 
        consistent with the intent of this section.
    ``(f) Requirements.--
            ``(1) Fiscal agent.--For the purpose of this section, the 
        institution of higher education in an eligible partnership 
        shall serve as the fiscal agent and grant recipient for the 
        eligible partnership.
            ``(2) Duration.--The Secretary shall award grants under 
        this section for periods that may not exceed 5 years.
            ``(3) Supplement, not supplant.--Funds made available under 
        this section shall be used to supplement and not supplant other 
        Federal, State, and local funds available to the eligible 
        partnership for carrying out the activities described in 
        subsection (e).
    ``(g) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this part such sums as may be necessary for 
fiscal year 2006 and each of the 5 succeeding fiscal years.

   ``PART D--GRANT PROGRAM TO INCREASE STUDENT RETENTION AND PROMOTE 
                        ARTICULATION AGREEMENTS

``SEC. 841. GRANT PROGRAM TO INCREASE STUDENT RETENTION AND PROMOTE 
              ARTICULATION AGREEMENTS.

    ``(a) Authorization of Program.--The Secretary shall award grants, 
on a competitive basis, to eligible institutions to enable the 
institutions to--
            ``(1) focus on increasing traditional and nontraditional 
        student retention at such institutions; and
            ``(2) promote articulation agreements among different 
        institutions that will increase the likelihood of progression 
        of students at such institutions to baccalaureate degrees.
    ``(b) Definition of Eligible Institution.--In this section, the 
term `eligible institution' means an institution of higher education 
(as defined in section 101(a)) where not less than 40 percent of such 
institution's student body receives financial aid under subpart 1 of 
part A of title IV.
    ``(c) Application.--An eligible institution that desires a grant 
under this section shall submit an application to the Secretary at such 
time, in such manner, and containing such information as the Secretary 
may require, including the number of students proposed to be served and 
a description of the services that will be provided.
    ``(d) Mandatory Activities.--An eligible institution that receives 
a grant under this section shall use the grant funds to carry out each 
of the following:
            ``(1) Offering counseling and advisement services to help 
        students adapt to postsecondary education and select 
        appropriate coursework.
            ``(2) Making mentors available to students who are at risk 
        for not completing a degree.
            ``(3) Providing detailed assistance to students who request 
        help in understanding--
                    ``(A) the options for financing their education, 
                including information on grants, loans, and loan 
                repayment programs;
                    ``(B) the process of applying for financial 
                assistance;
                    ``(C) the outcome of their financial assistance 
                application; and
                    ``(D) any unanticipated problems related to 
                financing their education that arise.
            ``(4) Offering tutoring to students at risk of dropping out 
        of school with any course or subject.
            ``(5) Designing and implementing innovative ways to improve 
        retention in and completion of courses, such as enrolling 
        students in cohorts, providing counseling, or creating bridge 
        programs that customize courses to the needs of special 
        population students.
            ``(6) Conducting outreach activities so that all students 
        know that these services are available and are aware of how to 
        access the services.
            ``(7) Creating articulation agreements to promote smooth 
        transition from two year to four year programs.
            ``(8) Making services listed in paragraphs (1) through (5) 
        available in students' native languages, if it is not English, 
        if the percentage of students needing translation services in a 
        specific language exceeds 5 percent.
    ``(e) Permissible Activities.--An eligible institution that 
receives a grant under this section may use grant funds to carry out 
any of the following activities:
            ``(1) Designing innovative course schedules to meet the 
        needs of working adults, such as online, modular, compressed, 
        or other alternative methods.
            ``(2) Offering childcare during the hours when students 
        have class or are studying.
            ``(3) Providing transportation assistance to students that 
        helps such students manage their schedules.
            ``(4) Partnering with local businesses to create flexible 
        work-hour programs so that students can balance work and 
        school.
            ``(5) Offering time management or financial literacy 
        seminars to help students improve their management skills.
            ``(6) Improving professional development to align 
        instruction with innovative program designs.
            ``(7) Any other activities the Secretary believes will 
        promote retention of students attending eligible institutions.
    ``(f) Technical Assistance.--The Secretary may enter into a 
contract with a private entity to provide such technical assistance to 
grantees under this section as the Secretary determines appropriate.
    ``(g) Evaluation.--The Secretary shall conduct an evaluation of 
program impacts under the demonstration program, and shall disseminate 
to the public the findings from the evaluation and information on best 
practices.
    ``(h) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this and such sums as may be necessary for 
fiscal year 2006 and each of the 5 succeeding fiscal years.

                 ``PART E--AMERICAN HISTORY FOR FREEDOM

``SEC. 851. AMERICAN HISTORY FOR FREEDOM.

    ``(a) Grants Authorized.--The Secretary is authorized to award 3-
year grants, on a competitive basis, to eligible institutions to 
establish or strengthen postsecondary academic programs or centers that 
promote and impart knowledge of--
            ``(1) traditional American history;
            ``(2) the history and nature of, and threats to, free 
        institutions; or
            ``(3) the history and achievements of Western civilization.
    ``(b) Definitions.--In this section:
            ``(1) Eligible institution.--The term `eligible 
        institution' means an institution of higher education as 
        defined in section 101.
            ``(2) Free institution.--The term `free institution' means 
        an institution that emerged out of Western civilization, such 
        as democracy, constitutional government, individual rights, 
        market economics, religious freedom and religious tolerance, 
        and freedom of thought and inquiry.
            ``(3) Traditional american history.--The term `traditional 
        American history' means--
                    ``(A) the significant constitutional, political, 
                intellectual, economic, and foreign policy trends and 
                issues that have shaped the course of American history; 
                and
                    ``(B) the key episodes, turning points, and leading 
                figures involved in the constitutional, political, 
                intellectual, diplomatic, and economic history of the 
                United States.
    ``(c) Application.--
            ``(1) In general.--Each eligible institution that desires a 
        grant under this part shall submit an application to the 
        Secretary at such time, in such manner, and accompanied by such 
        additional information as the Secretary may require.
            ``(2) Contents.--Each application submitted under 
        subsection (a) shall include a description of --
                    ``(A) how funds made available under this part will 
                be used for the activities set forth under subsection 
                (e), including how such activities will increase 
                knowledge with respect to traditional American history, 
                free institutions, or Western civilization;
                    ``(B) how the eligible institution will ensure that 
                information about the activities funded under this part 
                is widely disseminated pursuant to subsection 
                (e)(1)(B);
                    ``(C) any activities to be undertaken pursuant to 
                subsection (e)(2)(A), including identification of 
                entities intended to participate;
                    ``(D) how funds made available under this part 
                shall be used to supplement and not supplant non-
                Federal funds available for the activities described in 
                subsection (e); and
                    ``(E) such fiscal controls and accounting 
                procedures as may be necessary to ensure proper 
                disbursement of and accounting for funding made 
                available to the eligible institution under this part.
    ``(d) Award Basis.--In awarding grants under this part, the 
Secretary shall take into consideration the capability of the eligible 
institution to--
            ``(1) increase access to quality programming that expands 
        knowledge of traditional American history, free institutions, 
        or Western civilization;
            ``(2) involve personnel with strong expertise in 
        traditional American history, free institutions, or Western 
        civilization; and
            ``(3) sustain the activities funded under this part after 
        the grant has expired.
    ``(e) Use of Funds.--
            ``(1) Required use of funds.--Funds provided under this 
        part shall be used to--
                    ``(A) establish or strengthen academic programs or 
                centers focused on traditional American history, free 
                institutions, or Western civilization, which may 
                include--
                            ``(i) design and implementation of programs 
                        of study, courses, lecture series, seminars, 
                        and symposia;
                            ``(ii) development, publication, and 
                        dissemination of instructional materials;
                            ``(iii) research;
                            ``(iv) support for faculty teaching in 
                        undergraduate and, if applicable, graduate 
                        programs;
                            ``(v) support for graduate and postgraduate 
                        fellowships, if applicable; or
                            ``(vi) teacher preparation initiatives that 
                        stress content mastery regarding traditional 
                        American history, free institutions, or Western 
                        civilization; and
                    ``(B) conduct outreach activities to ensure that 
                information about the activities funded under this part 
                is widely disseminated--
                            ``(i) to undergraduate students (including 
                        students enrolled in teacher education 
                        programs, if applicable);
                            ``(ii) to graduate students (including 
                        students enrolled in teacher education 
                        programs), if applicable;
                            ``(iii) to faculty;
                            ``(iv) to local educational agencies; and
                            ``(v) within the local community.
            ``(2) Allowable uses of funds.--Funds provided under this 
        part may be used to support--
                    ``(A) collaboration with entities such as--
                            ``(i) local educational agencies, for the 
                        purpose of providing elementary, middle and 
                        secondary school teachers an opportunity to 
                        enhance their knowledge of traditional American 
                        history, free institutions, or Western 
                        civilization; and
                            ``(ii) nonprofit organizations whose 
                        mission is consistent with the purpose of this 
                        part, such as academic organizations, museums, 
                        and libraries, for assistance in carrying out 
                        activities described under subsection (a); and
                    ``(B) other activities that meet the purposes of 
                this part.
    ``(f) Authorization of Appropriations.--For the purpose of carrying 
out this part, there are authorized to be appropriated such sums as may 
be necessary for fiscal year 2006 and each of the 5 succeeding fiscal 
years.

                      ``PART F--TEACH FOR AMERICA

``SEC. 861. TEACH FOR AMERICA.

    ``(a) Definitions.--
            ``(1) In general.--The terms `highly qualified', `local 
        educational agency', and `Secretary' have the meanings given 
        the terms in section 9101 of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 7801).
            ``(2) Grantee.--The term `grantee' means Teach For America, 
        Inc.
            ``(3) High need.--The term `high need', when used with 
        respect to a local educational agency, means a local 
        educational agency experiencing a shortage of highly qualified 
        teachers.
    ``(b) Grants Authorized.--The Secretary is authorized to award a 
grant to Teach For America, Inc., the national teacher corps of 
outstanding recent college graduates who commit to teach for 2 years in 
underserved communities in the United States, to implement and expand 
its program of recruiting, selecting, training, and supporting new 
teachers.
    ``(c) Requirements.--In carrying out the grant program under 
subsection (b), the Secretary shall enter into an agreement with the 
grantee under which the grantee agrees to use the grant funds provided 
under this section--
            ``(1) to provide highly qualified teachers to high need 
        local educational agencies in urban and rural communities;
            ``(2) to pay the cost of recruiting, selecting, training, 
        and supporting new teachers; and
            ``(3) to serve a substantial number and percentage of 
        underserved students.
    ``(d) Authorized Activities.--
            ``(1) In general.--Grant funds provided under this section 
        shall be used by the grantee to carry out each of the following 
        activities:
                    ``(A) Recruiting and selecting teachers through a 
                highly selective national process.
                    ``(B) Providing preservice training to the teachers 
                through a rigorous summer institute that includes 
                hands-on teaching experience and significant exposure 
                to education coursework and theory.
                    ``(C) Placing the teachers in schools and positions 
                designated by partner local educational agencies as 
                high need placements serving underserved students.
                    ``(D) Providing ongoing professional development 
                activities for the teachers' first 2 years in the 
                classroom, including regular classroom observations and 
                feedback, and ongoing training and support.
            ``(2) Limitation.--The grantee shall use all grant funds 
        received under this section to support activities related 
        directly to the recruitment, selection, training, and support 
        of teachers as described in subsection (a).
    ``(e) Reports and Evaluations.--
            ``(1) Annual report.--The grantee shall provide to the 
        Secretary an annual report that includes--
                    ``(A) data on the number and quality of the 
                teachers provided to local educational agencies through 
                a grant under this section;
                    ``(B) an externally conducted analysis of the 
                satisfaction of local educational agencies and 
                principals with the teachers so provided; and
                    ``(C) comprehensive data on the background of the 
                teachers chosen, the training the teachers received, 
                the placement sites of the teachers, the professional 
                development of the teachers, and the retention of the 
                teachers.
            ``(2) Study.--
                    ``(A) In general.--From funds appropriated under 
                subsection (f), the Secretary shall provide for a study 
                that examines the achievement levels of the students 
                taught by the teachers assisted under this section.
                    ``(B) Achievement gains compared.--The study shall 
                compare, within the same schools, the achievement gains 
                made by students taught by teachers who are assisted 
                under this section with the achievement gains made by 
                students taught by teachers who are not assisted under 
                this section.
            ``(3) Requirements.--The Secretary shall provide for such a 
        study not less than once every 3 years, and each such study 
        shall include multiple placement sites and multiple schools 
        within placement sites.
            ``(4) Peer review standards.--Each such study shall meet 
        the peer review standards of the education research community.
    ``(f) Authorization of Appropriations.--
            ``(1) In general.--There are authorized to be appropriated 
        to carry out this section such sums as may be necessary for 
        fiscal year 2006 and each of the 5 succeeding fiscal years.
            ``(2) Limitation.--The grantee shall not use more than 25 
        percent of Federal funds from any source for administrative 
        costs.

               ``PART G--PATSY T. MINK FELLOWSHIP PROGRAM

``SEC. 871. PATSY T. MINK FELLOWSHIP PROGRAM.

    ``(a) Purpose.--
            ``(1) In general.--It is the purpose of this section to 
        provide, through eligible institutions, a program of fellowship 
        awards to assist highly qualified minorities and women to 
        acquire the doctoral degree, or highest possible degree 
        available, in academic areas in which such individuals are 
        underrepresented for the purpose of enabling such individuals 
        to enter the higher education professoriate.
            ``(2) Designation.--Each recipient of a fellowship award 
        from an eligible institution receiving a grant under this 
        section shall be known as a `Patsy T. Mink Graduate Fellow'.
    ``(b) Definitions.--In this section, the term `eligible 
institution' means an institution of higher education, or a consortium 
of such institutions, that offers a program of postbaccalaureate study 
leading to a graduate degree.
    ``(c) Program Authorized.--
            ``(1) Grants by secretary.--
                    ``(A) In general.--The Secretary shall award grants 
                to eligible institutions to enable such institutions to 
                make fellowship awards to individuals in accordance 
                with the provisions of this section.
                    ``(B) Priority consideration.--In awarding grants 
                under this section, the Secretary shall consider the 
                eligible institution's prior experience in producing 
                doctoral degree, or highest possible degree available, 
                holders who are minorities and women, and shall give 
                priority consideration in making grants under this 
                section to those eligible institutions with a 
                demonstrated record of producing minorities and women 
                who have earned such degrees.
            ``(2) Applications.--
                    ``(A) In general.--An eligible institution that 
                desires a grant under this section shall submit an 
                application to the Secretary at such time, in such 
                manner, and containing such information as the 
                Secretary may require.
                    ``(B) Applications made on behalf.--
                            ``(i) In general.--The following entities 
                        may submit an application on behalf of an 
                        eligible institution:
                                    ``(I) A graduate school or 
                                department of such institution.
                                    ``(II) A graduate school or 
                                department of such institution in 
                                collaboration with an undergraduate 
                                college or university of such 
                                institution.
                                    ``(III) An organizational unit 
                                within such institution that offers a 
                                program of postbaccalaureate study 
                                leading to a graduate degree, including 
                                an interdisciplinary or an 
                                interdepartmental program.
                                    ``(IV) A nonprofit organization 
                                with a demonstrated record of helping 
                                minorities and women earn 
                                postbaccalaureate degrees.
                            ``(ii) Nonprofit organizations.--Nothing in 
                        this paragraph shall be construed to permit the 
                        Secretary to award a grant under this section 
                        to an entity other than an eligible 
                        institution.
            ``(3) Selection of applications.--In awarding grants under 
        subsection (a), the Secretary shall--
                    ``(A) take into account--
                            ``(i) the number and distribution of 
                        minority and female faculty nationally;
                            ``(ii) the current and projected need for 
                        highly trained individuals in all areas of the 
                        higher education professoriate; and
                            ``(iii) the present and projected need for 
                        highly trained individuals in academic career 
                        fields in which minorities and women are 
                        underrepresented in the higher education 
                        professoriate; and
                    ``(B) consider the need to prepare a large number 
                of minorities and women generally in academic career 
                fields of high national priority, especially in areas 
                in which such individuals are traditionally 
                underrepresented in college and university faculties, 
                such as mathematics, science, technology, and 
                engineering.
            ``(4) Distribution and amounts of grants.--
                    ``(A) Equitable distribution.--In awarding grants 
                under this section, the Secretary shall, to the maximum 
                extent feasible, ensure an equitable geographic 
                distribution of awards and an equitable distribution 
                among public and independent eligible institutions that 
                apply for grants under this section and that 
                demonstrate an ability to achieve the purpose of this 
                section.
                    ``(B) Special rule.--To the maximum extent 
                practicable, the Secretary shall use not less than 30 
                percent of the amount appropriated pursuant to 
                subsection (f) to award grants to eligible institutions 
                that--
                            ``(i) are eligible for assistance under 
                        title III or title V; or
                            ``(ii) have formed a consortium that 
                        includes both non-minority serving institutions 
                        and minority serving institutions.
                    ``(C) Allocation.--In awarding grants under this 
                section, the Secretary shall allocate appropriate funds 
                to those eligible institutions whose applications 
                indicate an ability to significantly increase the 
                numbers of minorities and women entering the higher 
                education professoriate and that commit institutional 
                resources to the attainment of the purpose of this 
                section.
                    ``(D) Number of fellowship awards.--An eligible 
                institution that receives a grant under this section 
                shall make not less than 15 fellowship awards.
                    ``(E) Reallotment.--If the Secretary determines 
                that an eligible institution awarded a grant under this 
                section is unable to use all of the grant funds awarded 
                to the institution, the Secretary shall reallot, on 
                such date during each fiscal year as the Secretary may 
                fix, the unused funds to other eligible institutions 
                that demonstrate that such institutions can use any 
                reallocated grant funds to make fellowship awards to 
                individuals under this section.
            ``(5) Institutional allowance.--
                    ``(A) In general.--
                            ``(i) Number of allowances.--In awarding 
                        grants under this section, the Secretary shall 
                        pay to each eligible institution awarded a 
                        grant, for each individual awarded a fellowship 
                        by such institution under this section, an 
                        institutional allowance.
                            ``(ii) Amount.--Except as provided in 
                        paragraph (3), an institutional allowance shall 
                        be in an amount equal to, for academic year 
                        2006-2007 and succeeding academic years, the 
                        amount of institutional allowance made to an 
                        institution of higher education under section 
                        715 for such academic year.
                    ``(B) Use of funds.--Institutional allowances may 
                be expended in the discretion of the eligible 
                institution and may be used to provide, except as 
                prohibited under paragraph (4), academic support and 
                career transition services for individuals awarded 
                fellowships by such institution.
                    ``(C) Reduction.--The institutional allowance paid 
                under paragraph (1) shall be reduced by the amount the 
                eligible institution charges and collects from a 
                fellowship recipient for tuition and other expenses as 
                part of the recipient's instructional program.
                    ``(D) Use for overhead prohibited.--Funds made 
                available under this section may not be used for 
                general operational overhead of the academic department 
                or institution receiving funds under this section.
    ``(d) Fellowship Recipients.--
            ``(1) Authorization.--An eligible institution that receives 
        a grant under this section shall use the grant funds to make 
        fellowship awards to minorities and women who are enrolled at 
        such institution in a doctoral degree, or highest possible 
        degree available, program and--
                    ``(A) intend to pursue a career in instruction at--
                            ``(i) an institution of higher education 
                        (as the term is defined in section 101);
                            ``(ii) an institution of higher education 
                        (as the term is defined in section 102(a)(1));
                            ``(iii) an institution of higher education 
                        outside the United States (as the term is 
                        described in section 102(a)(2)); or
                            ``(iv) a proprietary institution of higher 
                        education (as the term is defined in section 
                        102(b)); and
                    ``(B) sign an agreement with the Secretary 
                agreeing--
                            ``(i) to begin employment at an institution 
                        described in paragraph (1) not later than 3 
                        years after receiving the doctoral degree or 
                        highest possible degree available, which 3-year 
                        period may be extended by the Secretary for 
                        extraordinary circumstances; and
                            ``(ii) to be employed by such institution 
                        for 1 year for each year of fellowship 
                        assistance received under this section.
            ``(2) Failure to comply.--If an individual who receives a 
        fellowship award under this section fails to comply with the 
        agreement signed pursuant to subsection (a)(2), then the 
        Secretary shall do 1 or both of the following:
                    ``(A) Require the individual to repay all or the 
                applicable portion of the total fellowship amount 
                awarded to the individual by converting the balance due 
                to a loan at the interest rate applicable to loans made 
                under part B of title IV.
                    ``(B) Impose a fine or penalty in an amount to be 
                determined by the Secretary.
            ``(3) Waiver and modification.--
                    ``(A) Regulations.--The Secretary shall promulgate 
                regulations setting forth criteria to be considered in 
                granting a waiver for the service requirement under 
                subsection (a)(2).
                    ``(B) Content.--The criteria under paragraph (1) 
                shall include whether compliance with the service 
                requirement by the fellowship recipient would be--
                            ``(i) inequitable and represent an 
                        extraordinary hardship; or
                            ``(ii) deemed impossible because the 
                        individual is permanently and totally disabled 
                        at the time of the waiver request.
            ``(4) Amount of fellowship awards.--Fellowship awards under 
        this section shall consist of a stipend in an amount equal to 
        the level of support provided to the National Science 
        Foundation graduate fellows, except that such stipend shall be 
        adjusted as necessary so as not to exceed the fellow's tuition 
        and fees or demonstrated need (as determined by the institution 
        of higher education where the graduate student is enrolled), 
        whichever is greater.
            ``(5) Academic progress required.--An individual student 
        shall not be eligible to receive a fellowship award--
                    ``(A) except during periods in which such student 
                is enrolled, and such student is maintaining 
                satisfactory academic progress in, and devoting 
                essentially full time to, study or research in the 
                pursuit of the degree for which the fellowship support 
                was awarded; and
                    ``(B) if the student is engaged in gainful 
                employment, other than part-time employment in 
                teaching, research, or similar activity determined by 
                the eligible institution to be consistent with and 
                supportive of the student's progress toward the 
                appropriate degree.
    ``(e) Rule of Construction.--Nothing in this section shall be 
construed to require an eligible institution that receives a grant 
under this section--
            ``(1) to grant a preference or to differentially treat any 
        applicant for a faculty position as a result of the 
        institution's participation in the program under this section; 
        or
            ``(2) to hire a Patsy T. Mink Fellow who completes this 
        program and seeks employment at such institution.
    ``(f) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section such sums as may be necessary 
for fiscal year 2006 for each of the 5 succeeding fiscal years.

       ``PART H--STUDY ON COLLEGE ENROLLMENT BY SECONDARY SCHOOLS

``SEC. 881. STUDY ON COLLEGE ENROLLMENT BY SECONDARY SCHOOLS.

    ``The Secretary shall contract with a not-for-profit organization, 
with demonstrated expertise in increasing college enrollment rates in 
low-income communities nationwide, to make publicly available year-to-
year college enrollment rate trends by secondary schools, in full 
compliance with the Family Educational Rights and Privacy Act of 1974 
(FERPA).''.

                  CHAPTER 10--AMENDMENTS TO OTHER LAWS

            Subchapter A--Education of the Deaf Act of 1986

SEC. 7901. LAURENT CLERC NATIONAL DEAF EDUCATION CENTER.

    Section 104 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4304) is amended--
            (1) by striking the heading and inserting ``laurent clerc 
        national deaf education center'';
            (2) in subsection (a)(1)(A), by inserting ``the Laurent 
        Clerc National Deaf Education Center (referred to in this 
        section as the `Clerc Center') to carry out'' after ``maintain 
        and operate''; and
            (3) in subsection (b)--
                    (A) in the matter preceding subparagraph (A) of 
                paragraph (1), by striking ``elementary and secondary 
                education programs'' and inserting ``Clerc Center'';
                    (B) in paragraph (2), by striking ``elementary and 
                secondary education programs'' and inserting ``Clerc 
                Center''; and
                    (C) by adding at the end the following:
    ``(5) The University, for purposes of the elementary and secondary 
education programs carried out at the Clerc Center, shall--
            ``(A)(i) select challenging academic content standards, 
        challenging student academic achievement standards, and 
        academic assessments of a State, adopted and implemented, as 
        appropriate, pursuant to paragraphs (1) and (3) of section 
        1111(b) of the Elementary and Secondary Education Act of 1965 
        (20 U.S.C. 6311(b)(1) and (3)) and approved by the Secretary; 
        and
            ``(ii) implement such standards and assessments for such 
        programs by not later than the beginning of the 2008-2009 
        academic year;
            ``(B) annually determine whether such programs at the Clerc 
        Center are making adequate yearly progress, as determined 
        according to the definition of adequate yearly progress defined 
        (pursuant to section 1111(b)(2)(C) of such Act (20 U.S.C. 
        6311(b)(2)(C))) by the State that has adopted and implemented 
        the standards and assessments selected under subparagraph 
        (A)(i); and
            ``(C) publicly report the results of the academic 
        assessments implemented under subparagraph (A) and whether the 
        programs at the Clerc Center are making adequate yearly 
        progress, as determined under subparagraph (B).''.

SEC. 7902. AGREEMENT WITH GALLAUDET UNIVERSITY.

    Section 105(b)(4) of the Education of the Deaf Act of 1986 (20 
U.S.C. 4305(b)(4)) is amended--
            (1) by striking ``the Act of March 3, 1931 (40 U.S.C. 276a-
        276a-5) commonly referred to as the Davis-Bacon Act'' and 
        inserting ``subchapter IV of chapter 31 of title 40, United 
        States Code, commonly referred to as the Davis-Bacon Act''; and
            (2) by striking ``section 2 of the Act of June 13, 1934 (40 
        U.S.C. 276c)'' and inserting ``section 3145 of title 40, United 
        States Code''.

SEC. 7903. AGREEMENT FOR THE NATIONAL TECHNICAL INSTITUTE FOR THE DEAF.

    Section 112 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4332) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) in the first sentence--
                                    (I) by striking ``an institution of 
                                higher education'' and inserting ``the 
                                Rochester Institute of Technology, 
                                Rochester, New York''; and
                                    (II) by striking ``of a'' and 
                                inserting ``of the''; and
                            (ii) by striking the second sentence;
                    (B) by redesignating paragraph (2) as paragraph 
                (3); and
                    (C) by inserting after paragraph (1) the following:
            ``(2) Notwithstanding the requirement under paragraph (1), 
        if the Secretary or the Rochester Institute of Technology 
        terminates the agreement under paragraph (1), the Secretary 
        shall consider proposals from other institutions of higher 
        education and enter into an agreement with 1 of such 
        institutions for the establishment and operation of a National 
        Technical Institution for the Deaf.''; and
            (2) in subsection (b)--
                    (A) in paragraph (3), by striking ``Committee on 
                Education and Labor of the House of Representatives and 
                to the Committee on Labor and Human Resources of the 
                Senate'' and inserting ``Committee on Education and the 
                Workforce of the House of Representatives and to the 
                Committee on Health, Education, Labor, and Pensions of 
                the Senate''; and
                    (B) in paragraph (5)--
                            (i) by striking ``the Act of March 3, 1931 
                        (40 U.S.C. 276a-276a-5) commonly referred to as 
                        the Davis-Bacon Act'' and inserting 
                        ``subchapter IV of chapter 31 of title 40, 
                        United States Code, commonly referred to as the 
                        Davis-Bacon Act''; and
                            (ii) by striking ``section 2 of the Act of 
                        June 13, 1934 (40 U.S.C. 276c)'' and inserting 
                        ``section 3145 of title 40, United States 
                        Code''.

SEC. 7904. CULTURAL EXPERIENCES GRANTS.

    (a) Cultural Experiences Grants.--Title I of the Education of the 
Deaf Act of 1986 (20 U.S.C. 4301 et seq.) is amended by adding at the 
end the following:

                        ``PART C--OTHER PROGRAMS

``SEC. 121. CULTURAL EXPERIENCES GRANTS.

    ``(a) In General.--The Secretary shall, on a competitive basis, 
make grants to, and enter into contracts and cooperative agreements 
with, eligible entities to support the activities described in 
subsection (b).
    ``(b) Activities.--In carrying out this section, the Secretary 
shall support activities providing cultural experiences, through 
appropriate nonprofit organizations with a demonstrated proficiency in 
providing such activities, that--
            ``(1) enrich the lives of deaf and hard-of-hearing children 
        and adults;
            ``(2) increase public awareness and understanding of 
        deafness and of the artistic and intellectual achievements of 
        deaf and hard-of-hearing persons; or
            ``(3) promote the integration of hearing, deaf, and hard-
        of-hearing persons through shared cultural, educational, and 
        social experiences.
    ``(c) Applications.--An eligible entity that desires to receive a 
grant, or enter into a contract or cooperative agreement, under this 
section shall submit an application to the Secretary at such time, in 
such manner, and containing such information as the Secretary may 
require.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as may be necessary 
for fiscal year 2006 and each of the 5 succeeding fiscal years.''.
    (b) Conforming Amendment.--The title heading of title I of the 
Education of the Deaf Act of 1986 (20 U.S.C. 4301 et seq.) is amended 
by adding at the end ``; OTHER PROGRAMS''.

SEC. 7905. AUDIT.

    Section 203 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4353) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1), by striking the second 
                sentence and inserting the following: ``The institution 
                of higher education that the Secretary has an agreement 
                with under section 112 shall have an annual independent 
                financial and compliance audit made of NTID programs 
                and activities. The audit shall follow the cycle of the 
                Federal fiscal year.'';
                    (B) in paragraph (2), by striking ``sections'' and 
                all that follows through the period and inserting 
                ``sections 102(b), 105(b)(4), 112(b)(5), 203(c), 
                207(b)(2), subsections (c) through (f) of section 207, 
                and subsections (b) and (c) of section 209.''; and
                    (C) in paragraph (3), by inserting ``and the 
                Committee on Education and the Workforce of the House 
                of Representatives and the Committee on Health, 
                Education, Labor, and Pensions of the Senate'' after 
                ``Secretary''; and
            (2) in subsection (c)(2)(A), by striking ``Committee on 
        Education and Labor of the House of Representatives and the 
        Committee on Labor and Human Resources of the Senate'' and 
        inserting ``Committee on Education and the Workforce of the 
        House of Representatives and the Committee on Health, 
        Education, Labor, and Pensions of the Senate''.

SEC. 7906. REPORTS.

    Section 204 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4354) is amended--
            (1) in the matter preceding paragraph (1), by striking 
        ``Committee on Education and Labor of the House of 
        Representatives and the Committee on Labor and Human Resources 
        of the Senate'' and inserting ``Committee on Education and the 
        Workforce of the House of Representatives and the Committee on 
        Health, Education, Labor, and Pensions of the Senate'';
            (2) in paragraph (1), by striking ``preparatory,'';
            (3) in paragraph (2)(C), by striking ``upon graduation/
        completion'' and inserting ``on the date that is 1 year after 
        the date of graduation or completion''; and
            (4) in paragraph (3)(B), by striking ``of the institution 
        of higher education'' and all that follows through the period 
        and inserting ``of NTID programs and activities.''.

SEC. 7907. MONITORING, EVALUATION, AND REPORTING.

    Section 205 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4355) is amended--
            (1) in subsection (b), by striking ``The Secretary, as part 
        of the annual report required under section 426 of the 
        Department of Education Organization Act, shall include a 
        description of'' and inserting ``The Secretary shall annually 
        transmit information to Congress on''; and
            (2) in subsection (c), by striking ``fiscal years 1998 
        through 2003'' and inserting ``fiscal years 2006 through 
        2010''.

SEC. 7908. LIAISON FOR EDUCATIONAL PROGRAMS.

    Section 206(a) of the Education of the Deaf Act of 1986 (20 U.S.C. 
4356(a)) is amended by striking ``Not later than 30 days after the date 
of enactment of this Act, the'' and inserting ``The''.

SEC. 7909. FEDERAL ENDOWMENT PROGRAMS FOR GALLAUDET UNIVERSITY AND THE 
              NATIONAL TECHNICAL INSTITUTE FOR THE DEAF.

    Section 207(h) of the Education of the Deaf Act of 1986 (20 U.S.C. 
4357(h)) is amended by striking ``fiscal years 1998 through 2003'' each 
place it appears and inserting ``fiscal years 2006 through 2010''.

SEC. 7910. OVERSIGHT AND EFFECT OF AGREEMENTS.

    Section 208(a) of the Education of the Deaf Act of 1986 (20 U.S.C. 
4359(a)) is amended by striking ``Committee on Labor and Human 
Resources of the Senate and the Committee on Education and the 
Workforce of the House of Representatives'' and inserting ``Committee 
on Education and the Workforce of the House of Representatives and the 
Committee on Health, Education, Labor, and Pensions of the Senate''.

SEC. 7911. INTERNATIONAL STUDENTS.

    Section 209 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4359a) is amended--
            (1) in subsection (a)--
                    (A) by striking ``preparatory, undergraduate,'' and 
                inserting ``undergraduate'';
                    (B) by striking ``Effective with'' and inserting 
                the following:
            ``(1) In general.--Except as provided in paragraph (2), 
        effective with''; and
                    (C) by adding at the end the following:
            ``(2) Distance learning.--International students who 
        participate in distance learning courses that are at NTID or 
        the University and who are residing outside of the United 
        States shall--
                    ``(A) not be counted as international students for 
                purposes of the cap on international students under 
                paragraph (1), except that in any school year no United 
                States citizen who applies to participate in distance 
                learning courses that are at the University or NTID 
                shall be denied participation in such courses because 
                of the participation of an international student in 
                such courses; and
                    ``(B) not be charged a tuition surcharge, as 
                described in subsection (b).''; and
            (2) by striking subsections (b), (c), and (d), and 
        inserting the following:
    ``(b) Tuition Surcharge.--Except as provided in subsections 
(a)(2)(B) and (c), the tuition for postsecondary international students 
enrolled in the University (including undergraduate and graduate 
students) or NTID shall include, for academic year 2007-2008 and any 
succeeding academic year, a surcharge of--
            ``(1) 100 percent for a postsecondary international student 
        from a non-developing country; and
            ``(2) 50 percent for a postsecondary international student 
        from a developing country.
    ``(c) Reduction of Surcharge.--
            ``(1) In general.--Beginning with the academic year 2007-
        2008, the University or NTID may reduce the surcharge--
                    ``(A) under subsection (b)(1) to 50 percent if--
                            ``(i) a student described under subsection 
                        (b)(1) demonstrates need; and
                            ``(ii) such student has made a good faith 
                        effort to secure aid through such student's 
                        government or other sources; and
                    ``(B) under subsection (b)(2) to 25 percent if--
                            ``(i) a student described under subsection 
                        (b)(2) demonstrates need; and
                            ``(ii) such student has made a good faith 
                        effort to secure aid through such student's 
                        government or other sources.
            ``(2) Development of sliding scale.--The University and 
        NTID shall develop a sliding scale model that--
                    ``(A) will be used to determine the amount of a 
                tuition surcharge reduction pursuant to paragraph (1); 
                and
                    ``(B) shall be approved by the Secretary.
    ``(d) Definition.--In this section, the term `developing country' 
means a country with a per-capita income of not more than $4,825, 
measured in 1999 United States dollars, as adjusted by the Secretary to 
reflect inflation since 1999.''.

SEC. 7912. RESEARCH PRIORITIES.

    Section 210(b) of the Education of the Deaf Act of 1986 (20 U.S.C. 
4359b(b)) is amended by striking ``Committee on Labor and Human 
Resources of the Senate'' and inserting ``Committee on Health, 
Education, Labor, and Pensions of the Senate''.

SEC. 7913. AUTHORIZATION OF APPROPRIATIONS.

    Section 212 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4360a) is amended--
            (1) in subsection (a), in the matter preceding paragraph 
        (1), by striking ``fiscal years 1998 through 2003'' and 
        inserting ``fiscal years 2006 through 2011''; and
            (2) in subsection (b), by striking ``fiscal years 1998 
        through 2003'' and inserting ``fiscal years 2006 through 
        2011''.

           Subchapter B--United States Institute of Peace Act

SEC. 7921. UNITED STATES INSTITUTE OF PEACE ACT.

    (a) Powers and Duties.--Section 1705(b)(3) of the United States 
Institute of Peace Act (22 U.S.C. 4604(b)(3)) is amended by striking 
``the Arms Control and Disarmament Agency,''.
    (b) Board of Directors.--Section 1706 of the United States 
Institute of Peace Act (22 U.S.C. 4605) is amended--
            (1) by striking ``(b)(5)'' each place the term appears and 
        inserting ``(b)(4)''; and
            (2) in subsection (e), by adding at the end the following:
            ``(5) The term of a member of the Board shall not commence 
        until the member is confirmed by the Senate and sworn in as a 
        member of the Board.''.
    (c) Funding.--Section 1710 of the United States Institute of Peace 
Act (22 U.S.C. 4609) is amended by adding at the end the following:
    ``(d) Extension.--Any authorization of appropriations made for the 
purposes of carrying out this title shall be extended in the same 
manner as applicable programs are extended under section 422 of the 
General Education Provisions Act.''.

         Subchapter C--The Higher Education Amendments of 1998

SEC. 7931. REPEALS.

    The following provisions of title VIII of the Higher Education 
Amendments of 1998 (Public Law 105-244) are repealed:
            (1) Part A.
            (2) Part C (20 U.S.C. 1070 note).
            (3) Part F (20 U.S.C. 1862 note).
            (4) Part J.
            (5) Section 861.
            (6) Section 863.

SEC. 7932. GRANTS TO STATES FOR WORKPLACE AND COMMUNITY TRANSITION 
              TRAINING FOR INCARCERATED YOUTH OFFENDERS.

    Section 821(b) of the Higher Education Amendment of 1988 is amended 
by striking ``25'' and inserting ``35''.

                     Subchapter D--Indian Education

                PART I--TRIBAL COLLEGES AND UNIVERSITIES

SEC. 7941. REAUTHORIZATION OF THE TRIBALLY CONTROLLED COLLEGE OR 
              UNIVERSITY ASSISTANCE ACT OF 1978.

    (a) Clarification of the Definition of National Indian 
Organization.--Section 2(a)(6) of the Tribally Controlled College or 
University Assistance Act of 1978 (25 U.S.C. 1801(a)(6)) is amended by 
striking ``in the field of Indian education'' and inserting ``in the 
fields of tribally controlled colleges and universities and Indian 
higher education''.
    (b) Indian Student Count.--Section 2(a) of the Tribally Controlled 
College or University Assistance Act (25 U.S.C. 1801(a)) is amended--
            (1) by redesignating paragraphs (7) and (8) as paragraphs 
        (8) and (9), respectively; and
            (2) by inserting after paragraph (6) the following:
            ``(7) `Indian student' means a student who is--
                    ``(A) a member of an Indian tribe; or
                    ``(B) a biological child of a member of an Indian 
                tribe, living or deceased;''.
    (c) Continuing Education.--Section 2(b) of the Tribally Controlled 
College or University Assistance Act (25 U.S.C. 1801(b)) is amended by 
striking paragraph (5) and inserting the following:
            ``(5) Determination of credits.--Eligible credits earned in 
        a continuing education program--
                    ``(A) shall be determined as 1 credit for every 10 
                contact hours in the case of an institution on a 
                quarter system, or 15 contact hours in the case of an 
                institution on a semester system, of participation in 
                an organized continuing education experience under 
                responsible sponsorship, capable direction, and 
                qualified instruction, as described in the criteria 
                established by the International Association for 
                Continuing Education and Training; and
                    ``(B) shall be limited to 10 percent of the Indian 
                student count of a tribally controlled college or 
                university.''.
    (d) Accreditation Requirement.--Section 103 of the Tribally 
Controlled College or University Assistance Act (25 U.S.C. 1804) is 
amended--
            (1) in paragraph (2), by striking ``and'' at the end;
            (2) in paragraph (3), by striking the period at the end and 
        inserting ``; and''; and
            (3) by inserting after paragraph (3), the following:
            ``(4)(A) is accredited by a nationally recognized 
        accrediting agency or association determined by the Secretary 
        of Education to be a reliable authority with regard to the 
        quality of training offered; or
            ``(B) is, according to such an agency or association, 
        making reasonable progress toward accreditation.''.
    (e) Technical Assistance Contract Awards.--Section 105 of the 
Tribally Controlled College or University Assistance Act (25 U.S.C. 
1805) is amended in the second sentence by striking ``In the awarding 
of contracts for technical assistance, preference shall be given'' and 
inserting ``The Secretary shall direct that contracts for technical 
assistance be awarded''.
    (f) Title I Reauthorization.--Section 110(a) of the Tribally 
Controlled College or University Assistance Act of 1978 (25 U.S.C. 
1810(a)) is amended--
            (1) in paragraphs (1), (2), (3), and (4), by striking 
        ``1999'' and inserting ``2006'';
            (2) in paragraphs (1), (2), and (3), by striking ``4 
        succeeding'' and inserting ``5 succeeding'';
            (3) in paragraph (2), by striking ``$40,000,000'' and 
        inserting ``such sums as may be necessary'';
            (4) in paragraph (3), by striking ``$10,000,000'' and 
        inserting ``such sums as may be necessary''; and
            (5) in paragraph (4), by striking ``succeeding 4'' and 
        inserting ``5 succeeding''.
    (g) Title III Reauthorization.--Section 306(a) of the Tribally 
Controlled College or University Assistance Act of 1978 (25 U.S.C. 
1836(a)) is amended--
            (1) by striking ``1999'' and inserting ``2006''; and
            (2) by striking ``4 succeeding'' and inserting ``5 
        succeeding''.
    (h) Title IV Reauthorization.--Section 403 of the Tribal Economic 
Development and Technology Related Education Assistance Act of 1990 (25 
U.S.C. 1852) is amended--
            (1) by striking ``$2,000,000 for fiscal year 1999'' and 
        inserting ``such sums as may be necessary for fiscal year 
        2006''; and
            (2) by striking ``4 succeeding'' and inserting ``5 
        succeeding''.

                    PART II--NAVAJO HIGHER EDUCATION

SEC. 7945. SHORT TITLE.

    This part may be cited as the ``Navajo Nation Higher Education Act 
of 2005''.

SEC. 7946. REAUTHORIZATION OF NAVAJO COMMUNITY COLLEGE ACT.

    (a) Purpose.--Section 2 of the Navajo Community College Act (25 
U.S.C. 640a) is amended--
            (1) by striking ``Navajo Tribe of Indians'' and inserting 
        ``Navajo Nation''; and
            (2) by striking ``the Navajo Community College'' and 
        inserting ``Dine College''.
    (b) Grants.--Section 3 of the Navajo Community College Act (25 
U.S.C. 640b) is amended--
            (1) in the first sentence--
                    (A) by inserting ``the'' before ``Interior'';
                    (B) by striking ``Navajo Tribe of Indians'' and 
                inserting ``Navajo Nation''; and
                    (C) by striking ``the Navajo Community College'' 
                and inserting ``Dine College''; and
            (2) in the second sentence--
                    (A) by striking ``Navajo Tribe'' and inserting 
                ``Navajo Nation''; and
                    (B) by striking ``Navajo Indians'' and inserting 
                ``Navajo people''.
    (c) Study of Facilities Needs.--Section 4 of the Navajo Community 
College Act (25 U.S.C. 640c) is amended--
            (1) in subsection (a)--
                    (A) in the first sentence--
                            (i) by striking ``the Navajo Community 
                        College'' and inserting ``Dine College''; and
                            (ii) by striking ``August 1, 1979'' and 
                        inserting ``October 31, 2009''; and
                    (B) in the second sentence, by striking ``Navajo 
                Tribe'' and inserting ``Navajo Nation'';
            (2) in subsection (b), by striking ``the date of enactment 
        of the Tribally Controlled Community College Assistance Act of 
        1978'' and inserting ``October 1, 2006''; and
            (3) in subsection (c), in the first sentence, by striking 
        ``the Navajo Community College'' and inserting ``Dine 
        College''.
    (d) Authorization of Appropriations.--Section 5 of the Navajo 
Community College Act (25 U.S.C. 640c-1) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1), by striking ``$2,000,000'' 
                and all that follows through the end of the paragraph 
                and inserting ``such sums as are necessary for fiscal 
                years 2006 through 2011.''; and
                    (B) by adding at the end the following:
    ``(3) Sums described in paragraph (2) shall be used to provide 
grants for construction activities, including the construction of 
buildings, water and sewer facilities, roads, information technology 
and telecommunications infrastructure, classrooms, and external 
structures (such as walkways).'';
            (2) in subsection (b)(1)--
                    (A) in the matter preceding subparagraph (A)--
                            (i) by striking ``the Navajo Community 
                        College'' and inserting ``Dine College''; and
                            (ii) by striking ``, for each fiscal year'' 
                        and all that follows through ``for--'' and 
                        inserting ``such sums as are necessary for 
                        fiscal years 2006 through 2011 to pay the cost 
                        of--'';
                    (B) in subparagraph (A)--
                            (i) by striking ``college'' and inserting 
                        ``College'';
                            (ii) in clauses (i) and (iii), by striking 
                        the commas at the ends of the clauses and 
                        inserting semicolons; and
                            (iii) in clause (ii), by striking ``, and'' 
                        at the end and inserting ``; and'';
                    (C) in subparagraph (B), by striking the comma at 
                the end and inserting a semicolon;
                    (D) in subparagraph (C), by striking ``, and'' at 
                the end and inserting a semicolon;
                    (E) in subparagraph (D), by striking the period at 
                the end and inserting ``; and''; and
                    (F) by adding at the end the following:
                    ``(E) improving and expanding the College, 
                including by providing, for the Navajo people and 
                others in the community of the College--
                            ``(i) higher education programs;
                            ``(ii) vocational and technical education;
                            ``(iii) activities relating to the 
                        preservation and protection of the Navajo 
                        language, philosophy, and culture;
                            ``(iv) employment and training 
                        opportunities;
                            ``(v) economic development and community 
                        outreach; and
                            ``(vi) a safe learning, working, and living 
                        environment.''; and
            (3) in subsection (c), by striking ``the Navajo Community 
        College'' and inserting ``Dine College''.
    (e) Effect on Other Laws.--Section 6 of the Navajo Community 
College Act (25 U.S.C. 640c-2) is amended--
            (1) by striking ``the Navajo Community College'' each place 
        it appears and inserting ``Dine College''; and
            (2) in subsection (b), by striking ``college'' and 
        inserting ``College''.
    (f) Payments; Interest.--Section 7 of the Navajo Community College 
Act (25 U.S.C. 640c-3) is amended by striking ``the Navajo Community 
College'' each place it appears and inserting ``Dine College''.

                 TITLE VIII--COMMITTEE ON THE JUDICIARY

SEC. 8001. RECAPTURE OF UNUSED VISA NUMBERS.

    (a) Recapture of Unused Employment-Based Immigrant Visas.--Section 
201(d) of the Immigration and Nationality Act (8 U.S.C. 1151(d)) is 
amended--
            (1) in paragraph (2)(C)--
                    (A) by striking ``is the difference'' and inserting 
                ``is the sum of--
                            ``(i) the difference''; and
                    (B) by striking the period at the end and inserting 
                the following: ``; and
                            ``(ii) the lesser of--
                                    ``(I) the number of immigrant visas 
                                that were available in any previous 
                                fiscal year to employment-based 
                                immigrants (and their family members 
                                accompanying or following to join under 
                                section 203(d)) and that were not 
                                issued for that fiscal year or for any 
                                subsequent fiscal year, excluding those 
                                immigrant visas reserved for 
                                employment-based immigrants for an 
                                occupation listed in schedule A of 
                                section 656.5 of title 20, Code of 
                                Federal Regulations; and
                                    ``(II) 90,000.''; and
            (2) by adding at the end the following:
            ``(3) Immigrant visas issued on or after October 1, 2004, 
        to spouses and children of employment-based immigrants shall 
        not be counted against the numerical limitation set forth in 
        paragraph (1).''.
    (b) Supplemental Petition Fee.--Section 204(a)(1) of the 
Immigration and Nationality Act (8 U.S.C. 1154(a)(1)) is amended--
            (1) in subparagraph (E), by adding at the end the 
        following: ``Such petition shall be accompanied by a 
        supplemental petition fee in the amount of $500.''; and
            (2) in subparagraph (F), by adding at the end the 
        following: ``Such petition shall be accompanied by a 
        supplemental petition fee in the amount of $500.''.
    (c) Adjustment of Status.--
            (1) In general.--Section 245(a) of the Immigration and 
        Nationality Act (8 U.S.C. 1255(a)) is amended to read as 
        follows:
    ``(a)(1) The status of an alien who was inspected and admitted or 
paroled into the United States or the status of any other alien having 
an approved petition for classification under subparagraph (A)(iii), 
(A)(iv), (B)(ii), or (B)(iii) of section 204(a)(1) may be adjusted by 
the Secretary of Homeland Security or the Attorney General, in the 
discretion of the Secretary or Attorney General, and under such 
regulations as the Secretary or Attorney General may prescribe, to that 
of an alien lawfully admitted for permanent residence if--
            ``(A) the alien makes an application for such adjustment;
            ``(B) the alien is eligible to receive an immigrant visa 
        and is admissible to the United States for permanent residence; 
        and
            ``(C) an immigrant visa is immediately available to the 
        alien at the time the application is filed.
    ``(2) If a supplemental petition fee is paid for any petition under 
subparagraph (E) or (F) of section 204(a)(1), an application under 
paragraph (1) of this subsection on behalf of an alien beneficiary of 
such petition (including a spouse or child who is accompanying or 
following to join the principal beneficiary) may be filed without 
regard to the limitation set forth in paragraph (1)(C). An application 
for adjustment of status filed under this paragraph may not be approved 
until such time as an immigrant visa becomes available.''.
            (2) Pending applications.--An alien on whose behalf a 
        petition was pending under subparagraph (E) or (F) of section 
        204(a)(1) of the Immigration and Nationality Act (8 U.S.C. 
        1154(a)(1)), on the date of enactment of this Act may, upon the 
        payment of the supplemental petition fee set forth in such 
        section, apply for adjustment of status under this subsection 
        without regard to the limitation set forth in section 
        245(a)(1)(C) of the Immigration and Nationality Act (8 U.S.C. 
        1255(a)(1)(C)), as amended by paragraph (1).
    (d) Recapture of Unused H-1B Visa Numbers.--Section 214(g) of the 
Immigration and Nationality Act (8 U.S.C. 1184(g)) is amended--
            (1) by redesignating paragraphs (9) through (11) as 
        paragraphs (10) through (12), respectively; and
            (2) by inserting after paragraph (8) the following:
            ``(9)(A) If the numerical limitation in paragraph (1)(A) 
        for fiscal year 2006 or a subsequent fiscal year has been 
        reached, such numerical limitation shall be supplemented in a 
        number equal to the lesser of--
                    ``(i) the cumulative total number of visas that 
                were available in all prior fiscal years subsequent to 
                fiscal year 1991, and not issued for each such fiscal 
                year or any subsequent fiscal year; and
                    ``(ii) 30,000.
            ``(B) Any petition filed after the numerical limitation set 
        forth in paragraph (1)(A) has been reached for that fiscal 
        year, and seeking an H-1B visa number recaptured under 
        subparagraph (A) of this paragraph, shall be accompanied by an 
        H-1B recapture fee in the amount of $500.''.
    (e) Conforming Amendment.--Section 286(m) of the Immigration and 
Nationality Act (8 U.S.C. 1356(m)) is amended by inserting ``, 
including those fees provided for in subparagraphs (E) and (F) of 
section 204(a)(1) and subsections (c)(15) and (g)(9)(B) of section 
214,'' after ``all adjudication fees''.
    (f) Expenditure Limitation.--Amounts collected under subparagraphs 
(E) and (F) of section 204(a)(1) and subsections (c)(15) and (g)(9)(B) 
of section 214 of the Immigration and Nationality Act, as amended by 
this Act, may not be expended unless specifically appropriated by an 
Act of Congress.

SEC. 8002. FEES WITH RESPECT TO IMMIGRATION SERVICES FOR INTRACOMPANY 
              TRANSFEREES.

    Section 214(c) of the Immigration and Nationality Act (8 U.S.C. 
1184(c)) is amended by adding at the end the following:
    ``(15)(A) The Secretary of State shall impose a fee on an employer 
when an alien files an application abroad for a visa authorizing 
initial admission to the United States as a nonimmigrant described in 
section 101(a)(15)(L) in order to be employed by the employer, if the 
alien is covered under a blanket petition described in paragraph 
(2)(A).
    ``(B) The Secretary of Homeland Security shall impose a fee on an 
employer filing a petition under paragraph (1) initially to grant an 
alien nonimmigrant status described in section 101(a)(15)(L) or to 
extend for the first time the stay of an alien having such status.
    ``(C) The amount of the fee imposed under subparagraph (A) or (B) 
shall be $750.
    ``(D) The fees imposed under subparagraphs (A) and (B) shall only 
apply to principal aliens and not to spouses or children who are 
accompanying or following to join such principal aliens.
    ``(E)(i) An employer may not require an alien who is the 
beneficiary of the visa or petition for which a fee is imposed under 
this paragraph to reimburse, or otherwise compensate, the employer for 
part or all of the cost of such fee.
    ``(ii) Section 274A(g)(2) shall apply to a violation of clause (i) 
in the same manner as it applies to a violation of section 
274A(g)(1).''.
                                                       Calendar No. 274

109th CONGRESS

  1st Session

                                S. 1932

_______________________________________________________________________

                                 A BILL

    To provide for reconciliation pursuant to section 202(a) of the 
concurrent resolution on the budget for fiscal year 2006 (H. Con. Res. 
                                  95).

_______________________________________________________________________

                            October 27, 2005

                 Read twice and placed on the calendar
```