Calendar No. 483

105TH CONGRESS

2D SESSION S. 2206

[Report No. 105–256]

A BILL

To amend the Head Start Act, the Low-Income

cumulate assets, and for other purposes.opportunity for persons with limited means to acestablish demonstration projects that provide anthorize and make improvements to those Acts, toCommunity Services Block Grant Act to reauHome Energy Assistance Act of 1981, and the

JULY 21, 1998

Reported with an amendment
II

Calendar No. 483

105TH CONGRESS

2D SESSION S. 2206

[Report No. 105–256]

To amend the Head Start Act, the Low-Income Home Energy Assistance

Act of 1981, and the Community Services Block Grant Act to reauthorize

and make improvements to those Acts, to establish demonstration

projects that provide an opportunity for persons with limited means

to accumulate assets, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 23, 1998

Mr. COATS (for himself, Mr. DODD, Mr. JEFFORDS, and Mr. KENNEDY) introduced the following bill; which was read twice and referred to the Committee on Labor and Human Resources

JULY 21, 1998

Reported by Mr. JEFFORDS, with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]

A BILL

To amend the Head Start Act, the Low-Income Home Energy Assistance Act of 1981, and the Community Services Block Grant Act to reauthorize and make improvements to those Acts, to establish demonstration projects

that provide an opportunity for persons with limited

means to accumulate assets, and for other purposes.
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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Human Services Reau5 thorization Act of 1998’’.

6 SEC. 2. TABLE OF CONTENTS.

7 The table of contents for this Act is as follows:

Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I—HEAD START PROGRAMS

Sec. 101. Short title.

Sec. 102. References.

Sec. 103. Statement of purpose.

Sec. 104. Definitions.

Sec. 105. Financial assistance for Head Start programs.

Sec. 106. Authorization of appropriations.

Sec. 107. Allotment of funds.

Sec. 108. Designation of Head Start agencies.

Sec. 109. Quality standards.

Sec. 110. Powers and functions of Head Start agencies.

Sec. 111. Head Start transition.

Sec. 112. Submission of plans to Governors.

Sec. 113. Participation in Head Start programs.

Sec. 114. Early Head Start programs for families with infants and toddlers.

Sec. 115. Technical assistance and training.

Sec. 116. Staff qualifications and development.

Sec. 117. Research, demonstration, and evaluation.

TITLE II—COMMUNITY SERVICES BLOCK GRANT PROGRAM

Sec. 201. Reauthorization.

Sec. 202. Conforming amendments.

Sec. 203. Repealers.

TITLE III—LOW-INCOME HOME ENERGY ASSISTANCE

Sec. 301. Authorization.

Sec. 302. Definitions.

Sec. 303. Natural disasters and other emergencies.

Sec. 304. State allotments.

Sec. 305. Administration.

Sec. 306. Payments to States.

Sec. 307. Residential Energy Assistance Challenge option.

Sec. 308. Technical assistance, training, and compliance reviews.

TITLE IV—ASSETS FOR INDEPENDENCE
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Sec. 401. Short title.

Sec. 402. Findings.

Sec. 403. Purposes.

Sec. 404. Definitions.

Sec. 405. Applications.

Sec. 406. Demonstration authority; annual grants.

Sec. 407. Reserve fund.

Sec. 408. Eligibility for participation.

Sec. 409. Selection of individuals to participate.

Sec. 410. Deposits by qualified entities.

Sec. 411. Local control over demonstration projects.

Sec. 412. Annual progress reports.

Sec. 413. Sanctions.

Sec. 414. Evaluations.

Sec. 415. Treatment of funds.

Sec. 416. Authorization of appropriations.

1 TITLE I—HEAD START

2 PROGRAMS

3 SEC. 101. SHORT TITLE.

4 This title may be cited as the ‘‘Head Start Amend5 ments of 1998’’.

6 SEC. 102. REFERENCES.

7 Except as otherwise expressly provided, wherever in

8 this title an amendment or repeal is expressed in terms

9 of an amendment to, or repeal of, a section or other provi10 sion, the reference shall be considered to be made to a

11 section or other provision of the Head Start Act (42

12 U.S.C. 9831 et seq.).

13 SEC. 103. STATEMENT OF PURPOSE.

14 The Head Start Act is amended by striking section

15 636 (42 U.S.C. 9831) and inserting the following:

16 ‘‘SEC. 636. STATEMENT OF PURPOSE.

17 ‘‘It is the purpose of this subchapter to promote

18 school readiness by enhancing the social and cognitive de-
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1 velopment of low-income children through the provision,

2 to low-income children and their families, of health, edu3 cational, nutritional, social, and other services that are de4 termined to be necessary, based on family needs assess5 ments.’’.

6 SEC. 104. DEFINITIONS.

7 Section 637 (42 U.S.C. 9832) is amended—

8 (1) by redesignating paragraphs (3) through

9 (14) as paragraphs (4) through (15), respectively;

10 (2) by inserting after paragraph (2) the follow11 ing:

12 ‘‘(3) The term ‘child with a disability’ means—

13 ‘‘(A) a child with a disability, as defined in

14 section 602(3) of the Individuals with Disabil15 ities Education Act; and

16 ‘‘(B) an infant or toddler with a disability,

17 as defined in section 632(5) of such Act.’’;

18 (3) by striking paragraph (5) (as redesignated

19 in paragraph (1)) and inserting the following:

20 ‘‘(5) The term ‘family literacy services’ means

21 services that—

22 ‘‘(A) are provided to participants who re23 ceive the services on a voluntary basis;

24 ‘‘(B) are of sufficient intensity, and of suf25 ficient duration, to make sustainable changes in
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1 a family (such as eliminating or reducing de2 pendence on income-based public assistance);

3 and

4 ‘‘(C) integrate each of—

5 ‘‘(i) interactive literacy activities be6 tween parents and their children;

7 ‘‘(ii) training for parents on being

8 partners with their children in learning;

9 ‘‘(iii) parent literacy training, includ10 ing training that contributes to economic

11 self-sufficiency; and

12 ‘‘(iv) appropriate instruction for chil13 dren of parents receiving the parent lit14 eracy training.’’;

15 (4) in paragraph (7) (as redesignated in para16 graph (1)), by adding at the end the following:

17 ‘‘Nothing in this paragraph shall be construed to re18 quire an agency to provide services to a child who

19 has not reached the age of compulsory school attend20 ance for more than the number of hours per day

21 permitted by State law (including regulation) for the

22 provision of services to such a child.’’;

23 (5) by striking paragraph (13) (as redesignated

24 in paragraph (1)) and inserting the following:
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1 ‘‘(13) The term ‘‘migrant or seasonal Head

2 Start program’’ means—

3 ‘‘(A) with respect to services for migrant

4 farmworkers, a Head Start program that serves

5 families who are engaged in agricultural labor

6 and who have changed their residence from 1

7 geographic location to another in the preceding

8 2-year period; and

9 ‘‘(B) with respect to services for seasonal

10 farmworkers, a Head Start program that serves

11 families who are engaged primarily in seasonal

12 agricultural labor and who have not changed

13 their residence to another geographic location in

14 the preceding 2-year period.’’; and

15 (6) by adding at the end the following:

16 ‘‘(16) The term ‘reliable and replicable’, used

17 with respect to research, means an objective, valid,

18 scientific study that—

19 ‘‘(A) includes a rigorously defined sample

20 of subjects, that is sufficiently large and rep21 resentative to support the general conclusions of

22 the study;

23 ‘‘(B) relies on measurements that meet es24 tablished standards of reliability and validity;
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1 ‘‘(C) is subjected to peer review before the

2 results of the study are published; and

3 ‘‘(D) discovers effective strategies for en4 hancing the development and skills of chil5 dren.’’.

6 SEC. 105. FINANCIAL ASSISTANCE FOR HEAD START PRO7 GRAMS.

8 Section 638(1) (42 U.S.C. 9833(1)) is amended—

9 (1) by striking ‘‘aid the’’ and inserting ‘‘enable

10 the’’; and

11 (2) by striking the semicolon and inserting

12 ‘‘and attain school readiness;’’.

13 SEC. 106. AUTHORIZATION OF APPROPRIATIONS.

14 Section 639 (42 U.S.C. 9834) is amended—

15 (1) in subsection (a), by striking ‘‘1995 through

16 1998’’ and inserting ‘‘1999 through 2003’’; and

17 (2) in subsection (b), by striking all that follows

18 ‘‘shall make available—’’ and inserting the following:

19 ‘‘(1) for each of fiscal years 1999 through 2003

20 to carry out activities authorized under section

21 642A, not more than $35,000,000 but not less than

22 was made available for such activities for fiscal year

23 1998;
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1 ‘‘(2) not more than $5,000,000 for each of fis2 cal years 1999 through 2003 to carry out impact

3 studies under section 649(f); and

4 ‘‘(3) not more than $12,000,000 for fiscal year

5 1999, and such sums as may be necessary for each

6 of fiscal years 2000 through 2003, to carry out

7 other research, demonstration, and evaluation activi8 ties, including longitudinal studies, under section

9 649.’’.

10 SEC. 107. ALLOTMENT OF FUNDS.

11 (a) ALLOTMENTS.—Section 640(a) (42 U.S.C.

12 9835(a)) is amended—

13 (1) in paragraph (2)—

14 (A) in subparagraph (A)—

15 (i) by striking ‘‘handicapped children’’

16 and inserting ‘‘children with disabilities’’;

17 (ii) by striking ‘‘migrant Head Start

18 programs’’ each place it appears and in19 serting ‘‘migrant or seasonal Head Start

20 programs’’;

21 (iii) by striking ‘‘1994’’ and inserting

22 ‘‘1998’’; and

23 (iv) by adding at the end the follow24 ing: ‘‘In determining the need and demand

25 for migrant and seasonal Head Start pro-
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1 grams, and services provided through such

2 programs, the Secretary shall consult with

3 appropriate entities, including providers of

4 services for seasonal and migrant Head

5 Start programs. The Secretary shall, after

6 taking into consideration the need and de7 mand for migrant and seasonal Head Start

8 programs, and such services, ensure that

9 there is an adequate level of such services

10 for the children of eligible migrant farm11 workers before approving an increase in

12 the allocation provided for children of eligi13 ble seasonal farmworkers.’’;

14 (B) in subparagraph (C), by striking

15 ‘‘and’’ at the end;

16 (C) in subparagraph (D), by striking ‘‘re17 lated to the development and implementation of

18 quality improvement plans under section

19 641A(d)(2)’’ and inserting ‘‘carried out under

20 paragraph (1), (2), or (3) of section 641A(d)

21 related to correcting deficiencies and conducting

22 proceedings to terminate the designation of

23 Head Start agencies; and’’;

24 (D) by inserting after subparagraph (D)

25 the following:
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1 ‘‘(E) payments for research, demonstration, and

2 evaluation activities under section 649.’’; and

3 (E) by adding at the end the following: ‘‘In

4 carrying out this subchapter, the Secretary

5 shall continue the administrative arrangement

6 responsible for meeting the needs of migrant or

7 seasonal farmworker and Indian children and

8 shall assure that appropriate funding is pro9 vided to meet such needs.’’;

10 (2) in paragraph (3)—

11 (A) in subparagraph (B)—

12 (i) in clause (ii)—

13 (I) by striking ‘‘adequate quali14 fied staff’’ and inserting ‘‘adequate

15 numbers of qualified staff’’; and

16 (II) by inserting ‘‘and children

17 with disabilities’’ before ‘‘, when’’;

18 (ii) in clause (iv), by inserting before

19 the period the following: ‘‘, and to encour20 age the staff to continually improve their

21 skills and expertise by informing the staff

22 of the availability of State and Federal in23 centive and loan forgiveness programs for

24 professional development and by providing

25 for preferences in the awarding of salary
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1 increases, in excess of cost of living allow2 ances, to staff who obtain additional train3 ing or education related to their respon4 sibilities as employees of a Head Start pro5 gram or to advance their careers within

6 the Head Start program’’;

7 (iii) in clause (vi), by striking the pe8 riod and inserting ‘‘, and are physically ac9 cessible to children with disabilities and

10 their parents.’’;

11 (iv) by redesignating clause (vii) as

12 clause (viii); and

13 (v) by inserting after clause (vi) the

14 following:

15 ‘‘(vii) Ensuring that such programs have quali16 fied staff that can promote language skills and lit17 eracy growth of children and that provide children

18 with a variety of skills that have been identified,

19 through research that is reliable and replicable, as

20 predictive of later reading achievement.’’;

21 (B) in subparagraph (C)—

22 (i) in clause (i)(I)—

23 (I) by striking ‘‘of staff’’ and in24 serting ‘‘of classroom teachers and

25 other staff’’; and
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1 (II) by striking ‘‘such staff’’ and

2 inserting ‘‘qualified staff, including re3 cruitment and retention pursuant to

4 section 648A(a)’’;

5 (ii) by striking clause (ii) and insert6 ing the following:

7 ‘‘(ii) To supplement amounts provided under

8 paragraph (2)(C) to provide training to classroom

9 teachers and other staff on proven techniques that

10 promote—

11 ‘‘(I) language and literacy growth; and

12 ‘‘(II) the acquisition of the English lan13 guage for non-English background children and

14 families.’’;

15 (iii) in clause (v), by inserting ‘‘acces16 sibility or’’ before ‘‘availability’’;

17 (iv) to redesignate clauses (iii), (iv),

18 (v), and (vi) as clauses (iv), (v), (vi), and

19 (iii), respectively; and

20 (v) by inserting clause (iii) (as redes21 ignated in clause (iv) of this subparagraph)

22 after clause (ii); and

23 (C) in subparagraph (D)(i)(II), by striking

24 ‘‘migrant Head Start programs’’ and inserting

25 ‘‘migrant or seasonal Head Start programs’’;
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1 (3) in paragraph (4)(A), by striking ‘‘1981’’

2 and inserting ‘‘1998’’;

3 (4) in paragraph (5)—

4 (A) in subparagraph (A), by striking ‘‘sub5 paragraph (B)’’ and inserting ‘‘subparagraphs

6 (B) and (D)’’;

7 (B) in subparagraph (B), by inserting be8 fore the period the following ‘‘and encourage

9 Head Start agencies to collaborate with entities

10 involved in State and local planning processes

11 (including the State lead agency administering

12 the financial assistance received under the Child

13 Care and Development Block Grant Act of

14 1990 (42 U.S.C. 9858 et seq.) and the entities

15 providing resource and referral services in the

16 State) in order to better meet the needs of low17 income children and families’’;

18 (C) in subparagraph (C)—

19 (i) in clause (i)(I), by inserting ‘‘the

20 appropriate regional office of the Adminis21 tration for Children and Families and’’ be22 fore ‘‘agencies’’;

23 (ii) in clause (iii), by striking ‘‘and’’

24 at the end;

25 (iii) in clause (iv)—
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1 (I) by striking ‘‘education, and

2 national service activities,’’ and insert3 ing ‘‘education, and community serv4 ice activities,’’;

5 (II) by striking ‘‘and activities’’

6 and inserting ‘‘activities’’; and

7 (III) by striking the period and

8 inserting ‘‘, and services for homeless

9 children; and’’; and

10 (iv) by adding at the end the follow11 ing:

12 ‘‘(v) include representatives of the State Head

13 Start Association and local Head Start agencies in

14 unified planning regarding early care and education

15 services at both the State and local levels, including

16 collaborative efforts to plan for the provision of full17 working-day, full calendar year early care and edu18 cation services for children.’’;

19 (D) by redesignating subparagraph (D) as

20 subparagraph (F); and

21 (E) by inserting after subparagraph (C)

22 the following:

23 ‘‘(D) Following the award of collaboration grants de24 scribed in subparagraph (B), the Secretary shall provide,
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1 from the reserved sums, supplemental funding for collabo2 ration grants—

3 ‘‘(i) to States that (in consultation with their

4 State Head Start Associations) develop statewide,

5 regional, or local unified plans for early childhood

6 education and child care that include the participa7 tion of Head Start agencies; and

8 ‘‘(ii) to States that engage in other innovative

9 collaborative initiatives, including plans for collabo10 rative training and career development initiatives for

11 child care, early childhood education, and Head

12 Start service managers, providers, and staff.

13 ‘‘(E)(i) The Secretary shall—

14 ‘‘(I) review on an ongoing basis evidence of bar15 riers to effective collaboration between Head Start

16 programs and other Federal child care and early

17 childhood education programs and resources;

18 ‘‘(II) develop initiatives, including providing ad19 ditional training and technical assistance and mak20 ing regulatory changes, in necessary cases, to elimi21 nate barriers to the collaboration; and

22 ‘‘(III) develop a mechanism to resolve adminis23 trative and programmatic conflicts between such

24 programs that would be a barrier to service provid25 ers, parents, or children related to the provision of
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1 unified services and the consolidation of funding for

2 child care services.

3 ‘‘(ii) In the case of a collaborative activity funded

4 under this subchapter and another provision of law provid5 ing for Federal child care or early childhood education,

6 the use of equipment and nonconsumable supplies pur7 chased with funds made available under this subchapter

8 or such provision shall not be restricted to children en9 rolled or otherwise participating in the program carried

10 out under that subchapter or provision, during a period

11 in which the activity is predominantly funded under this

12 subchapter or such provision.’’; and

13 (5) in paragraph (6)—

14 (A) by inserting ‘‘(A)’’ before ‘‘From’’; and

15 (B) by striking ‘‘3 percent’’ and all that

16 follows and inserting the following: ‘‘7.5 percent

17 for fiscal year 1999, 8 percent for fiscal year

18 2000, 9 percent for fiscal year 2001, 10 percent

19 for fiscal year 2002, and 10 percent for fiscal

20 year 2003, of the amount appropriated pursu21 ant to section 639(a), except as provided in

22 subparagraph (B).

23 ‘‘(B)(i) For any fiscal year for which the Secretary

24 determines that the amount appropriated under section

25 639(a) is not sufficient to permit the Secretary to reserve
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1 the portion described in subparagraph (A) without reduc2 ing the number of children served by Head Start programs

3 or negatively impacting the quality of Head Start services,

4 relative to the number of children served and the quality

5 of the services during the preceding fiscal year, the Sec6 retary may reduce the percentage of funds required to be

7 reserved for the portion described in subparagraph (A) for

8 the fiscal year for which the determination is made, but

9 not below the percentage required to be so reserved for

10 the preceding fiscal year.

11 ‘‘(ii) For any fiscal year for which the amount appro12 priated under section 639(a) is lowered to a level that re13 quires a reduction in the amount made available under

14 this subchapter to Head Start agencies and entities de15 scribed in section 645A, relative to the amount made avail16 able to the agencies and entities for the preceding fiscal

17 year, adjusted as described in paragraph (3)(A)(ii), the

18 Secretary shall proportionately reduce—

19 ‘‘(I) the amounts made available to the entities

20 for programs carried out under section 645A; and

21 ‘‘(II) the amounts made available to Head Start

22 agencies for Head Start programs.’’.

23 (b) CHILDREN WITH DISABILITIES.—Section 640(d)

24 (42 U.S.C. 9835(d)) is amended—
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1 (1) by striking ‘‘1982’’ and inserting ‘‘1999’’;

2 and

3 (2) by striking ‘‘(as defined in section 602(a) of

4 the Individuals with Disabilities Education Act)’’.

5 (c) INCREASED APPROPRIATIONS.—Section 640(g)

6 (42 U.S.C. 9835(g)) is amended—

7 (1) in paragraph (2)—

8 (A) in subparagraph (A), by striking the

9 semicolon and inserting ‘‘, and the performance

10 history of the applicant in providing services

11 under other Federal programs (other than the

12 program carried out under this subchapter);’’;

13 (B) in subparagraph (C), by striking the

14 semicolon and inserting ‘‘, and organizations

15 serving children with disabilities;’’;

16 (C) in subparagraph (D), by inserting be17 fore the semicolon the following: ‘‘and the ex18 tent to which, and manner in which, the appli19 cant demonstrates the ability to collaborate and

20 participate with other local community provid21 ers of child care or preschool services to provide

22 full working day, full calendar year services’’;

23 (D) in subparagraph (E), by striking ‘‘pro24 gram; and’’ and inserting ‘‘or any other early

25 childhood program;’’;
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1 (E) in subparagraph (F), by striking the

2 period and inserting ‘‘; and’’; and

3 (F) by adding at the end the following:

4 ‘‘(G) the extent to which the applicant proposes

5 to foster partnerships with other service providers in

6 a manner that will enhance the resource capacity of

7 the applicant.’’; and

8 (2) by adding at the end the following:

9 ‘‘(4) Notwithstanding subsection (a)(2), after taking

10 into account the provisions of paragraph (1), the Secretary

11 may allocate a portion of the remaining additional funds

12 under subsection (a)(2)(A) for the purpose of increasing

13 funds available for the activities described in such sub14 section.’’.

15 (d) MIGRANT OR SEASONAL HEAD START PRO16 GRAMS.—Section 640(l) (42 U.S.C. 9835(l)) is amend17 ed—

18 (1) by striking ‘‘migrant Head Start programs’’

19 each place it appears and inserting ‘‘migrant or sea20 sonal Head Start programs’’; and

21 (2) by striking ‘‘migrant families’’ and inserting

22 ‘‘migrant or seasonal farmworker families’’.

23 (e) CONFORMING AMENDMENT.—Section 644(f)(2)

24 (42 U.S.C. 9839(f)(2)) is amended by striking

25 ‘‘640(a)(3)(C)(v)’’ and inserting ‘‘640(a)(3)(C)(vi).’’
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1 SEC. 108. DESIGNATION OF HEAD START AGENCIES.

2 Section 641 (42 U.S.C. 9836) is amended—

3 (1) in subsection (a)—

4 (A) in the matter preceding paragraph (1),

5 by inserting ‘‘or for-profit’’ after ‘‘nonprofit’’;

6 and

7 (B) in paragraph (2), by inserting ‘‘(in

8 consultation with the chief executive officer of

9 the State in which the community is located)’’

10 after ‘‘the Secretary’’;

11 (2) in subsection (c)—

12 (A) in paragraph (1)—

13 (i) by striking ‘‘shall give priority’’

14 and inserting ‘‘shall, in consultation with

15 the chief executive officer of the State, give

16 priority’’;

17 (ii) by inserting ‘‘or for-profit’’ after

18 ‘‘nonprofit’’; and

19 (iii) by striking ‘‘unless the Secretary

20 makes a finding’’ and all that follows and

21 inserting the following: ‘‘unless the Sec22 retary determines that the agency involved

23 fails to meet program and financial man24 agement requirements, performance stand25 ards described in section 641A(a)(1), and
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1 other requirements established by the Sec2 retary.’’;

3 (B) in paragraph (2), by striking ‘‘shall

4 give priority’’ and inserting ‘‘shall, in consulta5 tion with the chief executive officer of the State,

6 give priority’’; and

7 (C) by aligning the margins of paragraphs

8 (2) and (3) with the margins of paragraph (1);

9 (3) in subsection (d)—

10 (A) in the matter preceding paragraph (1),

11 by inserting after the first sentence the follow12 ing new sentence: ‘‘In selecting from among

13 qualified applicants for designation as a Head

14 Start agency, the Secretary shall give priority

15 to any qualified agency that functioned as a

16 Head Start delegate agency in the community

17 and carried out a Head Start program that the

18 Secretary determines has met or exceeded the

19 performance standards and outcome-based per20 formance measures described in section 641A.’’;

21 (B) in paragraph (4)(A), by inserting ‘‘(at

22 home and in the center involved where prac23 ticable)’’ after ‘‘activities’’;

24 (C) by redesignating paragraphs (7) and

25 (8) as paragraphs (9) and (10); and
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1 (D) by inserting after paragraph (6) the

2 following:

3 ‘‘(7) the plan of such applicant to meet the

4 needs of non-English background children and their

5 families, including needs related to the acquisition of

6 the English language;

7 ‘‘(8) the plan of such applicant to meet the

8 needs of children with disabilities;’’; and

9 (4) by striking subsection (e) and inserting the

10 following:

11 ‘‘(e) If no agency in the community receives priority

12 designation, and there is no qualified applicant in the com13 munity, the Secretary shall designate an agency to carry

14 out the Head Start program in the community on an in15 terim basis until a qualified applicant from the community

16 is so designated.’’.

17 SEC. 109. QUALITY STANDARDS.

18 (a) QUALITY STANDARDS.—Section 641A(a) (42

19 U.S.C. 9836a(a)) is amended—

20 (1) in paragraph (1)—

21 (A) in the matter preceding subparagraph

22 (A), by inserting ‘‘, including minimum levels of

23 overall accomplishment,’’ after ‘‘regulation

24 standards’’;
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1 (B) in subparagraph (A), by striking ‘‘edu2 cation,’’;

3 (C) by redesignating subparagraphs (B)

4 through (D) as subparagraphs (C) through (E);

5 and

6 (D) by inserting after subparagraph (A)

7 the following:

8 ‘‘(B)(i) education performance standards

9 to ensure the school readiness of children par10 ticipating in a Head Start program, on comple11 tion of the Head Start program and prior to

12 entering school; and

13 ‘‘(ii) additional education performance

14 standards to ensure that the children partici15 pating in the program, at a minimum—

16 ‘‘(I) develop phonemic, print, and

17 numeracy awareness;

18 ‘‘(II) understand and use oral lan19 guage to communicate needs, wants, and

20 thoughts;

21 ‘‘(III) understand and use increas22 ingly complex and varied vocabulary;

23 ‘‘(IV) develop and demonstrate an ap24 preciation of books; and
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1 ‘‘(V) in the case of non-English back2 ground children, progress toward acquisi3 tion of the English language.’’;

4 (2) by striking paragraph (2);

5 (3) by redesignating paragraphs (3) and (4) as

6 paragraphs (2) and (3); and

7 (4) in paragraph (2) (as redesignated in para8 graph (3))—

9 (A) in subparagraph (B)(iii), striking

10 ‘‘child’’ and inserting ‘‘early childhood edu11 cation and’’; and

12 (B) in subparagraph (C)—

13 (i) in clause (i)—

14 (I) by striking ‘‘not later than 1

15 year after the date of enactment of

16 this section,’’; and

17 (II) by striking ‘‘section 651(b)’’

18 and all that follows and inserting

19 ‘‘this subsection; and’’; and

20 (ii) in subclause (ii), by striking ‘‘No21 vember 2, 1978’’ and inserting ‘‘the date

22 of enactment of the Human Services Reau23 thorization Act of 1998’’.

24 (b) PERFORMANCE MEASURES.—Section 641A(b)

25 (42 U.S.C. 9836a(b)) is amended—
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1 (1) in the subsection heading, by inserting

2 ‘‘OUTCOME-BASED’’ before ‘‘PERFORMANCE’’;

3 (2) in paragraph (1)—

4 (A) by striking ‘‘Not later than 1 year

5 after the date of enactment of this section, the’’

6 and inserting ‘‘The’’;

7 (B) by striking ‘‘child’’ and inserting

8 ‘‘early childhood education and’’;

9 (C) by striking the period and inserting ‘‘,

10 and the impact of the services provided through

11 the programs to children and their families.’’;

12 and

13 (D) by adding at the end the following:

14 ‘‘The performance measures shall include the

15 performance standards described in subsection

16 (a)(1)(B)(ii).’’; and

17 (3) in paragraph (2)—

18 (A) in the paragraph heading, by striking

19 ‘‘DESIGN’’ and inserting ‘‘CHARACTERISTICS’’;

20 (B) in the matter preceding subparagraph

21 (A), by striking ‘‘shall be designed—’’ and in22 serting ‘‘shall—’’;

23 (C) in subparagraph (A), by striking ‘‘to

24 assess’’ and insert ‘‘assess the impact of’’;

25 (D) in subparagraph (B)—
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1 (i) by striking ‘‘to’’; and

2 (ii) by striking ‘‘and peer review’’ and

3 inserting ‘‘, peer review, and program eval4 uation’’; and

5 (E) in subparagraph (C), by inserting ‘‘be

6 developed’’ before ‘‘for other’’.

7 (c) MONITORING.—Section 641A(c)(2) (42 U.S.C.

8 9836a(c)(2)) is amended—

9 (1) in subparagraph (B), by striking ‘‘; and’’

10 and inserting a semicolon;

11 (2) in subparagraph (C)—

12 (A) by inserting ‘‘(including children with

13 disabilities)’’ after ‘‘eligible children’’; and

14 (B) by striking the period and inserting ‘‘;

15 and’’; and

16 (3) by adding at the end the following:

17 ‘‘(D) as part of the reviews of the pro18 grams, include a review and assessment of pro19 gram effectiveness, as measured in accordance

20 with the outcome-based performance measures

21 developed pursuant to subsection (b) and with

22 the performance standards established pursuant

23 to subparagraphs (A) and (B) of subsection

24 (a)(1).’’.
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1 (d) TERMINATION.—Section 641A(d) (42 U.S.C.

2 9836a(d)) is amended—

3 (1) in paragraph (1)(B), to read as follows:

4 ‘‘(B) with respect to each identified defi5 ciency, require the agency—

6 ‘‘(i) to correct the deficiency imme7 diately, if the Secretary finds that the defi8 ciency threatens the health or safety of

9 staff or program participants or poses a

10 threat to the integrity of Federal funds;

11 ‘‘(ii) to correct the deficiency not later

12 than 90 days after the identification of the

13 deficiency if the Secretary finds, in the dis14 cretion of the Secretary, that such a 90-

15 day period is reasonable, in light of the na16 ture and magnitude of the deficiency; or

17 ‘‘(iii) in the discretion of the Sec18 retary (taking into consideration the seri19 ousness of the deficiency and the time rea20 sonably required to correct the deficiency)

21 to comply with the requirements of para22 graph (2) concerning a quality improve23 ment plan; and’’; and

24 (2) in paragraph (2)(A), in the matter preced25 ing clause (i), by striking ‘‘immediately’’ and insert-
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1 ing ‘‘immediately or during a 90-day period under

2 clause (i) or (ii) of paragraph (1)(B)’’.

3 SEC. 110. POWERS AND FUNCTIONS OF HEAD START AGEN4 CIES.

5 Section 642 (42 U.S.C. 9837) is amended—

6 (1) in subsection (a), by inserting ‘‘or for-prof7 it’’ after ‘‘nonprofit’’;

8 (2) in subsection (c)—

9 (A) by inserting ‘‘and collaborate’’ after

10 ‘‘coordinate’’; and

11 (B) by striking ‘‘section 402(g) of the So12 cial Security Act, and other’’ and inserting ‘‘the

13 State program carried out under the Child Care

14 and Development Block Grant Act of 1990 (42

15 U.S.C. 9858 et seq.), and other early childhood

16 education and development’’; and

17 (3) in subsection (d)—

18 (A) in paragraph (1)—

19 (i) by striking ‘‘shall carry out’’ and

20 all that follows through ‘‘maintain’’ and in21 serting ‘‘shall take steps to ensure, to the

22 maximum extent possible, that children

23 maintain’’;
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1 (ii) by striking ‘‘developmental’’ and

2 inserting ‘‘developmental and educational’’;

3 and

4 (iii) by striking ‘‘to build’’ and insert5 ing ‘‘build’’;

6 (B) by striking paragraph (2); and

7 (C) by redesignating paragraphs (3)

8 through (5) as paragraphs (2) through (4), re9 spectively.

10 SEC. 111. HEAD START TRANSITION.

11 The Head Start Act (42 U.S.C. 9831 et seq.) is

12 amended by inserting after section 642 the following:

13 ‘‘SEC. 642A. HEAD START TRANSITION.

14 ‘‘Each Head Start agency shall take steps to coordi15 nate with the local educational agency serving the commu16 nity involved and with schools in which children participat17 ing in a Head Start program operated by such agency will

18 enroll following such program, including—

19 ‘‘(1) developing and implementing a systematic

20 procedure for transferring, with parental consent,

21 Head Start program records for each participating

22 child to the school in which such child will enroll;

23 ‘‘(2) establishing channels of communication be24 tween Head Start staff and their counterparts in the
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1 schools (including teachers, social workers, and

2 health staff) to facilitate coordination of programs;

3 ‘‘(3) conducting meetings involving parents,

4 kindergarten or elementary school teachers, and

5 Head Start program teachers to discuss the develop6 mental and other needs of individual children;

7 ‘‘(4) organizing and participating in joint tran8 sition-related training of school staff and Head Start

9 staff;

10 ‘‘(5) developing and implementing a family out11 reach and support program in cooperation with enti12 ties carrying out parental involvement efforts under

13 title I of the Elementary and Secondary Education

14 Act of 1965 (20 U.S.C. 6301 et seq.); and

15 ‘‘(6) assisting families, administrators, and

16 teachers in enhancing developmental continuity be17 tween Head Start services and elementary school

18 classes.’’.

19 SEC. 112. SUBMISSION OF PLANS TO GOVERNORS.

20 The first sentence of section 643 (42 U.S.C. 9838)

21 is amended—

22 (1) by striking ‘‘within 30 days’’ and inserting

23 ‘‘within 45 days’’; and

24 (2) by striking ‘‘so disapproved’’ and inserting

25 ‘‘disapproved (for reasons other than failure of the
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1 program to comply with State health, safety, and

2 child care laws, including regulations, applicable to

3 comparable child care programs within the State)’’.

4 SEC. 113. PARTICIPATION IN HEAD START PROGRAMS.

5 (a) REGULATIONS.—Section 645(a)(1) (42 U.S.C.

6 9840(a)(1)) is amended—

7 (1) in subparagraph (B), by striking ‘‘that pro8 grams’’ and inserting ‘‘that (i) programs’’; and

9 (2) by striking the period at the end of sub10 paragraph (B) and inserting the following: ‘‘, and

11 (ii) a child who has been determined to meet the

12 low-income criteria and who is participating in a

13 Head Start program in a program year shall be con14 sidered to continue to meet the low-income criteria

15 through the end of the succeeding program year. In

16 determining, for purposes of this paragraph, whether

17 a child who has applied for enrollment in a Head

18 Start program meets the low-income criteria, an en19 tity may consider evidence of family income during

20 the 12 months preceding the month in which the ap21 plication is submitted, or during the calendar year

22 preceding the calendar year in which the application

23 is submitted, whichever more accurately reflects the

24 needs of the family at the time of application.’’.
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1 (b) SLIDING FEE SCALE.—Section 645(b) (42 U.S.C.

2 9840(b)) is amended by adding at the end the following:

3 ‘‘A Head Start agency that provides a Head Start

4 program with full-working-day services in collaboration

5 with other agencies or entities may collect a family copay6 ment to support extended day services if a copayment is

7 required in conjunction with the partnership. The copay8 ment shall not exceed the copayment charged to families

9 with similar incomes and circumstances who are receiving

10 the services through participation in a program carried

11 out by another agency or entity.’’.

12 (c) CONTINUOUS RECRUITMENT AND ACCEPTANCE

13 OF APPLICATIONS.—Section 645(c) (42 U.S.C. 9840(c))

14 is amended by adding at the end the following: ‘‘Each

15 Head Start program operated in a community shall be

16 permitted to recruit and accept applications for enrollment

17 of children throughout the year.’’.

18 SEC. 114. EARLY HEAD START PROGRAMS FOR FAMILIES

19 WITH INFANTS AND TODDLERS.

20 Section 645A (42 U.S.C. 9840a) is amended—

21 (1) in the section heading, by inserting ‘‘EARLY

22 HEAD START’’ before ‘‘PROGRAMS FOR’’;

23 (2) in subsection (a)—
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1 (A) by striking ‘‘for—’’ and all that follows

2 through ‘‘programs providing’’ and inserting

3 ‘‘for programs providing’’;

4 (B) by striking ‘‘; and’’ and inserting a pe5 riod; and

6 (C) by striking paragraph (2);

7 (3) in subsection (b)(5), by inserting ‘‘(includ8 ing programs for infants and toddlers with disabil9 ities)’’ after ‘‘community’’;

10 (4) in subsection (c)—

11 (A) in the matter preceding paragraph (1),

12 by striking ‘‘subsection (a)(1)’’ and inserting

13 ‘‘subsection (a)’’; and

14 (B) in paragraph (2), by striking ‘‘3 (or

15 under’’ and all that follows and inserting ‘‘3;’’;

16 (5) in subsection (d)—

17 (A) by striking paragraph (2); and

18 (B) by redesignating paragraph (3) as

19 paragraph (2);

20 (6) by striking subsection (e);

21 (7) by redesignating subsections (f) and (g) as

22 subsections (e) and (f), respectively;

23 (8) in subsection (e) (as redesignated in para24 graph (7))—
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1 (A) in the subsection heading, by striking

2 ‘‘OTHER’’; and

3 (B) by striking ‘‘From the balance remain4 ing of the portion specified in section 640(a)(6),

5 after making grants to the eligible entities spec6 ified in subsection (e),’’ and inserting ‘‘From

7 the portion specified in section 640(a)(6),’’; and

8 (9) by striking subsection (h) and inserting the

9 following:

10 ‘‘(h) MONITORING, TRAINING, TECHNICAL ASSIST11 ANCE, AND EVALUATION.—In order to ensure the success12 ful operation of programs assisted under this section, the

13 Secretary shall use funds from the portion specified in sec14 tion 640(a)(6) to monitor the operation of such programs,

15 evaluate their effectiveness, and provide training and tech16 nical assistance tailored to the particular needs of such

17 programs.

18 ‘‘(i) TRAINING AND TECHNICAL ASSISTANCE AC19 COUNT.—

20 ‘‘(1) IN GENERAL.—Of the amount made avail21 able to carry out this section for any fiscal year, not

22 less than 5 percent and not more than 10 percent

23 shall be reserved to fund a training and technical as24 sistance account.
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1 ‘‘(2) ACTIVITIES.—Funds in the account may

2 be used for purposes including—

3 ‘‘(A) making grants to, and entering into

4 contracts with, organizations with specialized

5 expertise relating to infants, toddlers, and fami6 lies and the capacity needed to provide direction

7 and support to a national training and technical

8 assistance system, in order to provide such di9 rection and support;

10 ‘‘(B) providing ongoing training and tech11 nical assistance for regional and program staff

12 charged with monitoring and overseeing the ad13 ministration of the program carried out under

14 this section;

15 ‘‘(C) providing ongoing training and tech16 nical assistance for existing recipients of grants

17 under subsection (a) and support and program

18 planning and implementation assistance for new

19 recipients of such grants; and

20 ‘‘(D) providing professional development

21 and personnel enhancement activities, including

22 the provision of funds to recipients of grants

23 under subsection (a) for the recruitment and re24 tention of qualified staff with an appropriate

25 level of education and experience.’’.
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1 SEC. 115. TECHNICAL ASSISTANCE AND TRAINING.

2 (a) FULL-WORKING-DAY, FULL CALENDAR YEAR

3 SERVICES.—Section 648(b) (42 U.S.C. 9843(b)) is

4 amended—

5 (1) in paragraph (1), by striking ‘‘; and’’ and

6 inserting a semicolon;

7 (2) in paragraph (2), by striking the period and

8 inserting ‘‘; and’’; and

9 (3) by adding at the end the following:

10 ‘‘(3) ensure the provision of technical assistance

11 to assist Head Start agencies, entities carrying out

12 other child care and early childhood programs, com13 munities, and States in collaborative efforts to pro14 vide quality full-working-day, full calendar year serv15 ices, including technical assistance related to identi16 fying and assisting in resolving barriers to collabora17 tion.’’.

18 (b) ALLOCATING RESOURCES.—Section 648(c) (42

19 U.S.C. 9843(c)) is amended—

20 (1) in paragraph (4)—

21 (A) by striking ‘‘developing’’ and inserting

22 ‘‘developing and implementing’’; and

23 (B) by striking ‘‘a longer day;’’ and insert24 ing the following: ‘‘the day, and assist the agen25 cies and programs in expediting the sharing of

26 information about innovative models for provid-
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1 ing full-working-day, full calendar year services

2 for children;’’;

3 (2) in paragraph (7), by striking ‘‘; and’’ and

4 inserting a semicolon;

5 (3) in paragraph (8), by striking the period and

6 inserting ‘‘; and’’; and

7 (4) by adding at the end the following:

8 ‘‘(9) assist Head Start agencies in—

9 ‘‘(A) ensuring the school readiness of chil10 dren; and

11 ‘‘(B) meeting the education performance

12 standards described in this subchapter.’’.

13 (c) SERVICES.—Section 648(e) (42 U.S.C. 9843(e))

14 is amended by inserting ‘‘(including services to promote

15 the acquisition of the English language)’’ after ‘‘non16 English language background children’’.

17 SEC. 116. STAFF QUALIFICATIONS AND DEVELOPMENT.

18 Section 648A(a) (42 U.S.C. 9843a(a)) is amended—

19 (1) in paragraph (1)—

20 (A) by redesignating subparagraphs (B)

21 through (D) as clauses (ii) through (iv), respec22 tively;

23 (B) by striking ‘‘(A)’’ and inserting

24 ‘‘(B)(i)’’;
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1 (C) by inserting before subparagraph (B)

2 (as redesignated in subparagraph (B) of this

3 paragraph) the following:

4 ‘‘(A) demonstrated competency to perform

5 functions that include—

6 ‘‘(i) planning and implementing learn7 ing experiences that advance the intellec8 tual and physical development of children,

9 including improving the readiness of chil10 dren for school by developing their literacy

11 and phonemic, print, and numeracy aware12 ness, their understanding and use of oral

13 language, their understanding and use of

14 increasingly complex and varied vocabu15 lary, their appreciation of books, and their

16 problem solving abilities;

17 ‘‘(ii) establishing and maintaining a

18 safe, healthy learning environment;

19 ‘‘(iii) supporting the social and emo20 tional development of children; and

21 ‘‘(iv) encouraging the involvement of

22 the families of the children in a Head

23 Start program and supporting the develop24 ment of relationships between children and

25 their families; and’’; and
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1 (2) by striking paragraph (2) and inserting the

2 following:

3 ‘‘(2) WAIVER.—On request, the Secretary shall

4 grant a 180-day waiver of the requirements of para5 graph (1)(B), for a Head Start agency that can

6 demonstrate that the agency has unsuccessfully at7 tempted to recruit an individual who has a creden8 tial, certificate, or degree described in paragraph

9 (1)(B), with respect to an individual who—

10 ‘‘(A) is enrolled in a program that grants

11 any such credential, certificate, or degree; and

12 ‘‘(B) will receive such credential, certifi13 cate, or degree under the terms of such pro14 gram not later than 180 days after beginning

15 employment as a teacher with such agency.’’.

16 SEC. 117. RESEARCH, DEMONSTRATION, AND EVALUATION.

17 (a) COMPARATIVE STUDIES.—Section 649(d) (42

18 U.S.C. 9844(d)) is amended—

19 (1) in paragraph (6), by striking ‘‘; and’’ and

20 inserting a semicolon;

21 (2) in paragraph (7), by striking the period and

22 inserting ‘‘; and’’; and

23 (3) by adding at the end the following:

24 ‘‘(8) study the experiences of small, medium,

25 and large States with Head Start programs in order
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1 to permit comparisons of children participating in

2 the programs with eligible children who did not par3 ticipate in the programs, which study—

4 ‘‘(A) may include the use of a data set

5 that existed prior to the initiation of the study;

6 and

7 ‘‘(B) shall compare the educational

8 achievement, social adaptation, and health sta9 tus of the participating children and the eligible

10 nonparticipating children.

11 The Secretary shall ensure that an appropriate entity car12 ries out a study described in paragraph (8), and prepares

13 and submits to the appropriate committees of Congress

14 a report containing the results of the study, not later than

15 September 30, 2002.’’.

16 (b) NATIONAL RESEARCH.—Section 649 (42 U.S.C.

17 9844) is amended by inserting after subsection (e) the fol18 lowing:

19 ‘‘(f) NATIONAL HEAD START IMPACT RESEARCH.—

20 ‘‘(1) EXPERT PANEL.—

21 ‘‘(A) IN GENERAL.—The Secretary shall

22 appoint an independent panel consisting of ex23 perts in program evaluation and research, edu24 cation, and early childhood programs—
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1 ‘‘(i) to review, and make recommenda2 tions on, the design and plan for the re3 search (whether conducted as a single as4 sessment or as a series of assessments),

5 described in paragraph (2), within 1 year

6 after the date of enactment of the Human

7 Services Reauthorization Act of 1998;

8 ‘‘(ii) to maintain and advise the Sec9 retary regarding the progress of the re10 search; and

11 ‘‘(iii) to comment, if the panel so de12 sires, on the interim and final research re13 ports submitted under paragraph (7).

14 ‘‘(B) TRAVEL EXPENSES.—The members

15 of the panel shall not receive compensation for

16 the performance of services for the panel, but

17 shall be allowed travel expenses, including per

18 diem in lieu of subsistence, at rates authorized

19 for employees of agencies under subchapter I of

20 chapter 57 of title 5, United States Code, while

21 away from their homes or regular places of

22 business in the performance of services for the

23 panel. Notwithstanding section 1342 of title 31,

24 United States Code, the Secretary may accept
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1 the voluntary and uncompensated services of

2 members of the panel.

3 ‘‘(2) GENERAL AUTHORITY.—After reviewing

4 the recommendations of the expert panel the Sec5 retary shall enter into a grant, contract, or coopera6 tive agreement with an organization to conduct inde7 pendent research that provides a national analysis of

8 the impact of Head Start programs. The Secretary

9 shall ensure that the organization shall have exper10 tise in program evaluation, and research, education,

11 and early childhood programs.

12 ‘‘(3) DESIGNS AND TECHNIQUES.—The Sec13 retary shall ensure that the research uses rigorous

14 methodological designs and techniques (based on the

15 recommendations of the expert panel), including lon16 gitudinal designs, control groups, nationally recog17 nized standardized measures, and random selection

18 and assignment, as appropriate. The Secretary may

19 provide that the research shall be conducted as a

20 single comprehensive assessment or as a group of co21 ordinated assessments designed to provide, when

22 taken together, a national analysis of the impact of

23 Head Start programs.

24 ‘‘(4) PROGRAMS.—The Secretary shall ensure

25 that the research focuses primarily on Head Start
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1 programs that operate in the 50 States, the Com2 monwealth of Puerto Rico, or the District of Colum3 bia and that do not specifically target special popu4 lations.

5 ‘‘(5) ANALYSIS.—The Secretary shall ensure

6 that the organization conducting the research—

7 ‘‘(A)(i) determines if, overall, the Head

8 Start programs have impacts consistent with

9 their primary goal of increasing the social com10 petence of children, by increasing the everyday

11 effectiveness of the children in dealing with

12 their present environments and future respon13 sibilities, and increasing their school readiness;

14 ‘‘(ii) considers whether the Head Start

15 programs—

16 ‘‘(I) enhance the growth and develop17 ment of children in cognitive, emotional,

18 and physical health areas;

19 ‘‘(II) strengthen families as the pri20 mary nurturers of their children; and

21 ‘‘(III) ensure that children attain

22 school readiness; and

23 ‘‘(iii) examines—

24 ‘‘(I) the impact of the Head Start

25 programs on increasing access of children
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1 to such services as educational, health, and

2 nutritional services, and linking children

3 and families to needed community services;

4 and

5 ‘‘(II) how receipt of services described

6 in subclause (I) enriches the lives of chil7 dren and families participating in Head

8 Start programs;

9 ‘‘(B) examines the impact of Head Start

10 programs on participants on the date the par11 ticipants leave Head Start programs, at the end

12 of kindergarten, and at the end of first grade,

13 by examining a variety of factors, including

14 educational achievement, referrals for special

15 education or remedial course work, and absen16 teeism;

17 ‘‘(C) makes use of random selection from

18 the population of all Head Start programs de19 scribed in paragraph (4) in selecting programs

20 for inclusion in the research; and

21 ‘‘(D) includes comparisons of individuals

22 who participate in Head Start programs with

23 control groups (including comparison groups)

24 composed of—
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1 ‘‘(i) individuals who participate in

2 other early childhood programs (such as

3 preschool programs and day care); and

4 ‘‘(ii) individuals who do not partici5 pate in any other early childhood program.

6 ‘‘(6) CONSIDERATION OF SOURCES OF VARI7 ATION.—In designing the research, the Secretary

8 shall, to the extent practicable, consider addressing

9 possible sources of variation in impact of Head Start

10 programs, including variations in impact related to

11 such factors as—

12 ‘‘(A) Head Start program operations;

13 ‘‘(B) Head Start program quality;

14 ‘‘(C) the length of time a child attends a

15 Head Start program;

16 ‘‘(D) the age of the child on entering the

17 Head Start program;

18 ‘‘(E) the type of organization (such as a

19 local educational agency or a community action

20 agency) providing services for the Head Start

21 program;

22 ‘‘(F) the number of hours and days of pro23 gram operation of the Head Start program

24 (such as whether the program is a full-working-
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1 day, full calendar year program, a part-day pro2 gram, or a part-year program); and

3 ‘‘(G) other characteristics and features of

4 the Head Start program (such as geographic lo5 cation, location in an urban or a rural service

6 area, or participant characteristics), as appro7 priate.

8 ‘‘(7) REPORTS.—

9 ‘‘(A) SUBMISSION OF INTERIM REPORTS.—

10 The organization shall prepare and submit to

11 the Secretary 2 interim reports on the research.

12 The first interim report shall describe the de13 sign of the research, and the rationale for the

14 design, including a description of how potential

15 sources of variation in impact of Head Start

16 programs have been considered in designing the

17 research. The second interim report shall de18 scribe the status of the research and prelimi19 nary findings of the research, as appropriate.

20 ‘‘(B) SUBMISSION OF FINAL REPORT.—

21 The organization shall prepare and submit to

22 the Secretary a final report containing the find23 ings of the research.

24 ‘‘(C) TRANSMITTAL OF REPORTS TO CON25 GRESS.—
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1 ‘‘(i) IN GENERAL.—The Secretary

2 shall transmit, to the committees described

3 in clause (ii), the first interim report by

4 September 30, 1999, the second interim

5 report by September 30, 2001, and the

6 final report by September 30, 2003.

7 ‘‘(ii) COMMITTEES.—The committees

8 referred to in clause (i) are the Committee

9 on Education and the Workforce of the

10 House of Representatives and the Commit11 tee on Labor and Human Resources of the

12 Senate.

13 ‘‘(8) DEFINITION.—In this subsection, the term

14 ‘impact’, used with respect to a Head Start pro15 gram, means a difference in an outcome for a partic16 ipant in the program that would not have occurred

17 without the participation in the program.

18 ‘‘(g) QUALITY IMPROVEMENT STUDY.

19 ‘‘(1) STUDY.—The Secretary shall conduct a

20 study regarding the use and effects of use of the

21 quality improvement funds made available under sec22 tion 640(a)(3) of the Head Start Act (42 U.S.C.

23 9835(a)(3)) since fiscal year 1991.

24 ‘‘(2) REPORT.—The Secretary shall prepare

25 and submit to Congress not later than September
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1 2000 a report containing the results of the study, in2 cluding—

3 ‘‘(A) the types of activities funded with the

4 quality improvement funds;

5 ‘‘(B) the extent to which the use of the

6 quality improvement funds has accomplished

7 the goals of section 640(a)(3)(B);

8 ‘‘(C) the effect of use of the quality im9 provement funds on teacher training, salaries,

10 benefits, recruitment, and retention; and

11 ‘‘(D) the effect of use of the quality im12 provement funds on the cognitive and social de13 velopment of children receiving services under

14 the this subchapter.’’.

15 (b) CONFORMING AMENDMENT.—Section 650(13)

16 (42 U.S.C. 9846(13)) is amended by striking ‘‘, dem17 onstration,’’.

18 TITLE II—COMMUNITY SERV19 ICES BLOCK GRANT PRO20 GRAM

21 SEC. 201. REAUTHORIZATION.

22 The Community Services Block Grant Act (42 U.S.C.

23 9901 et seq.) is amended to read as follows:
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1 ‘‘Subtitle B—Community Services

2 Block Grant Program

3 ‘‘SEC. 671. SHORT TITLE.

4 ‘‘This subtitle may be cited as the ‘Community Serv5 ices Block Grant Act’.

6 ‘‘SEC. 672. PURPOSES AND GOALS.

7 ‘‘The purposes of this subtitle are—

8 ‘‘(1) to provide financial assistance to States

9 and local communities, working through a network

10 of community action agencies and other neighbor11 hood-based organizations, for the reduction of pov12 erty, the revitalization of low-income communities,

13 and the empowerment of low-income families and in14 dividuals in rural and urban areas to become fully

15 self-sufficient (particularly families who are attempt16 ing to transition off a State program carried out

17 under part A of title IV of the Social Security Act

18 (42 U.S.C. 601 et seq.));

19 ‘‘(2) to accomplish the goal described in para20 graph (1) through—

21 ‘‘(A) the strengthening of community capa22 bilities for planning and coordinating the use of

23 a broad range of Federal, State, and other as24 sistance related to the elimination of poverty, so
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1 that this assistance can be used in a manner re2 sponsive to local needs and conditions;

3 ‘‘(B) the organization of a range of serv4 ices related to the needs of low-income families

5 and individuals, so that these services may have

6 a measurable and potentially major impact on

7 the causes of poverty in the community and

8 may help the families and individuals to achieve

9 self-sufficiency;

10 ‘‘(C) the use of innovative and effective,

11 community-based approaches to attacking the

12 causes and effects of poverty and of community

13 breakdown;

14 ‘‘(D) the development and implementation

15 of all programs designated to serve low-income

16 communities and groups with the maximum

17 feasible participation of residents of the com18 munities and members of the groups served, so

19 as to best stimulate and take full advantage of

20 capabilities for self-advancement and assure

21 that the programs are otherwise meaningful to

22 the intended beneficiaries of the programs; and

23 ‘‘(E) the broadening of the resource base

24 of programs directed to the elimination of pov25 erty.
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1 ‘‘SEC. 673. DEFINITIONS.

2 ‘‘In this subtitle:

3 ‘‘(1) ELIGIBLE ENTITY.—The term ‘eligible en4 tity’ means an entity—

5 ‘‘(A) that is an eligible entity described in

6 section 673(1) (as in effect on the day before

7 the date of enactment of the Human Services

8 Reauthorization Act of 1998) as of such date of

9 enactment or is designated by the process de10 scribed in section 676A (including an organiza11 tion serving migrant or seasonal farmworkers

12 that is so described or designated); and

13 ‘‘(B) that has a tripartite board or other

14 mechanism described in subsection (a) or (b),

15 as appropriate, of section 676B.

16 ‘‘(2) POVERTY LINE.—The term ‘poverty line’

17 means the official poverty line defined by the Sec18 retary. The Secretary shall revise the poverty line

19 annually (or at any shorter interval the Secretary

20 determines to be feasible and desirable) which shall

21 be used as a criterion of eligibility in the community

22 services block grant program established under this

23 subtitle. The required revision shall be accomplished

24 by multiplying the official poverty line by the per25 centage change in the Consumer Price Index for All

26 Urban Consumers during the annual or other inter-
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1 val immediately preceding the time at which the re2 vision is made. Whenever a State determines that it

3 serves the objectives of the block grant program es4 tablished under this subtitle, the State may revise

5 the poverty line to not to exceed 125 percent of the

6 official poverty line otherwise applicable under this

7 paragraph.

8 ‘‘(3) PRIVATE, NONPROFIT ORGANIZATION.—

9 The term ‘private, nonprofit organization’ includes a

10 faith-based organization, to which the provisions of

11 section 679 shall apply.

12 ‘‘(4) SECRETARY.—The term ‘Secretary’ means

13 the Secretary of Health and Human Services.

14 ‘‘(5) STATE.—The term ‘State’ means each of

15 the several States, the District of Columbia, the

16 Commonwealth of Puerto Rico, Guam, the United

17 States Virgin Islands, American Samoa, the Com18 monwealth of the Northern Mariana Islands, and

19 the combined Freely Associated States.

20 ‘‘SEC. 674. AUTHORIZATION OF APPROPRIATIONS.

21 ‘‘(a) IN GENERAL.—There are authorized to be ap22 propriated $625,000,000 for fiscal year 1999 and such

23 sums as may be necessary for each of fiscal years 2000

24 through 2003 to carry out the provisions of this subtitle

25 (other than sections 681 and 682).
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1 ‘‘(b) RESERVATIONS.—Of the amounts appropriated

2 under subsection (a) for each fiscal year, the Secretary

3 shall reserve—

‘‘(1) 1 4 ⁄2 of 1 percent for carrying out section

5 675A (relating to payments for territories);

‘‘(2) not less than 1 6 ⁄2 of 1 percent and not more

7 than 1 percent for activities authorized in section

8 678A (relating to training and technical assistance);

9 and

10 ‘‘(3) 9 percent for carrying out section 680 (re11 lating to discretionary activities).

12 ‘‘SEC. 675. ESTABLISHMENT OF BLOCK GRANT PROGRAM.

13 ‘‘The Secretary is authorized to establish a commu14 nity services block grant program and make grants

15 through the program to States to ameliorate the causes

16 of poverty in communities within the States.

17 ‘‘SEC. 675A. DISTRIBUTION TO TERRITORIES.

18 ‘‘(a) APPORTIONMENT.—The Secretary shall appor19 tion the amount reserved under section 674(b)(1) for each

20 fiscal year on the basis of need among Guam, American

21 Samoa, the United States Virgin Islands, the Common22 wealth of the Northern Mariana Islands, and the combined

23 Freely Associated States.

24 ‘‘(b) APPLICATION.—Each jurisdiction to which sub25 section (a) applies may receive a grant under this subtitle
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1 for the amount apportioned under subsection (a) on sub2 mitting to the Secretary, and obtaining approval of, an

3 application containing provisions that describe the pro4 grams for which assistance is sought under this subtitle,

5 and that are consistent with the requirements of section

6 676.

7 ‘‘SEC. 675B. ALLOTMENTS AND PAYMENTS TO STATES.

8 ‘‘(a) ALLOTMENTS IN GENERAL.—The Secretary

9 shall, from the amount appropriated under section 674(a)

10 for each fiscal year that remains after the Secretary makes

11 the reservations required in section 674(b), allot to each

12 State an amount that bears the same ratio to such remain13 ing amount as the amount received by the State for fiscal

14 year 1981 under section 221 of the Economic Opportunity

15 Act of 1964 bore to the total amount received by all States

16 for fiscal year 1981 under such section, except that no

State shall receive less than 1 17 ⁄4 of 1 percent of the amount

18 appropriated under section 674(a) for such fiscal year.

19 ‘‘(b) ALLOTMENTS IN YEARS WITH GREATER AVAIL20 ABLE FUNDS.—

21 ‘‘(1) MINIMUM ALLOTMENTS.—Subject to para22 graphs (2) and (3), if the amount appropriated

23 under section 674(a) for each fiscal year that re24 mains after the Secretary makes the reservations re25 quired in section 674(b) exceeds $345,000,000, the
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Secretary shall allot to each State not less than 1 1 ⁄2

2 of 1 percent of the amount appropriated under sec3 tion 674(a) for such fiscal year.

4 ‘‘(2) MAINTENANCE OF 1990 LEVELS.—Para5 graph (1) shall not apply with respect to a fiscal

6 year if the amount allotted under subsection (a) to

7 any State for that year is less than the amount al8 lotted under section 674(a)(1) to such State for fis9 cal year 1990.

10 ‘‘(3) MAXIMUM ALLOTMENTS.—The amount al11 lotted under paragraph (1) to a State shall be re12 duced, if necessary, so that the aggregate amount al13 lotted to such State under such paragraph and sub14 section (a) does not exceed 140 percent of the aggre15 gate amount allotted to such State under the cor16 responding provisions of this subtitle for the fiscal

17 year preceding the fiscal year for which a determina18 tion is made under this subsection.

19 ‘‘(c) PAYMENTS.—The Secretary shall make grants

20 to eligible States for the allotments described in sub21 sections (a) and (b). The Secretary shall make payments

22 for the grants in accordance with section 6503(a) of title

23 31, United States Code.

24 ‘‘(d) DEFINITION.—For purposes of this section, the

25 term ‘State’ does not include Guam, American Samoa, the
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1 United States Virgin Islands, the Commonwealth of the

2 Northern Mariana Islands, and the Freely Associated

3 States.

4 ‘‘SEC. 675C. USES OF FUNDS.

5 ‘‘(a) GRANTS TO ELIGIBLE ENTITIES AND OTHER

6 ORGANIZATIONS.—

7 ‘‘(1) IN GENERAL.—Not less than 90 percent of

8 the funds allotted to a State under section 675B

9 shall be used by the State to make grants for the

10 purposes described in section 672 to eligible entities.

11 ‘‘(2) OBLIGATIONAL AUTHORITY.—Funds dis12 tributed to eligible entities through grants made in

13 accordance with paragraph (1) for a fiscal year shall

14 be available for obligation during that fiscal year

15 and the succeeding fiscal year, in accordance with

16 paragraph (3).

17 ‘‘(3) RECAPTURE AND REDISTRIBUTION OF UN18 OBLIGATED FUNDS.—

19 ‘‘(A) AMOUNT.—Beginning on October 1,

20 2000, a State may recapture and redistribute

21 funds distributed to an eligible entity through a

22 grant made under paragraph (1) that are unob23 ligated at the end of a fiscal year if such unobli24 gated funds exceed 20 percent of the amount so
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1 distributed to such eligible entity for such fiscal

2 year.

3 ‘‘(B) REDISTRIBUTION.—In redistributing

4 funds recaptured in accordance with this para5 graph, States shall redistribute such funds to

6 an eligible entity, or require the original recipi7 ent of the funds to redistribute the funds to a

8 private, nonprofit organization, located within

9 the community served by the original recipient

10 of the funds, for activities consistent with the

11 purposes of this subtitle.

12 ‘‘(b) OTHER ACTIVITIES.—

13 ‘‘(1) USE OF REMAINDER.—If a State uses less

14 than 100 percent of the State allotment to make

15 grants under subsection (a), the State shall use the

16 remainder of the allotment (subject to paragraph

17 (2)) for—

18 ‘‘(A) providing training and technical as19 sistance to those entities in need of such train20 ing and assistance;

21 ‘‘(B) coordinating State-operated programs

22 and services targeted to low-income children

23 and families with services provided by eligible

24 entities and other organizations funded under

25 this subtitle, including detailing appropriate
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1 employees of State or local agencies to entities

2 funded under this subtitle, to ensure increased

3 access to services provided by such State or

4 local agencies;

5 ‘‘(C) supporting statewide coordination and

6 communication among eligible entities;

7 ‘‘(D) analyzing the distribution of funds

8 made available under this subtitle within the

9 State to determine if such funds have been tar10 geted to the areas of greatest need;

11 ‘‘(E) supporting asset-building programs

12 for low-income individuals, such as programs

13 supporting individual development accounts;

14 ‘‘(F) supporting innovative programs and

15 activities conducted by community action agen16 cies or other neighborhood-based organizations

17 to eliminate poverty, promote self-sufficiency,

18 and promote community revitalization; and

19 ‘‘(G) supporting other activities, consistent

20 with the purposes of this subtitle.

21 ‘‘(2) ADMINISTRATIVE CAP.—No State may

22 spend more than the greater of $55,000, or 5 per23 cent, of the portion of the State allotment that re24 mains after the State makes grants to eligible enti25 ties under subsection (a), for administrative ex-
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1 penses, including monitoring activities. The cost of

2 activities conducted under paragraph (1)(A) shall

3 not be considered to be administrative expenses.

4 ‘‘SEC. 676. APPLICATION AND PLAN.

5 ‘‘(a) DESIGNATION OF LEAD AGENCY.—

6 ‘‘(1) DESIGNATION.—The chief executive officer

7 of a State desiring to receive an allotment under this

8 subtitle shall designate, in an application submitted

9 to the Secretary under subsection (b), an appro10 priate State agency that complies with the require11 ments of paragraph (2) to act as a lead agency for

12 purposes of carrying out State activities under this

13 subtitle.

14 ‘‘(2) DUTIES.—The lead agency shall—

15 ‘‘(A) develop the State plan to be submit16 ted to the Secretary under subsection (b);

17 ‘‘(B) in conjunction with the development

18 of the State plan as required under subsection

19 (b), hold at least 1 hearing in the State with

20 sufficient time and statewide distribution of no21 tice of such hearing, to provide to the public an

22 opportunity to comment on the proposed use

23 and distribution of funds to be provided

24 through the allotment for the period covered by

25 the State plan; and
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1 ‘‘(C) conduct reviews of eligible entities

2 under section 678B.

3 ‘‘(3) LEGISLATIVE HEARING.—The State shall

4 hold at least 1 legislative hearing every 3 years in

5 conjunction with the development of the State plan.

6 ‘‘(b) STATE APPLICATION AND PLAN.—Beginning

7 with fiscal year 2000, to be eligible to receive an allotment

8 under this subtitle, a State shall prepare and submit to

9 the Secretary an application and State plan covering a pe10 riod of not less than 1 fiscal year and not more than 2

11 fiscal years. The plan shall be submitted not later than

12 30 days prior to the beginning of the first fiscal year cov13 ered by the plan, and shall contain such information as

14 the Secretary shall require, including—

15 ‘‘(1) an assurance that funds made available

16 through the allotment will be used to support activi17 ties that are designed to assist low-income families

18 and individuals, including homeless families and in19 dividuals, migrant or seasonal farmworkers, and el20 derly low-income individuals and families, and a de21 scription of how such activities will enable the fami22 lies and individuals—

23 ‘‘(A) to remove obstacles and solve prob24 lems that block the achievement of self-suffi25 ciency;
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1 ‘‘(B) to secure and retain meaningful em2 ployment;

3 ‘‘(C) to attain an adequate education;

4 ‘‘(D) to make better use of available in5 come;

6 ‘‘(E) to obtain and maintain adequate

7 housing and a suitable living environment;

8 ‘‘(F) to obtain emergency assistance

9 through loans, grants, or other means to meet

10 immediate and urgent individual and family

11 needs;

12 ‘‘(G) to achieve greater participation in the

13 affairs of the community; and

14 ‘‘(H) to make more effective use of other

15 programs related to the purposes of this sub16 title (including State welfare reform efforts);

17 ‘‘(2) a description of how the State intends to

18 use discretionary funds made available from the re19 mainder of the allotment described in section

20 675C(b) in accordance with this subtitle, including a

21 description of how the State will support innovative

22 community and neighborhood-based initiatives relat23 ed to the purposes of this subtitle;

24 ‘‘(3) based on information provided by eligible

25 entities in the State, a description of—
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1 ‘‘(A) the service delivery system, for serv2 ices provided or coordinated with funds made

3 available through the allotment, targeted to

4 low-income individuals and families in commu5 nities within the State;

6 ‘‘(B) a description of how linkages will be

7 developed to fill identified gaps in the services,

8 through the provision of information, referrals,

9 case management, and followup consultations;

10 ‘‘(C) a description of how funds made

11 available through the allotment will be coordi12 nated with other public and private resources;

13 and

14 ‘‘(D) a description of how the funds will be

15 used to support innovative community and

16 neighborhood-based initiatives related to the

17 purposes of this subtitle;

18 ‘‘(4) an assurance that the State will provide,

19 on an emergency basis, for the provision of such

20 supplies and services, nutritious foods, and related

21 services, as may be necessary to counteract condi22 tions of starvation and malnutrition among low-in23 come individuals;

24 ‘‘(5) an assurance that the State will coordi25 nate, and establish linkages between, governmental
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1 and other social services programs to assure the ef2 fective delivery of such services to low-income indi3 viduals;

4 ‘‘(6) an assurance that the State will ensure co5 ordination between antipoverty programs in each

6 community, and ensure, where appropriate, that

7 emergency energy crisis intervention programs under

8 title XXVI (relating to low-income home energy as9 sistance) are conducted in such community;

10 ‘‘(7) an assurance that the State will permit

11 and cooperate with Federal investigations under12 taken in accordance with section 678D;

13 ‘‘(8) an assurance that any eligible entity that

14 received funding in the previous fiscal year under

15 this subtitle will not have its funding terminated

16 under this subtitle, or reduced below the propor17 tional share of funding the entity received in the

18 previous fiscal year unless, after providing notice

19 and an opportunity for a hearing on the record, the

20 State determines that cause exists for such termi21 nation or such reduction, subject to review by the

22 Secretary as provided in section 678C(b);

23 ‘‘(9) an assurance that the State will, to the

24 maximum extent possible, coordinate programs with

25 and form partnerships with other organizations serv-
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1 ing low-income residents of the communities and

2 members of the groups served by the State, includ3 ing faith-based organizations, charitable groups, and

4 community organizations;

5 ‘‘(10) an assurance that the State will require

6 each eligible entity to establish procedures under

7 which a low-income individual, community organiza8 tion, or faith-based organization, or representative of

9 low-income individuals that considers its organiza10 tion, or low-income individuals, to be inadequately

11 represented on the board (or other mechanism) of

12 the eligible entity to petition for adequate represen13 tation;

14 ‘‘(11) an assurance that the State will secure

15 from each eligible entity, as a condition to receipt of

16 funding by the entity under this subtitle for a pro17 gram, a community action plan (which shall be sub18 mitted to the Secretary, at the request of the Sec19 retary, with the State plan) that includes a commu20 nity-needs assessment for the community served,

21 which may be coordinated with community-needs as22 sessments conducted for other programs;

23 ‘‘(12) an assurance that the State and all eligi24 ble entities in the State will, not later than fiscal

25 year 2002, participate in the Results Oriented Man-
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1 agement and Accountability System, any other per2 formance measure system established by the Sec3 retary under section 678E(b), or an alternative sys4 tem for measuring performance and results that

5 meets the requirements of that section, and a de6 scription of outcome measures to be used to measure

7 eligible entity performance in promoting self-suffi8 ciency, family stability, and community revitaliza9 tion; and

10 ‘‘(13) information describing how the State will

11 carry out the assurances described in this sub12 section.

13 ‘‘(c) DETERMINATIONS.—For purposes of making a

14 determination in accordance with subsection (b)(8) with

15 respect to—

16 ‘‘(1) a funding reduction, the term ‘cause’ in17 cludes—

18 ‘‘(A) a statewide redistribution of funds

19 provided under this subtitle to respond to—

20 ‘‘(i) the results of the most recently

21 available census or other appropriate data;

22 ‘‘(ii) the designation of a new eligible

23 entity; or

24 ‘‘(iii) severe economic dislocation; or
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1 ‘‘(B) the failure of an eligible entity to

2 comply with the terms of an agreement to pro3 vide services under this subtitle; and

4 ‘‘(2) a termination, the term ‘cause’ includes

5 the material failure of an eligible entity to comply

6 with the terms of such an agreement and the State

7 plan to provide services under this subtitle or the

8 consistent failure of the entity to achieve perform9 ance measures as determined by the State.

10 ‘‘(d) PROCEDURES AND INFORMATION.—The Sec11 retary may prescribe procedures only for the purpose of

12 assessing the effectiveness of eligible entities in carrying

13 out the purposes of this subtitle.

14 ‘‘(e) REVISIONS AND INSPECTION.—

15 ‘‘(1) REVISIONS.—The chief executive officer of

16 each State may revise any plan prepared under this

17 section and shall submit the revised plan to the Sec18 retary.

19 ‘‘(2) PUBLIC INSPECTION.—Each plan or re20 vised plan prepared under this section shall be made

21 available for public inspection within the State in

22 such a manner as will facilitate review of, and com23 ment on, the plan.
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1 ‘‘SEC. 676A. DESIGNATION AND REDESIGNATION OF ELIGI2 BLE ENTITIES IN UNSERVED AREAS.

3 ‘‘(a) QUALIFIED ORGANIZATION IN OR NEAR

4 AREA.—

5 ‘‘(1) IN GENERAL.—If any geographic area of a

6 State is not, or ceases to be, served by an eligible

7 entity under this subtitle, and if the chief executive

8 officer of the State decides to serve such area, the

9 chief executive officer may solicit applications from,

10 and designate as an eligible entity, 1 or more—

11 ‘‘(A) private nonprofit organizations geo12 graphically located in the unserved area that

13 meet the requirements of this subtitle; or

14 ‘‘(B) private nonprofit organizations

15 (which may include eligible entities) located in

16 an area contiguous to or within reasonable

17 proximity of the unserved area that are already

18 providing related services in the unserved area.

19 ‘‘(2) REQUIREMENT.—In order to serve as the

20 eligible entity for the area, an entity described in

21 paragraph (1)(B) shall agree to add additional mem22 bers to the board of the entity to ensure adequate

23 representation—

24 ‘‘(A) in each of the 3 required categories

25 described in subparagraphs (A), (B), and (C) of

26 section 676B(a)(2), by members that reside in
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1 the community comprised by the unserved area;

2 and

3 ‘‘(B) in the category described in section

4 676B(a)(2), by members that reside in the

5 neighborhood served.

6 ‘‘(b) SPECIAL CONSIDERATION.—In designating an

7 eligible entity under subsection (a), the chief executive of8 ficer shall grant the designation to an organization of

9 demonstrated effectiveness in meeting the goals and pur10 poses of this subtitle and may give priority, in granting

11 the designation, to local entities that are providing services

12 in the unserved area, consistent with the needs identified

13 by a community-needs assessment.

14 ‘‘(c) NO QUALIFIED ORGANIZATION IN OR NEAR

15 AREA.—If no private, nonprofit organization is identified

16 or determined to be qualified under subsection (a) to serve

17 the unserved area as an eligible entity the chief executive

18 officer may designate an appropriate political subdivision

19 of the State to serve as an eligible entity for the area.

20 In order to serve as the eligible entity for that area, the

21 political subdivision shall have a board or other mecha22 nism as required in section 676B(b).

23 ‘‘SEC. 676B. TRIPARTITE BOARDS.

24 ‘‘(a) PRIVATE NONPROFIT ENTITIES.—
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1 ‘‘(1) BOARD.—In order for a private, nonprofit

2 entity to be considered to be an eligible entity for

3 purposes of section 673(1), the entity shall admin4 ister the community services block grant program

5 through a tripartite board described in paragraph

6 (2) that fully participates in the development and

7 implementation of the program to serve low-income

8 communities or groups.

9 ‘‘(2) SELECTION AND COMPOSITION OF

10 BOARD.—The members of the board referred to in

11 paragraph (1) shall be selected by the entity and the

12 board shall be composed so as to assure that—

‘‘(A) 1 13 ⁄3 of the members of the board are

14 elected public officials, holding office on the

15 date of selection, or their representatives, ex16 cept that if the number of elected officials rea17 sonably available and willing to serve on the

board is less than 1 18 ⁄3 of the membership of the

19 board, membership on the board of appointive

20 public officials or their representatives may be

counted in meeting such 1 21 ⁄3 requirement;

‘‘(B) not fewer than 1 22 ⁄3 of the members are

23 persons chosen in accordance with democratic

24 selection procedures adequate to assure that

25 these members are representative of low-income
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1 individuals and families in the neighborhood

2 served;

3 ‘‘(C) the remainder of the members are of4 ficials or members of business, industry, labor,

5 religious, law enforcement, education, or other

6 major groups and interests in the community

7 served; and

8 ‘‘(D)(i) each member resides in the com9 munity; and

10 ‘‘(ii) each representative of low-income in11 dividuals and families selected to represent a

12 specific neighborhood within a community

13 under this paragraph resides in the neighbor14 hood represented by the member.

15 ‘‘(b) PUBLIC ORGANIZATIONS.—In order for a public

16 organization to be considered to be an eligible entity for

17 purposes of section 673(1), the entity shall administer the

18 community services block grant program through—

19 ‘‘(1) a tripartite board, which shall have mem20 bers selected by the organization and shall be composed so as to assure that not fewer than 1 21 ⁄3 of the

22 members are persons chosen in accordance with

23 democratic selection procedures adequate to assure

24 that these members—
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1 ‘‘(A) are representative of low-income indi2 viduals and families in the neighborhood served;

3 ‘‘(B) reside in the neighborhood served;

4 and

5 ‘‘(C) are able to participate actively in the

6 planning and implementation of programs fund7 ed under this subtitle; or

8 ‘‘(2) another mechanism specified by the State

9 to assure decisionmaking and participation by low10 income individuals in the planning, administration,

11 and evaluation of programs funded under this sub12 title.

13 ‘‘SEC. 677. PAYMENTS TO INDIAN TRIBES.

14 ‘‘(a) RESERVATION.—If, with respect to any State,

15 the Secretary—

16 ‘‘(1) receives a request from the governing body

17 of an Indian tribe or tribal organization within the

18 State that assistance under this subtitle be made di19 rectly to such tribe or organization; and

20 ‘‘(2) determines that the members of such tribe

21 or tribal organization would be better served by

22 means of grants made directly to provide benefits

23 under this subtitle,

24 the Secretary shall reserve from amounts that would oth25 erwise be allotted to such State under section 675B for
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1 the fiscal year the amount determined under subsection

2 (b).

3 ‘‘(b) DETERMINATION OF RESERVED AMOUNT.—The

4 Secretary shall reserve for the purpose of subsection (a)

5 from amounts that would otherwise be allotted to such

6 State, not less than 100 percent of an amount that bears

7 the same ratio to the State allotment for the fiscal year

8 involved as the population of all eligible Indians for whom

9 a determination has been made under subsection (a) bears

10 to the population of all individuals eligible for assistance

11 under this subtitle in such State.

12 ‘‘(c) AWARDS.—The sums reserved by the Secretary

13 on the basis of a determination made under subsection (a)

14 shall be made available by grant to the Indian tribe or

15 tribal organization serving the individuals for whom such

16 a determination has been made.

17 ‘‘(d) PLAN.—In order for an Indian tribe or tribal

18 organization to be eligible for a grant award for a fiscal

19 year under this section, the tribe or organization shall sub20 mit to the Secretary a plan for such fiscal year that meets

21 such criteria as the Secretary may prescribe by regulation.

22 ‘‘(e) DEFINITIONS.—In this section:

23 ‘‘(1) INDIAN TRIBE; TRIBAL ORGANIZATION.—

24 The terms ‘Indian tribe’ and ‘tribal organization’

25 mean a tribe, band, or other organized group recog-
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1 nized in the State in which the tribe, band, or group

2 resides, or considered by the Secretary of the Inte3 rior, to be an Indian tribe or an Indian organization

4 for any purpose.

5 ‘‘(2) INDIAN.—The term ‘Indian’ means a

6 member of an Indian tribe or of a tribal organiza7 tion.

8 ‘‘SEC. 678. OFFICE OF COMMUNITY SERVICES.

9 ‘‘(a) OFFICE.—The Secretary shall carry out the

10 functions of this subtitle through an Office of Community

11 Services, which shall be established in the Department of

12 Health and Human Services. The Office shall be headed

13 by a Director.

14 ‘‘(b) GRANTS, CONTRACTS, COOPERATIVE AGREE15 MENTS.—The Secretary shall carry out functions of this

16 subtitle through grants, contracts, or cooperative agree17 ments.

18 ‘‘SEC. 678A. TRAINING AND TECHNICAL ASSISTANCE.

19 ‘‘(a) ACTIVITIES.—The Secretary shall use the

20 amounts reserved in section 674(b)(2) for training, tech21 nical assistance, planning, evaluation, and data collection

22 activities related to programs carried out under this sub23 title.
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1 ‘‘(b) PROCESS.—The process for determining the

2 training and technical assistance to be carried out under

3 this section shall—

4 ‘‘(1) ensure that the needs of eligible entities

5 and programs relating to improving program quality,

6 including financial management practices, are ad7 dressed to the maximum extent feasible; and

8 ‘‘(2) incorporate mechanisms to ensure respon9 siveness to local needs, including an ongoing proce10 dure for obtaining input from the national and State

11 network of eligible entities.

12 ‘‘SEC. 678B. MONITORING OF ELIGIBLE ENTITIES.

13 ‘‘(a) IN GENERAL.—In order to determine whether

14 eligible entities meet the performance goals, administra15 tive standards, financial management requirements, and

16 other requirements of a State, the State shall conduct the

17 following reviews of eligible entities:

18 ‘‘(1) A full onsite review of each such entity at

19 least once during each 3-year period.

20 ‘‘(2) An onsite review of each newly designated

21 entity immediately after the completion of the first

22 year in which such entity receives funds through the

23 community services block grant program.

24 ‘‘(3) Followup reviews including prompt return

25 visits to eligible entities, and their programs, that
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1 fail to meet the goals, standards, and requirements

2 established by the State.

3 ‘‘(4) Other reviews as appropriate, including re4 views of entities with programs that have had other

5 Federal, State, or local grants terminated for cause.

6 ‘‘(b) REQUESTS.—The State may request training

7 and technical assistance from the Secretary as needed to

8 comply with the requirements of this section.

9 ‘‘SEC. 678C. CORRECTIVE ACTION; TERMINATION AND RE10 DUCTION OF FUNDING.

11 ‘‘(a) DETERMINATION.—If the State determines, on

12 the basis of a review pursuant to subsection 678B, that

13 an eligible entity materially fails to comply with the terms

14 of an agreement, or the State plan, to provide services

15 under this subtitle or to meet appropriate standards,

16 goals, and other requirements established by the State (in17 cluding performance objectives), the State shall—

18 ‘‘(1) inform the entity of the deficiency to be

19 corrected;

20 ‘‘(2) require the entity to correct the deficiency;

21 ‘‘(3)(A) offer training and technical assistance,

22 if appropriate, to help correct the deficiency, and

23 prepare and submit to the Secretary a report de24 scribing the training and technical assistance of25 fered; or
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1 ‘‘(B) if the State determines that such training

2 and technical assistance are not appropriate, prepare

3 and submit to the Secretary a report stating the rea4 sons for the determination;

5 ‘‘(4)(A) at the discretion of the State (taking

6 into account the seriousness of the deficiency and

7 the time reasonably required to correct the defi8 ciency), allow the entity to develop and implement,

9 within 60 days after being informed of the defi10 ciency, a quality improvement plan to correct such

11 deficiency within a reasonable period of time, as de12 termined by the State; and

13 ‘‘(B) not later than 30 days after receiving

14 from an eligible entity a proposed quality improve15 ment plan pursuant to subparagraph (A), either ap16 prove such proposed plan or specify the reasons why

17 the proposed plan cannot be approved; and

18 ‘‘(5) after providing adequate notice and an op19 portunity for a hearing, initiate proceedings to ter20 minate the designation of or reduce the funding

21 under this subtitle of the eligible entity unless the

22 entity corrects the deficiency.

23 ‘‘(b) REVIEW.—A determination to terminate the

24 designation or reduce the funding of an eligible entity is

25 reviewable by the Secretary. The Secretary shall, upon re-
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1 quest, review such a determination. The review shall be

2 completed not later than 60 days after the determination

3 to terminate the designation or reduce the funding. If the

4 review is not completed within 60 days, the determination

5 of the State shall become final at the end of the 60th day.

6 ‘‘SEC. 678D. FISCAL CONTROLS, AUDITS, AND WITHHOLD7 ING.

8 ‘‘(a) FISCAL CONTROLS, PROCEDURES, AUDITS, AND

9 INSPECTIONS.—

10 ‘‘(1) IN GENERAL.—A State that receives funds

11 under this subtitle shall—

12 ‘‘(A) establish fiscal control and fund ac13 counting procedures necessary to assure the

14 proper disbursal of and accounting for Federal

15 funds paid to the State under this subtitle, in16 cluding procedures for monitoring the funds

17 provided under this subtitle;

18 ‘‘(B) ensure that cost and accounting

19 standards of the Office of Management and

20 Budget apply to a recipient of funds under this

21 subtitle;

22 ‘‘(C) prepare, at least every year (or in the

23 case of a State with a 2-year State plan, every

24 2 years) in accordance with paragraph (2) an

25 audit of the expenditures of the State of
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1 amounts received under this subtitle and

2 amounts transferred to carry out the purposes

3 of this subtitle; and

4 ‘‘(D) make appropriate books, documents,

5 papers, and records available to the Secretary

6 and the Comptroller General of the United

7 States, or any of their duly authorized rep8 resentatives, for examination, copying, or me9 chanical reproduction on or off the premises of

10 the appropriate entity upon a reasonable re11 quest for the items.

12 ‘‘(2) AUDITS.—Each audit required by sub13 section (a)(1)(C) shall be conducted by an entity

14 independent of any agency administering activities

15 or services carried out under this subtitle and shall

16 be conducted in accordance with generally accepted

17 accounting principles. Within 30 days after the com18 pletion of each such audit in a State, the chief exec19 utive officer of the State shall submit a copy of such

20 audit to any eligible entity that was the subject of

21 the audit at no charge, to the legislature of the

22 State, and to the Secretary.

23 ‘‘(3) REPAYMENTS.—The State shall repay to

24 the United States amounts found not to have been

25 expended in accordance with this subtitle or the Sec-
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1 retary may offset such amounts against any other

2 amount to which the State is or may become entitled

3 under this subtitle.

4 ‘‘(b) WITHHOLDING.—

5 ‘‘(1) IN GENERAL.—The Secretary shall, after

6 providing adequate notice and an opportunity for a

7 hearing conducted within the affected State, with8 hold funds from any State that does not utilize the

9 State allotment substantially in accordance with the

10 provisions of this subtitle, including the assurances

11 such State provided under section 676.

12 ‘‘(2) RESPONSE TO COMPLAINTS.—The Sec13 retary shall respond in an expeditious and speedy

14 manner to complaints of a substantial or serious na15 ture that a State has failed to use funds in accord16 ance with the provisions of this subtitle, including

17 the assurances provided by the State under section

18 676. For purposes of this paragraph, a complaint of

19 a failure to meet any 1 of the assurances provided

20 under section 676 that constitutes disregarding that

21 assurance shall be considered to be a complaint of

22 a serious nature.

23 ‘‘(3) INVESTIGATIONS.—Whenever the Sec24 retary determines that there is a pattern of com25 plaints of failures described in paragraph (2) from
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1 any State in any fiscal year, the Secretary shall con2 duct an investigation of the use of funds received

3 under this subtitle by such State in order to ensure

4 compliance with the provisions of this subtitle.

5 ‘‘SEC. 678E. ACCOUNTABILITY AND REPORTING REQUIRE6 MENTS.

7 ‘‘(a) STATE ACCOUNTABILITY AND REPORTING RE8 QUIREMENTS.—

9 ‘‘(1) PERFORMANCE MEASUREMENT.—

10 ‘‘(A) IN GENERAL.—By October 1, 2001,

11 each State that receives funds under this sub12 title shall participate, and shall ensure that all

13 eligible entities in the State participate, in a

14 performance measurement system, which may

15 be a performance measurement system estab16 lished by the Secretary pursuant to subsection

17 (b), or an alternative system that meets the re18 quirements of subsection (b).

19 ‘‘(B) LOCAL AGENCIES.—The State may

20 elect to have local agencies who are subcontrac21 tors of the eligible entities under this subtitle

22 participate in the performance measurement

23 system. If the State makes that election, ref24 erences in this section to eligible entities shall

25 be considered to include the local agencies.
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1 ‘‘(2) ANNUAL REPORT.—Each State shall annu2 ally prepare and submit to the Secretary a report on

3 the measured performance of the State and the eligi4 ble entities in the State. Each State shall also in5 clude in the report an accounting of the expenditure

6 of funds received by the State through the commu7 nity services block grant program, including an ac8 counting of funds spent on administrative costs by

9 the State and the eligible entities, and funds spent

10 by eligible entities on the direct delivery of local

11 services, and shall include information on the num12 ber of and characteristics of clients served under this

13 subtitle in the State, based on data collected from

14 the eligible entities. The State shall also include in

15 the report a summary describing the training and

16 technical assistance offered by the State under sec17 tion 678C(a)(3) during the year covered by the re18 port.

19 ‘‘(b) SECRETARY’S ACCOUNTABILITY AND REPORT20 ING REQUIREMENTS.—

21 ‘‘(1) PERFORMANCE MEASUREMENT.—The Sec22 retary, in collaboration with the States and with eli23 gible entities throughout the Nation, shall establish

24 1 or more model performance measurement systems,

25 which may be used by the States and by eligible en-
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1 tities to measure their performance in carrying out

2 the requirements of this subtitle and in achieving the

3 goals of community action plans. The Secretary shall

4 provide technical assistance, including support for

5 the enhancement of electronic data systems, to

6 States and to eligible entities to enhance their capa7 bility to collect and report data for such a system

8 and to aid in their participation in such a system.

9 ‘‘(2) REPORTING REQUIREMENTS.—At the end

10 of each fiscal year beginning after September 30,

11 1999, the Secretary shall, directly or by grant or

12 contract, prepare a report containing—

13 ‘‘(A) a summary of the planned use of

14 funds by each State, and the eligible entities in

15 the State, under the community services block

16 grant program, as contained in each State plan

17 submitted pursuant to section 676;

18 ‘‘(B) a description of how funds were actu19 ally spent by the State and eligible entities in

20 the State, including a breakdown of funds spent

21 on administrative costs and on the direct deliv22 ery of local services by eligible entities;

23 ‘‘(C) information on the number of entities

24 eligible for funds under this subtitle, the num25 ber of low-income persons served under this
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1 subtitle, and such demographic data on the low2 income populations served by eligible entities as

3 is determined by the Secretary to be feasible;

4 ‘‘(D) a comparison of the planned uses of

5 funds for each State and the actual uses of the

6 funds;

7 ‘‘(E) a summary of each State’s perform8 ance results, and the results for the eligible en9 tities, as collected and submitted by the States

10 in accordance with subsection (a)(2); and

11 ‘‘(F) any additional information that the

12 Secretary considers to be appropriate to carry

13 out this subtitle, if the Secretary informs the

14 States of the need for such additional informa15 tion and allows a reasonable period of time for

16 the States to collect and provide the informa17 tion.

18 ‘‘(3) SUBMISSION.—The Secretary shall submit

19 to the Committee on Education and the Workforce

20 of the House of Representatives and the Committee

21 on Labor and Human Resources of the Senate the

22 report described in paragraph (2), and any com23 ments the Secretary may have with respect to such

24 report. The report shall include definitions of direct,

25 indirect, and administrative costs used by the De-
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1 partment of Health and Human Services for pro2 grams funded under this subtitle.

3 ‘‘(4) COSTS.—Of the funds reserved under sec4 tion 674(b)(3), not more than $350,000 shall be

5 available to carry out the reporting requirements

6 contained in paragraph (2) and the provision of

7 technical assistance described in paragraph (1).

8 ‘‘SEC. 678F. LIMITATIONS ON USE OF FUNDS.

9 ‘‘(a) CONSTRUCTION OF FACILITIES.—

10 ‘‘(1) LIMITATIONS.—Except as provided in

11 paragraph (2), grants made under this subtitle

12 (other than amounts reserved under section

13 674(b)(3)) may not be used by the State, or by any

14 other person with which the State makes arrange15 ments to carry out the purposes of this subtitle, for

16 the purchase or improvement of land, or the pur17 chase, construction, or permanent improvement

18 (other than low-cost residential weatherization or

19 other energy-related home repairs) of any building

20 or other facility.

21 ‘‘(2) WAIVER.—The Secretary may waive the

22 limitation contained in paragraph (1) upon a State

23 request for such a waiver, if the Secretary finds that

24 the request describes extraordinary circumstances to

25 justify the purchase of land or the construction of
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1 facilities (or the making of permanent improve2 ments) and that permitting the waiver will contrib3 ute to the ability of the State to carry out the pur4 poses of this subtitle.

5 ‘‘(b) POLITICAL ACTIVITIES.—

6 ‘‘(1) TREATMENT AS A STATE OR LOCAL AGEN7 CY.—For purposes of chapter 15 of title 5, United

8 States Code, any entity that assumes responsibility

9 for planning, developing, and coordinating activities

10 under this subtitle and receives assistance under this

11 subtitle shall be deemed to be a State or local agen12 cy. For purposes of paragraphs (1) and (2) of sec13 tion 1502(a) of such title, any entity receiving as14 sistance under this subtitle shall be deemed to be a

15 State or local agency.

16 ‘‘(2) PROHIBITIONS.—Programs assisted under

17 this subtitle shall not be carried on in a manner in18 volving the use of program funds, the provision of

19 services, or the employment or assignment of per20 sonnel, in a manner supporting or resulting in the

21 identification of such programs with—

22 ‘‘(A) any partisan or nonpartisan political

23 activity or any political activity associated with

24 a candidate, or contending faction or group, in

25 an election for public or party office;
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1 ‘‘(B) any activity to provide voters or pro2 spective voters with transportation to the polls

3 or similar assistance in connection with any

4 such election; or

5 ‘‘(C) any voter registration activity.

6 ‘‘(3) RULES AND REGULATIONS.—The Sec7 retary, after consultation and regulations with the

8 Office of Personnel Management, shall issue rules

9 and regulations to provide for the enforcement of

10 this subsection, which shall include provisions for

11 summary suspension of assistance or other action

12 necessary to permit enforcement on an emergency

13 basis.

14 ‘‘(c) NONDISCRIMINATION.—

15 ‘‘(1) IN GENERAL.—No person shall, on the

16 basis of race, color, religion, national origin, or sex

17 be excluded from participation in, be denied the ben18 efits of, or be subjected to discrimination under, any

19 program or activity funded in whole or in part with

20 funds made available under this subtitle. Any prohi21 bition against discrimination on the basis of age

22 under the Age Discrimination Act of 1975 (42

23 U.S.C. 6101 et seq.) or with respect to an otherwise

24 qualified individual with a disability as provided in

25 section 504 of the Rehabilitation Act of 1973 (29
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1 U.S.C. 794) or title II of the Americans with Dis2 abilities Act of 1990 (42 U.S.C. 12131 et seq.) shall

3 also apply to any such program or activity.

4 ‘‘(2) ACTION OF SECRETARY.—Whenever the

5 Secretary determines that a State that has received

6 a payment under this subtitle has failed to comply

7 with paragraph (1) or an applicable regulation, the

8 Secretary shall notify the chief executive officer of

9 the State and shall request that the officer secure

10 compliance. If within a reasonable period of time,

11 not to exceed 60 days, the chief executive officer

12 fails or refuses to secure compliance, the Secretary

13 is authorized to—

14 ‘‘(A) refer the matter to the Attorney Gen15 eral with a recommendation that an appropriate

16 civil action be instituted;

17 ‘‘(B) exercise the powers and functions

18 provided by title VI of the Civil Rights Act of

19 1964 (42 U.S.C. 2000d et seq.), the Age Dis20 crimination Act of 1975 (42 U.S.C. 6101 et

21 seq.), or section 504 of the Rehabilitation Act

22 of 1973 (29 U.S.C. 794), as may be applicable;

23 or

24 ‘‘(C) take such other action as may be pro25 vided by law.
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1 ‘‘(3) ACTION OF ATTORNEY GENERAL.—When a

2 matter is referred to the Attorney General pursuant

3 to paragraph (2), or whenever the Attorney General

4 has reason to believe that the State is engaged in a

5 pattern or practice of discrimination in violation of

6 the provisions of this subsection, the Attorney Gen7 eral may bring a civil action in any appropriate

8 United States district court for such relief as may

9 be appropriate, including injunctive relief.

10 ‘‘SEC. 679. OPERATIONAL RULE.

11 ‘‘(a) FAITH-BASED ORGANIZATIONS INCLUDED AS

12 NONGOVERNMENTAL PROVIDERS.—For any program car13 ried out by the Federal Government, or by a State or local

14 government under this subtitle, the government shall con15 sider, on the same basis as other nongovernmental organi16 zations, faith-based organizations to provide the assistance

17 under the program, so long as the program is implemented

18 in a manner consistent with the Establishment Clause of

19 the first amendment to the Constitution. Neither the Fed20 eral Government nor a State or local government receiving

21 funds under this subtitle shall discriminate against an or22 ganization that provides assistance under, or applies to

23 provide assistance under, this subtitle, on the basis that

24 the organization has a faith-based character.
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1 ‘‘(b) ADDITIONAL SAFEGUARDS.—Neither the Fed2 eral Government nor a State or local government shall re3 quire a faith-based organization to remove religious art,

4 icons, scripture, or other symbols in order to be eligible

5 to provide assistance under a program described in sub6 section (a).

7 ‘‘(c) LIMITATIONS ON USE OF FUNDS FOR CERTAIN

8 PURPOSES.—No funds provided through a grant or con9 tract to a faith-based organization to provide assistance

10 under any program described in subsection (a) shall be

11 expended for sectarian worship, instruction, or proselytiza12 tion.

13 ‘‘(d) FISCAL ACCOUNTABILITY.—

14 ‘‘(1) IN GENERAL.—Except as provided in para15 graph (2), any faith-based organization providing as16 sistance under any program described in subsection

17 (a) shall be subject to the same regulations as other

18 nongovernmental organizations to account in accord

19 with generally accepted accounting principles for the

20 use of such funds provided under such program.

21 ‘‘(2) LIMITED AUDIT.—Such organization shall

22 segregate government funds provided under such

23 program into a separate account. Only the govern24 ment funds shall be subject to audit by the govern25 ment.
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1 ‘‘SEC. 680. DISCRETIONARY AUTHORITY OF THE SEC2 RETARY.

3 ‘‘(a) GRANTS, CONTRACTS, ARRANGEMENTS, LOANS,

4 AND GUARANTEES.—

5 ‘‘(1) IN GENERAL.—The Secretary shall, from

6 funds reserved under section 674(b)(3), make

7 grants, loans, or guarantees to States and public

8 agencies and private, nonprofit organizations, or

9 enter into contracts or jointly financed cooperative

10 arrangements with States and public agencies and

11 private, nonprofit organizations (and for-profit orga12 nizations, to the extent specified in paragraph

13 (2)(E)) for each of the objectives described in para14 graphs (2) through (4).

15 ‘‘(2) COMMUNITY ECONOMIC DEVELOPMENT.—

16 ‘‘(A) ECONOMIC DEVELOPMENT ACTIVI17 TIES.—The Secretary shall make grants de18 scribed in paragraph (1) on a competitive basis

19 to private, non-profit organizations that are

20 community development corporations to provide

21 technical and financial assistance for economic

22 development activities designed to address the

23 economic needs of low-income individuals and

24 families by creating employment and business

25 development opportunities.
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1 ‘‘(B) CONSULTATION.—The Secretary

2 shall exercise the authority provided under sub3 paragraph (A) after consultation with other rel4 evant Federal officials.

5 ‘‘(C) GOVERNING BOARDS.—For a commu6 nity development corporation to receive funds to

7 carry out this paragraph, the corporation shall

8 be governed by a board that shall consist of

9 residents of the community and business and

10 civic leaders and shall have as a principal pur11 pose planning, developing, or managing low-in12 come housing or community development

13 projects.

14 ‘‘(D) GEOGRAPHIC DISTRIBUTION.—In

15 making grants to carry out this paragraph, the

16 Secretary shall take into consideration the geo17 graphic distribution of funding among States

18 and the relative proportion of funding among

19 rural and urban areas.

20 ‘‘(E) RESERVATION.—Of the amounts

21 made available to carry out this paragraph, the

22 Secretary may reserve not more than 1 percent

23 for each fiscal year to make grants to private,

24 nonprofit organizations or to enter into con25 tracts with private, nonprofit or for-profit orga-
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1 nizations to provide technical assistance to aid

2 community development corporations in devel3 oping or implementing activities funded to carry

4 out this paragraph and to evaluate activities

5 funded to carry out this paragraph.

6 ‘‘(3) RURAL COMMUNITY DEVELOPMENT AC7 TIVITIES.—The Secretary shall provide the assist8 ance described in paragraph (1) for rural community

9 development activities, which shall include—

10 ‘‘(A) grants to private, nonprofit corpora11 tions that provide assistance concerning home

12 repair to rural low-income families and plan13 ning and developing low-income rural rental

14 housing units; and

15 ‘‘(B) grants to multistate, regional, pri16 vate, nonprofit organizations to provide training

17 and technical assistance to small, rural commu18 nities in meeting their community facility needs.

19 ‘‘(4) NEIGHBORHOOD INNOVATION

20 PROJECTS.—The Secretary shall provide the assist21 ance described in paragraph (1) for neighborhood in22 novation projects, which shall include grants to

23 neighborhood-based private, nonprofit organizations

24 to test or assist in the development of new ap25 proaches or methods that will aid in overcoming spe-
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1 cial problems identified by communities or neighbor2 hoods or otherwise assist in furthering the purposes

3 of this subtitle, and which may include projects that

4 are designed to serve low-income individuals and

5 families who are not being effectively served by other

6 programs.

7 ‘‘(b) EVALUATION.—The Secretary shall require all

8 activities receiving assistance under this section to be eval9 uated for their effectiveness. Funding for such evaluations

10 shall be provided as a stated percentage of the assistance

11 or through a separate grant awarded by the Secretary spe12 cifically for the purpose of evaluation of a particular activ13 ity or group of activities.

14 ‘‘(c) ANNUAL REPORT.—The Secretary shall compile

15 an annual report containing a summary of the evaluations

16 required in subsection (b) and a listing of all activities as17 sisted under this section. The Secretary shall annually

18 submit the report to the Chairperson of the Committee

19 on Education and the Workforce of the House of Rep20 resentatives and the Chairperson of the Committee on

21 Labor and Human Resources of the Senate.

22 ‘‘SEC. 681. COMMUNITY FOOD AND NUTRITION PROGRAMS.

23 ‘‘(a) GRANTS.—The Secretary may, through grants

24 to public and private, nonprofit agencies, provide for com25 munity-based, local, statewide, and national programs—
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1 ‘‘(1) to coordinate private and public food as2 sistance resources, wherever the grant recipient de3 termines such coordination to be inadequate, to bet4 ter serve low-income populations;

5 ‘‘(2) to assist low-income communities to iden6 tify potential sponsors of child nutrition programs

7 and to initiate such programs in underserved or

8 unserved areas; and

9 ‘‘(3) to develop innovative approaches at the

10 State and local level to meet the nutrition needs of

11 low-income individuals.

12 ‘‘(b) ALLOTMENTS AND DISTRIBUTION OF FUNDS.—

13 ‘‘(1) IN GENERAL.—Of the amount appro14 priated for a fiscal year to carry out this section, the

15 Secretary shall distribute funds for grants under

16 subsection (a) as follows:

17 ‘‘(A) ALLOTMENTS.—From 60 percent of

18 such amount (but not to exceed $3,600,000),

19 the Secretary shall allot for grants to eligible

20 agencies for statewide programs in each State

21 the amount that bears the same ratio to 60 per22 cent of such amount as the low-income and un23 employed population of such State bears to the

24 low-income and unemployed population of all

25 the States.
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1 ‘‘(B) COMPETITIVE GRANTS.—From 40

2 percent of such amount (but not to exceed

3 $2,400,000), the Secretary shall make grants

4 on a competitive basis to eligible agencies for

5 local and statewide programs.

6 ‘‘(2) GREATER AVAILABLE APPROPRIATIONS.—

7 Any amounts appropriated for a fiscal year to carry

8 out this section in excess of $6,000,000 shall be al9 lotted as follows:

10 ‘‘(A) ALLOTMENTS.—The Secretary shall

11 use 40 percent of such excess to make allot12 ments for grants under subsection (a) to eligi13 ble agencies for statewide programs in each

14 State in an amount that bears the same ratio

15 to 40 percent of such excess as the low-income

16 and unemployed population of such State bears

17 to the low-income and unemployed population

18 of all the States.

19 ‘‘(B) COMPETITIVE GRANTS FOR LOCAL

20 AND STATEWIDE PROGRAMS.—The Secretary

21 shall use 40 percent of such excess to make

22 grants under subsection (a) on a competitive

23 basis to eligible agencies for local and statewide

24 programs.
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1 ‘‘(C) COMPETITIVE GRANTS FOR NATION2 WIDE PROGRAMS.—The Secretary shall use the

3 remaining 20 percent of such excess to make

4 grants under subsection (a) on a competitive

5 basis to eligible agencies for nationwide pro6 grams, including programs benefiting Indians

7 as defined in section 677 and migrant or sea8 sonal farmworkers.

9 ‘‘(3) ELIGIBILITY FOR ALLOTMENTS FOR

10 STATEWIDE PROGRAMS.—To be eligible to receive an

11 allotment under paragraph (1)(A) or (2)(A), an eli12 gible agency shall demonstrate that the proposed

13 program is statewide in scope and represents a com14 prehensive and coordinated effort to alleviate hunger

15 within the State.

16 ‘‘(4) MINIMUM ALLOTMENTS FOR STATEWIDE

17 PROGRAMS.—

18 ‘‘(A) IN GENERAL.—From the amounts al19 lotted under paragraphs (1)(A) and (2)(A), the

20 minimum total allotment for each State for

21 each fiscal year shall be—

22 ‘‘(i) $15,000 if the total amount ap23 propriated to carry out this section is not

24 less than $7,000,000 but less than

25 $10,000,000;
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1 ‘‘(ii) $20,000 if the total amount ap2 propriated to carry out this section is not

3 less than $10,000,000 but less than

4 $15,000,000; or

5 ‘‘(iii) $30,000 if the total amount ap6 propriated to carry out this section is not

7 less than $15,000,000.

8 ‘‘(B) DEFINITION.—In this paragraph, the

9 term ‘State’ does not include Guam, American

10 Samoa, the United States Virgin Islands, the

11 Commonwealth of the Northern Mariana Is12 lands, or the Freely Associated States.

13 ‘‘(5) MAXIMUM GRANTS.—From funds made

14 available under paragraphs (1)(B) and (2)(B) for

15 any fiscal year, the Secretary may not make grants

16 under subsection (a) to an eligible agency in an ag17 gregate amount exceeding $50,000. From funds

18 made available under paragraph (2)(C) for any fiscal

19 year, the Secretary may not make grants under sub20 section (a) to an eligible agency in an aggregate

21 amount exceeding $300,000.

22 ‘‘(c) REPORT.—For each fiscal year, the Secretary

23 shall prepare and submit, to the Committee on Education

24 and the Workforce of the House of Representatives and

25 the Committee on Labor and Human Resources of the
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1 Senate, a report concerning the grants made under this

2 section. Such report shall include—

3 ‘‘(1) a list of grant recipients;

4 ‘‘(2) information on the amount of funding

5 awarded to each grant recipient; and

6 ‘‘(3) a summary of the activities performed by

7 the grant recipients with funding awarded under this

8 section and a description of the manner in which

9 such activities meet the objectives described in sub10 section (a).

11 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There

12 are authorized to be appropriated to carry out this section

13 $25,000,000 for fiscal year 1999, and such sums as may

14 be necessary for each of fiscal years 2000 through 2003.

15 ‘‘SEC. 682. NATIONAL OR REGIONAL PROGRAMS DESIGNED

16 TO PROVIDE INSTRUCTIONAL ACTIVITIES

17 FOR LOW-INCOME YOUTH.

18 ‘‘(a) GENERAL AUTHORITY.—The Secretary is au19 thorized to make a grant to an eligible service provider

20 to administer national or regional programs to provide in21 structional activities for low-income youth. In making such

22 a grant, the Secretary shall give priority to eligible service

23 providers that have a demonstrated ability to operate such

24 a program.
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1 ‘‘(b) PROGRAM REQUIREMENTS.—Any instructional

2 activity carried out by an eligible service provider receiving

3 a grant under this section shall be carried out on the cam4 pus of an institution of higher education (as defined in

5 section 1201(a) of the Higher Education Act of 1965 (20

6 U.S.C. 1141(a))) and shall include—

7 ‘‘(1) access to the facilities and resources of

8 such an institution;

9 ‘‘(2) an initial medical examination and follow10 up referral or treatment, without charge, for youth

11 during their participation in such activity;

12 ‘‘(3) at least 1 nutritious meal daily, without

13 charge, for participating youth during each day of

14 participation;

15 ‘‘(4) high quality instruction in a variety of

16 sports (that shall include swimming and that may

17 include dance and any other high quality rec18 reational activity) provided by coaches and teachers

19 from institutions of higher education and from ele20 mentary and secondary schools (as defined in section

21 14101 of the Elementary and Secondary Education

22 Act of 1965 (20 U.S.C. 8801)); and

23 ‘‘(5) enrichment instruction and information on

24 matters relating to the well-being of youth, to in25 clude educational opportunities and information on
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1 study practices, education for the prevention of drug

2 and alcohol abuse, and information on health and

3 nutrition, career opportunities, and family and job

4 responsibilities.

5 ‘‘(c) ADVISORY COMMITTEE; PARTNERSHIPS.—The

6 eligible service provider shall, in each community in which

7 a program is funded under this section—

8 ‘‘(1) ensure that—

9 ‘‘(A) a community-based advisory commit10 tee is established, with representatives from

11 local youth, family, and social service organiza12 tions, schools, entities providing park and recre13 ation services, and other community-based orga14 nizations serving high-risk youth; or

15 ‘‘(B) an existing community-based advisory

16 board, commission, or committee with similar

17 membership is utilized to serve as the commit18 tee described in subparagraph (A); and

19 ‘‘(2) enter into formal partnerships with youth20 serving organizations or other appropriate social

21 service entities in order to link program participants

22 with year-round services in their home communities

23 that support and continue the objectives of this sub24 title.
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1 ‘‘(d) ELIGIBLE PROVIDERS.—A service provider that

2 is a national private, nonprofit organization, a coalition

3 of such organizations, or a private, nonprofit organization

4 applying jointly with a business concern shall be eligible

5 for a grant under this section if—

6 ‘‘(1) the applicant has demonstrated experience

7 in operating a program providing instruction to low8 income youth;

9 ‘‘(2) the applicant agrees to contribute an

10 amount (in cash or in kind, fairly evaluated) of not

11 less than 25 percent of the amount requested;

12 ‘‘(3) the applicant agrees to use no funds from

13 a grant authorized under this section for administra14 tive expenses; and

15 ‘‘(4) the applicant agrees to comply with the

16 regulations or program guidelines promulgated by

17 the Secretary for use of funds made available

18 through the grant.

19 ‘‘(e) APPLICATIONS PROCESS.—To be eligible to re20 ceive a grant under this section, a service provider shall

21 submit to the Secretary, for approval, an application at

22 such time, in such manner, and containing such informa23 tion as the Secretary may require.

24 ‘‘(f) PROMULGATION OF REGULATIONS OR PROGRAM

25 GUIDELINES.—The Secretary shall promulgate regula-
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1 tions or program guidelines to ensure funds made avail2 able through a grant made under this section are used

3 in accordance with the objectives of this subtitle.

4 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There

5 is authorized to be appropriated $15,000,000 for each of

6 fiscal years 1999 through 2003 for grants to carry out

7 this section.

8 ‘‘SEC. 683. REFERENCES.

9 ‘‘Any reference in any provision of law to the poverty

10 line set forth in section 624 or 625 of the Economic Op11 portunity Act of 1964 shall be construed to be a reference

12 to the poverty line defined in section 673. Any reference

13 in any provision of law to any community action agency

14 designated under title II of the Economic Opportunity Act

15 of 1964 shall be construed to be a reference to an entity

16 eligible to receive funds under the community services

17 block grant program.’’.

18 SEC. 202. CONFORMING AMENDMENTS.

19 (a) PREPARATION.—After consultation with the ap20 propriate committees of Congress and the Director of the

21 Office of Management and Budget, the Secretary of

22 Health and Human Services shall prepare recommended

23 legislation containing technical and conforming amend24 ments to reflect the changes made by this title.
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1 (b) SUBMISSION TO CONGRESS.—Not later than 6

2 months after the date of enactment of this Act, the Sec3 retary shall submit to Congress the recommended legisla4 tion referred to under subsection (a).

5 SEC. 203. REPEALERS.

6 Sections 407 and 408 of the Human Services Reau7 thorization Act of 1986 (42 U.S.C 9812a and 9910b) are

8 repealed.

9 TITLE III—LOW-INCOME HOME

10 ENERGY ASSISTANCE

11 SEC. 301. AUTHORIZATION.

12 (a) IN GENERAL.—Section 2602(b) of the Low-In13 come Home Energy Assistance Act of 1981 (42 U.S.C.

14 8621(b)) is amended by striking ‘‘fiscal years 1995

15 through 1999’’ and inserting ‘‘fiscal years 1999 through

16 2004’’.

17 (b) PROGRAM YEAR.—Section 2602(c) of such Act

18 (42 U.S.C. 8621(c)) is amended to read as follows:

19 ‘‘(c)(1) Amounts appropriated under this section in

20 any fiscal year for programs and activities under this title

21 shall be made available for obligation in the succeeding

22 fiscal year.’’.

23 (c) INCENTIVE PROGRAM FOR LEVERAGING NON24 FEDERAL RESOURCES.—Section 2602(d) of such Act (42

25 U.S.C. 8621(d)) is amended—
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1 (1) by striking ‘‘(d)’’ and inserting ‘‘(d)(1)’’;

2 (2) by striking ‘‘$50,000,000’’ and all that fol3 lows and inserting the following: ‘‘$30,000,000 for

4 each of fiscal years 1999 through 2004, except as

5 provided in paragraph (2).’’; and

6 (3) by adding at the end the following:

7 ‘‘(2) For any fiscal year for which the amount appro8 priated under subsection (b) is not less than

9 $1,400,000,000, there are authorized to be appropriated

10 to carry out section 2607A $50,000,000 for each of fiscal

11 years 1999 through 2004.’’.

12 (d) TECHNICAL AMENDMENT.—Section 2602(e) of

13 such Act (42 U.S.C. 8621(e)) is amended by striking

14 ‘‘subsection (g)’’ and inserting ‘‘subsection (e) of such sec15 tion’’.

16 SEC. 302. DEFINITIONS.

17 Section 2603(4) of the Low-Income Home Energy

18 Assistance Act of 1981 (42 U.S.C. 8622(4)) is amended—

19 (1) by striking ‘‘the term’’ and inserting ‘‘The

20 term’’; and

21 (2) by striking the semicolon and inserting a

22 period.

23 SEC. 303. NATURAL DISASTERS AND OTHER EMERGENCIES.

24 (a) DEFINITIONS.—Section 2603 of the Low-Income

25 Home Energy Assistance Act of 1981 is amended—
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1 (1) by redesignating paragraphs (6) through

2 (9) as paragraphs (8) through (11), respectively;

3 (2) by inserting before paragraph (8) (as redes4 ignated in paragraph (1)) the following:

5 ‘‘(7) NATURAL DISASTER.—The term ‘natural

6 disaster’ means a weather event (relating to cold or

7 hot weather), flood, earthquake, tornado, hurricane,

8 or ice storm, or an event meeting such other criteria

9 as the Secretary, in the discretion of the Secretary,

10 may determine to be appropriate.’’;

11 (3) by redesignating paragraphs (1) through

12 (5) as paragraphs (2) through (6), respectively; and

13 (4) by inserting before paragraph (2) (as redes14 ignated in paragraph (3)) the following:

15 ‘‘(1) EMERGENCY.—The term ‘emergency’ means—

16 ‘‘(A) a natural disaster;

17 ‘‘(B) a significant home energy supply shortage

18 or disruption;

19 ‘‘(C) a significant increase in the cost of home

20 energy, as determined by the Secretary;

21 ‘‘(D) a significant increase in home energy dis22 connections reported by a utility, a State regulatory

23 agency, or another agency with necessary data;

24 ‘‘(E) a significant increase in participation in a

25 public benefit program such as the food stamp pro-
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1 gram carried out under the Food Stamp Act of 1977

2 (7 U.S.C. 2011 et seq.), the national program to

3 provide supplemental security income carried out

4 under title XVI of the Social Security Act (42

5 U.S.C. 1381 et seq.), or the State temporary assist6 ance for needy families program carried out under

7 part A of title IV of the Social Security Act (42

8 U.S.C. 601 et seq.), as determined by the head of

9 the appropriate Federal agency;

10 ‘‘(F) a significant increase in unemployment,

11 layoffs, or the number of households with an individ12 ual applying for unemployment benefits, as deter13 mined by the Secretary of Labor; or

14 ‘‘(G) an event meeting such criteria as the Sec15 retary, in the discretion of the Secretary, may deter16 mined to be appropriate.’’.

17 (b) CONSIDERATIONS.—Section 2604(g) of such Act

18 (42 U.S.C. 8623(g)) is amended by striking the last 2 sen19 tences and inserting the following: ‘‘In determining wheth20 er to make such an allotment to a State, the Secretary

21 shall take into account the extent to which the State was

22 affected by the emergency or disaster involved, the avail23 ability to the State of other resources under the program

24 carried out under this title or any other program, whether

25 a Member of Congress has requested that the State receive
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1 the allotment, and such other factors as the Secretary may

2 find to be relevant. Not later than 30 days after making

3 the determination, but prior to releasing an allotted

4 amount to a State, the Secretary shall notify Congress of

5 the allotments made pursuant to this subsection.’’.

6 SEC. 304. STATE ALLOTMENTS.

7 Section 2604 of the Low-Income Home Energy As8 sistance Act of 1981 (42 U.S.C. 8623) is amended—

9 (1) in subsection (b)(1), by striking ‘‘the North10 ern Mariana Islands, and the Trust Territory of the

11 Pacific Islands.’’ and inserting ‘‘the Commonwealth

12 of the Northern Mariana Islands, and the combined

13 Freely Associated States.’’;

14 (2) in subsection (c)(3)(B)(ii), by striking ‘‘ap15 plication’’ and inserting ‘‘applications’’;

16 (3) by striking subsection (f);

17 (4) in subsection (g)—

18 (A) in the first sentence, by striking ‘‘(a)

19 through (f)’’ and inserting ‘‘(a) through (d)’’;

20 and

21 (B) in the second sentence, by striking

22 ‘‘emergency or disaster,’’ and inserting ‘‘natural

23 disaster or other emergency,’’; and

24 (5) by redesignating subsection (g) as sub25 section (e).
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1 SEC. 305. ADMINISTRATION.

2 Section 2605 of the Low-Income Home Energy As3 sistance Act of 1981 (42 U.S.C. 8624) is amended—

4 (1) in subsection (b)—

5 (A) in paragraph (9)(A), by striking ‘‘and

6 not transferred pursuant to section 2604(f) for

7 use under another block grant’’;

8 (B) in paragraph (14), by striking ‘‘; and’’

9 and inserting a semicolon;

10 (C) in the matter following paragraph

11 (14), by striking ‘‘The Secretary may not pre12 scribe the manner in which the States will com13 ply with the provisions of this subsection.’’; and

14 (D) in the matter following paragraph

15 (16), by inserting before ‘‘The Secretary shall

16 issue’’ the following: ‘‘The Secretary may not

17 prescribe the manner in which the States will

18 comply with the provisions of this subsection.’’;

19 and

20 (2) in subsection (c)(1)—

21 (A) in subparagraph (B), by striking

22 ‘‘States’’ and inserting ‘‘State’’; and

23 (B) in subparagraph (G)(i), by striking

24 ‘‘has’’ and inserting ‘‘had’’.
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1 SEC. 306. PAYMENTS TO STATES.

2 Section 2607(b)(2)(B) of the Low-Income Home En3 ergy Assistance Act of 1981 (42 U.S.C. 8626(b)(2)(B))

4 is amended—

5 (1) in the first sentence, by striking ‘‘and not

6 transferred pursuant to section 2604(f)’’; and

7 (2) in the second sentence, by striking ‘‘but not

8 transferred by the State’’.

9 SEC. 307. RESIDENTIAL ENERGY ASSISTANCE CHALLENGE

10 OPTION.

11 (a) EVALUATION.—The Comptroller General shall

12 conduct an evaluation of the Residential Energy Assist13 ance Challenge program described in section 2607B of the

14 Low-Income Home Energy Assistance Act of 1981 (42

15 U.S.C. 8626b).

16 (b) REPORT.—Not later than 2 years after the date

17 of enactment of this Act, the Comptroller General shall

18 prepare and submit to Congress a report containing—

19 (1) the findings resulting from the evaluation

20 described in subsection (a); and

21 (2) the State evaluations described in para22 graphs (1) and (2) of subsection (b) of such section

23 2607B.

24 (c) INCENTIVE GRANTS.—Section 2607B(b)(1) of the

25 Low-Income Home Energy Assistance Act of 1981 (42

26 U.S.C. 8626b(b)(1)) is amended by striking ‘‘For each of
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1 the fiscal years 1996 through 1999’’ and inserting ‘‘For

2 each fiscal year’’.

3 (d) TECHNICAL AMENDMENTS.—Section 2607B of

4 such Act (42 U.S.C. 8626b) is amended—

5 (1) in subsection (e)(2)—

6 (A) by redesignating subparagraphs (F)

7 through (N) as subparagraphs (E) through

8 (M), respectively; and

9 (B) in clause (i) of subparagraph (I) (as

10 redesignated in subparagraph (A)), by striking

11 ‘‘on’’ and inserting ‘‘of’’; and

12 (2) by redesignating subsection (g) as sub13 section (f).

14 SEC. 308. TECHNICAL ASSISTANCE, TRAINING, AND COM15 PLIANCE REVIEWS.

16 (a) IN GENERAL.—Section 2609A(a) of the Low-In17 come Home Energy Assistance Act of 1981 (42 U.S.C.

18 8628a(a)) is amended—

19 (1) in the matter preceding paragraph (1)—

20 (A) by striking ‘‘$250,000’’ and inserting

21 ‘‘$300,000’’; and

22 (B) by striking ‘‘Secretary—’’ and insert23 ing ‘‘Secretary to conduct onsite compliance re24 views of programs supported under this title

25 or—’’; and
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1 (2) in paragraph (2)—

2 (A) by inserting ‘‘or interagency agree3 ments’’ after ‘‘cooperative arrangements’’; and

4 (B) by inserting ‘‘(including Federal agen5 cies)’’ after ‘‘public agencies’’.

6 (b) CONFORMING AMENDMENT.—The section head7 ing of section 2609A of such Act (42 U.S.C. 8628a) is

8 amended to read as follows:

9 ‘‘TECHNICAL ASSISTANCE, TRAINING, AND COMPLIANCE

10 REVIEWS’’.

11 TITLE IV—ASSETS FOR

12 INDEPENDENCE

13 SEC. 401. SHORT TITLE.

14 This title may be cited as the ‘‘Assets for Independ15 ence Act’’.

16 SEC. 402. FINDINGS.

17 Congress makes the following findings:

18 (1) Economic well-being does not come solely

19 from income, spending, and consumption, but also

20 requires savings, investment, and accumulation of

21 assets because assets can improve economic inde22 pendence and stability, connect individuals with a

23 viable and hopeful future, stimulate development of

24 human and other capital, and enhance the welfare of

25 offspring.
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(2) Fully 1 1 ⁄2 of all Americans have either no,

2 negligible, or negative assets available for invest3 ment, just as the price of entry to the economic

4 mainstream, the cost of a house, an adequate edu5 cation, and starting a business, is increasing. Fur6 ther, the household savings rate of the United States

7 lags far behind other industrial nations presenting a

8 barrier to economic growth.

9 (3) In the current tight fiscal environment, the

10 United States should invest existing resources in

11 high-yield initiatives. There is reason to believe that

12 the financial returns, including increased income, tax

13 revenue, and decreased welfare cash assistance, re14 sulting from individual development accounts will far

15 exceed the cost of investment in those accounts.

16 (4) Traditional public assistance programs con17 centrating on income and consumption have rarely

18 been successful in promoting and supporting the

19 transition to increased economic self-sufficiency. In20 come-based domestic policy should be complemented

21 with asset-based policy because, while income-based

22 policies ensure that consumption needs (including

23 food, child care, rent, clothing, and health care) are

24 met, asset-based policies provide the means to
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1 achieve greater independence and economic well2 being.

3 SEC. 403. PURPOSES.

4 The purposes of this title are to provide for the estab5 lishment of demonstration projects designed to deter6 mine—

7 (1) the social, civic, psychological, and economic

8 effects of providing to individuals and families with

9 limited means an incentive to accumulate assets by

10 saving a portion of their earned income;

11 (2) the extent to which an asset-based policy

12 that promotes saving for postsecondary education,

13 homeownership, and microenterprise development

14 may be used to enable individuals and families with

15 limited means to increase their economic self-suffi16 ciency; and

17 (3) the extent to which an asset-based policy

18 stabilizes and improves families and the community

19 in which they live.

20 SEC. 404. DEFINITIONS.

21 In this title:

22 (1) APPLICABLE PERIOD.—The term ‘‘applica23 ble period’’ means, with respect to amounts to be

24 paid from a grant made for a project year, the cal-
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1 endar year immediately preceding the calendar year

2 in which the grant is made.

3 (2) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible

4 individual’’ means an individual who is selected to

5 participate by a qualified entity under section 409.

6 (3) EMERGENCY WITHDRAWAL.—The term

7 ‘‘emergency withdrawal’’ means a withdrawal by an

8 eligible individual that—

9 (A) is a withdrawal of only those funds, or

10 a portion of those funds, deposited by the indi11 vidual in the individual development account of

12 the individual;

13 (B) is permitted by a qualified entity on a

14 case-by-case basis; and

15 (C) is made for—

16 (i) expenses for medical care or nec17 essary to obtain medical care, for the indi18 vidual or a spouse or dependent of the in19 dividual described in paragraph (8)(D);

20 (ii) payments necessary to prevent the

21 eviction of the individual from the resi22 dence of the individual, or foreclosure on

23 the mortgage for the principal residence of

24 the individual, as defined in paragraph

25 (8)(B); or
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1 (iii) payments necessary to enable the

2 individual to meet necessary living ex3 penses following loss of employment.

4 (4) HOUSEHOLD.—The term ‘‘household’’

5 means all individuals who share use of a dwelling

6 unit as primary quarters for living and eating sepa7 rate from other individuals.

8 (5) INDIVIDUAL DEVELOPMENT ACCOUNT.—

9 (A) IN GENERAL.—The term ‘‘individual

10 development account’’ means a trust created or

11 organized in the United States exclusively for

12 the purpose of paying the qualified expenses of

13 an eligible individual, or enabling the eligible in14 dividual to make an emergency withdrawal, but

15 only if the written governing instrument creat16 ing the trust meets the following requirements:

17 (i) No contribution will be accepted

18 unless it is in cash or by check.

19 (ii) The trustee is a federally insured

20 financial institution, or a State insured fi21 nancial institution if no federally insured

22 financial institution is available.

23 (iii) The assets of the trust will be in24 vested in accordance with the direction of

25 the eligible individual after consultation
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1 with the qualified entity providing deposits

2 for the individual under section 410.

3 (iv) The assets of the trust will not be

4 commingled with other property except in

5 a common trust fund or common invest6 ment fund.

7 (v) Except as provided in clause (vi),

8 any amount in the trust which is attrib9 utable to a deposit provided under section

10 410 may be paid or distributed out of the

11 trust only for the purpose of paying the

12 qualified expenses of the eligible individual,

13 or enabling the eligible individual to make

14 an emergency withdrawal.

15 (vi) Any balance in the trust on the

16 day after the date on which the individual

17 for whose benefit the trust is established

18 dies shall be distributed within 30 days of

19 that date as directed by that individual to

20 another individual development account es21 tablished for the benefit of an eligible indi22 vidual.

23 (B) CUSTODIAL ACCOUNTS.—For purposes

24 of subparagraph (A), a custodial account shall

25 be treated as a trust if the assets of the custo-
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1 dial account are held by a bank (as defined in

2 section 408(n) of the Internal Revenue Code of

3 1986) or another person who demonstrates, to

4 the satisfaction of the Secretary, that the man5 ner in which such person will administer the

6 custodial account will be consistent with the re7 quirements of this title, and if the custodial ac8 count would, except for the fact that it is not

9 a trust, constitute an individual development

10 account described in subparagraph (A). For

11 purposes of this title, in the case of a custodial

12 account treated as a trust by reason of the pre13 ceding sentence, the custodian of that custodial

14 account shall be treated as the trustee thereof.

15 (6) PROJECT YEAR.—The term ‘‘project year’’

16 means, with respect to a demonstration project, any

17 of the 4 consecutive 12-month periods beginning on

18 the date the project is originally authorized to be

19 conducted.

20 (7) QUALIFIED ENTITY.—

21 (A) IN GENERAL.—The term ‘‘qualified en22 tity’’ means—

23 (i) one or more not-for-profit organi24 zations described in section 501(c)(3) of

25 the Internal Revenue Code of 1986 and ex-
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1 empt from taxation under section 501(a)

2 of such Code; or

3 (ii) a State or local government agen4 cy, or a tribal government, submitting an

5 application under section 405 jointly with

6 an organization described in clause (i).

7 (B) RULE OF CONSTRUCTION.—Nothing in

8 this paragraph shall be construed as preventing

9 an organization described in subparagraph

10 (A)(i) from collaborating with a financial insti11 tution or for-profit community development cor12 poration to carry out the purposes of this title.

13 (8) QUALIFIED EXPENSES.—The term ‘‘quali14 fied expenses’’ means 1 or more of the following, as

15 provided by the qualified entity:

16 (A) POSTSECONDARY EDUCATIONAL EX17 PENSES.—Postsecondary educational expenses

18 paid from an individual development account di19 rectly to an eligible educational institution. In

20 this subparagraph:

21 (i) POSTSECONDARY EDUCATIONAL

22 EXPENSES.—The term ‘‘postsecondary

23 educational expenses’’ means the following:

24 (I) TUITION AND FEES.—Tuition

25 and fees required for the enrollment
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1 or attendance of a student at an eligi2 ble educational institution.

3 (II) FEES, BOOKS, SUPPLIES,

4 AND EQUIPMENT.—Fees, books, sup5 plies, and equipment required for

6 courses of instruction at an eligible

7 educational institution.

8 (ii) ELIGIBLE EDUCATIONAL INSTITU9 TION.—The term ‘‘eligible educational in10 stitution’’ means the following:

11 (I) INSTITUTION OF HIGHER

12 EDUCATION.—An institution described

13 in section 481(a)(1) or 1201(a) of the

14 Higher Education Act of 1965 (20

15 U.S.C. 1088(a)(1) or 1141(a)), as

16 such sections are in effect on the date

17 of enactment of this title.

18 (II) POSTSECONDARY VOCA19 TIONAL EDUCATION SCHOOL.—An

20 area vocational education school (as

21 defined in subparagraph (C) or (D) of

22 section 521(4) of the Carl D. Perkins

23 Vocational and Applied Technology

24 Education Act (20 U.S.C. 2471(4)))

25 which is in any State (as defined in
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1 section 521(33) of such Act), as such

2 sections are in effect on the date of

3 enactment of this title.

4 (B) FIRST-HOME PURCHASE.—Qualified

5 acquisition costs with respect to a principal res6 idence for a qualified first-time homebuyer, if

7 paid from an individual development account di8 rectly to the persons to whom the amounts are

9 due. In this subparagraph:

10 (i) PRINCIPAL RESIDENCE.—The term

11 ‘‘principal residence’’ means a principal

12 residence, the qualified acquisition costs of

13 which do not exceed 100 percent of the av14 erage area purchase price applicable to

15 such residence.

16 (ii) QUALIFIED ACQUISITION COSTS.—

17 The term ‘‘qualified acquisition costs’’

18 means the costs of acquiring, constructing,

19 or reconstructing a residence. The term in20 cludes any usual or reasonable settlement,

21 financing, or other closing costs.

22 (iii) QUALIFIED FIRST-TIME HOME23 BUYER.—

24 (I) IN GENERAL.—The term

25 ‘‘qualified first-time homebuyer’’
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1 means an individual participating in

2 the project (and, if married, the indi3 vidual’s spouse) who has no present

4 ownership interest in a principal resi5 dence during the 3-year period ending

6 on the date of acquisition of the prin7 cipal residence to which this subpara8 graph applies.

9 (II) DATE OF ACQUISITION.—

10 The term ‘‘date of acquisition’’ means

11 the date on which a binding contract

12 to acquire, construct, or reconstruct

13 the principal residence to which this

14 subparagraph applies is entered into.

15 (C) BUSINESS CAPITALIZATION.—Amounts

16 paid from an individual development account di17 rectly to a business capitalization account which

18 is established in a federally insured financial in19 stitution and is restricted to use solely for

20 qualified business capitalization expenses. In

21 this subparagraph:

22 (i) QUALIFIED BUSINESS CAPITALIZA23 TION EXPENSES.—The term ‘‘qualified

24 business capitalization expenses’’ means

25 qualified expenditures for the capitalization
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1 of a qualified business pursuant to a quali2 fied plan.

3 (ii) QUALIFIED EXPENDITURES.—The

4 term ‘‘qualified expenditures’’ means ex5 penditures included in a qualified plan, in6 cluding capital, plant, equipment, working

7 capital, and inventory expenses.

8 (iii) QUALIFIED BUSINESS.—The term

9 ‘‘qualified business’’ means any business

10 that does not contravene any law or public

11 policy (as determined by the Secretary).

12 (iv) QUALIFIED PLAN.—The term

13 ‘‘qualified plan’’ means a business plan, or

14 a plan to use a business asset purchased,

15 which—

16 (I) is approved by a financial in17 stitution, a microenterprise develop18 ment organization, or a nonprofit loan

19 fund having demonstrated fiduciary

20 integrity;

21 (II) includes a description of

22 services or goods to be sold, a market23 ing plan, and projected financial

24 statements; and
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1 (III) may require the eligible in2 dividual to obtain the assistance of an

3 experienced entrepreneurial adviser.

4 (D) TRANSFERS TO IDAS OF FAMILY MEM5 BERS.—Amounts paid from an individual devel6 opment account directly into another such ac7 count established for the benefit of an eligible

8 individual who is—

9 (i) the individual’s spouse; or

10 (ii) any dependent of the individual

11 with respect to whom the individual is al12 lowed a deduction under section 151 of the

13 Internal Revenue Code of 1986.

14 (9) QUALIFIED SAVINGS OF THE INDIVIDUAL

15 FOR THE PERIOD.—The term ‘‘qualified savings of

16 the individual for the period’’ means the aggregate

17 of the amounts contributed by the individual to the

18 individual development account of the individual

19 during the period.

20 (10) SECRETARY.—The term ‘‘Secretary’’

21 means the Secretary of Health and Human Services.

22 (11) TRIBAL GOVERNMENT.—The term ‘‘tribal

23 government’’ means a tribal organization, as defined

24 in section 4 of the Indian Self-Determination and

25 Education Assistance Act (25 U.S.C. 450b) or a Na-
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1 tive Hawaiian organization, as defined in section

2 9212 of the Native Hawaiian Education Act (20

3 U.S.C. 7912).

4 SEC. 405. APPLICATIONS.

5 (a) ANNOUNCEMENT OF DEMONSTRATION

6 PROJECTS.—Not later than 3 months after the date of

7 enactment of this title, the Secretary shall publicly an8 nounce the availability of funding under this title for dem9 onstration projects and shall ensure that applications to

10 conduct the demonstration projects are widely available to

11 qualified entities.

12 (b) SUBMISSION.—Not later than 6 months after the

13 date of enactment of this title, a qualified entity may sub14 mit to the Secretary an application to conduct a dem15 onstration project under this title.

16 (c) CRITERIA.—In considering whether to approve an

17 application to conduct a demonstration project under this

18 title, the Secretary shall assess the following:

19 (1) SUFFICIENCY OF PROJECT.—The degree to

20 which the project described in the application ap21 pears likely to aid project participants in achieving

22 economic self-sufficiency through activities requiring

23 qualified expenses. In making such assessment, the

24 Secretary shall consider the overall quality of project

25 activities in making any particular kind or combina-
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1 tion of qualified expenses to be an essential feature

2 of any project.

3 (2) ADMINISTRATIVE ABILITY.—The experience

4 and ability of the applicant to responsibly administer

5 the project.

6 (3) ABILITY TO ASSIST PARTICIPANTS.—The

7 experience and ability of the applicant in recruiting,

8 educating, and assisting project participants to in9 crease their economic independence and general well10 being through the development of assets.

11 (4) COMMITMENT OF NON-FEDERAL FUNDS.—

12 The aggregate amount of direct funds from non13 Federal public sector and from private sources that

14 are formally committed to the project as matching

15 contributions.

16 (5) ADEQUACY OF PLAN FOR PROVIDING IN17 FORMATION FOR EVALUATION.—The adequacy of

18 the plan for providing information relevant to an

19 evaluation of the project.

20 (6) OTHER FACTORS.—Such other factors rel21 evant to the purposes of this title as the Secretary

22 may specify.

23 (d) PREFERENCES.—In considering an application to

24 conduct a demonstration project under this title, the Sec25 retary shall give preference to an application that—
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1 (1) demonstrates the willingness and ability to

2 select individuals described in section 408 who are

3 predominantly from households in which a child (or

4 children) is living with the child’s biological or adop5 tive mother or father, or with the child’s legal guard6 ian;

7 (2) provides a commitment of non-Federal

8 funds with a proportionately greater amount of such

9 funds committed by private sector sources; and

10 (3) targets such individuals residing within 1 or

11 more relatively well-defined neighborhoods or com12 munities (including rural communities) that experi13 ence high rates of poverty or unemployment.

14 (e) APPROVAL.—Not later than 9 months after the

15 date of enactment of this title, the Secretary shall, on a

16 competitive basis, approve such applications to conduct

17 demonstration projects under this title as the Secretary

18 deems appropriate, taking into account the assessments

19 required by subsections (c) and (d). The Secretary is en20 couraged to ensure that the applications that are approved

21 involve a range of communities (both rural and urban) and

22 diverse populations.

23 (f) CONTRACTS WITH NONPROFIT ENTITIES.—The

24 Secretary may contract with an entity described in section

25 501(c)(3) of the Internal Revenue Code of 1986 and ex-
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1 empt from taxation under section 501(a) of such Code to

2 conduct any responsibility of the Secretary under this sec3 tion or section 412 if—

4 (1) such entity demonstrates the ability to con5 duct such responsibility; and

6 (2) the Secretary can demonstrate that such re7 sponsibility would not be conducted by the Secretary

8 at a lower cost.

9 SEC. 406. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.

10 (a) DEMONSTRATION AUTHORITY.—If the Secretary

11 approves an application to conduct a demonstration

12 project under this title, the Secretary shall, not later than

13 10 months after the date of enactment of this title, au14 thorize the applicant to conduct the project for 4 project

15 years in accordance with the approved application and the

16 requirements of this title.

17 (b) GRANT AUTHORITY.—For each project year of a

18 demonstration project conducted under this title, the Sec19 retary may make a grant to the qualified entity authorized

20 to conduct the project. In making such a grant, the Sec21 retary shall make the grant on the first day of the project

22 year in an amount not to exceed the lesser of—

23 (1) the aggregate amount of funds committed

24 as matching contributions by non-Federal public or

25 private sector sources; or
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1 (2) $1,000,000.

2 SEC. 407. RESERVE FUND.

3 (a) ESTABLISHMENT.—A qualified entity under this

4 title, other than a State or local government agency, or

5 a tribal government, shall establish a Reserve Fund which

6 shall be maintained in accordance with this section.

7 (b) AMOUNTS IN RESERVE FUND.—

8 (1) IN GENERAL.—As soon after receipt as is

9 practicable, a qualified entity shall deposit in the Re10 serve Fund established under subsection (a)—

11 (A) all funds provided to the qualified en12 tity by any public or private source in connec13 tion with the demonstration project; and

14 (B) the proceeds from any investment

15 made under subsection (c)(2).

16 (2) UNIFORM ACCOUNTING REGULATIONS.—

17 The Secretary shall prescribe regulations with re18 spect to accounting for amounts in the Reserve

19 Fund established under subsection (a).

20 (c) USE OF AMOUNTS IN THE RESERVE FUND.—

21 (1) IN GENERAL.—A qualified entity shall use

22 the amounts in the Reserve Fund established under

23 subsection (a) to—

24 (A) assist participants in the demonstra25 tion project in obtaining the skills (including
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1 economic literacy, budgeting, credit, and coun2 seling) and information necessary to achieve

3 economic self-sufficiency through activities re4 quiring qualified expenses;

5 (B) provide deposits in accordance with

6 section 410 for individuals selected by the quali7 fied entity to participate in the demonstration

8 project;

9 (C) administer the demonstration project;

10 and

11 (D) provide the research organization eval12 uating the demonstration project under section

13 414 with such information with respect to the

14 demonstration project as may be required for

15 the evaluation.

16 (2) AUTHORITY TO INVEST FUNDS.—

17 (A) GUIDELINES.—The Secretary shall es18 tablish guidelines for investing amounts in the

19 Reserve Fund established under subsection (a)

20 in a manner that provides an appropriate bal21 ance between return, liquidity, and risk.

22 (B) INVESTMENT.—A qualified entity shall

23 invest the amounts in its Reserve Fund that are

24 not immediately needed to carry out the provi-
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1 sions of paragraph (1), in accordance with the

2 guidelines established under subparagraph (A).

3 (3) LIMITATION ON USES.—Not more than 9.5

4 percent of the amounts provided to a qualified entity

5 under section 406(b) shall be used by the qualified

6 entity for the purposes described in subparagraphs

7 (A), (C), and (D) of paragraph (1), of which not

8 more than 2 percent of the amounts shall be used

9 by the qualified entity for the purposes described in

10 paragraph (1)(D). If 2 or more qualified entities are

11 jointly administering a project, no qualified entity

12 shall use more than its proportional share for the

13 purposes described in subparagraphs (A), (C), and

14 (D) of paragraph (1).

15 (d) UNUSED FEDERAL GRANT FUNDS TRANS16 FERRED TO THE SECRETARY WHEN PROJECT TERMI17 NATES.—Notwithstanding subsection (c), upon the termi18 nation of any demonstration project authorized under this

19 section, the qualified entity conducting the project shall

20 transfer to the Secretary an amount equal to—

21 (1) the amounts in its Reserve Fund at time of

22 the termination; multiplied by

23 (2) a percentage equal to—
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1 (A) the aggregate amount of grants made

2 to the qualified entity under section 406(b); di3 vided by

4 (B) the aggregate amount of all funds pro5 vided to the qualified entity by all sources to

6 conduct the project.

7 SEC. 408. ELIGIBILITY FOR PARTICIPATION.

8 (a) IN GENERAL.—Any individual who is a member

9 of a household that is eligible for assistance under the

10 State temporary assistance for needy families program es11 tablished under part A of title IV of the Social Security

12 Act (42 U.S.C. 601 et seq.), or that meets each of the

13 following requirements shall be eligible to participate in

14 a demonstration project conducted under this title:

15 (1) INCOME TEST.—The adjusted gross income

16 of the household does not exceed the earned income

17 amount described in section 32 of the Internal Reve18 nue Code of 1986 (taking into account the size of

19 the household).

20 (2) NET WORTH TEST.—

21 (A) IN GENERAL.—The net worth of the

22 household, as of the end of the calendar year

23 preceding the determination of eligibility, does

24 not exceed $10,000.
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1 (B) DETERMINATION OF NET WORTH.—

2 For purposes of subparagraph (A), the net

3 worth of a household is the amount equal to—

4 (i) the aggregate market value of all

5 assets that are owned in whole or in part

6 by any member of the household; minus

7 (ii) the obligations or debts of any

8 member of the household.

9 (C) EXCLUSIONS.—For purposes of deter10 mining the net worth of a household, a house11 hold’s assets shall not be considered to include

12 the primary dwelling unit and 1 motor vehicle

13 owned by the household.

14 (b) INDIVIDUALS UNABLE TO COMPLETE THE

15 PROJECT.—The Secretary shall establish such regulations

16 as are necessary, including prohibiting future eligibility to

17 participate in any other demonstration project conducted

18 under this title, to ensure compliance with this title if an

19 individual participating in the demonstration project

20 moves from the community in which the project is con21 ducted or is otherwise unable to continue participating in

22 that project.
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1 SEC. 409. SELECTION OF INDIVIDUALS TO PARTICIPATE.

2 From among the individuals eligible to participate in

3 a demonstration project conducted under this title, each

4 qualified entity shall select the individuals—

5 (1) that the qualified entity deems to be best

6 suited to participate; and

7 (2) to whom the qualified entity will provide de8 posits in accordance with section 410.

9 SEC. 410. DEPOSITS BY QUALIFIED ENTITIES.

10 (a) IN GENERAL.—Not less than once every 3 months

11 during each project year, each qualified entity under this

12 title shall deposit in the individual development account

13 of each individual participating in the project, or into a

14 parallel account maintained by the qualified entity—

15 (1) from the non-Federal funds described in

16 section 405(c)(4), a matching contribution of not

17 less than $0.50 and not more than $4 for every $1

18 of earned income (as defined in section 911(d)(2) of

19 the Internal Revenue Code of 1986) deposited in the

20 account by a project participant during that period;

21 (2) from the grant made under section 406(b),

22 an amount equal to the matching contribution made

23 under paragraph (1); and

24 (3) any interest that has accrued on amounts

25 deposited under paragraph (1) or (2) on behalf of

26 that individual into the individual development ac-
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1 count of the individual or into a parallel account

2 maintained by the qualified entity.

3 (b) LIMITATION ON DEPOSITS FOR AN INDIVID4 UAL.—Not more than $2,000 from a grant made under

5 section 406(b) shall be provided to any 1 individual over

6 the course of the demonstration project.

7 (c) LIMITATION ON DEPOSITS FOR A HOUSEHOLD.—

8 Not more than $4,000 from a grant made under section

9 406(b) shall be provided to any 1 household over the

10 course of the demonstration project.

11 (d) WITHDRAWAL OF FUNDS.—The Secretary shall

12 establish such guidelines as may be necessary to ensure

13 that funds held in an individual development account are

14 not withdrawn, except for 1 or more qualified expenses,

15 or for an emergency withdrawal. Such guidelines shall in16 clude a requirement that a responsible official of the quali17 fied entity conducting a project approve such withdrawal

18 in writing. The guidelines shall provide that no individual

19 may withdraw funds from an individual development ac20 count earlier than 6 months after the date on which the

21 individual first deposits funds in the account.

22 (e) REIMBURSEMENT.—An individual shall reimburse

23 an individual development account for any funds with24 drawn from the account for an emergency withdrawal, not

25 later than 12 months after the date of the withdrawal.
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1 If the individual fails to make the reimbursement, the

2 qualified entity administering the account shall transfer

3 the funds deposited into the account or a parallel account

4 under section 410 to the Reserve Fund of the qualified

5 entity, and use the funds to benefit other individuals par6 ticipating in the demonstration project involved.

7 SEC. 411. LOCAL CONTROL OVER DEMONSTRATION

8 PROJECTS.

9 A qualified entity under this title, other than a State

10 or local government agency or a tribal government, shall,

11 subject to the provisions of section 413, have sole author12 ity over the administration of the project. The Secretary

13 may prescribe only such regulations or guidelines with re14 spect to demonstration projects conducted under this title

15 as are necessary to ensure compliance with the approved

16 applications and the requirements of this title.

17 SEC. 412. ANNUAL PROGRESS REPORTS.

18 (a) IN GENERAL.—Each qualified entity under this

19 title shall prepare an annual report on the progress of the

20 demonstration project. Each report shall include both pro21 gram and participant information and shall specify for the

22 period covered by the report the following information:

23 (1) The number of individuals making a deposit

24 into an individual development account.
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1 (2) The amounts in the Reserve Fund estab2 lished with respect to the project.

3 (3) The amounts deposited in the individual de4 velopment accounts.

5 (4) The amounts withdrawn from the individual

6 development accounts and the purposes for which

7 such amounts were withdrawn.

8 (5) The balances remaining in the individual

9 development accounts.

10 (6) The savings account characteristics (such as

11 threshold amounts and match rates) required to

12 stimulate participation in the demonstration project,

13 and how such characteristics vary among different

14 populations or communities.

15 (7) What service configurations of the qualified

16 entity (such as peer support, structured planning ex17 ercises, mentoring, and case management) increased

18 the rate and consistency of participation in the dem19 onstration project and how such configurations var20 ied among different populations or communities.

21 (8) Such other information as the Secretary

22 may require to evaluate the demonstration project.

23 (b) SUBMISSION OF REPORTS.—The qualified entity

24 shall submit each report required to be prepared under

25 subsection (a) to—
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1 (1) the Secretary; and

2 (2) the Treasurer (or equivalent official) of the

3 State in which the project is conducted, if the State

4 or a local government or a tribal government com5 mitted funds to the demonstration project.

6 (c) TIMING.—The first report required by subsection

7 (a) shall be submitted not later than 60 days after the

8 end of the calendar year in which the Secretary authorized

9 the qualified entity to conduct the demonstration project,

10 and subsequent reports shall be submitted every 12

11 months thereafter, until the conclusion of the project.

12 SEC. 413. SANCTIONS.

13 (a) AUTHORITY TO TERMINATE DEMONSTRATION

14 PROJECT.—If the Secretary determines that a qualified

15 entity under this title is not operating the demonstration

16 project in accordance with the entity’s application or the

17 requirements of this title (and has not implemented any

18 corrective recommendations directed by the Secretary),

19 the Secretary shall terminate such entity’s authority to

20 conduct the demonstration project.

21 (b) ACTIONS REQUIRED UPON TERMINATION.—If

22 the Secretary terminates the authority to conduct a dem23 onstration project, the Secretary—

24 (1) shall suspend the demonstration project;
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1 (2) shall take control of the Reserve Fund es2 tablished pursuant to section 407;

3 (3) shall make every effort to identify another

4 qualified entity (or entities) willing and able to con5 duct the project in accordance with the approved ap6 plication (or, as modified, if necessary to incorporate

7 the recommendations) and the requirements of this

8 title;

9 (4) shall, if the Secretary identifies an entity

10 (or entities) described in paragraph (3)—

11 (A) authorize the entity (or entities) to

12 conduct the project in accordance with the ap13 proved application (or, as modified, if nec14 essary, to incorporate the recommendations)

15 and the requirements of this title;

16 (B) transfer to the entity (or entities) con17 trol over the Reserve Fund established pursuant

18 to section 407; and

19 (C) consider, for purposes of this title—

20 (i) such other entity (or entities) to be

21 the qualified entity (or entities) originally

22 authorized to conduct the demonstration

23 project; and
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1 (ii) the date of such authorization to

2 be the date of the original authorization;

3 and

4 (5) if, by the end of the 1-year period beginning

5 on the date of the termination, the Secretary has not

6 found a qualified entity (or entities) described in

7 paragraph (3), shall—

8 (A) terminate the project; and

9 (B) from the amount remaining in the Re10 serve Fund established as part of the project,

11 remit to each source that provided funds under

12 section 405(c)(4) to the entity originally au13 thorized to conduct the project, an amount that

14 bears the same ratio to the amount so remain15 ing as the amount provided by the source under

16 section 405(c)(4) bears to the amount provided

17 by all such sources under that section.

18 SEC. 414. EVALUATIONS.

19 (a) IN GENERAL.—Not later than 10 months after

20 the date of enactment of this title, the Secretary shall

21 enter into a contract with an independent research organi22 zation to evaluate, individually and as a group, all quali23 fied entities and sources participating in the demonstra24 tion projects conducted under this title.
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1 (b) FACTORS TO EVALUATE.—In evaluating any

2 demonstration project conducted under this title, the re3 search organization shall address the following factors:

4 (1) The effects of incentives and organizational

5 or institutional support on savings behavior in the

6 demonstration project.

7 (2) The savings rates of individuals in the dem8 onstration project based on demographic characteris9 tics including gender, age, family size, race or ethnic

10 background, and income.

11 (3) The economic, civic, psychological, and so12 cial effects of asset accumulation, and how such ef13 fects vary among different populations or commu14 nities.

15 (4) The effects of individual development ac16 counts on savings rates, homeownership, level of

17 postsecondary education attained, and self-employ18 ment, and how such effects vary among different

19 populations or communities.

20 (5) The potential financial returns to the Fed21 eral Government and to other public sector and pri22 vate sector investors in individual development ac23 counts over a 5-year and 10-year period of time.

24 (6) The lessons to be learned from the dem25 onstration projects conducted under this title and if
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1 a permanent program of individual development ac2 counts should be established.

3 (7) Such other factors as may be prescribed by

4 the Secretary.

5 (c) METHODOLOGICAL REQUIREMENTS.—In evaluat6 ing any demonstration project conducted under this title,

7 the research organization shall—

8 (1) for at least 1 site, use control groups to

9 compare participants with nonparticipants;

10 (2) before, during, and after the project, obtain

11 such quantitative data as are necessary to evaluate

12 the project thoroughly; and

13 (3) develop a qualitative assessment, derived

14 from sources such as in-depth interviews, of how

15 asset accumulation affects individuals and families.

16 (d) REPORTS BY THE SECRETARY.—

17 (1) INTERIM REPORTS.—Not later than 90 days

18 after the end of the calendar year in which the Sec19 retary first authorizes a qualified entity to conduct

20 a demonstration project under this title, and every

21 12 months thereafter until all demonstration

22 projects conducted under this title are completed,

23 the Secretary shall submit to Congress an interim

24 report setting forth the results of the reports sub25 mitted pursuant to section 412(b).
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1 (2) FINAL REPORTS.—Not later than 12

2 months after the conclusion of all demonstration

3 projects conducted under this title, the Secretary

4 shall submit to Congress a final report setting forth

5 the results and findings of all reports and evalua6 tions conducted pursuant to this title.

7 (e) EVALUATION EXPENSES.—The Secretary shall

8 expend such sums as may be necessary, but not more than

9 2 percent of the amounts appropriated under section 416

10 for a fiscal year, to carry out the purposes of this section.

11 SEC. 415. TREATMENT OF FUNDS.

12 Funds (including interest accruing) deposited in indi13 vidual development accounts shall not be considered to be

14 income for purposes of determining eligibility for, or the

15 amount of assistance furnished under, any Federal or fed16 erally assisted program based on need.

17 SEC. 416. AUTHORIZATION OF APPROPRIATIONS.

18 There is authorized to be appropriated to carry out

19 this title, $25,000,000 for each of fiscal years 1999, 2000,

20 2001, 2002, and 2003 to remain available until expended.

21 SECTION 1. SHORT TITLE.

22 This Act may be cited as the ‘‘Community Opportuni23 ties, Accountability, and Training and Educational Serv24 ices Act of 1998’’ or the ‘‘Coats Human Services Reauthor25 ization Act of 1998’’.
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1 SEC. 2. TABLE OF CONTENTS.

2 The table of contents for this Act is as follows:

Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I—HEAD START PROGRAMS

Sec. 101. Short title.

Sec. 102. References.

Sec. 103. Statement of purpose.

Sec. 104. Definitions.

Sec. 105. Financial assistance for Head Start programs.

Sec. 106. Authorization of appropriations.

Sec. 107. Allotment of funds.

Sec. 108. Designation of Head Start agencies.

Sec. 109. Quality standards.

Sec. 110. Powers and functions of Head Start agencies.

Sec. 111. Head Start transition.

Sec. 112. Submission of plans to Governors.

Sec. 113. Participation in Head Start programs.

Sec. 114. Early Head Start programs for families with infants and toddlers.

Sec. 115. Technical assistance and training.

Sec. 116. Staff qualifications and development.

Sec. 117. Research, demonstration, and evaluation.

Sec. 118. Repeal.

TITLE II—COMMUNITY SERVICES BLOCK GRANT PROGRAM

Sec. 201. Reauthorization.

Sec. 202. Conforming amendments.

Sec. 203. Repealers.

TITLE III—LOW-INCOME HOME ENERGY ASSISTANCE

Sec. 301. Authorization.

Sec. 302. Definitions.

Sec. 303. Natural disasters and other emergencies.

Sec. 304. State allotments.

Sec. 305. Administration.

Sec. 306. Payments to States.

Sec. 307. Residential Energy Assistance Challenge option.

Sec. 308. Technical assistance, training, and compliance reviews.

TITLE IV—ASSETS FOR INDEPENDENCE

Sec. 401. Short title.

Sec. 402. Findings.

Sec. 403. Purposes.

Sec. 404. Definitions.

Sec. 405. Applications.

Sec. 406. Demonstration authority; annual grants.

Sec. 407. Reserve Fund.

Sec. 408. Eligibility for participation.

Sec. 409. Selection of individuals to participate.

Sec. 410. Deposits by qualified entities.
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Sec. 411. Local control over demonstration projects.

Sec. 412. Annual progress reports.

Sec. 413. Sanctions.

Sec. 414. Evaluations.

Sec. 415. Treatment of funds.

Sec. 416. Authorization of appropriations.

1 TITLE I—HEAD START

2 PROGRAMS

3 SEC. 101. SHORT TITLE.

4 This title may be cited as the ‘‘Head Start Amend5 ments of 1998’’.

6 SEC. 102. REFERENCES.

7 Except as otherwise expressly provided, wherever in

8 this title an amendment or repeal is expressed in terms of

9 an amendment to, or repeal of, a section or other provision,

10 the reference shall be considered to be made to a section or

11 other provision of the Head Start Act (42 U.S.C. 9831 et

12 seq.).

13 SEC. 103. STATEMENT OF PURPOSE.

14 The Head Start Act is amended by striking section 636

15 (42 U.S.C. 9831) and inserting the following:

16 ‘‘SEC. 636. STATEMENT OF PURPOSE.

17 ‘‘It is the purpose of this subchapter to promote school

18 readiness by enhancing the social and cognitive develop19 ment of low-income children through the provision, to low20 income children and their families, of health, educational,

21 nutritional, social, and other services that are determined

22 to be necessary, based on family needs assessments.’’.
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1 SEC. 104. DEFINITIONS.

2 Section 637 (42 U.S.C. 9832) is amended—

3 (1) by redesignating paragraphs (5) through (14)

4 as paragraphs (7) through (16), respectively;

5 (2) by redesignating paragraph (3) as para6 graph (6) and inserting such paragraph after para7 graph (4);

8 (3) by striking paragraph (4) and inserting the

9 following:

10 ‘‘(3) The term ‘child with a disability’ means—

11 ‘‘(A) a child with a disability, as defined in

12 section 602(3) of the Individuals with Disabil13 ities Education Act; and

14 ‘‘(B) an infant or toddler with a disability,

15 as defined in section 632(5) of such Act.

16 ‘‘(4) The term ‘delegate agency’ means a public,

17 private nonprofit, or for-profit organization or agency

18 to which a grantee has delegated all or part of the re19 sponsibility of the grantee for operating a Head Start

20 program.

21 ‘‘(5) The term ‘family literacy services’ means

22 services that—

23 ‘‘(A) are provided to participants who re24 ceive the services on a voluntary basis;

25 ‘‘(B) are of sufficient intensity, and of suffi26 cient duration, to make sustainable changes in a
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1 family (such as eliminating or reducing depend2 ence on income-based public assistance); and

3 ‘‘(C) integrate each of—

4 ‘‘(i) interactive literacy activities be5 tween parents and their children;

6 ‘‘(ii) training for parents on being

7 partners with their children in learning;

8 ‘‘(iii) parent literacy training, includ9 ing training that contributes to economic

10 self-sufficiency; and

11 ‘‘(iv) appropriate instruction for chil12 dren of parents receiving the parent literacy

13 training.’’;

14 (4) in paragraph (8) (as redesignated in para15 graph (1)), by adding at the end the following: ‘‘Noth16 ing in this paragraph shall be construed to require an

17 agency to provide services to a child who has not

18 reached the age of compulsory school attendance for

19 more than the number of hours per day permitted by

20 State law (including regulation) for the provision of

21 services to such a child.’’;

22 (5) by striking paragraph (14) (as redesignated

23 in paragraph (1)) and inserting the following:

24 ‘‘(14) The term ‘migrant or seasonal Head Start

25 program’ means—
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1 ‘‘(A) with respect to services for migrant

2 farmworkers, a Head Start program that serves

3 families who are engaged in agricultural labor

4 and who have changed their residence from one

5 geographic location to another in the preceding

6 2-year period; and

7 ‘‘(B) with respect to services for seasonal

8 farmworkers, a Head Start program that serves

9 families who are engaged primarily in seasonal

10 agricultural labor and who have not changed

11 their residence to another geographic location in

12 the preceding 2-year period.’’; and

13 (6) by adding at the end the following:

14 ‘‘(17) The term ‘reliable and replicable’, used

15 with respect to research, means an objective, valid,

16 scientific study that—

17 ‘‘(A) includes a rigorously defined sample of

18 subjects, that is sufficiently large and representa19 tive to support the general conclusions of the

20 study;

21 ‘‘(B) relies on measurements that meet es22 tablished standards of reliability and validity;

23 ‘‘(C) is subjected to peer review before the

24 results of the study are published; and
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1 ‘‘(D) discovers effective strategies for en2 hancing the development and skills of children.’’.

3 SEC. 105. FINANCIAL ASSISTANCE FOR HEAD START PRO4 GRAMS.

5 Section 638(1) (42 U.S.C. 9833(1)) is amended—

6 (1) by striking ‘‘aid the’’ and inserting ‘‘enable

7 the’’; and

8 (2) by striking the semicolon and inserting ‘‘and

9 attain school readiness;’’.

10 SEC. 106. AUTHORIZATION OF APPROPRIATIONS.

11 Section 639 (42 U.S.C. 9834) is amended—

12 (1) in subsection (a), by striking ‘‘1995 through

13 1998’’ and inserting ‘‘1999 through 2003’’; and

14 (2) in subsection (b), by striking all that follows

15 ‘‘shall make available—’’ and inserting the following:

16 ‘‘(1) for each of fiscal years 1999 through 2003

17 to carry out activities authorized under section 642A,

18 not more than $35,000,000 but not less than was

19 made available for such activities for fiscal year 1998;

20 ‘‘(2) not more than $5,000,000 for each of fiscal

21 years 1999 through 2003 to carry out impact studies

22 under section 649(g); and

23 ‘‘(3) not more than $12,000,000 for fiscal year

24 1999, and such sums as may be necessary for each of

25 fiscal years 2000 through 2003, to carry out other re-
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1 search, demonstration, and evaluation activities, in2 cluding longitudinal studies, under section 649.’’.

3 SEC. 107. ALLOTMENT OF FUNDS.

4 (a) ALLOTMENTS.—Section 640(a) (42 U.S.C.

5 9835(a)) is amended—

6 (1) in paragraph (2)—

7 (A) in subparagraph (A)—

8 (i) by striking ‘‘handicapped children’’

9 and inserting ‘‘children with disabilities’’;

10 (ii) by striking ‘‘migrant Head Start

11 programs’’ each place it appears and insert12 ing ‘‘migrant or seasonal Head Start pro13 grams’’; and

14 (iii) by striking ‘‘1994’’ and inserting

15 ‘‘1998’’;

16 (B) in subparagraph (C), by striking ‘‘and’’

17 at the end;

18 (C) in subparagraph (D), by striking ‘‘re19 lated to the development and implementation of

20 quality improvement plans under section

21 641A(d)(2).’’ and inserting ‘‘carried out under

22 paragraph (1), (2), or (3) of section 641A(d) re23 lated to correcting deficiencies and conducting

24 proceedings to terminate the designation of Head

25 Start agencies; and’’;
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1 (D) by inserting after subparagraph (D) the

2 following:

3 ‘‘(E) payments for research, demonstration, and

4 evaluation activities under section 649.’’; and

5 (E) by adding at the end the following: ‘‘In

6 determining the need and demand for migrant

7 and seasonal Head Start programs, and services

8 provided through such programs, the Secretary

9 shall consult with appropriate entities, including

10 providers of services for seasonal and migrant

11 Head Start programs. The Secretary shall, after

12 taking into consideration the need and demand

13 for migrant and seasonal Head Start programs,

14 and such services, ensure that there is an ade15 quate level of such services for the children of eli16 gible migrant farmworkers before approving an

17 increase in the allocation provided for children

18 of eligible seasonal farmworkers. In carrying out

19 this subchapter, the Secretary shall continue the

20 administrative arrangement responsible for meet21 ing the needs of migrant or seasonal farmworker

22 and Indian children and shall assure that ap23 propriate funding is provided to meet such

24 needs.’’;

25 (2) in paragraph (3)—
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1 (A) in subparagraph (B)—

2 (i) in clause (ii)—

3 (I) by striking ‘‘adequate quali4 fied staff’’ and inserting ‘‘adequate

5 numbers of qualified staff’’; and

6 (II) by inserting ‘‘and children

7 with disabilities’’ before ‘‘, when’’;

8 (ii) in clause (iv), by inserting before

9 the period the following: ‘‘, and to encourage

10 the staff to continually improve their skills

11 and expertise by informing the staff of the

12 availability of Federal and State incentive

13 and loan forgiveness programs for profes14 sional development and by providing for

15 preferences in the awarding of salary in16 creases, in excess of cost-of-living allow17 ances, to staff who obtain additional train18 ing or education related to their responsibil19 ities as employees of a Head Start program

20 or to advance their careers within the Head

21 Start program’’;

22 (iii) in clause (vi), by striking the pe23 riod and inserting ‘‘, and are physically ac24 cessible to children with disabilities and

25 their parents.’’;
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1 (iv) by redesignating clause (vii) as

2 clause (viii); and

3 (v) by inserting after clause (vi) the

4 following:

5 ‘‘(vii) Ensuring that such programs have quali6 fied staff that can promote language skills and lit7 eracy growth of children and that can provide chil8 dren with a variety of skills that have been identified,

9 through research that is reliable and replicable, as

10 predictive of later reading achievement.’’;

11 (B) in subparagraph (C)—

12 (i) in clause (i)(I)—

13 (I) by striking ‘‘of staff’’ and in14 serting ‘‘of classroom teachers and

15 other staff’’; and

16 (II) by striking ‘‘such staff’’ and

17 inserting ‘‘qualified staff, including re18 cruitment and retention pursuant to

19 section 648A(a)’’;

20 (ii) by striking clause (ii) and insert21 ing the following:

22 ‘‘(ii) To supplement amounts provided under

23 paragraph (2)(C) to provide training to classroom

24 teachers and other staff on proven techniques that

25 promote—
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1 ‘‘(I) language and literacy growth; and

2 ‘‘(II) the acquisition of the English lan3 guage for non-English background children and

4 families.’’;

5 (iii) in clause (v), by inserting ‘‘acces6 sibility or’’ before ‘‘availability’’;

7 (iv) by redesignating clauses (iii), (iv),

8 (v), and (vi) as clauses (iv), (v), (vi), and

9 (iii), respectively; and

10 (v) by inserting clause (iii) (as redesig11 nated in clause (iv) of this subparagraph)

12 after clause (ii); and

13 (C) in subparagraph (D)(i)(II), by striking

14 ‘‘migrant Head Start programs’’ and inserting

15 ‘‘migrant or seasonal Head Start programs’’;

16 (3) in paragraph (4)(A), by striking ‘‘1981’’ and

17 inserting ‘‘1998’’;

18 (4) in paragraph (5)—

19 (A) in subparagraph (A), by striking ‘‘sub20 paragraph (B)’’ and inserting ‘‘subparagraphs

21 (B) and (D)’’;

22 (B) in subparagraph (B), by inserting be23 fore the period the following: ‘‘and to encourage

24 Head Start agencies to collaborate with entities

25 involved in State and local planning processes
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1 (including the State lead agency administering

2 the financial assistance received under the Child

3 Care and Development Block Grant Act of 1990

4 (42 U.S.C. 9858 et seq.) and the entities provid5 ing resource and referral services in the State) in

6 order to better meet the needs of low-income chil7 dren and families’’;

8 (C) in subparagraph (C)—

9 (i) in clause (i)(I), by inserting ‘‘the

10 appropriate regional office of the Adminis11 tration for Children and Families and’’ be12 fore ‘‘agencies’’;

13 (ii) in clause (iii), by striking ‘‘and’’

14 at the end;

15 (iii) in clause (iv)—

16 (I) by striking ‘‘education, and

17 national service activities,’’ and insert18 ing ‘‘education, and community service

19 activities,’’;

20 (II) by striking ‘‘and activities’’

21 and inserting ‘‘activities’’; and

22 (III) by striking the period and

23 inserting ‘‘, and services for homeless

24 children; and’’; and

25 (iv) by adding at the end the following:
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1 ‘‘(v) include representatives of the State Head

2 Start Association and local Head Start agencies in

3 unified planning regarding early care and education

4 services at both the State and local levels, including

5 collaborative efforts to plan for the provision of full6 working-day, full calendar year early care and edu7 cation services for children.’’;

8 (D) by redesignating subparagraph (D) as

9 subparagraph (F); and

10 (E) by inserting after subparagraph (C) the

11 following:

12 ‘‘(D) Following the award of collaboration grants de13 scribed in subparagraph (B), the Secretary shall provide,

14 from the reserved sums, supplemental funding for collabora15 tion grants—

16 ‘‘(i) to States that (in consultation with their

17 State Head Start Associations) develop statewide, re18 gional, or local unified plans for early childhood edu19 cation and child care that include the participation

20 of Head Start agencies; and

21 ‘‘(ii) to States that engage in other innovative

22 collaborative initiatives, including plans for collabo23 rative training and career development initiatives for

24 child care, early childhood education, and Head Start

25 service managers, providers, and staff.
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1 ‘‘(E)(i) The Secretary shall—

2 ‘‘(I) review on an ongoing basis evidence of bar3 riers to effective collaboration between Head Start

4 programs and other Federal child care and early

5 childhood education programs and resources;

6 ‘‘(II) develop initiatives, including providing ad7 ditional training and technical assistance and mak8 ing regulatory changes, in necessary cases, to elimi9 nate barriers to the collaboration; and

10 ‘‘(III) develop a mechanism to resolve adminis11 trative and programmatic conflicts between such pro12 grams that would be a barrier to service providers,

13 parents, or children related to the provision of unified

14 services and the consolidation of funding for child

15 care services.

16 ‘‘(ii) In the case of a collaborative activity funded

17 under this subchapter and another provision of law provid18 ing for Federal child care or early childhood education, the

19 use of equipment and nonconsumable supplies purchased

20 with funds made available under this subchapter or such

21 provision shall not be restricted to children enrolled or oth22 erwise participating in the program carried out under that

23 subchapter or provision, during a period in which the activ24 ity is predominantly funded under this subchapter or such

25 provision.’’; and
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1 (5) in paragraph (6)—

2 (A) by inserting ‘‘(A)’’ before ‘‘From’’; and

3 (B) by striking ‘‘3 percent’’ and all that fol4 lows and inserting the following: ‘‘7.5 percent for

5 fiscal year 1999, 8 percent for fiscal year 2000,

6 9 percent for fiscal year 2001, 10 percent for fis7 cal year 2002, and 10 percent for fiscal year

8 2003, of the amount appropriated pursuant to

9 section 639(a), except as provided in subpara10 graph (B).

11 ‘‘(B)(i) For any fiscal year for which the Secretary

12 determines that the amount appropriated under section

13 639(a) is not sufficient to permit the Secretary to reserve

14 the portion described in subparagraph (A) without reducing

15 the number of children served by Head Start programs or

16 adversely affecting the quality of Head Start services, rel17 ative to the number of children served and the quality of

18 the services during the preceding fiscal year, the Secretary

19 may reduce the percentage of funds required to be reserved

20 for the portion described in subparagraph (A) for the fiscal

21 year for which the determination is made, but not below

22 the percentage required to be so reserved for the preceding

23 fiscal year.

24 ‘‘(ii) For any fiscal year for which the amount appro25 priated under section 639(a) is reduced to a level that re-
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1 quires a lower amount to be made available under this sub2 chapter to Head Start agencies and entities described in

3 section 645A, relative to the amount made available to the

4 agencies and entities for the preceding fiscal year, adjusted

5 as described in paragraph (3)(A)(ii), the Secretary shall

6 proportionately reduce—

7 ‘‘(I) the amounts made available to the entities

8 for programs carried out under section 645A; and

9 ‘‘(II) the amounts made available to Head Start

10 agencies for Head Start programs.’’.

11 (b) CHILDREN WITH DISABILITIES.—Section 640(d)

12 (42 U.S.C. 9835(d)) is amended—

13 (1) by striking ‘‘1982’’ and inserting ‘‘1999’’;

14 and

15 (2) by striking ‘‘(as defined in section 602(a) of

16 the Individuals with Disabilities Education Act)’’.

17 (c) INCREASED APPROPRIATIONS.—Section 640(g) (42

18 U.S.C. 9835(g)) is amended—

19 (1) in paragraph (2)—

20 (A) in subparagraph (A), by striking the

21 semicolon and inserting ‘‘, and the performance

22 history of the applicant in providing services

23 under other Federal programs (other than the

24 program carried out under this subchapter);’’;
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1 (B) in subparagraph (C), by striking ‘‘spo2 ken);’’ and inserting ‘‘spoken, and organizations

3 serving children with disabilities);’’;

4 (C) in subparagraph (D), by inserting be5 fore the semicolon the following: ‘‘and the extent

6 to which, and manner in which, the applicant

7 demonstrates the ability to collaborate and par8 ticipate with other local community providers of

9 child care or preschool services to provide full10 working-day, full calendar year services’’;

11 (D) in subparagraph (E), by striking ‘‘pro12 gram; and’’ and inserting ‘‘program or any

13 other early childhood program;’’;

14 (E) in subparagraph (F), by striking the

15 period and inserting ‘‘; and’’; and

16 (F) by adding at the end the following:

17 ‘‘(G) the extent to which the applicant proposes

18 to foster partnerships with other service providers in

19 a manner that will enhance the resource capacity of

20 the applicant.’’; and

21 (2) by adding at the end the following:

22 ‘‘(4) Notwithstanding subsection (a)(2), after taking

23 into account the provisions of paragraph (1), the Secretary

24 may allocate a portion of the remaining additional funds

25 under subsection (a)(2)(A) for the purpose of increasing
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1 funds available for the activities described in such sub2 section.’’.

3 (d) MIGRANT OR SEASONAL HEAD START PRO4 GRAMS.—Section 640(l) (42 U.S.C. 9835(l)) is amended—

5 (1) by striking ‘‘migrant Head Start programs’’

6 each place it appears and inserting ‘‘migrant or sea7 sonal Head Start programs’’; and

8 (2) by striking ‘‘migrant families’’ and inserting

9 ‘‘migrant or seasonal farmworker families’’.

10 (e) CONFORMING AMENDMENT.—Section 644(f)(2) (42

11 U.S.C. 9839(f)(2)) is amended by striking

12 ‘‘640(a)(3)(C)(v)’’ and inserting ‘‘640(a)(3)(C)(vi)’’.

13 SEC. 108. DESIGNATION OF HEAD START AGENCIES.

14 Section 641 (42 U.S.C. 9836) is amended—

15 (1) in subsection (a)—

16 (A) in the matter preceding paragraph (1),

17 by inserting ‘‘or for-profit’’ after ‘‘nonprofit’’;

18 and

19 (B) in paragraph (2), by inserting ‘‘(in

20 consultation with the chief executive officer of the

21 State in which the community is located)’’ after

22 ‘‘the Secretary’’;

23 (2) in subsection (c)—

24 (A) in paragraph (1)—
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1 (i) by striking ‘‘shall give priority’’

2 and inserting ‘‘shall, in consultation with

3 the chief executive officer of the State, give

4 priority’’;

5 (ii) by inserting ‘‘or for-profit’’ after

6 ‘‘nonprofit’’; and

7 (iii) by striking ‘‘unless the Secretary

8 makes a finding’’ and all that follows and

9 inserting the following: ‘‘unless the Sec10 retary determines that the agency involved

11 fails to meet program and financial man12 agement requirements, performance stand13 ards described in section 641A(a)(1), or

14 other requirements established by the Sec15 retary.’’;

16 (B) in paragraph (2), by striking ‘‘shall

17 give priority’’ and inserting ‘‘shall, in consulta18 tion with the chief executive officer of the State,

19 give priority’’; and

20 (C) by aligning the margins of paragraphs

21 (2) and (3) with the margins of paragraph (1);

22 (3) in subsection (d)—

23 (A) in the matter preceding paragraph (1),

24 by inserting after the first sentence the following

25 new sentence: ‘‘In selecting from among qualified
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1 applicants for designation as a Head Start

2 agency, the Secretary shall give priority to any

3 qualified agency that functioned as a delegate

4 agency in the community and carried out a

5 Head Start program that the Secretary deter6 mines has met or exceeded the performance

7 standards and outcome-based performance meas8 ures described in section 641A.’’;

9 (B) in paragraph (4)(A), by inserting ‘‘(at

10 home and in the center involved where prac11 ticable)’’ after ‘‘activities’’;

12 (C) by redesignating paragraphs (7) and

13 (8) as paragraphs (9) and (10), respectively; and

14 (D) by inserting after paragraph (6) the fol15 lowing:

16 ‘‘(7) the plan of such applicant to meet the needs

17 of non-English background children and their fami18 lies, including needs related to the acquisition of the

19 English language;

20 ‘‘(8) the plan of such applicant to meet the needs

21 of children with disabilities;’’;

22 (4) by striking subsection (e) and inserting the

23 following:

24 ‘‘(e) If no agency in the community receives priority

25 designation under subsection (c), and there is no qualified
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1 applicant in the community, the Secretary shall designate

2 a qualified agency to carry out the Head Start program

3 in the community on an interim basis until a qualified

4 applicant from the community is so designated.’’; and

5 (5) by adding at the end the following:

6 ‘‘(g) If the Secretary determines that a nonprofit agen7 cy and a for-profit agency have submitted applications for

8 designation of equivalent quality under subsection (d), the

9 Secretary may give priority to the nonprofit agency.’’.

10 SEC. 109. QUALITY STANDARDS.

11 (a) QUALITY STANDARDS.—Section 641A(a) (42

12 U.S.C. 9836a(a)) is amended—

13 (1) in paragraph (1)—

14 (A) in the matter preceding subparagraph

15 (A), by inserting ‘‘, including minimum levels of

16 overall accomplishment,’’ after ‘‘regulation

17 standards’’;

18 (B) in subparagraph (A), by striking ‘‘edu19 cation,’’;

20 (C) by redesignating subparagraphs (B)

21 through (D) as subparagraphs (C) through (E),

22 respectively; and

23 (D) by inserting after subparagraph (A) the

24 following:
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1 ‘‘(B)(i) education performance standards to

2 ensure the school readiness of children partici3 pating in a Head Start program, on completion

4 of the Head Start program and prior to entering

5 school; and

6 ‘‘(ii) additional education performance

7 standards to ensure that the children participat8 ing in the program, at a minimum—

9 ‘‘(I) develop phonemic, print, and

10 numeracy awareness;

11 ‘‘(II) understand and use oral lan12 guage to communicate needs, wants, and

13 thoughts;

14 ‘‘(III) understand and use increasingly

15 complex and varied vocabulary;

16 ‘‘(IV) develop and demonstrate an ap17 preciation of books; and

18 ‘‘(V) in the case of non-English back19 ground children, progress toward acquisi20 tion of the English language.’’;

21 (2) by striking paragraph (2);

22 (3) by redesignating paragraphs (3) and (4) as

23 paragraphs (2) and (3), respectively;

24 (4) in paragraph (2) (as redesignated in para25 graph (3))—
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1 (A) in subparagraph (B)(iii), by striking

2 ‘‘child’’ and inserting ‘‘early childhood education

3 and’’; and

4 (B) in subparagraph (C)—

5 (i) in clause (i)—

6 (I) by striking ‘‘not later than 1

7 year after the date of enactment of this

8 section,’’; and

9 (II) by striking ‘‘section 651(b)’’

10 and all that follows and inserting ‘‘this

11 subsection; and’’; and

12 (ii) in subclause (ii), by striking ‘‘No13 vember 2, 1978’’ and inserting ‘‘the date of

14 enactment of the Coats Human Services Re15 authorization Act of 1998’’; and

16 (5) in paragraph (3) (as redesignated in para17 graph (3)), by striking ‘‘to an agency (referred to in

18 this subchapter as the ‘‘delegate agency’’)’’ and insert19 ing ‘‘to a delegate agency’’.

20 (b) PERFORMANCE MEASURES.—Section 641A(b) (42

21 U.S.C. 9836a(b)) is amended—

22 (1) in the subsection heading, by inserting ‘‘OUT23 COME-BASED’’ before ‘‘PERFORMANCE’’;

24 (2) in paragraph (1)—
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1 (A) by striking ‘‘Not later than 1 year after

2 the date of enactment of this section, the’’ and

3 inserting ‘‘The’’;

4 (B) by striking ‘‘child’’ and inserting ‘‘early

5 childhood education and’’;

6 (C) by striking ‘‘(referred’’ and inserting ‘‘,

7 and the impact of the services provided through

8 the programs to children and their families (re9 ferred’’;

10 (D) by striking ‘‘performance measures’’

11 and inserting ‘‘outcome-based performance meas12 ures’’; and

13 (E) by adding at the end the following:

14 ‘‘The performance measures shall include the

15 performance standards described in subsection

16 (a)(1)(B)(ii).’’; and

17 (3) in paragraph (2)—

18 (A) in the paragraph heading, by striking

19 ‘‘DESIGN’’ and inserting ‘‘CHARACTERISTICS’’;

20 (B) in the matter preceding subparagraph

21 (A), by striking ‘‘shall be designed—’’ and in22 serting ‘‘shall—’’;

23 (C) in subparagraph (A), by striking ‘‘to

24 assess’’ and inserting ‘‘be used to assess the im25 pact of’’;
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1 (D) in subparagraph (B)—

2 (i) by striking ‘‘to’’; and

3 (ii) by striking ‘‘and peer review’’ and

4 inserting ‘‘, peer review, and program eval5 uation’’; and

6 (E) in subparagraph (C), by inserting ‘‘be

7 developed’’ before ‘‘for other’’.

8 (c) MONITORING.—Section 641A(c)(2) (42 U.S.C.

9 9836a(c)(2)) is amended—

10 (1) in subparagraph (B), by striking ‘‘; and’’

11 and inserting a semicolon;

12 (2) in subparagraph (C)—

13 (A) by inserting ‘‘(including children with

14 disabilities)’’ after ‘‘eligible children’’; and

15 (B) by striking the period and inserting ‘‘;

16 and’’; and

17 (3) by adding at the end the following:

18 ‘‘(D) as part of the reviews of the programs,

19 include a review and assessment of program ef20 fectiveness, as measured in accordance with the

21 outcome-based performance measures developed

22 pursuant to subsection (b) and with the perform23 ance standards established pursuant to subpara24 graphs (A) and (B) of subsection (a)(1).’’.
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1 (d) TERMINATION.—Section 641A(d) (42 U.S.C.

2 9836a(d)) is amended—

3 (1) in paragraph (1)(B), to read as follows:

4 ‘‘(B) with respect to each identified defi5 ciency, require the agency—

6 ‘‘(i) to correct the deficiency imme7 diately, if the Secretary finds that the defi8 ciency threatens the health or safety of staff

9 or program participants or poses a threat

10 to the integrity of Federal funds;

11 ‘‘(ii) to correct the deficiency not later

12 than 90 days after the identification of the

13 deficiency if the Secretary finds, in the dis14 cretion of the Secretary, that such a 90-day

15 period is reasonable, in light of the nature

16 and magnitude of the deficiency; or

17 ‘‘(iii) in the discretion of the Secretary

18 (taking into consideration the seriousness of

19 the deficiency and the time reasonably re20 quired to correct the deficiency), to comply

21 with the requirements of paragraph (2) con22 cerning a quality improvement plan; and’’;

23 and

24 (2) in paragraph (2)(A), in the matter preceding

25 clause (i), by striking ‘‘able to correct a deficiency
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1 immediately’’ and inserting ‘‘required to correct a de2 ficiency immediately or during a 90-day period

3 under clause (i) or (ii) of paragraph (1)(B)’’.

4 SEC. 110. POWERS AND FUNCTIONS OF HEAD START AGEN5 CIES.

6 Section 642 (42 U.S.C. 9837) is amended—

7 (1) in subsection (a), by inserting ‘‘or for-profit’’

8 after ‘‘nonprofit’’;

9 (2) in subsection (c)—

10 (A) by inserting ‘‘and collaborate’’ after

11 ‘‘coordinate’’; and

12 (B) by striking ‘‘section 402(g) of the Social

13 Security Act, and other’’ and inserting ‘‘the

14 State program carried out under the Child Care

15 and Development Block Grant Act of 1990 (42

16 U.S.C. 9858 et seq.), and other early childhood

17 education and development’’; and

18 (3) in subsection (d)—

19 (A) in paragraph (1)—

20 (i) by striking ‘‘shall carry out’’ and

21 all that follows through ‘‘maintain’’ and in22 serting ‘‘shall take steps to ensure, to the

23 maximum extent possible, that children

24 maintain’’;
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1 (ii) by striking ‘‘developmental’’ and

2 inserting ‘‘developmental and educational’’;

3 and

4 (iii) by striking ‘‘to build’’ and insert5 ing ‘‘build’’;

6 (B) by striking paragraph (2);

7 (C) by redesignating paragraphs (3)

8 through (5) as paragraphs (2) through (4), re9 spectively; and

10 (D) in subparagraph (A) of paragraph (4)

11 (as redesignated in subparagraph (C)), by strik12 ing ‘‘the Head Start Transition Project Act (42

13 U.S.C. 9855 et seq.)’’ and inserting ‘‘section

14 642A’’.

15 SEC. 111. HEAD START TRANSITION.

16 The Head Start Act (42 U.S.C. 9831 et seq.) is amend17 ed by inserting after section 642 the following:

18 ‘‘SEC. 642A. HEAD START TRANSITION.

19 ‘‘Each Head Start agency shall take steps to coordi20 nate with the local educational agency serving the commu21 nity involved and with schools in which children partici22 pating in a Head Start program operated by such agency

23 will enroll following such program, including—

24 ‘‘(1) developing and implementing a systematic

25 procedure for transferring, with parental consent,
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1 Head Start program records for each participating

2 child to the school in which such child will enroll;

3 ‘‘(2) establishing channels of communication be4 tween Head Start staff and their counterparts in the

5 schools (including teachers, social workers, and health

6 staff) to facilitate coordination of programs;

7 ‘‘(3) conducting meetings involving parents, kin8 dergarten or elementary school teachers, and Head

9 Start program teachers to discuss the developmental

10 and other needs of individual children;

11 ‘‘(4) organizing and participating in joint tran12 sition-related training of school staff and Head Start

13 staff;

14 ‘‘(5) developing and implementing a family out15 reach and support program in cooperation with enti16 ties carrying out parental involvement efforts under

17 title I of the Elementary and Secondary Education

18 Act of 1965 (20 U.S.C. 6301 et seq.); and

19 ‘‘(6) assisting families, administrators, and

20 teachers in enhancing continuity in child development

21 between Head Start services and elementary school

22 classes.’’.

23 SEC. 112. SUBMISSION OF PLANS TO GOVERNORS.

24 The first sentence of section 643 (42 U.S.C. 9838) is

25 amended—
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1 (1) by striking ‘‘within 30 days’’ and inserting

2 ‘‘within 45 days’’; and

3 (2) by striking ‘‘so disapproved’’ and inserting

4 ‘‘disapproved (for reasons other than failure of the

5 program to comply with State health, safety, and

6 child care laws, including regulations, applicable to

7 comparable child care programs within the State)’’.

8 SEC. 113. PARTICIPATION IN HEAD START PROGRAMS.

9 (a) REGULATIONS.—Section 645(a)(1) (42 U.S.C.

10 9840(a)(1)) is amended—

11 (1) in subparagraph (B), by striking ‘‘that pro12 grams’’ and inserting ‘‘that (i) programs’’; and

13 (2) by striking the period at the end of subpara14 graph (B) and inserting the following: ‘‘, and (ii) a

15 child who has been determined to meet the low-income

16 criteria and who is participating in a Head Start

17 program in a program year shall be considered to

18 continue to meet the low-income criteria through the

19 end of the succeeding program year. In determining,

20 for purposes of this paragraph, whether a child who

21 has applied for enrollment in a Head Start program

22 meets the low-income criteria, an entity may consider

23 evidence of family income during the 12 months pre24 ceding the month in which the application is submit25 ted, or during the calendar year preceding the cal-
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1 endar year in which the application is submitted,

2 whichever more accurately reflects the needs of the

3 family at the time of application.’’.

4 (b) SLIDING FEE SCALE.—Section 645(b) (42 U.S.C.

5 9840(b)) is amended by adding at the end the following:

6 ‘‘A Head Start agency that provides a Head Start program

7 with full-working-day services in collaboration with other

8 agencies or entities may collect a family copayment to sup9 port extended day services if a copayment is required in

10 conjunction with the collaborative. The copayment charged

11 to families receiving services through the Head Start pro12 gram shall not exceed the copayment charged to families

13 with similar incomes and circumstances who are receiving

14 the services through participation in a program carried out

15 by another agency or entity.’’.

16 (c) CONTINUOUS RECRUITMENT AND ACCEPTANCE OF

17 APPLICATIONS.—Section 645(c) (42 U.S.C. 9840(c)) is

18 amended by adding at the end the following: ‘‘Each Head

19 Start program operated in a community shall be permitted

20 to recruit and accept applications for enrollment of children

21 throughout the year.’’.

22 SEC. 114. EARLY HEAD START PROGRAMS FOR FAMILIES

23 WITH INFANTS AND TODDLERS.

24 Section 645A (42 U.S.C. 9840a) is amended—
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1 (1) in the section heading, by inserting ‘‘EARLY

2 HEAD START’’ before ‘‘PROGRAMS FOR’’;

3 (2) in subsection (a)—

4 (A) by striking ‘‘for—’’ and all that follows

5 through ‘‘programs providing’’ and inserting

6 ‘‘for programs providing’’;

7 (B) by striking ‘‘; and’’ and inserting a pe8 riod; and

9 (C) by striking paragraph (2);

10 (3) in subsection (b)(5), by inserting ‘‘(including

11 programs for infants and toddlers with disabilities)’’

12 after ‘‘community’’;

13 (4) in subsection (c)—

14 (A) in the matter preceding paragraph (1),

15 by striking ‘‘subsection (a)(1)’’ and inserting

16 ‘‘subsection (a)’’; and

17 (B) in paragraph (2), by striking ‘‘3 (or

18 under’’ and all that follows and inserting ‘‘3;’’;

19 (5) in subsection (d)—

20 (A) by striking paragraph (2); and

21 (B) by redesignating paragraph (3) as

22 paragraph (2);

23 (6) by striking subsection (e);

24 (7) by redesignating subsections (f) and (g) as

25 subsections (e) and (f), respectively;
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1 (8) in subsection (e) (as redesignated in para2 graph (7))—

3 (A) in the subsection heading, by striking

4 ‘‘OTHER’’; and

5 (B) by striking ‘‘From the balance remain6 ing of the portion specified in section 640(a)(6),

7 after making grants to the eligible entities speci8 fied in subsection (e),’’ and inserting ‘‘From the

9 portion specified in section 640(a)(6),’’; and

10 (9) by striking subsection (h) and inserting the

11 following:

12 ‘‘(g) MONITORING, TRAINING, TECHNICAL ASSIST13 ANCE, AND EVALUATION.—In order to ensure the successful

14 operation of programs assisted under this section, the Sec15 retary shall use funds from the portion specified in section

16 640(a)(6) to monitor the operation of such programs, evalu17 ate their effectiveness, and provide training and technical

18 assistance tailored to the particular needs of such programs.

19 ‘‘(h) TRAINING AND TECHNICAL ASSISTANCE AC20 COUNT.—

21 ‘‘(1) IN GENERAL.—Of the amount made avail22 able to carry out this section for any fiscal year, not

23 less than 5 percent and not more than 10 percent

24 shall be reserved to fund a training and technical as25 sistance account.
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1 ‘‘(2) ACTIVITIES.—Funds in the account may be

2 used by the Secretary for purposes including—

3 ‘‘(A) making grants to, and entering into

4 contracts with, organizations with specialized ex5 pertise relating to infants, toddlers, and families

6 and the capacity needed to provide direction and

7 support to a national training and technical as8 sistance system, in order to provide such direc9 tion and support;

10 ‘‘(B) providing ongoing training and tech11 nical assistance for regional and program staff

12 charged with monitoring and overseeing the ad13 ministration of the program carried out under

14 this section;

15 ‘‘(C) providing ongoing training and tech16 nical assistance for recipients of grants under

17 subsection (a) and support and program plan18 ning and implementation assistance for new re19 cipients of such grants; and

20 ‘‘(D) providing professional development

21 and personnel enhancement activities, including

22 the provision of funds to recipients of grants

23 under subsection (a) for the recruitment and re24 tention of qualified staff with an appropriate

25 level of education and experience.’’.
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1 SEC. 115. TECHNICAL ASSISTANCE AND TRAINING.

2 (a) FULL-WORKING-DAY, FULL CALENDAR YEAR

3 SERVICES.—Section 648(b) (42 U.S.C. 9843(b)) is amend4 ed—

5 (1) in paragraph (1), by striking ‘‘; and’’ and

6 inserting a semicolon;

7 (2) in paragraph (2), by striking the period and

8 inserting ‘‘; and’’; and

9 (3) by adding at the end the following:

10 ‘‘(3) ensure the provision of technical assistance

11 to assist Head Start agencies, entities carrying out

12 other child care and early childhood programs, com13 munities, and States in collaborative efforts to pro14 vide quality full-working-day, full calendar year serv15 ices, including technical assistance related to identify16 ing and assisting in resolving barriers to collabora17 tion.’’.

18 (b) ALLOCATING RESOURCES.—Section 648(c) (42

19 U.S.C. 9843(c)) is amended—

20 (1) in paragraph (4)—

21 (A) by striking ‘‘developing’’ and inserting

22 ‘‘developing and implementing’’; and

23 (B) by striking ‘‘a longer day;’’ and insert24 ing the following: ‘‘the day, and assist the agen25 cies and programs in expediting the sharing of

26 information about innovative models for provid-
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1 ing full-working-day, full calendar year services

2 for children;’’;

3 (2) in paragraph (7), by striking ‘‘; and’’ and

4 inserting a semicolon;

5 (3) in paragraph (8), by striking the period and

6 inserting ‘‘; and’’; and

7 (4) by adding at the end the following:

8 ‘‘(9) assist Head Start agencies in—

9 ‘‘(A) ensuring the school readiness of chil10 dren; and

11 ‘‘(B) meeting the education performance

12 standards described in this subchapter.’’.

13 (c) SERVICES.—Section 648(e) (42 U.S.C. 9843(e)) is

14 amended by inserting ‘‘(including services to promote the

15 acquisition of the English language)’’ after ‘‘non-English

16 language background children’’.

17 SEC. 116. STAFF QUALIFICATIONS AND DEVELOPMENT.

18 Section 648A(a) (42 U.S.C. 9843a(a)) is amended—

19 (1) in paragraph (1)—

20 (A) by redesignating subparagraphs (B)

21 through (D) as clauses (ii) through (iv), respec22 tively;

23 (B) by striking ‘‘(A)’’ and inserting

24 ‘‘(B)(i)’’; and
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1 (C) by inserting before subparagraph (B)

2 (as redesignated in subparagraph (B) of this

3 paragraph) the following:

4 ‘‘(A) demonstrated competency to perform

5 functions that include—

6 ‘‘(i) planning and implementing learn7 ing experiences that advance the intellectual

8 and physical development of children, in9 cluding improving the readiness of children

10 for school by developing their literacy and

11 phonemic, print, and numeracy awareness,

12 their understanding and use of oral lan13 guage, their understanding and use of in14 creasingly complex and varied vocabulary,

15 their appreciation of books, and their prob16 lem solving abilities;

17 ‘‘(ii) establishing and maintaining a

18 safe, healthy learning environment;

19 ‘‘(iii) supporting the social and emo20 tional development of children; and

21 ‘‘(iv) encouraging the involvement of

22 the families of the children in a Head Start

23 program and supporting the development of

24 relationships between children and their

25 families; and’’; and
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1 (2) by striking paragraph (2) and inserting the

2 following:

3 ‘‘(2) WAIVER.—On request, the Secretary shall

4 grant a 180-day waiver of the requirements of para5 graph (1)(B), for a Head Start agency that can dem6 onstrate that the agency has unsuccessfully attempted

7 to recruit an individual who has a credential, certifi8 cate, or degree described in paragraph (1)(B), with

9 respect to an individual who—

10 ‘‘(A) is enrolled in a program that grants

11 any such credential, certificate, or degree; and

12 ‘‘(B) will receive such credential, certificate,

13 or degree under the terms of such program not

14 later than 180 days after beginning employment

15 as a teacher with such agency.’’.

16 SEC. 117. RESEARCH, DEMONSTRATION, AND EVALUATION.

17 (a) COMPARATIVE STUDIES.—Section 649(d) (42

18 U.S.C. 9844(d)) is amended—

19 (1) in paragraph (6), by striking ‘‘; and’’ and

20 inserting a semicolon;

21 (2) in paragraph (7), by striking the period and

22 inserting ‘‘; and’’; and

23 (3) by adding at the end the following:

24 ‘‘(8) study the experiences of small, medium, and

25 large States with Head Start programs in order to
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1 permit comparisons of children participating in the

2 programs with eligible children who did not partici3 pate in the programs, which study—

4 ‘‘(A) may include the use of a data set that

5 existed prior to the initiation of the study; and

6 ‘‘(B) shall compare the educational achieve7 ment, social adaptation, and health status of the

8 participating children and the eligible non9 participating children.

10 The Secretary shall ensure that an appropriate entity car11 ries out a study described in paragraph (8), and prepares

12 and submits to the appropriate committees of Congress a

13 report containing the results of the study, not later than

14 September 30, 2002.’’.

15 (b) NATIONAL RESEARCH.—Section 649 (42 U.S.C.

16 9844) is amended by adding at the end the following:

17 ‘‘(g) NATIONAL HEAD START IMPACT RESEARCH.—

18 ‘‘(1) EXPERT PANEL.—

19 ‘‘(A) IN GENERAL.—The Secretary shall ap20 point an independent panel consisting of experts

21 in program evaluation and research, education,

22 and early childhood programs—

23 ‘‘(i) to review, and make recommenda24 tions on, the design and plan for the re25 search (whether conducted as a single as-
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1 sessment or as a series of assessments), de2 scribed in paragraph (2), within 1 year

3 after the date of enactment of the Coats

4 Human Services Reauthorization Act of

5 1998;

6 ‘‘(ii) to maintain and advise the Sec7 retary regarding the progress of the re8 search; and

9 ‘‘(iii) to comment, if the panel so de10 sires, on the interim and final research re11 ports submitted under paragraph (7).

12 ‘‘(B) TRAVEL EXPENSES.—The members of

13 the panel shall not receive compensation for the

14 performance of services for the panel, but shall be

15 allowed travel expenses, including per diem in

16 lieu of subsistence, at rates authorized for em17 ployees of agencies under subchapter I of chapter

18 57 of title 5, United States Code, while away

19 from their homes or regular places of business in

20 the performance of services for the panel. Not21 withstanding section 1342 of title 31, United

22 States Code, the Secretary may accept the vol23 untary and uncompensated services of members

24 of the panel.
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1 ‘‘(2) GENERAL AUTHORITY.—After reviewing the

2 recommendations of the expert panel, the Secretary

3 shall enter into a grant, contract, or cooperative

4 agreement with an organization to conduct independ5 ent research that provides a national analysis of the

6 impact of Head Start programs. The Secretary shall

7 ensure that the organization shall have expertise in

8 program evaluation, and research, education, and

9 early childhood programs.

10 ‘‘(3) DESIGNS AND TECHNIQUES.—The Secretary

11 shall ensure that the research uses rigorous meth12 odological designs and techniques (based on the rec13 ommendations of the expert panel), including longitu14 dinal designs, control groups, nationally recognized

15 standardized measures, and random selection and as16 signment, as appropriate. The Secretary may provide

17 that the research shall be conducted as a single com18 prehensive assessment or as a group of coordinated

19 assessments designed to provide, when taken together,

20 a national analysis of the impact of Head Start pro21 grams.

22 ‘‘(4) PROGRAMS.—The Secretary shall ensure

23 that the research focuses primarily on Head Start

24 programs that operate in the 50 States, the Common25 wealth of Puerto Rico, or the District of Columbia
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1 and that do not specifically target special popu2 lations.

3 ‘‘(5) ANALYSIS.—The Secretary shall ensure that

4 the organization conducting the research—

5 ‘‘(A)(i) determines if, overall, the Head

6 Start programs have impacts consistent with

7 their primary goal of increasing the social com8 petence of children, by increasing the everyday

9 effectiveness of the children in dealing with their

10 present environments and future responsibilities,

11 and increasing their school readiness;

12 ‘‘(ii) considers whether the Head Start pro13 grams—

14 ‘‘(I) enhance the growth and develop15 ment of children in cognitive, emotional,

16 and physical health areas;

17 ‘‘(II) strengthen families as the pri18 mary nurturers of their children; and

19 ‘‘(III) ensure that children attain

20 school readiness; and

21 ‘‘(iii) examines—

22 ‘‘(I) the impact of the Head Start pro23 grams on increasing access of children to

24 such services as educational, health, and nu-
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1 tritional services, and linking children and

2 families to needed community services; and

3 ‘‘(II) how receipt of services described

4 in subclause (I) enriches the lives of chil5 dren and families participating in Head

6 Start programs;

7 ‘‘(B) examines the impact of Head Start

8 programs on participants on the date the par9 ticipants leave Head Start programs, at the end

10 of kindergarten (in public or private school), and

11 at the end of first grade (in public or private

12 school), by examining a variety of factors, in13 cluding educational achievement, referrals for

14 special education or remedial course work, and

15 absenteeism;

16 ‘‘(C) makes use of random selection from the

17 population of all Head Start programs described

18 in paragraph (4) in selecting programs for in19 clusion in the research; and

20 ‘‘(D) includes comparisons of individuals

21 who participate in Head Start programs with

22 control groups (including comparison groups)

23 composed of—

24 ‘‘(i) individuals who participate in

25 other public or private early childhood pro-
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1 grams (such as public or private preschool

2 programs and day care); and

3 ‘‘(ii) individuals who do not partici4 pate in any other early childhood program.

5 ‘‘(6) CONSIDERATION OF SOURCES OF VARI6 ATION.—In designing the research, the Secretary

7 shall, to the extent practicable, consider addressing

8 possible sources of variation in impact of Head Start

9 programs, including variations in impact related to

10 such factors as—

11 ‘‘(A) Head Start program operations;

12 ‘‘(B) Head Start program quality;

13 ‘‘(C) the length of time a child attends a

14 Head Start program;

15 ‘‘(D) the age of the child on entering the

16 Head Start program;

17 ‘‘(E) the type of organization (such as a

18 local educational agency or a community action

19 agency) providing services for the Head Start

20 program;

21 ‘‘(F) the number of hours and days of pro22 gram operation of the Head Start program (such

23 as whether the program is a full-working-day,

24 full calendar year program, a part-day program,

25 or a part-year program); and
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1 ‘‘(G) other characteristics and features of

2 the Head Start program (such as geographic lo3 cation, location in an urban or a rural service

4 area, or participant characteristics), as appro5 priate.

6 ‘‘(7) REPORTS.—

7 ‘‘(A) SUBMISSION OF INTERIM REPORTS.—

8 The organization shall prepare and submit to the

9 Secretary two interim reports on the research.

10 The first interim report shall describe the design

11 of the research, and the rationale for the design,

12 including a description of how potential sources

13 of variation in impact of Head Start programs

14 have been considered in designing the research.

15 The second interim report shall describe the sta16 tus of the research and preliminary findings of

17 the research, as appropriate.

18 ‘‘(B) SUBMISSION OF FINAL REPORT.—The

19 organization shall prepare and submit to the

20 Secretary a final report containing the findings

21 of the research.

22 ‘‘(C) TRANSMITTAL OF REPORTS TO CON23 GRESS.—

24 ‘‘(i) IN GENERAL.—The Secretary shall

25 transmit, to the committees described in
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1 clause (ii), the first interim report by Sep2 tember 30, 1999, the second interim report

3 by September 30, 2001, and the final report

4 by September 30, 2003.

5 ‘‘(ii) COMMITTEES.—The committees

6 referred to in clause (i) are the Committee

7 on Education and the Workforce of the

8 House of Representatives and the Committee

9 on Labor and Human Resources of the Sen10 ate.

11 ‘‘(8) DEFINITION.—In this subsection, the term

12 ‘impact’, used with respect to a Head Start program,

13 means a difference in an outcome for a participant

14 in the program that would not have occurred without

15 the participation in the program.

16 ‘‘(h) QUALITY IMPROVEMENT STUDY.—

17 ‘‘(1) STUDY.—The Secretary shall conduct a

18 study regarding the use and effects of use of the qual19 ity improvement funds made available under section

20 640(a)(3) of the Head Start Act (42 U.S.C.

21 9835(a)(3)) since fiscal year 1991.

22 ‘‘(2) REPORT.—The Secretary shall prepare and

23 submit to Congress not later than September 2000 a

24 report containing the results of the study, including—
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1 ‘‘(A) the types of activities funded with the

2 quality improvement funds;

3 ‘‘(B) the extent to which the use of the qual4 ity improvement funds has accomplished the

5 goals of section 640(a)(3)(B);

6 ‘‘(C) the effect of use of the quality improve7 ment funds on teacher training, salaries, bene8 fits, recruitment, and retention; and

9 ‘‘(D) the effect of use of the quality improve10 ment funds on the cognitive and social develop11 ment of children receiving services under this

12 subchapter.’’.

13 SEC. 118. REPEAL.

14 The Head Start Transition Project Act (42 U.S.C.

15 9855 et seq.) is repealed.

16 TITLE II—COMMUNITY SERVICES

17 BLOCK GRANT PROGRAM

18 SEC. 201. REAUTHORIZATION.

19 The Community Services Block Grant Act (42 U.S.C.

20 9901 et seq.) is amended to read as follows:

21 ‘‘Subtitle B—Community Services

22 Block Grant Program

23 ‘‘SEC. 671. SHORT TITLE.

24 ‘‘This subtitle may be cited as the ‘Community Serv25 ices Block Grant Act’.
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1 ‘‘SEC. 672. PURPOSES AND GOALS.

2 ‘‘The purposes of this subtitle are—

3 ‘‘(1) to provide financial assistance to States

4 and local communities, working through a network of

5 community action agencies and other neighborhood6 based organizations, for the reduction of poverty, the

7 revitalization of low-income communities, and the

8 empowerment of low-income families and individuals

9 in rural and urban areas to become fully self-suffi10 cient (particularly families who are attempting to

11 transition off a State program carried out under part

12 A of title IV of the Social Security Act (42 U.S.C.

13 601 et seq.)); and

14 ‘‘(2) to accomplish the goals described in para15 graph (1) through—

16 ‘‘(A) the strengthening of community capa17 bilities for planning and coordinating the use of

18 a broad range of Federal, State, and other assist19 ance related to the elimination of poverty, so

20 that this assistance can be used in a manner re21 sponsive to local needs and conditions;

22 ‘‘(B) the organization of a range of services

23 related to the needs of low-income families and

24 individuals, so that these services may have a

25 measurable and potentially major impact on the

26 causes of poverty in the community and may
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1 help the families and individuals to achieve self2 sufficiency;

3 ‘‘(C) the use of innovative and effective com4 munity-based approaches to attacking the causes

5 and effects of poverty and of community break6 down;

7 ‘‘(D) the development and implementation

8 of all programs designated to serve low-income

9 communities and groups with the maximum fea10 sible participation of residents of the commu11 nities and members of the groups served, so as to

12 best stimulate and take full advantage of capa13 bilities for self-advancement and assure that the

14 programs are otherwise meaningful to the in15 tended beneficiaries of the programs; and

16 ‘‘(E) the broadening of the resource base of

17 programs directed to the elimination of poverty.

18 ‘‘SEC. 673. DEFINITIONS.

19 ‘‘In this subtitle:

20 ‘‘(1) ELIGIBLE ENTITY.—The term ‘eligible en21 tity’ means an entity—

22 ‘‘(A) that is an eligible entity described in

23 section 673(1) (as in effect on the day before the

24 date of enactment of the Coats Human Services

25 Reauthorization Act of 1998) as of the day before
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1 such date of enactment or is designated by the

2 process described in section 676A (including an

3 organization serving migrant or seasonal farm4 workers that is so described or designated); and

5 ‘‘(B) that has a tripartite board or other

6 mechanism described in subsection (a) or (b), as

7 appropriate, of section 676B.

8 ‘‘(2) POVERTY LINE.—The term ‘poverty line’

9 means the official poverty line defined by the Office

10 of Management and Budget based on Bureau of the

11 Census data. The Secretary shall revise annually (or

12 at any shorter interval the Secretary determines to be

13 feasible and desirable) the poverty line, which shall be

14 used as a criterion of eligibility in the community

15 services block grant program established under this

16 subtitle. The required revision shall be accomplished

17 by multiplying the official poverty line by the per18 centage change in the Consumer Price Index for All

19 Urban Consumers during the annual or other interval

20 immediately preceding the time at which the revision

21 is made. Whenever a State determines that it serves

22 the objectives of the block grant program established

23 under this subtitle, the State may revise the poverty

24 line to not to exceed 125 percent of the official poverty

25 line otherwise applicable under this paragraph.
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1 ‘‘(3) PRIVATE, NONPROFIT ORGANIZATION.—The

2 term ‘private, nonprofit organization’ includes a

3 faith-based organization, to which the provisions of

4 section 679 shall apply.

5 ‘‘(4) SECRETARY.—The term ‘Secretary’ means

6 the Secretary of Health and Human Services.

7 ‘‘(5) STATE.—The term ‘State’ means each of the

8 several States, the District of Columbia, the Common9 wealth of Puerto Rico, Guam, the United States Vir10 gin Islands, American Samoa, the Commonwealth of

11 the Northern Mariana Islands, and the combined

12 Freely Associated States.

13 ‘‘SEC. 674. AUTHORIZATION OF APPROPRIATIONS.

14 ‘‘(a) IN GENERAL.—There are authorized to be appro15 priated $625,000,000 for fiscal year 1999 and such sums

16 as may be necessary for each of fiscal years 2000 through

17 2003 to carry out the provisions of this subtitle (other than

18 sections 681 and 682).

19 ‘‘(b) RESERVATIONS.—Of the amounts appropriated

20 under subsection (a) for each fiscal year, the Secretary shall

21 reserve—

‘‘(1) 1 22 ⁄2 of 1 percent for carrying out section

23 675A (relating to payments for territories);

‘‘(2) not less than 1 24 ⁄2 of 1 percent and not more

25 than 1 percent for activities authorized in section
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1 678A (relating to training and technical assistance);

2 and

3 ‘‘(3) 9 percent for carrying out section 680 (re4 lating to discretionary activities).

5 ‘‘SEC. 675. ESTABLISHMENT OF BLOCK GRANT PROGRAM.

6 ‘‘The Secretary is authorized to establish a community

7 services block grant program and make grants through the

8 program to States to ameliorate the causes of poverty in

9 communities within the States.

10 ‘‘SEC. 675A. DISTRIBUTION TO TERRITORIES.

11 ‘‘(a) APPORTIONMENT.—The Secretary shall apportion

12 the amount reserved under section 674(b)(1) for each fiscal

13 year on the basis of need among Guam, American Samoa,

14 the United States Virgin Islands, the Commonwealth of the

15 Northern Mariana Islands, and the combined Freely Associ16 ated States.

17 ‘‘(b) APPLICATION.—Each jurisdiction to which sub18 section (a) applies may receive a grant under this subtitle

19 for the amount apportioned under subsection (a) on submit20 ting to the Secretary, and obtaining approval of, an appli21 cation, containing provisions that describe the programs for

22 which assistance is sought under this subtitle, that is pre23 pared in accordance with, and contains the information de24 scribed in, section 676.
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1 ‘‘SEC. 675B. ALLOTMENTS AND PAYMENTS TO STATES.

2 ‘‘(a) ALLOTMENTS IN GENERAL.—The Secretary shall,

3 from the amount appropriated under section 674(a) for

4 each fiscal year that remains after the Secretary makes the

5 reservations required in section 674(b), allot to each State

6 (subject to section 677) an amount that bears the same ratio

7 to such remaining amount as the amount received by the

8 State for fiscal year 1981 under section 221 of the Economic

9 Opportunity Act of 1964 bore to the total amount received

10 by all States for fiscal year 1981 under such section, except

that no State shall receive less than 1 11 ⁄4 of 1 percent of the

12 amount appropriated under section 674(a) for such fiscal

13 year.

14 ‘‘(b) ALLOTMENTS IN YEARS WITH GREATER AVAIL15 ABLE FUNDS.—

16 ‘‘(1) MINIMUM ALLOTMENTS.—Subject to para17 graphs (2) and (3), if the amount appropriated under

18 section 674(a) for a fiscal year that remains after the

19 Secretary makes the reservations required in section

20 674(b) exceeds $345,000,000, the Secretary shall allot

to each State not less than 1 21 ⁄2 of 1 percent of the

22 amount appropriated under section 674(a) for such

23 fiscal year.

24 ‘‘(2) MAINTENANCE OF FISCAL YEAR 1990 LEV25 ELS.—Paragraph (1) shall not apply with respect to

26 a fiscal year if the amount allotted under subsection
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1 (a) to any State for that year is less than the amount

2 allotted under section 674(a)(1) (as in effect on Sep3 tember 30, 1989) to such State for fiscal year 1990.

4 ‘‘(3) MAXIMUM ALLOTMENTS.—The amount al5 lotted under paragraph (1) to a State for a fiscal

6 year shall be reduced, if necessary, so that the aggre7 gate amount allotted to such State under such para8 graph and subsection (a) does not exceed 140 percent

9 of the aggregate amount allotted to such State under

10 the corresponding provisions of this subtitle for the

11 preceding fiscal year.

12 ‘‘(c) PAYMENTS.—The Secretary shall make grants to

13 eligible States for the allotments described in subsections (a)

14 and (b). The Secretary shall make payments for the grants

15 in accordance with section 6503(a) of title 31, United States

16 Code.

17 ‘‘(d) DEFINITION.—For purposes of this section, the

18 term ‘State’ does not include Guam, American Samoa, the

19 United States Virgin Islands, the Commonwealth of the

20 Northern Mariana Islands, and the Freely Associated

21 States.

22 ‘‘SEC. 675C. USES OF FUNDS.

23 ‘‘(a) GRANTS TO ELIGIBLE ENTITIES AND OTHER OR24 GANIZATIONS.—
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1 ‘‘(1) IN GENERAL.—Not less than 90 percent of

2 the funds made available to a State under section

3 675A or 675B shall be used by the State to make

4 grants for the purposes described in section 672 to eli5 gible entities.

6 ‘‘(2) OBLIGATIONAL AUTHORITY.—Funds distrib7 uted to eligible entities through grants made in ac8 cordance with paragraph (1) for a fiscal year shall be

9 available for obligation during that fiscal year and

10 the succeeding fiscal year, in accordance with para11 graph (3).

12 ‘‘(3) RECAPTURE AND REDISTRIBUTION OF UN13 OBLIGATED FUNDS.—

14 ‘‘(A) AMOUNT.—Beginning on October 1,

15 2000, a State may recapture and redistribute

16 funds distributed to an eligible entity through a

17 grant made under paragraph (1) that are unob18 ligated at the end of a fiscal year if such unobli19 gated funds exceed 20 percent of the amount so

20 distributed to such eligible entity for such fiscal

21 year.

22 ‘‘(B) REDISTRIBUTION.—In redistributing

23 funds recaptured in accordance with this para24 graph, States shall redistribute such funds to an

25 eligible entity, or require the original recipient of
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1 the funds to redistribute the funds to a private,

2 nonprofit organization, located within the com3 munity served by the original recipient of the

4 funds, for activities consistent with the purposes

5 of this subtitle.

6 ‘‘(b) OTHER ACTIVITIES.—

7 ‘‘(1) USE OF REMAINDER.—If a State uses less

8 than 100 percent of payments from a grant under sec9 tion 675A, or the State allotment under section 675B,

10 to make grants under subsection (a), the State shall

11 use the remainder of such payments (subject to para12 graph (2)) for—

13 ‘‘(A) providing training and technical as14 sistance to those entities in need of such training

15 and assistance;

16 ‘‘(B) coordinating State-operated programs

17 and services targeted to low-income children and

18 families with services provided by eligible enti19 ties and other organizations funded under this

20 subtitle, including detailing appropriate employ21 ees of State or local agencies to entities funded

22 under this subtitle, to ensure increased access to

23 services provided by such State or local agencies;

24 ‘‘(C) supporting statewide coordination and

25 communication among eligible entities;
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1 ‘‘(D) analyzing the distribution of funds

2 made available under this subtitle within the

3 State to determine if such funds have been tar4 geted to the areas of greatest need;

5 ‘‘(E) supporting asset-building programs for

6 low-income individuals, such as programs sup7 porting individual development accounts;

8 ‘‘(F) supporting innovative programs and

9 activities conducted by community action agen10 cies or other neighborhood-based organizations to

11 eliminate poverty, promote self-sufficiency, and

12 promote community revitalization; and

13 ‘‘(G) supporting other activities, consistent

14 with the purposes of this subtitle.

15 ‘‘(2) ADMINISTRATIVE CAP.—No State may

16 spend more than the greater of $55,000, or 5 percent,

17 of the State allotment for administrative expenses, in18 cluding monitoring activities. The cost of activities

19 conducted under paragraph (1)(A) shall not be con20 sidered to be administrative expenses.

21 ‘‘SEC. 676. APPLICATION AND PLAN.

22 ‘‘(a) DESIGNATION OF LEAD AGENCY.—

23 ‘‘(1) DESIGNATION.—The chief executive officer

24 of a State desiring to receive an allotment under this

25 subtitle shall designate, in an application submitted
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1 to the Secretary under subsection (b), an appropriate

2 State agency that complies with the requirements of

3 paragraph (2) to act as a lead agency for purposes

4 of carrying out State activities under this subtitle.

5 ‘‘(2) DUTIES.—The lead agency designated in

6 accordance with paragraph (1) shall—

7 ‘‘(A) develop the State plan to be submitted

8 to the Secretary under subsection (b);

9 ‘‘(B) in conjunction with the development of

10 the State plan as required under subsection (b),

11 hold at least one hearing in the State with suffi12 cient time, and statewide distribution of notice

13 of such hearing, to provide to the public an op14 portunity to comment on the proposed use and

15 distribution of funds to be provided through the

16 allotment for the period covered by the State

17 plan; and

18 ‘‘(C) conduct reviews of eligible entities

19 under section 678B.

20 ‘‘(3) LEGISLATIVE HEARING.—In order to be eli21 gible to receive an allotment under this subtitle, the

22 State shall hold at least one legislative hearing every

23 3 years in conjunction with the development of the

24 State plan.
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1 ‘‘(b) STATE APPLICATION AND PLAN.—Beginning with

2 fiscal year 2000, to be eligible to receive an allotment under

3 this subtitle, a State shall prepare and submit to the Sec4 retary an application and State plan covering a period of

5 not less than 1 fiscal year and not more than 2 fiscal years.

6 The plan shall be submitted not later than 30 days prior

7 to the beginning of the first fiscal year covered by the plan,

8 and shall contain such information as the Secretary shall

9 require, including—

10 ‘‘(1) an assurance that funds made available

11 through the allotment will be used to support activi12 ties that are designed to assist low-income families

13 and individuals, including homeless families and in14 dividuals, migrant or seasonal farmworkers, and el15 derly low-income individuals and families, and a de16 scription of how such activities will enable the fami17 lies and individuals—

18 ‘‘(A) to remove obstacles and solve problems

19 that block the achievement of self-sufficiency;

20 ‘‘(B) to secure and retain meaningful em21 ployment;

22 ‘‘(C) to attain an adequate education;

23 ‘‘(D) to make better use of available income;

24 ‘‘(E) to obtain and maintain adequate

25 housing and a suitable living environment;
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1 ‘‘(F) to obtain emergency assistance through

2 loans, grants, or other means to meet immediate

3 and urgent individual and family needs;

4 ‘‘(G) to achieve greater participation in the

5 affairs of the community involved; and

6 ‘‘(H) to make more effective use of other

7 programs related to the purposes of this subtitle

8 (including State welfare reform efforts);

9 ‘‘(2) a description of how the State intends to

10 use discretionary funds made available from the re11 mainder of the allotment described in section 675C(b)

12 in accordance with this subtitle, including a descrip13 tion of how the State will support innovative commu14 nity and neighborhood-based initiatives related to the

15 purposes of this subtitle;

16 ‘‘(3) based on information provided by eligible

17 entities in the State, a description of—

18 ‘‘(A) the service delivery system, for services

19 provided or coordinated with funds made avail20 able through the allotment, targeted to low-in21 come individuals and families in communities

22 within the State;

23 ‘‘(B) how linkages will be developed to fill

24 identified gaps in the services, through the provi-
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1 sion of information, referrals, case management,

2 and followup consultations;

3 ‘‘(C) how funds made available through the

4 allotment will be coordinated with other public

5 and private resources; and

6 ‘‘(D) how the funds will be used to support

7 innovative community and neighborhood-based

8 initiatives related to the purposes of this subtitle;

9 ‘‘(4) an assurance that the State will provide, on

10 an emergency basis, for the provision of such supplies

11 and services, nutritious foods, and related services, as

12 may be necessary to counteract conditions of starva13 tion and malnutrition among low-income individuals;

14 ‘‘(5) an assurance that the State will coordinate,

15 and establish linkages between, governmental and

16 other social services programs to assure the effective

17 delivery of such services to low-income individuals;

18 ‘‘(6) an assurance that the State will ensure co19 ordination between antipoverty programs in each

20 community, and ensure, where appropriate, that

21 emergency energy crisis intervention programs under

22 title XXVI (relating to low-income home energy as23 sistance) are conducted in such community;
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1 ‘‘(7) an assurance that the State will permit and

2 cooperate with Federal investigations undertaken in

3 accordance with section 678D;

4 ‘‘(8) an assurance that any eligible entity that

5 received funding in the previous fiscal year under this

6 subtitle will not have its funding terminated under

7 this subtitle, or reduced below the proportional share

8 of funding the entity received in the previous fiscal

9 year unless, after providing notice and an oppor10 tunity for a hearing on the record, the State deter11 mines that cause exists for such termination or such

12 reduction, subject to review by the Secretary as pro13 vided in section 678C(b);

14 ‘‘(9) an assurance that the State will, to the

15 maximum extent possible, coordinate programs with

16 and form partnerships with other organizations serv17 ing low-income residents of the communities and

18 members of the groups served by the State, including

19 faith-based organizations, charitable groups, and com20 munity organizations;

21 ‘‘(10) an assurance that the State will require

22 each eligible entity to establish procedures under

23 which a low-income individual, community organiza24 tion, or faith-based organization, or representative of

25 low-income individuals that considers its organiza-
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1 tion, or low-income individuals, to be inadequately

2 represented on the board (or other mechanism) of the

3 eligible entity to petition for adequate representation;

4 ‘‘(11) an assurance that the State will secure

5 from each eligible entity, as a condition to receipt of

6 funding by the entity under this subtitle for a pro7 gram, a community action plan (which shall be sub8 mitted to the Secretary, at the request of the Sec9 retary, with the State plan) that includes a commu10 nity-needs assessment for the community served,

11 which may be coordinated with community-needs as12 sessments conducted for other programs;

13 ‘‘(12) an assurance that the State and all eligible

14 entities in the State will, not later than fiscal year

15 2002, participate in the Results Oriented Manage16 ment and Accountability System, any other perform17 ance measure system established by the Secretary

18 under section 678E(b), or an alternative system for

19 measuring performance and results that meets the re20 quirements of that section, and a description of out21 come measures to be used to measure eligible entity

22 performance in promoting self-sufficiency, family sta23 bility, and community revitalization; and

24 ‘‘(13) information describing how the State will

25 carry out the assurances described in this subsection.
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1 ‘‘(c) DETERMINATIONS.—For purposes of making a de2 termination in accordance with subsection (b)(8) with re3 spect to—

4 ‘‘(1) a funding reduction, the term ‘cause’ in5 cludes—

6 ‘‘(A) a statewide redistribution of funds

7 provided under this subtitle to respond to—

8 ‘‘(i) the results of the most recently

9 available census or other appropriate data;

10 ‘‘(ii) the designation of a new eligible

11 entity; or

12 ‘‘(iii) severe economic dislocation; or

13 ‘‘(B) the failure of an eligible entity to com14 ply with the terms of an agreement to provide

15 services under this subtitle; and

16 ‘‘(2) a termination, the term ‘cause’ includes the

17 material failure of an eligible entity to comply with

18 the terms of such an agreement and the State plan to

19 provide services under this subtitle or the consistent

20 failure of the entity to achieve performance measures

21 as determined by the State.

22 ‘‘(d) PROCEDURES.—The Secretary may prescribe pro23 cedures relating to the implementation of this section only

24 for the purpose of assessing the effectiveness of eligible enti25 ties in carrying out the purposes of this subtitle.
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1 ‘‘(e) REVISIONS AND INSPECTION.—

2 ‘‘(1) REVISIONS.—The chief executive officer of

3 each State may revise any plan prepared under this

4 section and shall submit the revised plan to the Sec5 retary.

6 ‘‘(2) PUBLIC INSPECTION.—Each plan or revised

7 plan prepared under this section shall be made avail8 able for public inspection within the State in such a

9 manner as will facilitate review of, and comment on,

10 the plan.

11 ‘‘(f) FISCAL YEAR 1999.—For fiscal year 2000, to be

12 eligible to receive an allotment under this subtitle, a State

13 shall prepare and submit to the Secretary an application

14 and State plan in accordance with the provisions of this

15 subtitle (as in effect on the day before the date of enactment

16 of the Coats Human Services Reauthorization Act of 1998),

17 rather than the provisions of subsections (a) through (c) re18 lating to applications and plans.

19 ‘‘SEC. 676A. DESIGNATION AND REDESIGNATION OF ELIGI20 BLE ENTITIES IN UNSERVED AREAS.

21 ‘‘(a) QUALIFIED ORGANIZATION IN OR NEAR AREA.—

22 ‘‘(1) IN GENERAL.—If any geographic area of a

23 State is not, or ceases to be, served by an eligible en24 tity under this subtitle, and if the chief executive offi25 cer of the State decides to serve such area, the chief
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1 executive officer may solicit applications from, and

2 designate as an eligible entity, one or more—

3 ‘‘(A) private nonprofit organizations geo4 graphically located in the unserved area that

5 meet the requirements of this subtitle; or

6 ‘‘(B) private nonprofit organizations (which

7 may include eligible entities) located in an area

8 contiguous to or within reasonable proximity of

9 the unserved area that are already providing re10 lated services in the unserved area.

11 ‘‘(2) REQUIREMENT.—In order to serve as the el12 igible entity for the area, an entity described in para13 graph (1)(B) shall agree to add additional members

14 to the board of the entity to ensure adequate represen15 tation—

16 ‘‘(A) in each of the three required categories

17 described in subparagraphs (A), (B), and (C) of

18 section 676B(a)(2), by members that reside in

19 the community comprised by the unserved area;

20 and

21 ‘‘(B) in the category described in section

22 676B(a)(2)(B), by members that reside in the

23 neighborhood served.

24 ‘‘(b) SPECIAL CONSIDERATION.—In designating an el25 igible entity under subsection (a), the chief executive officer
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1 shall grant the designation to an organization of dem2 onstrated effectiveness in meeting the goals and purposes

3 of this subtitle and may give priority, in granting the des4 ignation, to local entities that are providing services in the

5 unserved area, consistent with the needs identified by a

6 community-needs assessment.

7 ‘‘(c) NO QUALIFIED ORGANIZATION IN OR NEAR

8 AREA.—If no private, nonprofit organization is identified

9 or determined to be qualified under subsection (a) to serve

10 the unserved area as an eligible entity the chief executive

11 officer may designate an appropriate political subdivision

12 of the State to serve as an eligible entity for the area. In

13 order to serve as the eligible entity for that area, the politi14 cal subdivision shall have a board or other mechanism as

15 required in section 676B(b).

16 ‘‘SEC. 676B. TRIPARTITE BOARDS.

17 ‘‘(a) PRIVATE NONPROFIT ENTITIES.—

18 ‘‘(1) BOARD.—In order for a private, nonprofit

19 entity to be considered to be an eligible entity for pur20 poses of section 673(1), the entity shall administer the

21 community services block grant program through a

22 tripartite board described in paragraph (2) that fully

23 participates in the development, planning, and imple24 mentation of the program to serve low-income com25 munities.
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1 ‘‘(2) SELECTION AND COMPOSITION OF BOARD.—

2 The members of the board referred to in paragraph

3 (1) shall be selected by the entity and the board shall

4 be composed so as to assure that—

‘‘(A) 1 5 ⁄3 of the members of the board are

6 elected public officials, holding office on the date

7 of selection, or their representatives, except that

8 if the number of elected officials reasonably

9 available and willing to serve on the board is less

than 1 10 ⁄3 of the membership of the board, member11 ship on the board of appointive public officials

12 or their representatives may be counted in meeting such 1 13 ⁄3 requirement;

‘‘(B) not fewer than 1 14 ⁄3 of the members are

15 persons chosen in accordance with democratic se16 lection procedures adequate to assure that these

17 members are representative of low-income indi18 viduals and families in the neighborhood served;

19 ‘‘(C) the remainder of the members are offi20 cials or members of business, industry, labor, re21 ligious, law enforcement, education, or other

22 major groups and interests in the community

23 served; and

24 ‘‘(D)(i) each member resides in the commu25 nity; and
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1 ‘‘(ii) each representative of low-income indi2 viduals and families selected to represent a spe3 cific neighborhood within a community under

4 this paragraph resides in the neighborhood rep5 resented by the member.

6 ‘‘(b) PUBLIC ORGANIZATIONS.—In order for a public

7 organization to be considered to be an eligible entity for

8 purposes of section 673(1), the entity shall administer the

9 community services block grant program through—

10 ‘‘(1) a tripartite board, which shall have mem11 bers selected by the organization and shall be composed so as to assure that not fewer than 1 12 ⁄3 of the

13 members are persons chosen in accordance with demo14 cratic selection procedures adequate to assure that

15 these members—

16 ‘‘(A) are representative of low-income indi17 viduals and families in the neighborhood served;

18 ‘‘(B) reside in the neighborhood served; and

19 ‘‘(C) are able to participate actively in the

20 development, planning, and implementation of

21 programs funded under this subtitle; or

22 ‘‘(2) another mechanism specified by the State to

23 assure decisionmaking and participation by low-in24 come individuals in the development, planning, and
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1 implementation of programs funded under this sub2 title.

3 ‘‘SEC. 677. PAYMENTS TO INDIAN TRIBES.

4 ‘‘(a) RESERVATION.—If, with respect to any State, the

5 Secretary—

6 ‘‘(1) receives a request from the governing body

7 of an Indian tribe or tribal organization within the

8 State that assistance under this subtitle be made di9 rectly to such tribe or organization; and

10 ‘‘(2) determines that the members of such tribe or

11 tribal organization would be better served by means

12 of grants made directly to provide benefits under this

13 subtitle,

14 the Secretary shall reserve from amounts that would other15 wise be allotted to such State under section 675B for the

16 fiscal year the amount determined under subsection (b).

17 ‘‘(b) DETERMINATION OF RESERVED AMOUNT.—The

18 Secretary shall reserve for the purpose of subsection (a) from

19 amounts that would otherwise be allotted to such State, not

20 less than 100 percent of an amount that bears the same

21 ratio to the State allotment for the fiscal year involved as

22 the population of all eligible Indians for whom a determina23 tion has been made under subsection (a) bears to the popu24 lation of all individuals eligible for assistance under this

25 subtitle in such State.
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1 ‘‘(c) AWARDS.—The sums reserved by the Secretary on

2 the basis of a determination made under subsection (a) shall

3 be made available by grant to the Indian tribe or tribal

4 organization serving the individuals for whom such a deter5 mination has been made.

6 ‘‘(d) PLAN.—In order for an Indian tribe or tribal or7 ganization to be eligible for a grant award for a fiscal year

8 under this section, the tribe or organization shall submit

9 to the Secretary a plan for such fiscal year that meets such

10 criteria as the Secretary may prescribe by regulation.

11 ‘‘(e) DEFINITIONS.—In this section:

12 ‘‘(1) INDIAN TRIBE; TRIBAL ORGANIZATION.—The

13 terms ‘Indian tribe’ and ‘tribal organization’ mean a

14 tribe, band, or other organized group recognized in

15 the State in which the tribe, band, or group resides,

16 or considered by the Secretary of the Interior, to be

17 an Indian tribe or an Indian organization for any

18 purpose.

19 ‘‘(2) INDIAN.—The term ‘Indian’ means a mem20 ber of an Indian tribe or of a tribal organization.

21 ‘‘SEC. 678. OFFICE OF COMMUNITY SERVICES.

22 ‘‘(a) OFFICE.—The Secretary shall carry out the func23 tions of this subtitle through an Office of Community Serv24 ices, which shall be established in the Department of Health
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1 and Human Services. The Office shall be headed by a Direc2 tor.

3 ‘‘(b) GRANTS, CONTRACTS, COOPERATIVE AGREE4 MENTS.—The Secretary shall carry out functions of this

5 subtitle through grants, contracts, or cooperative agree6 ments.

7 ‘‘SEC. 678A. TRAINING AND TECHNICAL ASSISTANCE.

8 ‘‘(a) ACTIVITIES.—The Secretary shall use the

9 amounts reserved in section 674(b)(2) for training, tech10 nical assistance, planning, evaluation, and data collection

11 activities related to programs carried out under this sub12 title.

13 ‘‘(b) PROCESS.—The process for determining the train14 ing and technical assistance to be carried out under this

15 section shall—

16 ‘‘(1) ensure that the needs of eligible entities and

17 programs relating to improving program quality, in18 cluding financial management practices, are ad19 dressed to the maximum extent feasible; and

20 ‘‘(2) incorporate mechanisms to ensure respon21 siveness to local needs, including an ongoing proce22 dure for obtaining input from the national and State

23 networks of eligible entities.
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1 ‘‘SEC. 678B. MONITORING OF ELIGIBLE ENTITIES.

2 ‘‘(a) IN GENERAL.—In order to determine whether eli3 gible entities meet the performance goals, administrative

4 standards, financial management requirements, and other

5 requirements of a State, the State shall conduct the follow6 ing reviews of eligible entities:

7 ‘‘(1) A full onsite review of each such entity at

8 least once during each 3-year period.

9 ‘‘(2) An onsite review of each newly designated

10 entity immediately after the completion of the first

11 year in which such entity receives funds through the

12 community services block grant program.

13 ‘‘(3) Followup reviews including prompt return

14 visits to eligible entities, and their programs, that fail

15 to meet the goals, standards, and requirements estab16 lished by the State.

17 ‘‘(4) Other reviews as appropriate, including re18 views of entities with programs that have had other

19 Federal, State, or local grants (other than assistance

20 provided under this subtitle) terminated for cause.

21 ‘‘(b) REQUESTS.—The State may request training and

22 technical assistance from the Secretary as needed to comply

23 with the requirements of this section.
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1 ‘‘SEC. 678C. CORRECTIVE ACTION; TERMINATION AND RE2 DUCTION OF FUNDING.

3 ‘‘(a) DETERMINATION.—If the State determines, on the

4 basis of a review pursuant to subsection 678B, that an eligi5 ble entity has had a failure described in section 676(c), the

6 State shall—

7 ‘‘(1) inform the entity of the deficiency to be cor8 rected;

9 ‘‘(2) require the entity to correct the deficiency;

10 ‘‘(3)(A) offer training and technical assistance, if

11 appropriate, to help correct the deficiency, and pre12 pare and submit to the Secretary a report describing

13 the training and technical assistance offered; or

14 ‘‘(B) if the State determines that such training

15 and technical assistance are not appropriate, prepare

16 and submit to the Secretary a report stating the rea17 sons for the determination;

18 ‘‘(4)(A) at the discretion of the State (taking into

19 account the seriousness of the deficiency and the time

20 reasonably required to correct the deficiency), allow

21 the entity to develop and implement, within 60 days

22 after being informed of the deficiency, a quality im23 provement plan to correct such deficiency within a

24 reasonable period of time, as determined by the State;

25 and
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1 ‘‘(B) not later than 30 days after receiving from

2 an eligible entity a proposed quality improvement

3 plan pursuant to subparagraph (A), either approve

4 such proposed plan or specify the reasons why the

5 proposed plan cannot be approved; and

6 ‘‘(5) after providing adequate notice and an op7 portunity for a hearing, initiate proceedings to termi8 nate the designation of or reduce the funding under

9 this subtitle of the eligible entity unless the entity cor10 rects the deficiency.

11 ‘‘(b) REVIEW.—A determination to terminate the des12 ignation or reduce the funding of an eligible entity is re13 viewable by the Secretary. The Secretary shall, upon re14 quest, review such a determination. The review shall be

15 completed not later than 60 days after the determination

16 to terminate the designation or reduce the funding. If the

17 review is not completed within 60 days, the determination

18 of the State shall become final at the end of the 60th day.

19 ‘‘SEC. 678D. FISCAL CONTROLS, AUDITS, AND WITHHOLD20 ING.

21 ‘‘(a) FISCAL CONTROLS, PROCEDURES, AUDITS, AND

22 INSPECTIONS.—

23 ‘‘(1) IN GENERAL.—A State that receives funds

24 under this subtitle shall—
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1 ‘‘(A) establish fiscal control and fund ac2 counting procedures necessary to assure the

3 proper disbursal of and accounting for Federal

4 funds paid to the State under this subtitle, in5 cluding procedures for monitoring the funds pro6 vided under this subtitle;

7 ‘‘(B) ensure that cost and accounting stand8 ards of the Office of Management and Budget

9 apply to a recipient of funds under this subtitle;

10 ‘‘(C) prepare, at least every year (or in the

11 case of a State with a 2-year State plan, every

12 2 years) in accordance with paragraph (2) an

13 audit of the expenditures of the State of amounts

14 received under this subtitle and amounts trans15 ferred to carry out the purposes of this subtitle;

16 and

17 ‘‘(D) make appropriate books, documents,

18 papers, and records available to the Secretary

19 and the Comptroller General of the United

20 States, or any of their duly authorized represent21 atives, for examination, copying, or mechanical

22 reproduction on or off the premises of the appro23 priate entity upon a reasonable request for the

24 items.
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1 ‘‘(2) AUDITS.—Each audit required by sub2 section (a)(1)(C) shall be conducted by an entity inde3 pendent of any agency administering activities or

4 services carried out under this subtitle and shall be

5 conducted in accordance with generally accepted ac6 counting principles. Within 30 days after the comple7 tion of each such audit in a State, the chief executive

8 officer of the State shall submit a copy of such audit

9 to any eligible entity that was the subject of the audit

10 at no charge, to the legislature of the State, and to

11 the Secretary.

12 ‘‘(3) REPAYMENTS.—The State shall repay to the

13 United States amounts found not to have been ex14 pended in accordance with this subtitle or the Sec15 retary may offset such amounts against any other

16 amount to which the State is or may become entitled

17 under this subtitle.

18 ‘‘(b) WITHHOLDING.—

19 ‘‘(1) IN GENERAL.—The Secretary shall, after

20 providing adequate notice and an opportunity for a

21 hearing conducted within the affected State, withhold

22 funds from any State that does not utilize the State

23 allotment in accordance with the provisions of this

24 subtitle, including the assurances such State provided

25 under section 676.
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1 ‘‘(2) RESPONSE TO COMPLAINTS.—The Secretary

2 shall respond in an expeditious and speedy manner

3 to complaints of a substantial or serious nature that

4 a State has failed to use funds in accordance with the

5 provisions of this subtitle, including the assurances

6 provided by the State under section 676. For purposes

7 of this paragraph, a complaint of a failure to meet

8 any one of the assurances provided under section 676

9 that constitutes disregarding that assurance shall be

10 considered to be a complaint of a serious nature.

11 ‘‘(3) INVESTIGATIONS.—Whenever the Secretary

12 determines that there is a pattern of complaints of

13 failures described in paragraph (2) from any State in

14 any fiscal year, the Secretary shall conduct an inves15 tigation of the use of funds received under this subtitle

16 by such State in order to ensure compliance with the

17 provisions of this subtitle.

18 ‘‘SEC. 678E. ACCOUNTABILITY AND REPORTING REQUIRE19 MENTS.

20 ‘‘(a) STATE ACCOUNTABILITY AND REPORTING RE21 QUIREMENTS.—

22 ‘‘(1) PERFORMANCE MEASUREMENT.—

23 ‘‘(A) IN GENERAL.—By October 1, 2001,

24 each State that receives funds under this subtitle

25 shall participate, and shall ensure that all eligi-
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1 ble entities in the State participate, in a per2 formance measurement system, which may be a

3 performance measurement system established by

4 the Secretary pursuant to subsection (b), or an

5 alternative system that the Secretary is satisfied

6 meets the requirements of subsection (b).

7 ‘‘(B) LOCAL AGENCIES.—The State may

8 elect to have local agencies that are subcontrac9 tors of the eligible entities under this subtitle

10 participate in the performance measurement sys11 tem. If the State makes that election, references

12 in this section to eligible entities shall be consid13 ered to include the local agencies.

14 ‘‘(2) ANNUAL REPORT.—Each State shall annu15 ally prepare and submit to the Secretary a report on

16 the measured performance of the State and the eligible

17 entities in the State. Prior to the participation of the

18 State in the performance measurement system, the

19 State shall include in the report any information col20 lected by the State relating to such performance. Each

21 State shall also include in the report an accounting

22 of the expenditure of funds received by the State

23 through the community services block grant program,

24 including an accounting of funds spent on adminis25 trative costs by the State and the eligible entities, and
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1 funds spent by eligible entities on the direct delivery

2 of local services, and shall include information on the

3 number of and characteristics of clients served under

4 this subtitle in the State, based on data collected from

5 the eligible entities. The State shall also include in the

6 report a summary describing the training and tech7 nical assistance offered by the State under section

8 678C(a)(3) during the year covered by the report.

9 ‘‘(b) SECRETARY’S ACCOUNTABILITY AND REPORTING

10 REQUIREMENTS.—

11 ‘‘(1) PERFORMANCE MEASUREMENT.—The Sec12 retary, in collaboration with the States and with eli13 gible entities throughout the Nation, shall establish

14 one or more model performance measurement systems,

15 which may be used by the States and by eligible enti16 ties to measure their performance in carrying out the

17 requirements of this subtitle and in achieving the

18 goals of community action plans. The Secretary shall

19 provide technical assistance, including support for the

20 enhancement of electronic data systems, to States and

21 to eligible entities to enhance their capability to col22 lect and report data for such a system and to aid in

23 their participation in such a system.

24 ‘‘(2) REPORTING REQUIREMENTS.—At the end of

25 each fiscal year beginning after September 30, 1999,
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1 the Secretary shall, directly or by grant or contract,

2 prepare a report containing each of the following ele3 ments:

4 ‘‘(A) A summary of the planned use of

5 funds by each State, and the eligible entities in

6 the State, under the community services block

7 grant program, as contained in each State plan

8 submitted pursuant to section 676.

9 ‘‘(B) A description of how funds were actu10 ally spent by the State and eligible entities in

11 the State, including a breakdown of funds spent

12 on administrative costs and on the direct deliv13 ery of local services by eligible entities.

14 ‘‘(C) Information on the number of entities

15 eligible for funds under this subtitle, the number

16 of low-income persons served under this subtitle,

17 and such demographic data on the low-income

18 populations served by eligible entities as is deter19 mined by the Secretary to be feasible.

20 ‘‘(D) A comparison of the planned uses of

21 funds for each State and the actual uses of the

22 funds.

23 ‘‘(E) A summary of each State’s perform24 ance results, and the results for the eligible enti-
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•S 2206 RS

1 ties, as collected and submitted by the States in

2 accordance with subsection (a)(2).

3 ‘‘(F) Any additional information that the

4 Secretary considers to be appropriate to carry

5 out this subtitle, if the Secretary informs the

6 States of the need for such additional informa7 tion and allows a reasonable period of time for

8 the States to collect and provide the information.

9 ‘‘(3) SUBMISSION.—The Secretary shall submit

10 to the Committee on Education and the Workforce of

11 the House of Representatives and the Committee on

12 Labor and Human Resources of the Senate the report

13 described in paragraph (2), and any comments the

14 Secretary may have with respect to such report. The

15 report shall include definitions of direct, indirect, and

16 administrative costs used by the Department of

17 Health and Human Services for programs funded

18 under this subtitle.

19 ‘‘(4) COSTS.—Of the funds reserved under section

20 674(b)(3), not more than $350,000 shall be available

21 to carry out the reporting requirements contained in

22 paragraph (2) and the provision of technical assist23 ance described in paragraph (1).

24 ‘‘SEC. 678F. LIMITATIONS ON USE OF FUNDS.

25 ‘‘(a) CONSTRUCTION OF FACILITIES.—
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1 ‘‘(1) LIMITATIONS.—Except as provided in para2 graph (2), grants made under this subtitle (other than

3 amounts reserved under section 674(b)(3)) may not be

4 used by the State, or by any other person with which

5 the State makes arrangements to carry out the pur6 poses of this subtitle, for the purchase or improvement

7 of land, or the purchase, construction, or permanent

8 improvement (other than low-cost residential weather9 ization or other energy-related home repairs) of any

10 building or other facility.

11 ‘‘(2) WAIVER.—The Secretary may waive the

12 limitation contained in paragraph (1) upon a State

13 request for such a waiver, if the Secretary finds that

14 the request describes extraordinary circumstances to

15 justify the purchase of land or the construction of fa16 cilities (or the making of permanent improvements)

17 and that permitting the waiver will contribute to the

18 ability of the State to carry out the purposes of this

19 subtitle.

20 ‘‘(b) POLITICAL ACTIVITIES.—

21 ‘‘(1) TREATMENT AS A STATE OR LOCAL AGEN22 CY.—For purposes of chapter 15 of title 5, United

23 States Code, any entity that assumes responsibility

24 for planning, developing, and coordinating activities

25 under this subtitle and receives assistance under this
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1 subtitle shall be deemed to be a State or local agency.

2 For purposes of paragraphs (1) and (2) of section

3 1502(a) of such title, any entity receiving assistance

4 under this subtitle shall be deemed to be a State or

5 local agency.

6 ‘‘(2) PROHIBITIONS.—Programs assisted under

7 this subtitle shall not be carried on in a manner in8 volving the use of program funds, the provision of

9 services, or the employment or assignment of person10 nel, in a manner supporting or resulting in the iden11 tification of such programs with—

12 ‘‘(A) any partisan or nonpartisan political

13 activity or any political activity associated with

14 a candidate, or contending faction or group, in

15 an election for public or party office;

16 ‘‘(B) any activity to provide voters or pro17 spective voters with transportation to the polls or

18 similar assistance in connection with any such

19 election; or

20 ‘‘(C) any voter registration activity.

21 ‘‘(3) RULES AND REGULATIONS.—The Secretary,

22 after consultation with the Office of Personnel Man23 agement, shall issue rules and regulations to provide

24 for the enforcement of this subsection, which shall in25 clude provisions for summary suspension of assistance
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1 or other action necessary to permit enforcement on an

2 emergency basis.

3 ‘‘(c) NONDISCRIMINATION.—

4 ‘‘(1) IN GENERAL.—No person shall, on the basis

5 of race, color, national origin, or sex be excluded from

6 participation in, be denied the benefits of, or be sub7 jected to discrimination under, any program or activ8 ity funded in whole or in part with funds made

9 available under this subtitle. Any prohibition against

10 discrimination on the basis of age under the Age Dis11 crimination Act of 1975 (42 U.S.C. 6101 et seq.) or

12 with respect to an otherwise qualified individual with

13 a disability as provided in section 504 of the Reha14 bilitation Act of 1973 (29 U.S.C. 794), or title II of

15 the Americans with Disabilities Act of 1990 (42

16 U.S.C. 12131 et seq.) shall also apply to any such

17 program or activity.

18 ‘‘(2) ACTION OF SECRETARY.—Whenever the Sec19 retary determines that a State that has received a

20 payment under this subtitle has failed to comply with

21 paragraph (1) or an applicable regulation, the Sec22 retary shall notify the chief executive officer of the

23 State and shall request that the officer secure compli24 ance. If within a reasonable period of time, not to ex-
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1 ceed 60 days, the chief executive officer fails or refuses

2 to secure compliance, the Secretary is authorized to—

3 ‘‘(A) refer the matter to the Attorney Gen4 eral with a recommendation that an appropriate

5 civil action be instituted;

6 ‘‘(B) exercise the powers and functions pro7 vided by title VI of the Civil Rights Act of 1964

8 (42 U.S.C. 2000d et seq.), the Age Discrimina9 tion Act of 1975 (42 U.S.C. 6101 et seq.), section

10 504 of the Rehabilitation Act of 1973 (29 U.S.C.

11 794), or title II of the Americans with Disabil12 ities Act of 1990 (42 U.S.C. 12131), as may be

13 applicable; or

14 ‘‘(C) take such other action as may be pro15 vided by law.

16 ‘‘(3) ACTION OF ATTORNEY GENERAL.—When a

17 matter is referred to the Attorney General pursuant

18 to paragraph (2), or whenever the Attorney General

19 has reason to believe that the State is engaged in a

20 pattern or practice of discrimination in violation of

21 the provisions of this subsection, the Attorney General

22 may bring a civil action in any appropriate United

23 States district court for such relief as may be appro24 priate, including injunctive relief.
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1 ‘‘SEC. 679. OPERATIONAL RULE.

2 ‘‘(a) FAITH-BASED ORGANIZATIONS INCLUDED AS

3 NONGOVERNMENTAL PROVIDERS.—For any program car4 ried out by the Federal Government, or by a State or local

5 government under this subtitle, the government shall con6 sider, on the same basis as other nongovernmental organiza7 tions, faith-based organizations to provide the assistance

8 under the program, so long as the program is implemented

9 in a manner consistent with the Establishment Clause of

10 the first amendment to the Constitution. Neither the Federal

11 Government nor a State or local government receiving

12 funds under this subtitle shall discriminate against an or13 ganization that provides assistance under, or applies to

14 provide assistance under, this subtitle, on the basis that the

15 organization has a faith-based character.

16 ‘‘(c) FAITH-BASED CHARACTER AND INDEPEND17 ENCE.—

18 ‘‘(1) IN GENERAL.—A faith-based organization

19 that provides assistance under a program described in

20 subsection (a) shall retain its faith-based character

21 and control over the definition, development, practice,

22 and expression of its faith-based beliefs.

23 ‘‘(2) ADDITIONAL SAFEGUARDS.—Neither the

24 Federal Government nor a State or local government

25 shall require a faith-based organization—
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1 ‘‘(A) to alter its form of internal govern2 ance, except (for purposes of administration of

3 the community services block grant program) as

4 provided in section 676B; or

5 ‘‘(B) to remove religious art, icons, scrip6 ture, or other symbols;

7 in order to be eligible to provide assistance under a

8 program described in subsection (a).

9 ‘‘(3) TENETS AND TEACHINGS.—A faith-based organi10 zation that provides assistance under a program described

11 in subsection (a) may require that employees adhere to the

12 religious tenets and teachings of such organization, and

13 such organization may require that employees adhere to

14 rules forbidding the use of drugs or alcohol.

15 ‘‘(c) LIMITATIONS ON USE OF FUNDS FOR CERTAIN

16 PURPOSES.—No funds provided through a grant or contract

17 to a faith-based organization to provide assistance under

18 any program described in subsection (a) shall be expended

19 for sectarian worship, instruction, or proselytization.

20 ‘‘(d) FISCAL ACCOUNTABILITY.—

21 ‘‘(1) IN GENERAL.—Except as provided in para22 graph (2), any faith-based organization providing as23 sistance under any program described in subsection

24 (a) shall be subject to the same regulations as other

25 nongovernmental organizations to account in accord
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1 with generally accepted accounting principles for the

2 use of such funds provided under such program.

3 ‘‘(2) LIMITED AUDIT.—Such organization shall

4 segregate government funds provided under such pro5 gram into a separate account. Only the government

6 funds shall be subject to audit by the government.

7 ‘‘(e) TREATMENT OF ELIGIBLE ENTITIES AND OTHER

8 INTERMEDIATE ORGANIZATIONS.—If an eligible entity or

9 other organization (referred to in this subsection as an ‘in10 termediate organization’), acting under a contract, or grant

11 or other agreement, with the Federal Government or a State

12 or local government, is given the authority under the con13 tract or agreement to select nongovernmental organizations

14 to provide assistance under the programs described in sub15 section (a), the intermediate organization shall have the

16 same duties under this section as the government.

17 ‘‘SEC. 680. DISCRETIONARY AUTHORITY OF THE SEC18 RETARY.

19 ‘‘(a) GRANTS, CONTRACTS, ARRANGEMENTS, LOANS,

20 AND GUARANTEES.—

21 ‘‘(1) IN GENERAL.—The Secretary shall, from

22 funds reserved under section 674(b)(3), make grants,

23 loans, or guarantees to States and public agencies

24 and private, nonprofit organizations, or enter into

25 contracts or jointly financed cooperative arrange-
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1 ments with States and public agencies and private,

2 nonprofit organizations (and for-profit organizations,

3 to the extent specified in paragraph (2)(E)) for each

4 of the objectives described in paragraphs (2) through

5 (4).

6 ‘‘(2) COMMUNITY ECONOMIC DEVELOPMENT.—

7 ‘‘(A) ECONOMIC DEVELOPMENT ACTIVI8 TIES.—The Secretary shall make grants de9 scribed in paragraph (1) on a competitive basis

10 to private, nonprofit organizations that are com11 munity development corporations to enable the

12 corporations to provide technical and financial

13 assistance for economic development activities

14 designed to address the economic needs of low-in15 come individuals and families by creating em16 ployment and business development opportuni17 ties.

18 ‘‘(B) CONSULTATION.—The Secretary shall

19 exercise the authority provided under subpara20 graph (A) after consultation with other relevant

21 Federal officials.

22 ‘‘(C) GOVERNING BOARDS.—For a commu23 nity development corporation to receive funds to

24 carry out this paragraph, the corporation shall

25 be governed by a board that shall consist of resi-
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1 dents of the community and business and civic

2 leaders and shall have as a principal purpose

3 planning, developing, or managing low-income

4 housing or community development projects.

5 ‘‘(D) GEOGRAPHIC DISTRIBUTION.—In

6 making grants to carry out this paragraph, the

7 Secretary shall take into consideration the geo8 graphic distribution of funding among States

9 and the relative proportion of funding among

10 rural and urban areas.

11 ‘‘(E) RESERVATION.—Of the amounts made

12 available to carry out this paragraph, the Sec13 retary may reserve not more than 1 percent for

14 each fiscal year to make grants to private, non15 profit organizations, or to enter into contracts

16 with private, nonprofit or for-profit organiza17 tions, to enable the organizations involved to

18 provide technical assistance to aid community

19 development corporations in developing or imple20 menting activities funded to carry out this para21 graph and to evaluate activities funded to carry

22 out this paragraph.

23 ‘‘(3) RURAL COMMUNITY DEVELOPMENT ACTIVI24 TIES.—The Secretary shall provide the assistance de-
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1 scribed in paragraph (1) for rural community devel2 opment activities, which shall include providing—

3 ‘‘(A) grants to private, nonprofit corpora4 tions to enable the corporations to provide assist5 ance concerning home repair to rural low-income

6 families and concerning planning and develop7 ing low-income rural rental housing units; and

8 ‘‘(B) grants to multistate, regional, private,

9 nonprofit organizations to enable the organiza10 tions to provide training and technical assist11 ance to small, rural communities concerning

12 meeting their community facility needs.

13 ‘‘(4) NEIGHBORHOOD INNOVATION PROJECTS.—

14 The Secretary shall provide the assistance described

15 in paragraph (1) for neighborhood innovation

16 projects, which shall include providing grants to

17 neighborhood-based private, nonprofit organizations

18 to test or assist in the development of new approaches

19 or methods that will aid in overcoming special prob20 lems identified by communities or neighborhoods or

21 otherwise assist in furthering the purposes of this sub22 title, and which may include providing assistance for

23 projects that are designed to serve low-income individ24 uals and families who are not being effectively served

25 by other programs.
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1 ‘‘(b) EVALUATION.—The Secretary shall require all ac2 tivities receiving assistance under this section to be evalu3 ated for their effectiveness. Funding for such evaluations

4 shall be provided as a stated percentage of the assistance

5 or through a separate grant awarded by the Secretary spe6 cifically for the purpose of evaluation of a particular activ7 ity or group of activities.

8 ‘‘(c) ANNUAL REPORT.—The Secretary shall compile

9 an annual report containing a summary of the evaluations

10 required in subsection (b) and a listing of all activities as11 sisted under this section. The Secretary shall annually sub12 mit the report to the Chairperson of the Committee on Edu13 cation and the Workforce of the House of Representatives

14 and the Chairperson of the Committee on Labor and

15 Human Resources of the Senate.

16 ‘‘SEC. 681. COMMUNITY FOOD AND NUTRITION PROGRAMS.

17 ‘‘(a) GRANTS.—The Secretary may, through grants to

18 public and private, nonprofit agencies, provide for commu19 nity-based, local, statewide, and national programs—

20 ‘‘(1) to coordinate private and public food assist21 ance resources, wherever the grant recipient involved

22 determines such coordination to be inadequate, to bet23 ter serve low-income populations;

24 ‘‘(2) to assist low-income communities to iden25 tify potential sponsors of child nutrition programs
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1 and to initiate such programs in underserved or

2 unserved areas; and

3 ‘‘(3) to develop innovative approaches at the

4 State and local level to meet the nutrition needs of

5 low-income individuals.

6 ‘‘(b) ALLOTMENTS AND DISTRIBUTION OF FUNDS.—

7 ‘‘(1) NOT TO EXCEED $6,000,000 IN APPROPRIA8 TIONS.—Of the amount appropriated for a fiscal year

9 to carry out this section (but not to exceed

10 $6,000,000), the Secretary shall distribute funds for

11 grants under subsection (a) as follows:

12 ‘‘(A) ALLOTMENTS.—From a portion equal

13 to 60 percent of such amount (but not to exceed

14 $3,600,000), the Secretary shall allot for grants

15 to eligible agencies for statewide programs in

16 each State the amount that bears the same ratio

17 to such portion as the low-income and unem18 ployed population of such State bears to the low19 income and unemployed population of all the

20 States.

21 ‘‘(B) COMPETITIVE GRANTS.—From a por22 tion equal to 40 percent of such amount (but not

23 to exceed $2,400,000), the Secretary shall make

24 grants on a competitive basis to eligible agencies

25 for local and statewide programs.
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1 ‘‘(2) GREATER AVAILABLE APPROPRIATIONS.—

2 Any amounts appropriated for a fiscal year to carry

3 out this section in excess of $6,000,000 shall be allot4 ted as follows:

5 ‘‘(A) ALLOTMENTS.—The Secretary shall

6 use 40 percent of such excess to make allotments

7 for grants under subsection (a) to eligible agen8 cies for statewide programs in each State in an

9 amount that bears the same ratio to 40 percent

10 of such excess as the low-income and unemployed

11 population of such State bears to the low-income

12 and unemployed population of all the States.

13 ‘‘(B) COMPETITIVE GRANTS FOR LOCAL AND

14 STATEWIDE PROGRAMS.—The Secretary shall use

15 40 percent of such excess to make grants under

16 subsection (a) on a competitive basis to eligible

17 agencies for local and statewide programs.

18 ‘‘(C) COMPETITIVE GRANTS FOR NATION19 WIDE PROGRAMS.—The Secretary shall use the

20 remaining 20 percent of such excess to make

21 grants under subsection (a) on a competitive

22 basis to eligible agencies for nationwide pro23 grams, including programs benefiting Indians as

24 defined in section 677 and migrant or seasonal

25 farmworkers.
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1 ‘‘(3) ELIGIBILITY FOR ALLOTMENTS FOR STATE2 WIDE PROGRAMS.—To be eligible to receive an allot3 ment under paragraph (1)(A) or (2)(A), an eligible

4 agency shall demonstrate that the proposed program

5 is statewide in scope and represents a comprehensive

6 and coordinated effort to alleviate hunger within the

7 State.

8 ‘‘(4) MINIMUM ALLOTMENTS FOR STATEWIDE

9 PROGRAMS.—

10 ‘‘(A) IN GENERAL.—From the amounts al11 lotted under paragraphs (1)(A) and (2)(A), the

12 minimum total allotment for each State for each

13 fiscal year shall be—

14 ‘‘(i) $15,000 if the total amount appro15 priated to carry out this section is not less

16 than $7,000,000 but less than $10,000,000;

17 ‘‘(ii) $20,000 if the total amount ap18 propriated to carry out this section is not

19 less than $10,000,000 but less than

20 $15,000,000; or

21 ‘‘(iii) $30,000 if the total amount ap22 propriated to carry out this section is not

23 less than $15,000,000.

24 ‘‘(B) DEFINITION.—In this paragraph, the

25 term ‘State’ does not include Guam, American
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1 Samoa, the United States Virgin Islands, the

2 Commonwealth of the Northern Mariana Islands,

3 or the Freely Associated States.

4 ‘‘(5) MAXIMUM GRANTS.—From funds made

5 available under paragraphs (1)(B) and (2)(B) for

6 any fiscal year, the Secretary may not make grants

7 under subsection (a) to an eligible agency in an ag8 gregate amount exceeding $50,000. From funds made

9 available under paragraph (2)(C) for any fiscal year,

10 the Secretary may not make grants under subsection

11 (a) to an eligible agency in an aggregate amount ex12 ceeding $300,000.

13 ‘‘(c) REPORT.—For each fiscal year, the Secretary

14 shall prepare and submit, to the Committee on Education

15 and the Workforce of the House of Representatives and the

16 Committee on Labor and Human Resources of the Senate,

17 a report concerning the grants made under this section.

18 Such report shall include—

19 ‘‘(1) a list of grant recipients;

20 ‘‘(2) information on the amount of funding

21 awarded to each grant recipient; and

22 ‘‘(3) a summary of the activities performed by

23 the grant recipients with funding awarded under this

24 section and a description of the manner in which
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1 such activities meet the objectives described in sub2 section (a).

3 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There

4 are authorized to be appropriated to carry out this section

5 $25,000,000 for fiscal year 1999, and such sums as may

6 be necessary for each of fiscal years 2000 through 2003.

7 ‘‘SEC. 682. NATIONAL OR REGIONAL PROGRAMS DESIGNED

8 TO PROVIDE INSTRUCTIONAL ACTIVITIES

9 FOR LOW-INCOME YOUTH.

10 ‘‘(a) GENERAL AUTHORITY.—The Secretary is author11 ized to make a grant to an eligible service provider to ad12 minister national or regional programs to provide instruc13 tional activities for low-income youth. In making such a

14 grant, the Secretary shall give priority to eligible service

15 providers that have a demonstrated ability to operate such

16 a program.

17 ‘‘(b) PROGRAM REQUIREMENTS.—Any instructional

18 activity carried out by an eligible service provider receiving

19 a grant under this section shall be carried out on the cam20 pus of an institution of higher education (as defined in sec21 tion 1201(a) of the Higher Education Act of 1965 (20

22 U.S.C. 1141(a))) and shall include—

23 ‘‘(1) access to the facilities and resources of such

24 an institution;
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1 ‘‘(2) an initial medical examination and follow2 up referral or treatment, without charge, for youth

3 during their participation in such activity;

4 ‘‘(3) at least one nutritious meal daily, without

5 charge, for participating youth during each day of

6 participation;

7 ‘‘(4) high quality instruction in a variety of

8 sports (that shall include swimming and that may in9 clude dance and any other high quality recreational

10 activity) provided by coaches and teachers from insti11 tutions of higher education and from elementary and

12 secondary schools (as defined in section 14101 of the

13 Elementary and Secondary Education Act of 1965

14 (20 U.S.C. 8801)); and

15 ‘‘(5) enrichment instruction and information on

16 matters relating to the well-being of youth, to include

17 educational opportunities and information on study

18 practices, education for the prevention of drug and al19 cohol abuse, and information on health and nutrition,

20 career opportunities, and family and job responsibil21 ities.

22 ‘‘(c) ADVISORY COMMITTEE; PARTNERSHIPS.—The eli23 gible service provider shall, in each community in which

24 a program is funded under this section—

25 ‘‘(1) ensure that—
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1 ‘‘(A) a community-based advisory commit2 tee is established, with representatives from local

3 youth, family, and social service organizations,

4 schools, entities providing park and recreation

5 services, and other community-based organiza6 tions serving high-risk youth; or

7 ‘‘(B) an existing community-based advisory

8 board, commission, or committee with similar

9 membership is utilized to serve as the committee

10 described in subparagraph (A); and

11 ‘‘(2) enter into formal partnerships with youth12 serving organizations or other appropriate social

13 service entities in order to link program participants

14 with year-round services in their home communities

15 that support and continue the objectives of this sub16 title.

17 ‘‘(d) ELIGIBLE PROVIDERS.—A service provider that

18 is a national private, nonprofit organization, a coalition

19 of such organizations, or a private, nonprofit organization

20 applying jointly with a business concern shall be eligible

21 to apply for a grant under this section if—

22 ‘‘(1) the applicant has demonstrated experience

23 in operating a program providing instruction to low24 income youth;
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1 ‘‘(2) the applicant agrees to contribute an

2 amount (in cash or in kind, fairly evaluated) of not

3 less than 25 percent of the amount requested, for the

4 program funded through the grant;

5 ‘‘(3) the applicant agrees to use no funds from

6 a grant authorized under this section for administra7 tive expenses; and

8 ‘‘(4) the applicant agrees to comply with the reg9 ulations or program guidelines promulgated by the

10 Secretary for use of funds made available through the

11 grant.

12 ‘‘(e) APPLICATIONS PROCESS.—To be eligible to receive

13 a grant under this section, a service provider shall submit

14 to the Secretary, for approval, an application at such time,

15 in such manner, and containing such information as the

16 Secretary may require.

17 ‘‘(f) PROMULGATION OF REGULATIONS OR PROGRAM

18 GUIDELINES.—The Secretary shall promulgate regulations

19 or program guidelines to ensure funds made available

20 through a grant made under this section are used in accord21 ance with the objectives of this subtitle.

22 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There is

23 authorized to be appropriated $15,000,000 for each of fiscal

24 years 1999 through 2003 for grants to carry out this section.
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1 ‘‘SEC. 683. REFERENCES.

2 ‘‘Any reference in any provision of law to the poverty

3 line set forth in section 624 or 625 of the Economic Oppor4 tunity Act of 1964 shall be construed to be a reference to

5 the poverty line defined in section 673. Any reference in

6 any provision of law to any community action agency des7 ignated under title II of the Economic Opportunity Act of

8 1964 shall be construed to be a reference to an entity eligible

9 to receive funds under the community services block grant

10 program.’’.

11 SEC. 202. CONFORMING AMENDMENTS.

12 (a) OLDER AMERICANS ACT OF 1965.—Section

13 306(a)(6)(E)(ii) of the Older Americans Act of 1965 (42

14 U.S.C. 3026(a)(6)(E)(ii)) is amended by striking ‘‘section

15 675(c)(3) of the Community Services Block Grant Act (42

16 U.S.C. 9904(c)(3))’’ and inserting ‘‘section 676B of the

17 Community Services Block Grant Act’’.

18 (b) ANTI-DRUG ABUSE ACT OF 1988.—Section

19 3521(c)(2) of the Anti-Drug Abuse Act of 1988 (42 U.S.C.

20 11841(c)(2)) is amended by striking ‘‘, such as activities

21 authorized by section 681(a)(2)(F) of the Community Serv22 ices Block Grant Act (42 U.S.C. section 9910(a)(2)(F)),’’.

23 SEC. 203. REPEALERS.

24 (a) COMMUNITY ECONOMIC DEVELOPMENT ACT OF

25 1981.—The Community Economic Development Act of

26 1981 (42 U.S.C. 9801 et seq.) is repealed.
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1 (b) HUMAN SERVICES REAUTHORIZATION ACT OF

2 1986.—Sections 407 and 408 of the Human Services Reau3 thorization Act of 1986 (42 U.S.C 9812a and 9910b) are

4 repealed.

5 TITLE III—LOW-INCOME HOME

6 ENERGY ASSISTANCE

7 SEC. 301. AUTHORIZATION.

8 (a) IN GENERAL.—Section 2602(b) of the Low-Income

9 Home Energy Assistance Act of 1981 (42 U.S.C. 8621(b))

10 is amended—

11 (1) by striking ‘‘are authorized’’ and inserting

12 ‘‘is authorized’’; and

13 (2) by striking ‘‘fiscal years 1995 through 1999’’

14 and inserting ‘‘fiscal years 1999 through 2004’’.

15 (b) PROGRAM YEAR.—Section 2602(c) of such Act (42

16 U.S.C. 8621(c)) is amended to read as follows:

17 ‘‘(c) Amounts appropriated under this section for any

18 fiscal year for programs and activities under this title shall

19 be made available for obligation in the succeeding fiscal

20 year.’’.

21 (c) INCENTIVE PROGRAM FOR LEVERAGING NON-FED22 ERAL RESOURCES.—Section 2602(d) of such Act (42 U.S.C.

23 8621(d)) is amended—

24 (1) by striking ‘‘(d)’’ and inserting ‘‘(d)(1)’’;
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1 (2) by striking ‘‘are authorized’’ and inserting

2 ‘‘is authorized’’;

3 (3) by striking ‘‘$50,000,000’’ and all that fol4 lows and inserting the following: ‘‘$30,000,000 for

5 each of fiscal years 1999 through 2004, except as pro6 vided in paragraph (2).’’; and

7 (4) by adding at the end the following:

8 ‘‘(2) For any of fiscal years 1999 through 2004 for

9 which the amount appropriated under subsection (b) is not

10 less than $1,400,000,000, there is authorized to be appro11 priated $50,000,000 to carry out section 2607A.’’.

12 (d) TECHNICAL AMENDMENTS.—Section 2602(e) of

13 such Act (42 U.S.C. 8621(e)) is amended—

14 (1) by striking ‘‘are authorized’’ and inserting

15 ‘‘is authorized’’; and

16 (2) by striking ‘‘subsection (g)’’ and inserting

17 ‘‘subsection (e) of such section’’.

18 SEC. 302. DEFINITIONS.

19 Section 2603(4) of the Low-Income Home Energy As20 sistance Act of 1981 (42 U.S.C. 8622(4)) is amended—

21 (1) by striking ‘‘the term’’ and inserting ‘‘The

22 term’’; and

23 (2) by striking the semicolon and inserting a pe24 riod.
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1 SEC. 303. NATURAL DISASTERS AND OTHER EMERGENCIES.

2 Section 2603 of the Low-Income Home Energy Assist3 ance Act of 1981 (42 U.S.C. 8622) is amended—

4 (1) by redesignating paragraphs (6) through (9)

5 as paragraphs (8) through (11), respectively;

6 (2) by inserting before paragraph (8) (as redesig7 nated in paragraph (1)) the following:

8 ‘‘(7) NATURAL DISASTER.—The term ‘natural

9 disaster’ means a weather event (relating to cold or

10 hot weather), flood, earthquake, tornado, hurricane, or

11 ice storm, or an event meeting such other criteria as

12 the Secretary, in the discretion of the Secretary, may

13 determine to be appropriate.’’;

14 (3) by redesignating paragraphs (1) through (5)

15 as paragraphs (2) through (6), respectively; and

16 (4) by inserting before paragraph (2) (as redesig17 nated in paragraph (3)) the following:

18 ‘‘(1) EMERGENCY.—The term ‘emergency’ means—

19 ‘‘(A) a natural disaster;

20 ‘‘(B) a significant home energy supply shortage

21 or disruption;

22 ‘‘(C) a significant increase in the cost of home

23 energy, as determined by the Secretary;

24 ‘‘(D) a significant increase in home energy dis25 connections reported by a utility, a State regulatory

26 agency, or another agency with necessary data;
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1 ‘‘(E) a significant increase in participation in a

2 public benefit program such as the food stamp pro3 gram carried out under the Food Stamp Act of 1977

4 (7 U.S.C. 2011 et seq.), the national program to pro5 vide supplemental security income carried out under

6 title XVI of the Social Security Act (42 U.S.C. 1381

7 et seq.), or the State temporary assistance for needy

8 families program carried out under part A of title IV

9 of the Social Security Act (42 U.S.C. 601 et seq.), as

10 determined by the head of the appropriate Federal

11 agency;

12 ‘‘(F) a significant increase in unemployment,

13 layoffs, or the number of households with an individ14 ual applying for unemployment benefits, as deter15 mined by the Secretary of Labor; or

16 ‘‘(G) an event meeting such criteria as the Sec17 retary, in the discretion of the Secretary, may deter18 mine to be appropriate.’’.

19 SEC. 304. STATE ALLOTMENTS.

20 Section 2604 of the Low-Income Home Energy Assist21 ance Act of 1981 (42 U.S.C. 8623) is amended—

22 (1) in subsection (b)(1), by striking ‘‘the North23 ern Mariana Islands, and the Trust Territory of the

24 Pacific Islands.’’ and inserting ‘‘the Commonwealth
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1 of the Northern Mariana Islands, and the combined

2 Freely Associated States.’’;

3 (2) in subsection (c)(3)(B)(ii), by striking ‘‘ap4 plication’’ and inserting ‘‘applications’’;

5 (3) by striking subsection (f);

6 (4) in subsection (g)—

7 (A) in the first sentence, by striking ‘‘(a)

8 through (f)’’ and inserting ‘‘(a) through (d)’’;

9 and

10 (B) by striking the last two sentences and

11 inserting the following: ‘‘In determining whether

12 to make such an allotment to a State, the Sec13 retary shall take into account the extent to which

14 the State was affected by the natural disaster or

15 other emergency involved, the availability to the

16 State of other resources under the program car17 ried out under this title or any other program,

18 whether a Member of Congress has requested that

19 the State receive the allotment, and such other

20 factors as the Secretary may find to be relevant.

21 Not later than 30 days after making the deter22 mination, but prior to releasing an allotted

23 amount to a State, the Secretary shall notify

24 Congress of the allotments made pursuant to this

25 subsection.’’; and
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1 (5) by redesignating subsection (g) as subsection

2 (e).

3 SEC. 305. ADMINISTRATION.

4 Section 2605 of the Low-Income Home Energy Assist5 ance Act of 1981 (42 U.S.C. 8624) is amended—

6 (1) in subsection (b)—

7 (A) in paragraph (9)(A), by striking ‘‘and

8 not transferred pursuant to section 2604(f) for

9 use under another block grant’’;

10 (B) in paragraph (14), by striking ‘‘; and’’

11 and inserting a semicolon;

12 (C) in the matter following paragraph (14),

13 by striking ‘‘The Secretary may not prescribe the

14 manner in which the States will comply with the

15 provisions of this subsection.’’; and

16 (D) in the matter following paragraph (16),

17 by inserting before ‘‘The Secretary shall issue’’

18 the following: ‘‘The Secretary may not prescribe

19 the manner in which the States will comply with

20 the provisions of this subsection.’’; and

21 (2) in subsection (c)(1)—

22 (A) in subparagraph (B), by striking

23 ‘‘States’’ and inserting ‘‘State’’; and

24 (B) in subparagraph (G)(i), by striking

25 ‘‘has’’ and inserting ‘‘had’’.
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1 SEC. 306. PAYMENTS TO STATES.

2 Section 2607(b)(2)(B) of the Low-Income Home En3 ergy Assistance Act of 1981 (42 U.S.C. 8626(b)(2)(B)) is

4 amended—

5 (1) in the first sentence, by striking ‘‘and not

6 transferred pursuant to section 2604(f)’’; and

7 (2) in the second sentence, by striking ‘‘but not

8 transferred by the State’’.

9 SEC. 307. RESIDENTIAL ENERGY ASSISTANCE CHALLENGE

10 OPTION.

11 (a) EVALUATION.—The Comptroller General of the

12 United States shall conduct an evaluation of the Residential

13 Energy Assistance Challenge program described in section

14 2607B of the Low-Income Home Energy Assistance Act of

15 1981 (42 U.S.C. 8626b).

16 (b) REPORT.—Not later than 2 years after the date

17 of enactment of this Act, the Comptroller General of the

18 United States shall prepare and submit to Congress a re19 port containing—

20 (1) the findings resulting from the evaluation de21 scribed in subsection (a); and

22 (2) the State evaluations described in para23 graphs (1) and (2) of subsection (b) of such section

24 2607B.

25 (c) INCENTIVE GRANTS.—Section 2607B(b)(1) of the

26 Low-Income Home Energy Assistance Act of 1981 (42
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1 U.S.C. 8626b(b)(1)) is amended by striking ‘‘For each of

2 the fiscal years 1996 through 1999’’ and inserting ‘‘For

3 each fiscal year’’.

4 (d) TECHNICAL AMENDMENTS.—Section 2607B of such

5 Act (42 U.S.C. 8626b) is amended—

6 (1) in subsection (e)(2)—

7 (A) by redesignating subparagraphs (F)

8 through (N) as subparagraphs (E) through (M),

9 respectively; and

10 (B) in clause (i) of subparagraph (I) (as re11 designated in subparagraph (A)), by striking

12 ‘‘on’’ and inserting ‘‘of’’; and

13 (2) by redesignating subsection (g) as subsection

14 (f).

15 SEC. 308. TECHNICAL ASSISTANCE, TRAINING, AND COMPLI16 ANCE REVIEWS.

17 (a) IN GENERAL.—Section 2609A(a) of the Low-In18 come Home Energy Assistance Act of 1981 (42 U.S.C.

19 8628a(a)) is amended—

20 (1) in the matter preceding paragraph (1)—

21 (A) by striking ‘‘$250,000’’ and inserting

22 ‘‘$300,000’’; and

23 (B) by striking ‘‘Secretary—’’ and inserting

24 ‘‘Secretary to conduct onsite compliance reviews
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1 of programs supported under this title or—’’;

2 and

3 (2) in paragraph (2)—

4 (A) by inserting ‘‘or interagency agree5 ments’’ after ‘‘cooperative arrangements’’; and

6 (B) by inserting ‘‘(including Federal agen7 cies)’’ after ‘‘public agencies’’.

8 (b) CONFORMING AMENDMENT.—The section heading

9 of section 2609A of such Act (42 U.S.C. 8628a) is amended

10 to read as follows:

11 ‘‘TECHNICAL ASSISTANCE, TRAINING, AND COMPLIANCE

12 REVIEWS’’.

13 TITLE IV—ASSETS FOR

14 INDEPENDENCE

15 SEC. 401. SHORT TITLE.

16 This title may be cited as the ‘‘Assets for Independence

17 Act’’.

18 SEC. 402. FINDINGS.

19 Congress makes the following findings:

20 (1) Economic well-being does not come solely

21 from income, spending, and consumption, but also re22 quires savings, investment, and accumulation of as23 sets because assets can improve economic independ24 ence and stability, connect individuals with a viable

25 and hopeful future, stimulate development of human
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1 and other capital, and enhance the welfare of off2 spring.

(2) Fully 1 3 ⁄2 of all Americans have either no,

4 negligible, or negative assets available for investment,

5 just as the price of entry to the economic mainstream,

6 the cost of a house, an adequate education, and start7 ing a business, is increasing. Further, the household

8 savings rate of the United States lags far behind other

9 industrial nations, presenting a barrier to economic

10 growth.

11 (3) In the current tight fiscal environment, the

12 United States should invest existing resources in high13 yield initiatives. There is reason to believe that the fi14 nancial returns, including increased income, tax reve15 nue, and decreased welfare cash assistance, resulting

16 from individual development accounts will far exceed

17 the cost of investment in those accounts.

18 (4) Traditional public assistance programs con19 centrating on income and consumption have rarely

20 been successful in promoting and supporting the tran21 sition to increased economic self-sufficiency. Income22 based domestic policy should be complemented with

23 asset-based policy because, while income-based policies

24 ensure that consumption needs (including food, child

25 care, rent, clothing, and health care) are met, asset-
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1 based policies provide the means to achieve greater

2 independence and economic well-being.

3 SEC. 403. PURPOSES.

4 The purposes of this title are to provide for the estab5 lishment of demonstration projects designed to determine—

6 (1) the social, civic, psychological, and economic

7 effects of providing to individuals and families with

8 limited means an incentive to accumulate assets by

9 saving a portion of their earned income;

10 (2) the extent to which an asset-based policy that

11 promotes saving for postsecondary education, home12 ownership, and microenterprise development may be

13 used to enable individuals and families with limited

14 means to increase their economic self-sufficiency; and

15 (3) the extent to which an asset-based policy sta16 bilizes and improves families and the community in

17 which they live.

18 SEC. 404. DEFINITIONS.

19 In this title:

20 (1) APPLICABLE PERIOD.—The term ‘‘applicable

21 period’’ means, with respect to amounts to be paid

22 from a grant made for a project year, the calendar

23 year immediately preceding the calendar year in

24 which the grant is made.
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1 (2) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible

2 individual’’ means an individual who is selected to

3 participate by a qualified entity under section 409.

4 (3) EMERGENCY WITHDRAWAL.—The term

5 ‘‘emergency withdrawal’’ means a withdrawal by an

6 eligible individual that—

7 (A) is a withdrawal of only those funds, or

8 a portion of those funds, deposited by the indi9 vidual in the individual development account of

10 the individual;

11 (B) is permitted by a qualified entity on a

12 case-by-case basis; and

13 (C) is made for—

14 (i) expenses for medical care or nec15 essary to obtain medical care, for the indi16 vidual or a spouse or dependent of the indi17 vidual described in paragraph (8)(D);

18 (ii) payments necessary to prevent the

19 eviction of the individual from the residence

20 of the individual, or foreclosure on the mort21 gage for the principal residence of the indi22 vidual, as defined in paragraph (8)(B); or

23 (iii) payments necessary to enable the

24 individual to meet necessary living expenses

25 following loss of employment.
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1 (4) HOUSEHOLD.—The term ‘‘household’’ means

2 all individuals who share use of a dwelling unit as

3 primary quarters for living and eating separate from

4 other individuals.

5 (5) INDIVIDUAL DEVELOPMENT ACCOUNT.—

6 (A) IN GENERAL.—The term ‘‘individual

7 development account’’ means a trust created or

8 organized in the United States exclusively for the

9 purpose of paying the qualified expenses of an el10 igible individual, or enabling the eligible indi11 vidual to make an emergency withdrawal, but

12 only if the written governing instrument creat13 ing the trust meets the following requirements:

14 (i) No contribution will be accepted

15 unless it is in cash or by check.

16 (ii) The trustee is a federally insured

17 financial institution, or a State insured fi18 nancial institution if no federally insured

19 financial institution is available.

20 (iii) The assets of the trust will be in21 vested in accordance with the direction of

22 the eligible individual after consultation

23 with the qualified entity providing deposits

24 for the individual under section 410.
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1 (iv) The assets of the trust will not be

2 commingled with other property except in a

3 common trust fund or common investment

4 fund.

5 (v) Except as provided in clause (vi),

6 any amount in the trust which is attrib7 utable to a deposit provided under section

8 410 may be paid or distributed out of the

9 trust only for the purpose of paying the

10 qualified expenses of the eligible individual,

11 or enabling the eligible individual to make

12 an emergency withdrawal.

13 (vi) Any balance in the trust on the

14 day after the date on which the individual

15 for whose benefit the trust is established dies

16 shall be distributed within 30 days of that

17 date as directed by that individual to an18 other individual development account estab19 lished for the benefit of an eligible individ20 ual.

21 (B) CUSTODIAL ACCOUNTS.—For purposes

22 of subparagraph (A), a custodial account shall be

23 treated as a trust if the assets of the custodial ac24 count are held by a bank (as defined in section

25 408(n) of the Internal Revenue Code of 1986) or
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1 another person who demonstrates, to the satisfac2 tion of the Secretary, that the manner in which

3 such person will administer the custodial ac4 count will be consistent with the requirements of

5 this title, and if the custodial account would, ex6 cept for the fact that it is not a trust, constitute

7 an individual development account described in

8 subparagraph (A). For purposes of this title, in

9 the case of a custodial account treated as a trust

10 by reason of the preceding sentence, the custo11 dian of that custodial account shall be treated

12 as the trustee thereof.

13 (6) PROJECT YEAR.—The term ‘‘project year’’

14 means, with respect to a demonstration project, any

15 of the 4 consecutive 12-month periods beginning on

16 the date the project is originally authorized to be con17 ducted.

18 (7) QUALIFIED ENTITY.—

19 (A) IN GENERAL.—The term ‘‘qualified en20 tity’’ means—

21 (i) one or more not-for-profit organiza22 tions described in section 501(c)(3) of the

23 Internal Revenue Code of 1986 and exempt

24 from taxation under section 501(a) of such

25 Code; or
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1 (ii) a State or local government agen2 cy, or a tribal government, submitting an

3 application under section 405 jointly with

4 an organization described in clause (i).

5 (B) RULE OF CONSTRUCTION.—Nothing in

6 this paragraph shall be construed as preventing

7 an organization described in subparagraph

8 (A)(i) from collaborating with a financial insti9 tution or for-profit community development cor10 poration to carry out the purposes of this title.

11 (8) QUALIFIED EXPENSES.—The term ‘‘qualified

12 expenses’’ means one or more of the following, as pro13 vided by the qualified entity:

14 (A) POSTSECONDARY EDUCATIONAL EX15 PENSES.—Postsecondary educational expenses

16 paid from an individual development account

17 directly to an eligible educational institution. In

18 this subparagraph:

19 (i) POSTSECONDARY EDUCATIONAL EX20 PENSES.—The term ‘‘postsecondary edu21 cational expenses’’ means the following:

22 (I) TUITION AND FEES.—Tuition

23 and fees required for the enrollment or

24 attendance of a student at an eligible

25 educational institution.
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1 (II) FEES, BOOKS, SUPPLIES, AND

2 EQUIPMENT.—Fees, books, supplies,

3 and equipment required for courses of

4 instruction at an eligible educational

5 institution.

6 (ii) ELIGIBLE EDUCATIONAL INSTITU7 TION.—The term ‘‘eligible educational insti8 tution’’ means the following:

9 (I) INSTITUTION OF HIGHER EDU10 CATION.—An institution described in

11 section 481(a)(1) or 1201(a) of the

12 Higher Education Act of 1965 (20

13 U.S.C. 1088(a)(1) or 1141(a)), as such

14 sections are in effect on the date of en15 actment of this title.

16 (II) POSTSECONDARY VOCATIONAL

17 EDUCATION SCHOOL.—An area voca18 tional education school (as defined in

19 subparagraph (C) or (D) of section

20 521(4) of the Carl D. Perkins Voca21 tional and Applied Technology Edu22 cation Act (20 U.S.C. 2471(4))) which

23 is in any State (as defined in section

24 521(33) of such Act), as such sections
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1 are in effect on the date of enactment

2 of this title.

3 (B) FIRST-HOME PURCHASE.—Qualified ac4 quisition costs with respect to a principal resi5 dence for a qualified first-time homebuyer, if

6 paid from an individual development account

7 directly to the persons to whom the amounts are

8 due. In this subparagraph:

9 (i) PRINCIPAL RESIDENCE.—The term

10 ‘‘principal residence’’ means a principal

11 residence, the qualified acquisition costs of

12 which do not exceed 100 percent of the aver13 age area purchase price applicable to such

14 residence.

15 (ii) QUALIFIED ACQUISITION COSTS.—

16 The term ‘‘qualified acquisition costs’’

17 means the costs of acquiring, constructing,

18 or reconstructing a residence. The term in19 cludes any usual or reasonable settlement,

20 financing, or other closing costs.

21 (iii) QUALIFIED FIRST-TIME HOME22 BUYER.—

23 (I) IN GENERAL.—The term

24 ‘‘qualified first-time homebuyer’’

25 means an individual participating in
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1 the project (and, if married, the indi2 vidual’s spouse) who has no present

3 ownership interest in a principal resi4 dence during the 3-year period ending

5 on the date of acquisition of the prin6 cipal residence to which this subpara7 graph applies.

8 (II) DATE OF ACQUISITION.—The

9 term ‘‘date of acquisition’’ means the

10 date on which a binding contract to

11 acquire, construct, or reconstruct the

12 principal residence to which this sub13 paragraph applies is entered into.

14 (C) BUSINESS CAPITALIZATION.—Amounts

15 paid from an individual development account

16 directly to a business capitalization account

17 which is established in a federally insured finan18 cial institution and is restricted to use solely for

19 qualified business capitalization expenses. In this

20 subparagraph:

21 (i) QUALIFIED BUSINESS CAPITALIZA22 TION EXPENSES.—The term ‘‘qualified busi23 ness capitalization expenses’’ means quali24 fied expenditures for the capitalization of a
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1 qualified business pursuant to a qualified

2 plan.

3 (ii) QUALIFIED EXPENDITURES.—The

4 term ‘‘qualified expenditures’’ means ex5 penditures included in a qualified plan, in6 cluding capital, plant, equipment, working

7 capital, and inventory expenses.

8 (iii) QUALIFIED BUSINESS.—The term

9 ‘‘qualified business’’ means any business

10 that does not contravene any law or public

11 policy (as determined by the Secretary).

12 (iv) QUALIFIED PLAN.—The term

13 ‘‘qualified plan’’ means a business plan, or

14 a plan to use a business asset purchased,

15 which—

16 (I) is approved by a financial in17 stitution, a microenterprise develop18 ment organization, or a nonprofit loan

19 fund having demonstrated fiduciary

20 integrity;

21 (II) includes a description of serv22 ices or goods to be sold, a marketing

23 plan, and projected financial state24 ments; and
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1 (III) may require the eligible in2 dividual to obtain the assistance of an

3 experienced entrepreneurial adviser.

4 (D) TRANSFERS TO IDAS OF FAMILY MEM5 BERS.—Amounts paid from an individual devel6 opment account directly into another such ac7 count established for the benefit of an eligible in8 dividual who is—

9 (i) the individual’s spouse; or

10 (ii) any dependent of the individual

11 with respect to whom the individual is al12 lowed a deduction under section 151 of the

13 Internal Revenue Code of 1986.

14 (9) QUALIFIED SAVINGS OF THE INDIVIDUAL FOR

15 THE PERIOD.—The term ‘‘qualified savings of the in16 dividual for the period’’ means the aggregate of the

17 amounts contributed by the individual to the individ18 ual development account of the individual during the

19 period.

20 (10) SECRETARY.—The term ‘‘Secretary’’ means

21 the Secretary of Health and Human Services.

22 (11) TRIBAL GOVERNMENT.—The term ‘‘tribal

23 government’’ means a tribal organization, as defined

24 in section 4 of the Indian Self-Determination and

25 Education Assistance Act (25 U.S.C. 450b) or a Na-
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1 tive Hawaiian organization, as defined in section

2 9212 of the Native Hawaiian Education Act (20

3 U.S.C. 7912).

4 SEC. 405. APPLICATIONS.

5 (a) ANNOUNCEMENT OF DEMONSTRATION

6 PROJECTS.—Not later than 3 months after the date of en7 actment of this title, the Secretary shall publicly announce

8 the availability of funding under this title for demonstra9 tion projects and shall ensure that applications to conduct

10 the demonstration projects are widely available to qualified

11 entities.

12 (b) SUBMISSION.—Not later than 6 months after the

13 date of enactment of this title, a qualified entity may sub14 mit to the Secretary an application to conduct a dem15 onstration project under this title.

16 (c) CRITERIA.—In considering whether to approve an

17 application to conduct a demonstration project under this

18 title, the Secretary shall assess the following:

19 (1) SUFFICIENCY OF PROJECT.—The degree to

20 which the project described in the application appears

21 likely to aid project participants in achieving eco22 nomic self-sufficiency through activities requiring

23 qualified expenses. In making such assessment, the

24 Secretary shall consider the overall quality of project

25 activities in making any particular kind or combina-
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1 tion of qualified expenses to be an essential feature of

2 any project.

3 (2) ADMINISTRATIVE ABILITY.—The experience

4 and ability of the applicant to responsibly administer

5 the project.

6 (3) ABILITY TO ASSIST PARTICIPANTS.—The ex7 perience and ability of the applicant in recruiting,

8 educating, and assisting project participants to in9 crease their economic independence and general well10 being through the development of assets.

11 (4) COMMITMENT OF NON-FEDERAL FUNDS.—The

12 aggregate amount of direct funds from non-Federal

13 public sector and from private sources that are for14 mally committed to the project as matching contribu15 tions.

16 (5) ADEQUACY OF PLAN FOR PROVIDING INFOR17 MATION FOR EVALUATION.—The adequacy of the plan

18 for providing information relevant to an evaluation

19 of the project.

20 (6) OTHER FACTORS.—Such other factors rel21 evant to the purposes of this title as the Secretary

22 may specify.

23 (d) PREFERENCES.—In considering an application to

24 conduct a demonstration project under this title, the Sec25 retary shall give preference to an application that—
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1 (1) demonstrates the willingness and ability to

2 select individuals described in section 408 who are

3 predominantly from households in which a child (or

4 children) is living with the child’s biological or adop5 tive mother or father, or with the child’s legal guard6 ian;

7 (2) provides a commitment of non-Federal funds

8 with a proportionately greater amount of such funds

9 committed by private sector sources; and

10 (3) targets such individuals residing within one

11 or more relatively well-defined neighborhoods or com12 munities (including rural communities) that experi13 ence high rates of poverty or unemployment.

14 (e) APPROVAL.—Not later than 9 months after the date

15 of enactment of this title, the Secretary shall, on a competi16 tive basis, approve such applications to conduct demonstra17 tion projects under this title as the Secretary deems appro18 priate, taking into account the assessments required by sub19 sections (c) and (d). The Secretary is encouraged to ensure

20 that the applications that are approved involve a range of

21 communities (both rural and urban) and diverse popu22 lations.

23 (f) CONTRACTS WITH NONPROFIT ENTITIES.—The

24 Secretary may contract with an entity described in section

25 501(c)(3) of the Internal Revenue Code of 1986 and exempt
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1 from taxation under section 501(a) of such Code to carry

2 out any responsibility of the Secretary under this section

3 or section 412 if—

4 (1) such entity demonstrates the ability to carry

5 out such responsibility; and

6 (2) the Secretary can demonstrate that such re7 sponsibility would not be carried out by the Secretary

8 at a lower cost.

9 SEC. 406. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.

10 (a) DEMONSTRATION AUTHORITY.—If the Secretary

11 approves an application to conduct a demonstration project

12 under this title, the Secretary shall, not later than 10

13 months after the date of enactment of this title, authorize

14 the applicant to conduct the project for 4 project years in

15 accordance with the approved application and the require16 ments of this title.

17 (b) GRANT AUTHORITY.—For each project year of a

18 demonstration project conducted under this title, the Sec19 retary may make a grant to the qualified entity authorized

20 to conduct the project. In making such a grant, the Sec21 retary shall make the grant on the first day of the project

22 year in an amount not to exceed the lesser of—

23 (1) the aggregate amount of funds committed as

24 matching contributions by non-Federal public or pri25 vate sector sources; or
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1 (2) $1,000,000.

2 SEC. 407. RESERVE FUND.

3 (a) ESTABLISHMENT.—A qualified entity under this

4 title, other than a State or local government agency, or a

5 tribal government, shall establish a Reserve Fund which

6 shall be maintained in accordance with this section.

7 (b) AMOUNTS IN RESERVE FUND.—

8 (1) IN GENERAL.—As soon after receipt as is

9 practicable, a qualified entity shall deposit in the Re10 serve Fund established under subsection (a)—

11 (A) all funds provided to the qualified en12 tity by any public or private source in connec13 tion with the demonstration project; and

14 (B) the proceeds from any investment made

15 under subsection (c)(2).

16 (2) UNIFORM ACCOUNTING REGULATIONS.—The

17 Secretary shall prescribe regulations with respect to

18 accounting for amounts in the Reserve Fund estab19 lished under subsection (a).

20 (c) USE OF AMOUNTS IN THE RESERVE FUND.—

21 (1) IN GENERAL.—A qualified entity shall use

22 the amounts in the Reserve Fund established under

23 subsection (a) to—

24 (A) assist participants in the demonstration

25 project in obtaining the skills (including eco-
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1 nomic literacy, budgeting, credit, and counsel2 ing) and information necessary to achieve eco3 nomic self-sufficiency through activities requir4 ing qualified expenses;

5 (B) provide deposits in accordance with sec6 tion 410 for individuals selected by the qualified

7 entity to participate in the demonstration

8 project;

9 (C) administer the demonstration project;

10 and

11 (D) provide the research organization evalu12 ating the demonstration project under section

13 414 with such information with respect to the

14 demonstration project as may be required for the

15 evaluation.

16 (2) AUTHORITY TO INVEST FUNDS.—

17 (A) GUIDELINES.—The Secretary shall es18 tablish guidelines for investing amounts in the

19 Reserve Fund established under subsection (a) in

20 a manner that provides an appropriate balance

21 between return, liquidity, and risk.

22 (B) INVESTMENT.—A qualified entity shall

23 invest the amounts in its Reserve Fund that are

24 not immediately needed to carry out the provi-
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1 sions of paragraph (1), in accordance with the

2 guidelines established under subparagraph (A).

3 (3) LIMITATION ON USES.—Not more than 9.5

4 percent of the amounts provided to a qualified entity

5 under section 406(b) shall be used by the qualified en6 tity for the purposes described in subparagraphs (A),

7 (C), and (D) of paragraph (1), of which not less than

8 2 percent of the amounts shall be used by the quali9 fied entity for the purposes described in paragraph

10 (1)(D). If two or more qualified entities are jointly

11 administering a project, no qualified entity shall use

12 more than its proportional share for the purposes de13 scribed in subparagraphs (A), (C), and (D) of para14 graph (1).

15 (d) UNUSED FEDERAL GRANT FUNDS TRANSFERRED

16 TO THE SECRETARY WHEN PROJECT TERMINATES.—Not17 withstanding subsection (c), upon the termination of any

18 demonstration project authorized under this section, the

19 qualified entity conducting the project shall transfer to the

20 Secretary an amount equal to—

21 (1) the amounts in its Reserve Fund at time of

22 the termination; multiplied by

23 (2) a percentage equal to—
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1 (A) the aggregate amount of grants made to

2 the qualified entity under section 406(b); divided

3 by

4 (B) the aggregate amount of all funds pro5 vided to the qualified entity by all sources to

6 conduct the project.

7 SEC. 408. ELIGIBILITY FOR PARTICIPATION.

8 (a) IN GENERAL.—Any individual who is a member

9 of a household that is eligible for assistance under the State

10 temporary assistance for needy families program estab11 lished under part A of title IV of the Social Security Act

12 (42 U.S.C. 601 et seq.), or that meets each of the following

13 requirements shall be eligible to participate in a demonstra14 tion project conducted under this title:

15 (1) INCOME TEST.—The adjusted gross income of

16 the household does not exceed the earned income

17 amount described in section 32 of the Internal Reve18 nue Code of 1986 (taking into account the size of the

19 household).

20 (2) NET WORTH TEST.—

21 (A) IN GENERAL.—The net worth of the

22 household, as of the end of the calendar year pre23 ceding the determination of eligibility, does not

24 exceed $10,000.
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1 (B) DETERMINATION OF NET WORTH.—For

2 purposes of subparagraph (A), the net worth of

3 a household is the amount equal to—

4 (i) the aggregate market value of all

5 assets that are owned in whole or in part

6 by any member of the household; minus

7 (ii) the obligations or debts of any

8 member of the household.

9 (C) EXCLUSIONS.—For purposes of deter10 mining the net worth of a household, a house11 hold’s assets shall not be considered to include

12 the primary dwelling unit and one motor vehicle

13 owned by the household.

14 (b) INDIVIDUALS UNABLE TO COMPLETE THE

15 PROJECT.—The Secretary shall establish such regulations

16 as are necessary, including prohibiting future eligibility to

17 participate in any other demonstration project conducted

18 under this title, to ensure compliance with this title if an

19 individual participating in the demonstration project

20 moves from the community in which the project is con21 ducted or is otherwise unable to continue participating in

22 that project.
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1 SEC. 409. SELECTION OF INDIVIDUALS TO PARTICIPATE.

2 From among the individuals eligible to participate in

3 a demonstration project conducted under this title, each

4 qualified entity shall select the individuals—

5 (1) that the qualified entity deems to be best

6 suited to participate; and

7 (2) to whom the qualified entity will provide de8 posits in accordance with section 410.

9 SEC. 410. DEPOSITS BY QUALIFIED ENTITIES.

10 (a) IN GENERAL.—Not less than once every 3 months

11 during each project year, each qualified entity under this

12 title shall deposit in the individual development account of

13 each individual participating in the project, or into a par14 allel account maintained by the qualified entity—

15 (1) from the non-Federal funds described in sec16 tion 405(c)(4), a matching contribution of not less

17 than $0.50 and not more than $4 for every $1 of

18 earned income (as defined in section 911(d)(2) of the

19 Internal Revenue Code of 1986) deposited in the ac20 count by a project participant during that period;

21 (2) from the grant made under section 406(b),

22 an amount equal to the matching contribution made

23 under paragraph (1); and

24 (3) any interest that has accrued on amounts de25 posited under paragraph (1) or (2) on behalf of that

26 individual into the individual development account of
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1 the individual or into a parallel account maintained

2 by the qualified entity.

3 (b) LIMITATION ON DEPOSITS FOR AN INDIVIDUAL.—

4 Not more than $2,000 from a grant made under section

5 406(b) shall be provided to any one individual over the

6 course of the demonstration project.

7 (c) LIMITATION ON DEPOSITS FOR A HOUSEHOLD.—

8 Not more than $4,000 from a grant made under section

9 406(b) shall be provided to any one household over the

10 course of the demonstration project.

11 (d) WITHDRAWAL OF FUNDS.—The Secretary shall es12 tablish such guidelines as may be necessary to ensure that

13 funds held in an individual development account are not

14 withdrawn, except for one or more qualified expenses, or

15 for an emergency withdrawal. Such guidelines shall include

16 a requirement that a responsible official of the qualified en17 tity conducting a project approve such withdrawal in writ18 ing. The guidelines shall provide that no individual may

19 withdraw funds from an individual development account

20 earlier than 6 months after the date on which the individual

21 first deposits funds in the account.

22 (e) REIMBURSEMENT.—An individual shall reimburse

23 an individual development account for any funds with24 drawn from the account for an emergency withdrawal, not

25 later than 12 months after the date of the withdrawal. If
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1 the individual fails to make the reimbursement, the quali2 fied entity administering the account shall transfer the

3 funds deposited into the account or a parallel account under

4 section 410 to the Reserve Fund of the qualified entity, and

5 use the funds to benefit other individuals participating in

6 the demonstration project involved.

7 SEC. 411. LOCAL CONTROL OVER DEMONSTRATION

8 PROJECTS.

9 A qualified entity under this title, other than a State

10 or local government agency or a tribal government, shall,

11 subject to the provisions of section 413, have sole authority

12 over the administration of the project. The Secretary may

13 prescribe only such regulations or guidelines with respect

14 to demonstration projects conducted under this title as are

15 necessary to ensure compliance with the approved applica16 tions and the requirements of this title.

17 SEC. 412. ANNUAL PROGRESS REPORTS.

18 (a) IN GENERAL.—Each qualified entity under this

19 title shall prepare an annual report on the progress of the

20 demonstration project. Each report shall include both pro21 gram and participant information and shall specify for the

22 period covered by the report the following information:

23 (1) The number of individuals making a deposit

24 into an individual development account.
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1 (2) The amounts in the Reserve Fund established

2 with respect to the project.

3 (3) The amounts deposited in the individual de4 velopment accounts.

5 (4) The amounts withdrawn from the individual

6 development accounts and the purposes for which such

7 amounts were withdrawn.

8 (5) The balances remaining in the individual de9 velopment accounts.

10 (6) The savings account characteristics (such as

11 threshold amounts and match rates) required to stim12 ulate participation in the demonstration project, and

13 how such characteristics vary among different popu14 lations or communities.

15 (7) What service configurations of the qualified

16 entity (such as peer support, structured planning ex17 ercises, mentoring, and case management) increased

18 the rate and consistency of participation in the dem19 onstration project and how such configurations varied

20 among different populations or communities.

21 (8) Such other information as the Secretary may

22 require to evaluate the demonstration project.

23 (b) SUBMISSION OF REPORTS.—The qualified entity

24 shall submit each report required to be prepared under sub25 section (a) to—
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1 (1) the Secretary; and

2 (2) the Treasurer (or equivalent official) of the

3 State in which the project is conducted, if the State

4 or a local government or a tribal government commit5 ted funds to the demonstration project.

6 (c) TIMING.—The first report required by subsection

7 (a) shall be submitted not later than 60 days after the end

8 of the calendar year in which the Secretary authorized the

9 qualified entity to conduct the demonstration project, and

10 subsequent reports shall be submitted every 12 months there11 after, until the conclusion of the project.

12 SEC. 413. SANCTIONS.

13 (a) AUTHORITY TO TERMINATE DEMONSTRATION

14 PROJECT.—If the Secretary determines that a qualified en15 tity under this title is not operating the demonstration

16 project in accordance with the entity’s application or the

17 requirements of this title (and has not implemented any

18 corrective recommendations directed by the Secretary), the

19 Secretary shall terminate such entity’s authority to conduct

20 the demonstration project.

21 (b) ACTIONS REQUIRED UPON TERMINATION.—If the

22 Secretary terminates the authority to conduct a demonstra23 tion project, the Secretary—

24 (1) shall suspend the demonstration project;
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1 (2) shall take control of the Reserve Fund estab2 lished pursuant to section 407;

3 (3) shall make every effort to identify another

4 qualified entity (or entities) willing and able to con5 duct the project in accordance with the approved ap6 plication (or, as modified, if necessary to incorporate

7 the recommendations) and the requirements of this

8 title;

9 (4) shall, if the Secretary identifies an entity (or

10 entities) described in paragraph (3)—

11 (A) authorize the entity (or entities) to con12 duct the project in accordance with the approved

13 application (or, as modified, if necessary, to in14 corporate the recommendations) and the require15 ments of this title;

16 (B) transfer to the entity (or entities) con17 trol over the Reserve Fund established pursuant

18 to section 407; and

19 (C) consider, for purposes of this title—

20 (i) such other entity (or entities) to be

21 the qualified entity (or entities) originally

22 authorized to conduct the demonstration

23 project; and

24 (ii) the date of such authorization to be

25 the date of the original authorization; and
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1 (5) if, by the end of the 1-year period beginning

2 on the date of the termination, the Secretary has not

3 found a qualified entity (or entities) described in

4 paragraph (3), shall—

5 (A) terminate the project; and

6 (B) from the amount remaining in the Re7 serve Fund established as part of the project,

8 remit to each source that provided funds under

9 section 405(c)(4) to the entity originally author10 ized to conduct the project, an amount that bears

11 the same ratio to the amount so remaining as

12 the amount provided by the source under section

13 405(c)(4) bears to the amount provided by all

14 such sources under that section.

15 SEC. 414. EVALUATIONS.

16 (a) IN GENERAL.—Not later than 10 months after the

17 date of enactment of this title, the Secretary shall enter into

18 a contract with an independent research organization to

19 evaluate, individually and as a group, all qualified entities

20 and sources participating in the demonstration projects

21 conducted under this title.

22 (b) FACTORS TO EVALUATE.—In evaluating any dem23 onstration project conducted under this title, the research

24 organization shall address the following factors:
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1 (1) The effects of incentives and organizational

2 or institutional support on savings behavior in the

3 demonstration project.

4 (2) The savings rates of individuals in the dem5 onstration project based on demographic characteris6 tics including gender, age, family size, race or ethnic

7 background, and income.

8 (3) The economic, civic, psychological, and social

9 effects of asset accumulation, and how such effects

10 vary among different populations or communities.

11 (4) The effects of individual development ac12 counts on savings rates, homeownership, level of post13 secondary education attained, and self-employment,

14 and how such effects vary among different popu15 lations or communities.

16 (5) The potential financial returns to the Federal

17 Government and to other public sector and private

18 sector investors in individual development accounts

19 over a 5-year and 10-year period of time.

20 (6) The lessons to be learned from the demonstra21 tion projects conducted under this title and if a per22 manent program of individual development accounts

23 should be established.

24 (7) Such other factors as may be prescribed by

25 the Secretary.
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1 (c) METHODOLOGICAL REQUIREMENTS.—In evaluat2 ing any demonstration project conducted under this title,

3 the research organization shall—

4 (1) for at least one site, use control groups to

5 compare participants with nonparticipants;

6 (2) before, during, and after the project, obtain

7 such quantitative data as are necessary to evaluate

8 the project thoroughly; and

9 (3) develop a qualitative assessment, derived

10 from sources such as in-depth interviews, of how asset

11 accumulation affects individuals and families.

12 (d) REPORTS BY THE SECRETARY.—

13 (1) INTERIM REPORTS.—Not later than 90 days

14 after the end of the calendar year in which the Sec15 retary first authorizes a qualified entity to conduct a

16 demonstration project under this title, and every 12

17 months thereafter until all demonstration projects

18 conducted under this title are completed, the Sec19 retary shall submit to Congress an interim report set20 ting forth the results of the reports submitted pursu21 ant to section 412(b).

22 (2) FINAL REPORTS.—Not later than 12 months

23 after the conclusion of all demonstration projects con24 ducted under this title, the Secretary shall submit to

25 Congress a final report setting forth the results and
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1 findings of all reports and evaluations conducted pur2 suant to this title.

3 (e) EVALUATION EXPENSES.—The Secretary shall ex4 pend such sums as may be necessary, but not more than

5 2 percent of the amounts appropriated under section 416

6 for a fiscal year, to carry out the purposes of this section.

7 SEC. 415. TREATMENT OF FUNDS.

8 Of the funds deposited in individual development ac9 counts for eligible individuals only the funds deposited by

10 the individuals (including interest accruing on those funds)

11 may be considered to be the income, assets, or resources of

12 the individuals, for purposes of determining eligibility for,

13 or the amount of assistance furnished under, any Federal

14 or federally assisted program based on need.

15 SEC. 416. AUTHORIZATION OF APPROPRIATIONS.

16 There is authorized to be appropriated to carry out

17 this title, $25,000,000 for each of fiscal years 1999, 2000,

18 2001, 2002, and 2003 to remain available until expended.