```

[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 2206 Introduced in Senate (IS)]

105th CONGRESS
  2d Session
                                S. 2206

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

_______________________________________________________________________

                                 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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Human Services Reauthorization Act 
of 1998''.

SEC. 2. TABLE OF CONTENTS.

    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

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.

                      TITLE I--HEAD START PROGRAMS

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Head Start Amendments of 1998''.

SEC. 102. REFERENCES.

    Except as otherwise expressly provided, wherever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Head Start Act (42 
U.S.C. 9831 et seq.).

SEC. 103. STATEMENT OF PURPOSE.

    The Head Start Act is amended by striking section 636 (42 U.S.C. 
9831) and inserting the following:

``SEC. 636. STATEMENT OF PURPOSE.

    ``It is the purpose of this subchapter to promote school readiness 
by enhancing the social and cognitive development of low-income 
children through the provision, to low-income children and their 
families, of health, educational, nutritional, social, and other 
services that are determined to be necessary, based on family needs 
assessments.''.

SEC. 104. DEFINITIONS.

    Section 637 (42 U.S.C. 9832) is amended--
            (1) by redesignating paragraphs (3) through (14) as 
        paragraphs (4) through (15), respectively;
            (2) by inserting after paragraph (2) the following:
            ``(3) The term `child with a disability' means--
                    ``(A) a child with a disability, as defined in 
                section 602(3) of the Individuals with Disabilities 
                Education Act; and
                    ``(B) an infant or toddler with a disability, as 
                defined in section 632(5) of such Act.'';
            (3) by striking paragraph (5) (as redesignated in paragraph 
        (1)) and inserting the following:
            ``(5) The term `family literacy services' means services 
        that--
                    ``(A) are provided to participants who receive the 
                services on a voluntary basis;
                    ``(B) are of sufficient intensity, and of 
                sufficient duration, to make sustainable changes in a 
                family (such as eliminating or reducing dependence on 
                income-based public assistance); and
                    ``(C) integrate each of--
                            ``(i) interactive literacy activities 
                        between parents and their children;
                            ``(ii) training for parents on being 
                        partners with their children in learning;
                            ``(iii) parent literacy training, including 
                        training that contributes to economic self-
                        sufficiency; and
                            ``(iv) appropriate instruction for children 
                        of parents receiving the parent literacy 
                        training.'';
            (4) in paragraph (7) (as redesignated in paragraph (1)), by 
        adding at the end the following: ``Nothing in this paragraph 
        shall be construed to require an agency to provide services to 
        a child who has not reached the age of compulsory school 
        attendance for more than the number of hours per day permitted 
        by State law (including regulation) for the provision of 
        services to such a child.'';
            (5) by striking paragraph (13) (as redesignated in 
        paragraph (1)) and inserting the following:
            ``(13) The term ``migrant or seasonal Head Start  program'' 
means--
                    ``(A) with respect to services for migrant 
                farmworkers, a Head Start program that serves families 
                who are engaged in agricultural labor and who have 
                changed their residence from 1 geographic location to 
                another in the preceding 2-year period; and
                    ``(B) with respect to services for seasonal 
                farmworkers, a Head Start program that serves families 
                who are engaged primarily in seasonal agricultural 
                labor and who have not changed their residence to 
                another geographic location in the preceding 2-year 
                period.''; and
            (6) by adding at the end the following:
            ``(16) The term `reliable and replicable', used with 
        respect to research, means an objective, valid, scientific 
        study that--
                    ``(A) includes a rigorously defined sample of 
                subjects, that is sufficiently large and representative 
                to support the general conclusions of the study;
                    ``(B) relies on measurements that meet established 
                standards of reliability and validity;
                    ``(C) is subjected to peer review before the 
                results of the study are published; and
                    ``(D) discovers effective strategies for enhancing 
                the development and skills of children.''.

SEC. 105. FINANCIAL ASSISTANCE FOR HEAD START PROGRAMS.

    Section 638(1) (42 U.S.C. 9833(1)) is amended--
            (1) by striking ``aid the'' and inserting ``enable the''; 
        and
            (2) by striking the semicolon and inserting ``and attain 
        school readiness;''.

SEC. 106. AUTHORIZATION OF APPROPRIATIONS.

    Section 639 (42 U.S.C. 9834) is amended--
            (1) in subsection (a), by striking ``1995 through 1998'' 
        and inserting ``1999 through 2003''; and
            (2) in subsection (b), by striking all that follows ``shall 
        make available--'' and inserting the following:
            ``(1) for each of fiscal years 1999 through 2003 to carry 
        out activities authorized under section 642A, not more than 
        $35,000,000 but not less than was made available for such 
        activities for fiscal year 1998;
            ``(2) not more than $5,000,000 for each of fiscal years 
        1999 through 2003 to carry out impact studies under section 
        649(f); and
            ``(3) not more than $12,000,000 for fiscal year 1999, and 
        such sums as may be necessary for each of fiscal years 2000 
        through 2003, to carry out other research, demonstration, and 
        evaluation activities, including longitudinal studies, under 
        section 649.''.

SEC. 107. ALLOTMENT OF FUNDS.

    (a) Allotments.--Section 640(a) (42 U.S.C. 9835(a)) is amended--
            (1) in paragraph (2)--
                    (A) in subparagraph (A)--
                            (i) by striking ``handicapped children'' 
                        and inserting ``children with disabilities'';
                            (ii) by striking ``migrant Head Start 
                        programs'' each place it appears and inserting 
                        ``migrant or seasonal Head Start programs'';
                            (iii) by striking ``1994'' and inserting 
                        ``1998''; and
                            (iv) by adding at the end the following: 
                        ``In determining the need and demand for 
                        migrant and seasonal Head Start programs, and 
                        services provided through such programs, the 
                        Secretary shall consult with appropriate 
                        entities, including providers of services for 
                        seasonal and migrant Head Start programs. The 
                        Secretary shall, after taking into 
                        consideration the need and demand for migrant 
                        and seasonal Head Start programs, and such 
services, ensure that there is an adequate level of such services for 
the children of eligible migrant farmworkers before approving an 
increase in the allocation provided for children of eligible seasonal 
farmworkers.'';
                    (B) in subparagraph (C), by striking ``and'' at the 
                end;
                    (C) in subparagraph (D), by striking ``related to 
                the development and implementation of quality 
                improvement plans under section 641A(d)(2)'' and 
                inserting ``carried out under paragraph (1), (2), or 
                (3) of section 641A(d) related to correcting 
                deficiencies and conducting proceedings to terminate 
                the designation of Head Start agencies; and'';
                    (D) by inserting after subparagraph (D) the 
                following:
            ``(E) payments for research, demonstration, and evaluation 
        activities under section 649.''; and
                    (E) by adding at the end the following: ``In 
                carrying out this subchapter, the Secretary shall 
                continue the administrative arrangement responsible for 
                meeting the needs of migrant or seasonal farmworker and 
                Indian children and shall assure that appropriate 
                funding is provided to meet such needs.'';
            (2) in paragraph (3)--
                    (A) in subparagraph (B)--
                            (i) in clause (ii)--
                                    (I) by striking ``adequate 
                                qualified staff'' and inserting 
                                ``adequate numbers of qualified 
                                staff''; and
                                    (II) by inserting ``and children 
                                with disabilities'' before ``, when'';
                            (ii) in clause (iv), by inserting before 
                        the period the following: ``, and to encourage 
                        the staff to continually improve their skills 
                        and expertise by informing the staff of the 
                        availability of State and Federal incentive and 
                        loan forgiveness programs for professional 
                        development and by providing for preferences in 
                        the awarding of salary increases, in excess of 
                        cost of living allowances, to staff who obtain 
                        additional training or education related to 
                        their responsibilities as employees of a Head 
                        Start program or to advance their careers 
                        within the Head Start program'';
                            (iii) in clause (vi), by striking the 
                        period and inserting ``, and are physically 
                        accessible to children with disabilities and 
                        their parents.'';
                            (iv) by redesignating clause (vii) as 
                        clause (viii); and
                            (v) by inserting after clause (vi) the 
                        following:
            ``(vii) Ensuring that such programs have qualified staff 
        that can promote language skills and literacy growth of 
        children and that provide children with a variety of skills 
        that have been identified, through research that is reliable 
        and replicable, as predictive of later reading achievement.'';
                    (B) in subparagraph (C)--
                            (i) in clause (i)(I)--
                                    (I) by striking ``of staff'' and 
                                inserting ``of classroom teachers and 
                                other staff''; and
                                    (II) by striking ``such staff'' and 
                                inserting ``qualified staff, including 
                                recruitment and retention pursuant to 
                                section 648A(a)'';
                            (ii) by striking clause (ii) and inserting 
                        the following:
            ``(ii) To supplement amounts provided under paragraph 
        (2)(C) to provide training to classroom teachers and other 
        staff on proven techniques that promote--
                    ``(I) language and literacy growth; and
                    ``(II) the acquisition of the English language for 
                non-English background children and families.'';
                            (iii) in clause (v), by inserting 
                        ``accessibility or'' before ``availability'';
                            (iv) to redesignate clauses (iii), (iv), 
                        (v), and (vi) as clauses (iv), (v), (vi), and 
                        (iii), respectively; and
                            (v) by inserting clause (iii) (as 
                        redesignated in clause (iv) of this 
                        subparagraph) after clause (ii); and
                    (C) in subparagraph (D)(i)(II), by striking 
                ``migrant Head Start programs'' and inserting ``migrant 
                or seasonal Head Start programs'';
            (3) in paragraph (4)(A), by striking ``1981'' and inserting 
        ``1998'';
            (4) in paragraph (5)--
                    (A) in subparagraph (A), by striking ``subparagraph 
                (B)'' and inserting ``subparagraphs (B) and (D)'';
                    (B) in subparagraph (B), by inserting before the 
                period the following ``and encourage Head Start 
                agencies to collaborate with entities involved in State 
                and local planning processes (including the State lead 
                agency administering the financial assistance received 
                under the Child Care and Development Block Grant Act of 
                1990 (42 U.S.C. 9858 et seq.) and the entities 
                providing resource and referral services in the State) 
                in order to better meet the needs of low-income 
                children and families'';
                    (C) in subparagraph (C)--
                            (i) in clause (i)(I), by inserting ``the 
                        appropriate regional office of the 
                        Administration for Children and Families and'' 
                        before ``agencies'';
                            (ii) in clause (iii), by striking ``and'' 
                        at the end;
                            (iii) in clause (iv)--
                                    (I) by striking ``education, and 
                                national service activities,'' and 
                                inserting ``education, and community 
                                service activities,'';
                                    (II) by striking ``and activities'' 
                                and inserting ``activities''; and
                                    (III) by striking the period and 
                                inserting ``, and services for homeless 
                                children; and''; and
                            (iv) by adding at the end the following:
            ``(v) include representatives of the State Head Start 
        Association and local Head Start agencies in unified planning 
        regarding early care and education services at both the State 
        and local levels, including collaborative efforts to plan for 
        the provision of full-working-day, full calendar year early 
        care and education services for children.'';
                    (D) by redesignating subparagraph (D) as 
                subparagraph (F); and
                    (E) by inserting after subparagraph (C) the 
                following:
    ``(D) Following the award of collaboration grants described in 
subparagraph (B), the Secretary shall provide, from the reserved sums, 
supplemental funding for collaboration grants--
            ``(i) to States that (in consultation with their State Head 
        Start Associations) develop statewide, regional, or local 
        unified plans for early childhood education and child care that 
        include the participation of Head Start agencies; and
            ``(ii) to States that engage in other innovative 
        collaborative initiatives, including plans for collaborative 
        training and career development initiatives for child care, 
        early childhood education, and Head Start service managers, 
        providers, and staff.
    ``(E)(i) The Secretary shall--
            ``(I) review on an ongoing basis evidence of barriers to 
        effective collaboration between Head Start programs and other 
        Federal child care and early childhood education programs and 
        resources;
            ``(II) develop initiatives, including providing additional 
        training and technical assistance and making regulatory 
        changes, in necessary cases, to eliminate barriers to the 
        collaboration; and
            ``(III) develop a mechanism to resolve administrative and 
        programmatic conflicts between such programs that would be a 
        barrier to service providers, parents, or children related to 
        the provision of unified services and the consolidation of 
        funding for child care services.
    ``(ii) In the case of a collaborative activity funded under this 
subchapter and another provision of law providing for Federal child 
care or early childhood education, the use of equipment and 
nonconsumable supplies purchased with funds made available under this 
subchapter or such provision shall not be restricted to children 
enrolled or otherwise participating in the program carried out under 
that subchapter or provision, during a period in which the activity is 
predominantly funded under this subchapter or such provision.''; and
            (5) in paragraph (6)--
                    (A) by inserting ``(A)'' before ``From''; and
                    (B) by striking ``3 percent'' and all that follows 
                and inserting the following: ``7.5 percent for fiscal 
                year 1999, 8 percent for fiscal year 2000, 9 percent 
                for fiscal year 2001, 10 percent for fiscal year 2002, 
                and 10 percent for fiscal year 2003, of the amount 
                appropriated pursuant to section 639(a), except as 
                provided in subparagraph (B).
    ``(B)(i) For any fiscal year for which the Secretary determines 
that the amount appropriated under section 639(a) is not sufficient to 
permit the Secretary to reserve the portion described in subparagraph 
(A) without reducing the number of children served by Head Start 
programs or negatively impacting the quality of Head Start services, 
relative to the number of children served and the quality of the 
services during the preceding fiscal year, the Secretary may reduce the 
percentage of funds required to be reserved for the portion described 
in subparagraph (A) for  the fiscal year for which the determination is 
made, but not below the percentage required to be so reserved for the 
preceding fiscal year.
    ``(ii) For any fiscal year for which the amount appropriated under 
section 639(a) is lowered to a level that requires a reduction in the 
amount made available under this subchapter to Head Start agencies and 
entities described in section 645A, relative to the amount made 
available to the agencies and entities for the preceding fiscal year, 
adjusted as described in paragraph (3)(A)(ii), the Secretary shall 
proportionately reduce--
            ``(I) the amounts made available to the entities for 
        programs carried out under section 645A; and
            ``(II) the amounts made available to Head Start agencies 
        for Head Start programs.''.
    (b) Children With Disabilities.--Section 640(d) (42 U.S.C. 9835(d)) 
is amended--
            (1) by striking ``1982'' and inserting ``1999''; and
            (2) by striking ``(as defined in section 602(a) of the 
        Individuals with Disabilities Education Act)''.
    (c) Increased Appropriations.--Section 640(g) (42 U.S.C. 9835(g)) 
is amended--
            (1) in paragraph (2)--
                    (A) in subparagraph (A), by striking the semicolon 
                and inserting ``, and the performance history of the 
                applicant in providing services under other Federal 
                programs (other than the program carried out under this 
                subchapter);'';
                    (B) in subparagraph (C), by striking the semicolon 
                and inserting ``, and organizations serving children 
                with disabilities;'';
                    (C) in subparagraph (D), by inserting before the 
                semicolon the following: ``and the extent to which, and 
                manner in which, the applicant demonstrates the ability 
                to collaborate and participate with other local 
                community providers of child care or preschool services 
                to provide full working day, full calendar year 
                services'';
                    (D) in subparagraph (E), by striking ``program; 
                and'' and inserting ``or any other early childhood 
                program;'';
                    (E) in subparagraph (F), by striking the period and 
                inserting ``; and''; and
                    (F) by adding at the end the following:
            ``(G) the extent to which the applicant proposes to foster 
        partnerships with other service providers in a manner that will 
        enhance the resource capacity of the applicant.''; and
            (2) by adding at the end the following:
    ``(4) Notwithstanding subsection (a)(2), after taking into account 
the provisions of paragraph (1), the Secretary may allocate a portion 
of the remaining additional funds under subsection (a)(2)(A) for the 
purpose of increasing funds available for the activities described in 
such subsection.''.
    (d) Migrant or Seasonal Head Start Programs.--Section 640(l) (42 
U.S.C. 9835(l)) is amended--
            (1) by striking ``migrant Head Start programs'' each place 
        it appears and inserting ``migrant or seasonal Head Start 
        programs''; and
            (2) by striking ``migrant families'' and inserting 
        ``migrant or seasonal farmworker families''.
    (e) Conforming Amendment.--Section 644(f)(2) (42 U.S.C. 9839(f)(2)) 
is amended by striking ``640(a)(3)(C)(v)'' and inserting 
``640(a)(3)(C)(vi).''

SEC. 108. DESIGNATION OF HEAD START AGENCIES.

    Section 641 (42 U.S.C. 9836) is amended--
            (1) in subsection (a)--
                    (A) in the matter preceding paragraph (1), by 
                inserting ``or for-profit'' after ``nonprofit''; and
                    (B) in paragraph (2), by inserting ``(in 
                consultation with the chief executive officer of the 
                State in which the community is located)'' after ``the 
                Secretary'';
            (2) in subsection (c)--
                    (A) in paragraph (1)--
                            (i) by striking ``shall give priority'' and 
                        inserting ``shall, in consultation with the 
                        chief executive officer of the State, give 
                        priority'';
                            (ii) by inserting ``or for-profit'' after 
                        ``nonprofit''; and
                            (iii) by striking ``unless the Secretary 
                        makes a finding'' and all that follows and 
                        inserting the following: ``unless the Secretary 
                        determines that the agency involved fails to 
                        meet program and financial management 
                        requirements, performance standards described 
                        in section 641A(a)(1), and other requirements 
                        established by the Secretary.'';
                    (B) in paragraph (2), by striking ``shall give 
                priority'' and inserting ``shall, in consultation with 
                the chief executive officer of the State, give 
                priority''; and
                    (C) by aligning the margins of paragraphs (2) and 
                (3) with the margins of paragraph (1);
            (3) in subsection (d)--
                    (A) in the matter preceding paragraph (1), by 
                inserting after the first sentence the following new 
                sentence: ``In selecting from among qualified 
                applicants for designation as a Head Start agency, the 
                Secretary shall give priority to any qualified agency 
                that functioned as a Head Start delegate agency in the 
                community and carried out a Head Start program that the 
                Secretary determines has met or exceeded the 
                performance standards and outcome-based performance 
                measures described in section 641A.'';
                    (B) in paragraph (4)(A), by inserting ``(at home 
                and in the center involved where practicable)'' after 
                ``activities'';
                    (C) by redesignating paragraphs (7) and (8) as 
                paragraphs (9) and (10); and
                    (D) by inserting after paragraph (6) the following:
            ``(7) the plan of such applicant to meet the needs of non-
        English background children and their families, including needs 
        related to the acquisition of the English language;
            ``(8) the plan of such applicant to meet the needs of 
        children with disabilities;''; and
            (4) by striking subsection (e) and inserting the following:
    ``(e) If no agency in the community receives priority designation, 
and there is no qualified applicant in the community, the Secretary 
shall designate an agency to carry out the Head Start program in the 
community on an interim basis until a qualified applicant from the 
community is so designated.''.

SEC. 109. QUALITY STANDARDS.

    (a) Quality Standards.--Section 641A(a) (42 U.S.C. 9836a(a)) is 
amended--
            (1) in paragraph (1)--
                    (A) in the matter preceding subparagraph (A), by 
                inserting ``, including minimum levels of overall 
                accomplishment,'' after ``regulation standards'';
                    (B) in subparagraph (A), by striking 
                ``education,'';
                    (C) by redesignating subparagraphs (B) through (D) 
                as subparagraphs (C) through (E); and
                    (D) by inserting after subparagraph (A) the 
                following:
                    ``(B)(i) education performance standards to ensure 
                the school readiness of children participating in a 
                Head Start program, on completion of the Head Start 
                program and prior to entering school; and
                    ``(ii) additional education performance standards 
                to ensure that the children participating in the 
                program, at a minimum--
                            ``(I) develop phonemic, print, and numeracy 
                        awareness;
                            ``(II) understand and use oral language to 
                        communicate needs, wants, and thoughts;
                            ``(III) understand and use increasingly 
                        complex and varied vocabulary;
                            ``(IV) develop and demonstrate an 
                        appreciation of books; and
                            ``(V) in the case of non-English background 
                        children, progress toward acquisition of the 
                        English language.'';
            (2) by striking paragraph (2);
            (3) by redesignating paragraphs (3) and (4) as paragraphs 
        (2) and (3); and
            (4) in paragraph (2) (as redesignated in paragraph (3))--
                    (A) in subparagraph (B)(iii), striking ``child'' 
                and inserting ``early childhood education and''; and
                    (B) in subparagraph (C)--
                            (i) in clause (i)--
                                    (I) by striking ``not later than 1 
                                year after the date of enactment of 
                                this section,''; and
                                    (II) by striking ``section 651(b)'' 
                                and all that follows and inserting 
                                ``this subsection; and''; and
                            (ii) in subclause (ii), by striking 
                        ``November 2, 1978'' and inserting ``the date 
                        of enactment of the Human Services 
                        Reauthorization Act of 1998''.
    (b) Performance Measures.--Section 641A(b) (42 U.S.C. 9836a(b)) is 
amended--
            (1) in the subsection heading, by inserting ``Outcome-
        Based'' before ``Performance'';
            (2) in paragraph (1)--
                    (A) by striking ``Not later than 1 year after the 
                date of enactment of this section, the'' and inserting 
                ``The'';
                    (B) by striking ``child'' and inserting ``early 
                childhood education and'';
                    (C) by striking the period and inserting ``, and 
                the impact of the services provided through the 
                programs to children and their families.''; and
                    (D) by adding at the end the following: ``The 
                performance measures shall include the performance 
                standards described in subsection (a)(1)(B)(ii).''; and
            (3) in paragraph (2)--
                    (A) in the paragraph heading, by striking 
                ``Design'' and inserting ``Characteristics'';
                    (B) in the matter preceding subparagraph (A), by 
                striking ``shall be designed--'' and inserting 
                ``shall--'';
                    (C) in subparagraph (A), by striking ``to assess'' 
                and insert ``assess the impact of'';
                    (D) in subparagraph (B)--
                            (i) by striking ``to''; and
                            (ii) by striking ``and peer review'' and 
                        inserting ``, peer review, and program 
                        evaluation''; and
                    (E) in subparagraph (C), by inserting ``be 
                developed'' before ``for other''.
    (c) Monitoring.--Section 641A(c)(2) (42 U.S.C. 9836a(c)(2)) is 
amended--
            (1) in subparagraph (B), by striking ``; and'' and 
        inserting a semicolon;
            (2) in subparagraph (C)--
                    (A) by inserting ``(including children with 
                disabilities)'' after ``eligible children''; and
                    (B) by striking the period and inserting ``; and''; 
                and
            (3) by adding at the end the following:
                    ``(D) as part of the reviews of the programs, 
                include a review and assessment of program 
                effectiveness, as measured in accordance with the 
                outcome-based performance measures developed pursuant 
                to subsection (b) and with the performance standards 
                established pursuant to subparagraphs (A) and (B) of 
                subsection (a)(1).''.
    (d) Termination.--Section 641A(d) (42 U.S.C. 9836a(d)) is amended--
            (1) in paragraph (1)(B), to read as follows:
                    ``(B) with respect to each identified deficiency, 
                require the agency--
                            ``(i) to correct the deficiency 
                        immediately, if the Secretary finds that the 
                        deficiency threatens the health or safety of 
                        staff or program participants or poses a threat 
                        to the integrity of Federal funds;
                            ``(ii) to correct the deficiency not later 
                        than 90 days after the identification of the 
                        deficiency if the Secretary finds, in the 
                        discretion of the Secretary, that such a 90-day 
                        period is reasonable, in light of the nature 
                        and magnitude of the deficiency; or
                            ``(iii) in the discretion of the Secretary 
                        (taking into consideration the seriousness of 
                        the deficiency and the time reasonably required 
                        to correct the deficiency) to comply with the 
                        requirements of paragraph (2) concerning a 
                        quality improvement plan; and''; and
            (2) in paragraph (2)(A), in the matter preceding clause 
        (i), by striking ``immediately'' and inserting ``immediately or 
        during a 90-day period under clause (i) or (ii) of paragraph 
        (1)(B)''.

SEC. 110. POWERS AND FUNCTIONS OF HEAD START AGENCIES.

    Section 642 (42 U.S.C. 9837) is amended--
            (1) in subsection (a), by inserting ``or for-profit'' after 
        ``nonprofit'';
            (2) in subsection (c)--
                    (A) by inserting ``and collaborate'' after 
                ``coordinate''; and
                    (B) by striking ``section 402(g) of the Social 
                Security Act, and other'' and inserting ``the State 
                program carried out under the Child Care and 
                Development Block Grant Act of 1990 (42 U.S.C. 9858 et 
                seq.), and other early childhood education and 
                development''; and
            (3) in subsection (d)--
                    (A) in paragraph (1)--
                            (i) by striking ``shall carry out'' and all 
                        that follows through ``maintain'' and inserting 
                        ``shall take steps to ensure, to the maximum 
                        extent possible, that children maintain'';
                            (ii) by striking ``developmental'' and 
                        inserting ``developmental and educational''; 
                        and
                            (iii) by striking ``to build'' and 
                        inserting ``build'';
                    (B) by striking paragraph (2); and
                    (C) by redesignating paragraphs (3) through (5) as 
                paragraphs (2) through (4), respectively.

SEC. 111. HEAD START TRANSITION.

    The Head Start Act (42 U.S.C. 9831 et seq.) is amended by inserting 
after section 642 the following:

``SEC. 642A. HEAD START TRANSITION.

    ``Each Head Start agency shall take steps to coordinate with the 
local educational agency serving the community involved and with 
schools in which children participating in a Head Start program 
operated by such agency will enroll following such program, including--
            ``(1) developing and implementing a systematic procedure 
        for transferring, with parental consent, Head Start program 
        records for each participating child to the school in which 
        such child will enroll;
            ``(2) establishing channels of communication between Head 
        Start staff and their counterparts in the schools (including 
        teachers, social workers, and health staff) to facilitate 
        coordination of programs;
            ``(3) conducting meetings involving parents, kindergarten 
        or elementary school teachers, and Head Start program teachers 
        to discuss the developmental and other needs of individual 
        children;
            ``(4) organizing and participating in joint transition-
        related training of school staff and Head Start staff;
            ``(5) developing and implementing a family outreach and 
        support program in cooperation with entities carrying out 
        parental involvement efforts under title I of the Elementary 
        and Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.); 
        and
            ``(6) assisting families, administrators, and teachers in 
        enhancing developmental continuity between Head Start services 
        and elementary school classes.''.

SEC. 112. SUBMISSION OF PLANS TO GOVERNORS.

    The first sentence of section 643 (42 U.S.C. 9838) is amended--
            (1) by striking ``within 30 days'' and inserting ``within 
        45 days''; and
            (2) by striking ``so disapproved'' and inserting 
        ``disapproved (for reasons other than failure of the program to 
        comply with State health, safety, and child care laws, 
        including regulations, applicable to comparable child care 
        programs within the State)''.

SEC. 113. PARTICIPATION IN HEAD START PROGRAMS.

    (a) Regulations.--Section 645(a)(1) (42 U.S.C. 9840(a)(1)) is 
amended--
            (1) in subparagraph (B), by striking ``that programs'' and 
        inserting ``that (i) programs''; and
            (2) by striking the period at the end of subparagraph (B) 
        and inserting the following: ``, and (ii) a child who has been 
        determined to meet the low-income criteria and who is 
        participating in a Head Start program in a program year shall 
        be considered to continue to meet the low-income criteria 
        through the end of the succeeding program year. In determining, 
        for purposes of this paragraph, whether a child who has applied 
        for enrollment in a Head Start program meets the low-income 
        criteria, an entity may consider evidence of family income 
        during the 12 months preceding the month in which the 
        application is submitted, or during the calendar year preceding 
        the calendar year in which the application is submitted, 
        whichever more accurately reflects the needs of the family at 
        the time of application.''.
    (b) Sliding Fee Scale.--Section 645(b) (42 U.S.C. 9840(b)) is 
amended by adding at the end the following:
    ``A Head Start agency that provides a Head Start program with full-
working-day services in collaboration with other agencies or entities 
may collect a family copayment to support extended day services if a 
copayment is required in conjunction with the partnership. The 
copayment shall not exceed the copayment charged to families with 
similar incomes and circumstances who are receiving the services 
through participation in a program carried out by another agency or 
entity.''.
    (c) Continuous Recruitment and Acceptance of Applications.--Section 
645(c) (42 U.S.C. 9840(c)) is amended by adding at the end the 
following: ``Each Head Start program operated in a community shall be 
permitted to recruit and accept applications for enrollment of children 
throughout the year.''.

SEC. 114. EARLY HEAD START PROGRAMS FOR FAMILIES WITH INFANTS AND 
              TODDLERS.

    Section 645A (42 U.S.C. 9840a) is amended--
            (1) in the section heading, by inserting ``early head 
        start'' before ``programs for'';
            (2) in subsection (a)--
                    (A) by striking ``for--'' and all that follows 
                through ``programs providing'' and inserting ``for 
                programs providing'';
                    (B) by striking ``; and'' and inserting a period; 
                and
                    (C) by striking paragraph (2);
            (3) in subsection (b)(5), by inserting ``(including 
        programs for infants and toddlers with disabilities)'' after 
        ``community'';
            (4) in subsection (c)--
                    (A) in the matter preceding paragraph (1), by 
                striking ``subsection (a)(1)'' and inserting 
                ``subsection (a)''; and
                    (B) in paragraph (2), by striking ``3 (or under'' 
                and all that follows and inserting ``3;'';
            (5) in subsection (d)--
                    (A) by striking paragraph (2); and
                    (B) by redesignating paragraph (3) as paragraph 
                (2);
            (6) by striking subsection (e);
            (7) by redesignating subsections (f) and (g) as subsections 
        (e) and (f), respectively;
            (8) in subsection (e) (as redesignated in paragraph (7))--
                    (A) in the subsection heading, by striking 
                ``Other''; and
                    (B) by striking ``From the balance remaining of the 
                portion specified in section 640(a)(6), after making 
                grants to the eligible entities specified in subsection 
                (e),'' and inserting ``From the portion specified in 
                section 640(a)(6),''; and
            (9) by striking subsection (h) and inserting the following:
    ``(h) Monitoring, Training, Technical Assistance, and Evaluation.--
In order to ensure the successful operation of programs assisted under 
this section, the Secretary shall use funds from the portion specified 
in section 640(a)(6) to monitor the operation of such programs, 
evaluate their effectiveness, and provide training and technical 
assistance tailored to the particular needs of such programs.
    ``(i) Training and Technical Assistance Account.--
            ``(1) In general.--Of the amount made available to carry 
        out this section for any fiscal year, not less than 5 percent 
        and not more than 10 percent shall be reserved to fund a 
        training and technical assistance account.
            ``(2) Activities.--Funds in the account may be used for 
        purposes including--
                    ``(A) making grants to, and entering into contracts 
                with, organizations with specialized expertise relating 
                to infants, toddlers, and families and the capacity 
                needed to provide direction and support to a national 
                training and technical assistance system, in order to 
                provide such direction and support;
                    ``(B) providing ongoing training and technical 
                assistance for regional and program staff charged with 
                monitoring and overseeing the administration of the 
                program carried out under this section;
                    ``(C) providing ongoing training and technical 
                assistance for existing recipients of grants under 
                subsection (a) and support and program planning and 
                implementation assistance for new recipients of such 
                grants; and
                    ``(D) providing professional development and 
                personnel enhancement activities, including the 
                provision of funds to recipients of grants under 
                subsection (a) for the recruitment and retention of 
                qualified staff with an appropriate level of education 
                and experience.''.

SEC. 115. TECHNICAL ASSISTANCE AND TRAINING.

    (a) Full-Working-Day, Full Calendar Year Services.--Section 648(b) 
(42 U.S.C. 9843(b)) is amended--
            (1) in paragraph (1), by striking ``; and'' and inserting a 
        semicolon;
            (2) in paragraph (2), by striking the period and inserting 
        ``; and''; and
            (3) by adding at the end the following:
            ``(3) ensure the provision of technical assistance to 
        assist Head Start agencies, entities carrying out other child 
        care and early childhood programs, communities, and States in 
        collaborative efforts to provide quality full-working-day, full 
        calendar year services, including technical assistance related 
        to identifying and assisting in resolving barriers to 
        collaboration.''.
    (b) Allocating Resources.--Section 648(c) (42 U.S.C. 9843(c)) is 
amended--
            (1) in paragraph (4)--
                    (A) by striking ``developing'' and inserting 
                ``developing and implementing''; and
                    (B) by striking ``a longer day;'' and inserting the 
                following: ``the day, and assist the agencies and 
                programs in expediting the sharing of information about 
                innovative models for providing full-working-day, full 
                calendar year services for children;'';
            (2) in paragraph (7), by striking ``; and'' and inserting a 
        semicolon;
            (3) in paragraph (8), by striking the period and inserting 
        ``; and''; and
            (4) by adding at the end the following:
            ``(9) assist Head Start agencies in--
                    ``(A) ensuring the school readiness of children; 
                and
                    ``(B) meeting the education performance standards 
                described in this subchapter.''.
    (c) Services.--Section 648(e) (42 U.S.C. 9843(e)) is amended by 
inserting ``(including services to promote the acquisition of the 
English language)'' after ``non-English language background children''.

SEC. 116. STAFF QUALIFICATIONS AND DEVELOPMENT.

    Section 648A(a) (42 U.S.C. 9843a(a)) is amended--
            (1) in paragraph (1)--
                    (A) by redesignating subparagraphs (B) through (D) 
                as clauses (ii) through (iv), respectively;
                    (B) by striking ``(A)'' and inserting ``(B)(i)'';
                    (C) by inserting before subparagraph (B) (as 
                redesignated in subparagraph (B) of this paragraph) the 
                following:
                    ``(A) demonstrated competency to perform functions 
                that include--
                            ``(i) planning and implementing learning 
                        experiences that advance the intellectual and 
                        physical development of children, including 
                        improving the readiness of children for school 
                        by developing their literacy and phonemic, 
                        print, and numeracy awareness, their 
                        understanding and use of oral language, their 
                        understanding and use of increasingly complex 
                        and varied vocabulary, their appreciation of 
                        books, and their problem solving abilities;
                            ``(ii) establishing and maintaining a safe, 
                        healthy learning environment;
                            ``(iii) supporting the social and emotional 
                        development of children; and
                            ``(iv) encouraging the involvement of the 
                        families of the children in a Head Start 
                        program and supporting the development of 
                        relationships between children and their 
                        families; and''; and
            (2) by striking paragraph (2) and inserting the following:
            ``(2) Waiver.--On request, the Secretary shall grant a 180-
        day waiver of the requirements of paragraph (1)(B), for a Head 
        Start agency that can demonstrate that the agency has 
        unsuccessfully attempted to recruit an individual who has a 
        credential, certificate, or degree described in paragraph 
        (1)(B), with respect to an individual who--
                    ``(A) is enrolled in a program that grants any such 
                credential, certificate, or degree; and
                    ``(B) will receive such credential, certificate, or 
                degree under the terms of such program not later than 
                180 days after beginning employment as a teacher with 
                such agency.''.

SEC. 117. RESEARCH, DEMONSTRATION, AND EVALUATION.

    (a) Comparative Studies.--Section 649(d) (42 U.S.C. 9844(d)) is 
amended--
            (1) in paragraph (6), by striking ``; and'' and inserting a 
        semicolon;
            (2) in paragraph (7), by striking the period and inserting 
        ``; and''; and
            (3) by adding at the end the following:
            ``(8) study the experiences of small, medium, and large 
        States with Head Start programs in order to permit comparisons 
        of children participating in the programs with eligible 
        children who did not participate in the programs, which study--
                    ``(A) may include the use of a data set that 
                existed prior to the initiation of the study; and
                    ``(B) shall compare the educational achievement, 
                social adaptation, and health status of the 
                participating children and the eligible 
                nonparticipating children.
The Secretary shall ensure that an appropriate entity carries out a 
study described in paragraph (8), and prepares and submits to the 
appropriate committees of Congress a report containing the results of 
the study, not later than September 30, 2002.''.
    (b) National Research.--Section 649 (42 U.S.C. 9844) is amended by 
inserting after subsection (e) the following:
    ``(f) National Head Start Impact Research.--
            ``(1) Expert panel.--
                    ``(A) In general.--The Secretary shall appoint an 
                independent panel consisting of experts in program 
                evaluation and research, education, and early childhood 
                programs--
                            ``(i) to review, and make recommendations 
                        on, the design and plan for the research 
                        (whether conducted as a single assessment or as 
                        a series of assessments), described in 
                        paragraph (2), within 1 year after the date of 
                        enactment of the Human Services Reauthorization 
                        Act of 1998;
                            ``(ii) to maintain and advise the Secretary 
                        regarding the progress of the research; and
                            ``(iii) to comment, if the panel so 
                        desires, on the interim and final research 
                        reports submitted under paragraph (7).
                    ``(B) Travel expenses.--The members of the panel 
                shall not receive compensation for the performance of 
                services for the panel, but shall be allowed travel 
                expenses, including per diem in lieu of subsistence, at 
                rates authorized for employees of agencies under 
                subchapter I of chapter 57 of title 5, United States 
                Code, while away from their homes or regular places of 
                business in the performance of services for the panel. 
                Notwithstanding section 1342 of title 31, United States 
                Code, the Secretary may accept the voluntary and 
                uncompensated services of members of the panel.
            ``(2) General authority.--After reviewing the 
        recommendations of the expert panel the Secretary shall enter 
        into a grant, contract, or cooperative agreement with an 
        organization to conduct independent research that provides a 
        national analysis of the impact of Head Start programs. The 
        Secretary shall ensure that the organization shall have 
        expertise in program evaluation, and research, education, and 
        early childhood programs.
            ``(3) Designs and techniques.--The Secretary shall ensure 
        that the research uses rigorous methodological designs and 
        techniques (based on the recommendations of the expert panel), 
        including longitudinal designs, control groups, nationally 
        recognized standardized measures, and random selection and 
        assignment, as appropriate. The Secretary may provide that the 
        research shall be conducted as a single comprehensive 
        assessment or as a group of coordinated assessments designed to 
        provide, when taken together, a national analysis of the impact 
        of Head Start programs.
            ``(4) Programs.--The Secretary shall ensure that the 
        research focuses primarily on Head Start programs that operate 
        in the 50 States, the Commonwealth of Puerto Rico, or the 
        District of Columbia and that do not specifically target 
        special populations.
            ``(5) Analysis.--The Secretary shall ensure that the 
        organization conducting the research--
                    ``(A)(i) determines if, overall, the Head Start 
                programs have impacts consistent with their primary 
                goal of increasing the social competence of children, 
                by increasing the everyday effectiveness of the 
                children in dealing with their present environments and 
                future responsibilities, and increasing their school 
                readiness;
                    ``(ii) considers whether the Head Start programs--
                            ``(I) enhance the growth and development of 
                        children in cognitive, emotional, and physical 
                        health areas;
                            ``(II) strengthen families as the primary 
                        nurturers of their children; and
                            ``(III) ensure that children attain school 
                        readiness; and
                    ``(iii) examines--
                            ``(I) the impact of the Head Start programs 
                        on increasing access of children to such 
                        services as educational, health, and 
                        nutritional services, and linking children and 
                        families to needed community services; and
                            ``(II) how receipt of services described in 
                        subclause (I) enriches the lives of children 
                        and families participating in Head Start 
                        programs;
                    ``(B) examines the impact of Head Start programs on 
                participants on the date the participants leave Head 
                Start programs, at the end of kindergarten, and at the 
                end of first grade, by examining a variety of factors, 
                including educational achievement, referrals for 
                special education or remedial course work, and 
                absenteeism;
                    ``(C) makes use of random selection from the 
                population of all Head Start programs described in 
                paragraph (4) in selecting programs for inclusion in 
                the research; and
                    ``(D) includes comparisons of individuals who 
                participate in Head Start programs with control groups 
                (including comparison groups) composed of--
                            ``(i) individuals who participate in other 
                        early childhood programs (such as preschool 
                        programs and day care); and
                            ``(ii) individuals who do not participate 
                        in any other early childhood program.
            ``(6) Consideration of sources of variation.--In designing 
        the research, the Secretary shall, to the extent practicable, 
        consider addressing possible sources of variation in impact of 
        Head Start programs, including variations in impact related to 
        such factors as--
                    ``(A) Head Start program operations;
                    ``(B) Head Start program quality;
                    ``(C) the length of time a child attends a Head 
                Start program;
                    ``(D) the age of the child on entering the Head 
                Start program;
                    ``(E) the type of organization (such as a local 
                educational agency or a community action agency) 
                providing services for the Head Start program;
                    ``(F) the number of hours and days of program 
                operation of the Head Start program (such as whether 
                the program is a full-working-day, full calendar year 
                program, a part-day program, or a part-year program); 
                and
                    ``(G) other characteristics and features of the 
                Head Start program (such as geographic location, 
                location in an urban or a rural service area, or 
                participant characteristics), as appropriate.
            ``(7) Reports.--
                    ``(A) Submission of interim reports.--The 
                organization shall prepare and submit to the Secretary 
                2 interim reports on the research. The first interim 
                report shall describe the design of the research, and 
                the rationale for the design, including a description 
                of how potential sources of variation in impact of Head 
                Start programs have been considered in designing the 
                research. The second interim report shall describe the 
                status of the research and preliminary findings of the 
                research, as appropriate.
                    ``(B) Submission of final report.--The organization 
                shall prepare and submit to the Secretary a final 
                report containing the findings of the research.
                    ``(C) Transmittal of reports to congress.--
                            ``(i) In general.--The Secretary shall 
                        transmit, to the committees described in clause 
                        (ii), the first interim report by September 30, 
                        1999, the second interim report by September 
                        30, 2001, and the final report by September 30, 
                        2003.
                            ``(ii) Committees.--The committees referred 
                        to in clause (i) are the Committee on Education 
                        and the Workforce of the House of 
                        Representatives and the Committee on Labor and 
                        Human Resources of the Senate.
            ``(8) Definition.--In this subsection, the term `impact', 
        used with respect to a Head Start program, means a difference 
        in an outcome for a participant in the program that would not 
        have occurred without the participation in the program.
    ``(g) Quality Improvement Study.
            ``(1) Study.--The Secretary shall conduct a study regarding 
        the use and effects of use of the quality improvement funds 
        made available under section 640(a)(3) of the Head Start Act 
        (42 U.S.C. 9835(a)(3)) since fiscal year 1991.
            ``(2) Report.--The Secretary shall prepare and submit to 
        Congress not later than September 2000 a report containing the 
        results of the study, including--
                    ``(A) the types of activities funded with the 
                quality improvement funds;
                    ``(B) the extent to which the use of the quality 
                improvement funds has accomplished the goals of section 
                640(a)(3)(B);
                    ``(C) the effect of use of the quality improvement 
                funds on teacher training, salaries, benefits, 
                recruitment, and retention; and
                    ``(D) the effect of use of the quality improvement 
                funds on the cognitive and social development of 
                children receiving services under the this 
                subchapter.''.
    (b) Conforming Amendment.--Section 650(13) (42 U.S.C. 9846(13)) is 
amended by striking ``, demonstration,''.

            TITLE II--COMMUNITY SERVICES BLOCK GRANT PROGRAM

SEC. 201. REAUTHORIZATION.

    The Community Services Block Grant Act (42 U.S.C. 9901 et seq.) is 
amended to read as follows:

          ``Subtitle B--Community Services Block Grant Program

``SEC. 671. SHORT TITLE.

    ``This subtitle may be cited as the `Community Services Block Grant 
Act'.

``SEC. 672. PURPOSES AND GOALS.

    ``The purposes of this subtitle are--
            ``(1) to provide financial assistance to States and local 
        communities, working through a network of community action 
        agencies and other neighborhood-based organizations, for the 
        reduction of poverty, the revitalization of low-income 
        communities, and the empowerment of low-income families and 
        individuals in rural and urban areas to become fully self-
        sufficient (particularly families who are attempting to 
        transition off a State program carried out under part A of 
title IV of the Social Security Act (42 U.S.C. 601 et seq.));
            ``(2) to accomplish the goal described in paragraph (1) 
        through--
                    ``(A) the strengthening of community capabilities 
                for planning and coordinating the use of a broad range 
                of Federal, State, and other assistance related to the 
                elimination of poverty, so that this assistance can be 
                used in a manner responsive to local needs and 
                conditions;
                    ``(B) the organization of a range of services 
                related to the needs of low-income families and 
                individuals, so that these services may have a 
                measurable and potentially major impact on the causes 
                of poverty in the community and may help the families 
                and individuals to achieve self-sufficiency;
                    ``(C) the use of innovative and effective, 
                community-based approaches to attacking the causes and 
                effects of poverty and of community breakdown;
                    ``(D) the development and implementation of all 
                programs designated to serve low-income communities and 
                groups with the maximum feasible participation of 
                residents of the communities and members of the groups 
                served, so as to best stimulate and take full advantage 
                of capabilities for self-advancement and assure that 
                the programs are otherwise meaningful to the intended 
                beneficiaries of the programs; and
                    ``(E) the broadening of the resource base of 
                programs directed to the elimination of poverty.

``SEC. 673. DEFINITIONS.

    ``In this subtitle:
            ``(1) Eligible entity.--The term `eligible entity' means an 
        entity--
                    ``(A) that is an eligible entity described in 
                section 673(1) (as in effect on the day before the date 
                of enactment of the Human Services Reauthorization Act 
                of 1998) as of such date of enactment or is designated 
                by the process described in section 676A (including an 
                organization serving migrant or seasonal farmworkers 
                that is so described or designated); and
                    ``(B) that has a tripartite board or other 
                mechanism described in subsection (a) or (b), as 
                appropriate, of section 676B.
            ``(2) Poverty line.--The term `poverty line' means the 
        official poverty line defined by the Secretary. The Secretary 
        shall revise the poverty line annually (or at any shorter 
        interval the Secretary determines to be feasible and desirable) 
        which shall be used as a criterion of eligibility in the 
        community services block grant program established under this 
        subtitle. The required revision shall be accomplished by 
        multiplying the official poverty line by the percentage change 
        in the Consumer Price Index for All Urban Consumers during the 
        annual or other interval immediately preceding the time at 
        which the revision is made. Whenever a State determines that it 
        serves the objectives of the block grant program established 
        under this subtitle, the State may revise the poverty line to 
        not to exceed 125 percent of the official poverty line 
        otherwise applicable under this paragraph.
            ``(3) Private, nonprofit organization.--The term `private, 
        nonprofit organization' includes a faith-based organization, to 
        which the provisions of section 679 shall apply.
            ``(4) Secretary.--The term `Secretary' means the Secretary 
        of Health and Human Services.
            ``(5) State.--The term `State' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, Guam, the United States Virgin Islands, American Samoa, 
        the Commonwealth of the Northern Mariana Islands, and the 
        combined Freely Associated States.

``SEC. 674. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) In General.--There are authorized to be appropriated 
$625,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of fiscal years 2000 through 2003 to carry out the provisions of 
this subtitle (other than sections 681 and 682).
    ``(b) Reservations.--Of the amounts appropriated under subsection 
(a) for each fiscal year, the Secretary shall reserve--
            ``(1) \1/2\ of 1 percent for carrying out section 675A 
        (relating to payments for territories);
            ``(2) not less than \1/2\ of 1 percent and not more than 1 
        percent for activities authorized in section 678A (relating to 
        training and technical assistance); and
            ``(3) 9 percent for carrying out section 680 (relating to 
        discretionary activities).

``SEC. 675. ESTABLISHMENT OF BLOCK GRANT PROGRAM.

    ``The Secretary is authorized to establish a community services 
block grant program and make grants through the program to States to 
ameliorate the causes of poverty in communities within the States.

``SEC. 675A. DISTRIBUTION TO TERRITORIES.

    ``(a) Apportionment.--The Secretary shall apportion the amount 
reserved under section 674(b)(1) for each fiscal year on the basis of 
need among Guam, American Samoa, the United States Virgin Islands, the 
Commonwealth of the Northern Mariana Islands, and the combined Freely 
Associated States.
    ``(b) Application.--Each jurisdiction to which subsection (a) 
applies may receive a grant under this subtitle for the amount 
apportioned under subsection (a) on submitting to the Secretary, and 
obtaining approval of, an application containing provisions that 
describe the programs for which assistance is sought under this 
subtitle, and that are consistent with the requirements of section 676.

``SEC. 675B. ALLOTMENTS AND PAYMENTS TO STATES.

    ``(a) Allotments in General.--The Secretary shall, from the amount 
appropriated under section 674(a) for each fiscal year that remains 
after the Secretary makes the reservations required in section 674(b), 
allot to each State an amount that bears the same ratio to such 
remaining amount as the amount received by the State for fiscal year 
1981 under section 221 of the Economic Opportunity Act of 1964 bore to 
the total amount received by all States for fiscal year 1981 under such 
section, except that no State shall receive less than \1/4\ of 1 
percent of the amount appropriated under section 674(a) for such fiscal 
year.
    ``(b) Allotments in Years With Greater Available Funds.--
            ``(1) Minimum allotments.--Subject to paragraphs (2) and 
        (3), if the amount appropriated under section 674(a) for each 
        fiscal year that remains after the Secretary makes the 
        reservations required in section 674(b) exceeds $345,000,000, 
        the Secretary shall allot to each State not less than \1/2\ of 
        1 percent of the amount appropriated under section 674(a) for 
        such fiscal year.
            ``(2) Maintenance of 1990 levels.--Paragraph (1) shall not 
        apply with respect to a fiscal year if the amount allotted 
        under subsection (a) to any State for that year is less than 
        the amount allotted under section 674(a)(1) to such State for 
        fiscal year 1990.
            ``(3) Maximum allotments.--The amount allotted under 
        paragraph (1) to a State shall be reduced, if necessary, so 
        that the aggregate amount allotted to such State under such 
        paragraph and subsection (a) does not exceed 140 percent of the 
        aggregate amount allotted to such State under the corresponding 
        provisions of this subtitle for the fiscal year preceding the 
        fiscal year for which a determination is made under this 
        subsection.
    ``(c) Payments.--The Secretary shall make grants to eligible States 
for the allotments described in subsections (a) and (b). The Secretary 
shall make payments for the grants in accordance with section 6503(a) 
of title 31, United States Code.
    ``(d) Definition.--For purposes of this section, the term `State' 
does not include Guam, American Samoa, the United States Virgin 
Islands, the Commonwealth of the Northern Mariana Islands, and the 
Freely Associated States.

``SEC. 675C. USES OF FUNDS.

    ``(a) Grants to Eligible Entities and Other Organizations.--
            ``(1) In general.--Not less than 90 percent of the funds 
        allotted to a State under section 675B shall be used by the 
        State to make grants for the purposes described in section 672 
        to eligible entities.
            ``(2) Obligational authority.--Funds distributed to 
        eligible entities through grants made in accordance with 
        paragraph (1) for a fiscal year shall be available for 
        obligation during that fiscal year and the succeeding fiscal 
        year, in accordance with paragraph (3).
            ``(3) Recapture and redistribution of unobligated funds.--
                    ``(A) Amount.--Beginning on October 1, 2000, a 
                State may recapture and redistribute funds distributed 
                to an eligible entity through a grant made under 
                paragraph (1) that are unobligated at the end of a 
                fiscal year if such unobligated funds exceed 20 percent 
                of the amount so distributed to such eligible entity 
                for such fiscal year.
                    ``(B) Redistribution.--In redistributing funds 
                recaptured in accordance with this paragraph, States 
                shall redistribute such funds to an eligible entity, or 
                require the original recipient of the funds to 
                redistribute the funds to a private, nonprofit 
                organization, located within the community served by 
                the original recipient of the funds, for activities 
                consistent with the purposes of this subtitle.
    ``(b) Other Activities.--
            ``(1) Use of remainder.--If a State uses less than 100 
        percent of the State allotment to make grants under subsection 
        (a), the State shall use the remainder of the allotment 
        (subject to paragraph (2)) for--
                    ``(A) providing training and technical assistance 
                to those entities in need of such training and 
                assistance;
                    ``(B) coordinating State-operated programs and 
                services targeted to low-income children and families 
                with services provided by eligible entities and other 
                organizations funded under this subtitle, including 
                detailing appropriate employees of State or local 
                agencies to entities funded under this subtitle, to 
                ensure increased access to services provided by such 
                State or local agencies;
                    ``(C) supporting statewide coordination and 
                communication among eligible entities;
                    ``(D) analyzing the distribution of funds made 
                available under this subtitle within the State to 
                determine if such funds have been targeted to the areas 
                of greatest need;
                    ``(E) supporting asset-building programs for low-
                income individuals, such as programs supporting 
                individual development accounts;
                    ``(F) supporting innovative programs and activities 
                conducted by community action agencies or other 
                neighborhood-based organizations to eliminate poverty, 
                promote self-sufficiency, and promote community 
                revitalization; and
                    ``(G) supporting other activities, consistent with 
                the purposes of this subtitle.
            ``(2) Administrative cap.--No State may spend more than the 
        greater of $55,000, or 5 percent, of the portion of the State 
        allotment that remains after the State makes grants to eligible 
        entities under subsection (a), for administrative expenses, 
        including monitoring activities. The cost of activities 
        conducted under paragraph (1)(A) shall not be considered to be 
        administrative expenses.

``SEC. 676. APPLICATION AND PLAN.

    ``(a) Designation of Lead Agency.--
            ``(1) Designation.--The chief executive officer of a State 
        desiring to receive an allotment under this subtitle shall 
        designate, in an application submitted to the Secretary under 
        subsection (b), an appropriate State agency that complies with 
        the requirements of paragraph (2) to act as a lead agency for 
        purposes of carrying out State activities under this subtitle.
            ``(2) Duties.--The lead agency shall--
                    ``(A) develop the State plan to be submitted to the 
                Secretary under subsection (b);
                    ``(B) in conjunction with the development of the 
                State plan as required under subsection (b), hold at 
                least 1 hearing in the State with sufficient time and 
                statewide distribution of notice of such hearing, to 
                provide to the public an opportunity to comment on the 
                proposed use and distribution of funds to be provided 
                through the allotment for the period covered by the 
                State plan; and
                    ``(C) conduct reviews of eligible entities under 
                section 678B.
            ``(3) Legislative hearing.--The State shall hold at least 1 
        legislative hearing every 3 years in conjunction with the 
        development of the State plan.
    ``(b) State Application and Plan.--Beginning with fiscal year 2000, 
to be eligible to receive an allotment under this subtitle, a State 
shall prepare and submit to the Secretary an application and State plan 
covering a period of not less than 1 fiscal year and not more than 2 
fiscal years. The plan shall be submitted not later than 30 days prior 
to the beginning of the first fiscal year covered by the plan, and 
shall contain such information as the Secretary shall require, 
including--
            ``(1) an assurance that funds made available through the 
        allotment will be used to support activities that are designed 
        to assist low-income families and individuals, including 
        homeless families and individuals, migrant or seasonal 
        farmworkers, and elderly low-income individuals and families, 
        and a description of how such activities will enable the 
        families and individuals--
                    ``(A) to remove obstacles and solve problems that 
                block the achievement of self-sufficiency;
                    ``(B) to secure and retain meaningful employment;
                    ``(C) to attain an adequate education;
                    ``(D) to make better use of available income;
                    ``(E) to obtain and maintain adequate housing and a 
                suitable living environment;
                    ``(F) to obtain emergency assistance through loans, 
                grants, or other means to meet immediate and urgent 
                individual and family needs;
                    ``(G) to achieve greater participation in the 
                affairs of the community; and
                    ``(H) to make more effective use of other programs 
                related to the purposes of this subtitle (including 
                State welfare reform efforts);
            ``(2) a description of how the State intends to use 
        discretionary funds made available from the remainder of the 
        allotment described in section 675C(b) in accordance with this 
        subtitle, including a description of how the State will support 
        innovative community and neighborhood-based initiatives related 
        to the purposes of this subtitle;
            ``(3) based on information provided by eligible entities in 
        the State, a description of--
                    ``(A) the service delivery system, for services 
                provided or coordinated with funds made available 
                through the allotment, targeted to low-income 
                individuals and families in communities within the 
                State;
                    ``(B) a description of how linkages will be 
                developed to fill identified gaps in the services, 
                through the provision of information, referrals, case 
                management, and followup consultations;
                    ``(C) a description of how funds made available 
                through the allotment will be coordinated with other 
                public and private resources; and
                    ``(D) a description of how the funds will be used 
                to support innovative community and neighborhood-based 
                initiatives related to the purposes of this subtitle;
            ``(4) an assurance that the State will provide, on an 
        emergency basis, for the provision of such supplies and 
        services, nutritious foods, and related services, as may be 
        necessary to counteract conditions of starvation and 
        malnutrition among low-income individuals;
            ``(5) an assurance that the State will coordinate, and 
        establish linkages between, governmental and other social 
        services programs to assure the effective delivery of such 
        services to low-income individuals;
            ``(6) an assurance that the State will ensure coordination 
        between antipoverty programs in each community, and ensure, 
        where appropriate, that emergency energy crisis intervention 
        programs under title XXVI (relating to low-income home energy 
        assistance) are conducted in such community;
            ``(7) an assurance that the State will permit and cooperate 
        with Federal investigations undertaken in accordance with 
        section 678D;
            ``(8) an assurance that any eligible entity that received 
        funding in the previous fiscal year under this subtitle will 
        not have its funding terminated under this subtitle, or reduced 
        below the proportional share of funding the entity received in 
        the previous fiscal year unless, after providing notice and an 
        opportunity for a hearing on the record, the State determines 
        that cause exists for such termination or such reduction, 
        subject to review by the Secretary as provided in section 
        678C(b);
            ``(9) an assurance that the State will, to the maximum 
        extent possible, coordinate programs with and form partnerships 
        with other organizations serving low-income residents of the 
        communities and members of the groups served by the State, 
        including faith-based organizations, charitable groups, and 
        community organizations;
            ``(10) an assurance that the State will require each 
        eligible entity to establish procedures under which a low-
        income individual, community organization, or faith-based 
        organization, or representative of low-income individuals that 
        considers its organization, or low-income individuals, to be 
        inadequately represented on the board (or other mechanism) of 
        the eligible entity to petition for adequate representation;
            ``(11) an assurance that the State will secure from each 
        eligible entity, as a condition to receipt of funding by the 
        entity under this subtitle for a program, a community action 
        plan (which shall be submitted to the Secretary, at the request 
        of the Secretary, with the State plan) that includes a 
        community-needs assessment for the community served, which may 
        be coordinated with community-needs assessments conducted for 
        other programs;
            ``(12) an assurance that the State and all eligible 
        entities in the State will, not later than fiscal year 2002, 
        participate in the Results Oriented Management and 
        Accountability System, any other performance measure system 
        established by the Secretary under section 678E(b), or an 
        alternative system for measuring performance and results that 
        meets the requirements of that section, and a description of 
        outcome measures to be used to measure eligible entity 
        performance in promoting self-sufficiency, family stability, 
        and community revitalization; and
            ``(13) information describing how the State will carry out 
        the assurances described in this subsection.
    ``(c) Determinations.--For purposes of making a determination in 
accordance with subsection (b)(8) with respect to--
            ``(1) a funding reduction, the term `cause' includes--
                    ``(A) a statewide redistribution of funds provided 
                under this subtitle to respond to--
                            ``(i) the results of the most recently 
                        available census or other appropriate data;
                            ``(ii) the designation of a new eligible 
                        entity; or
                            ``(iii) severe economic dislocation; or
                    ``(B) the failure of an eligible entity to comply 
                with the terms of an agreement to provide services 
                under this subtitle; and
            ``(2) a termination, the term `cause' includes the material 
        failure of an eligible entity to comply with the terms of such 
        an agreement and the State plan to provide services under this 
        subtitle or the consistent failure of the entity to achieve 
        performance measures as determined by the State.
    ``(d) Procedures and Information.--The Secretary may prescribe 
procedures only for the purpose of assessing the effectiveness of 
eligible entities in carrying out the purposes of this subtitle.
    ``(e) Revisions and Inspection.--
            ``(1) Revisions.--The chief executive officer of each State 
        may revise any plan prepared under this section and shall 
        submit the revised plan to the Secretary.
            ``(2) Public inspection.--Each plan or revised plan 
        prepared under this section shall be made available for public 
        inspection within the State in such a manner as will facilitate 
        review of, and comment on, the plan.

``SEC. 676A. DESIGNATION AND REDESIGNATION OF ELIGIBLE ENTITIES IN 
              UNSERVED AREAS.

    ``(a) Qualified Organization In or Near Area.--
            ``(1) In general.--If any geographic area of a State is 
        not, or ceases to be, served by an eligible entity under this 
        subtitle, and if the chief executive officer of the State 
        decides to serve such area, the chief executive officer may 
        solicit applications from, and designate as an eligible entity, 
        1 or more--
                    ``(A) private nonprofit organizations 
                geographically located in the unserved area that meet 
                the requirements of this subtitle; or
                    ``(B) private nonprofit organizations (which may 
                include eligible entities) located in an area 
                contiguous to or within reasonable proximity of the 
                unserved area that are already providing related 
                services in the unserved area.
            ``(2) Requirement.--In order to serve as the eligible 
        entity for the area, an entity described in paragraph (1)(B) 
        shall agree to add additional members to the board of the 
        entity to ensure adequate representation--
                    ``(A) in each of the 3 required categories 
                described in subparagraphs (A), (B), and (C) of section 
                676B(a)(2), by members that reside in the community 
                comprised by the unserved area; and
                    ``(B) in the category described in section 
                676B(a)(2), by members that reside in the neighborhood 
                served.
    ``(b) Special Consideration.--In designating an eligible entity 
under subsection (a), the chief executive officer shall grant the 
designation to an organization of demonstrated effectiveness in meeting 
the goals and purposes of this subtitle and may give priority, in 
granting the designation, to local entities that are providing services 
in the unserved area, consistent with the needs identified by a 
community-needs assessment.
    ``(c) No Qualified Organization in or Near Area.--If no private, 
nonprofit organization is identified or determined to be qualified 
under subsection (a) to serve the unserved area as an eligible entity 
the chief executive officer may designate an appropriate political 
subdivision of the State to serve as an eligible entity for the area. 
In order to serve as the eligible entity for that area, the political 
subdivision shall have a board or other mechanism as required in 
section 676B(b).

``SEC. 676B. TRIPARTITE BOARDS.

    ``(a) Private Nonprofit Entities.--
            ``(1) Board.--In order for a private, nonprofit entity to 
        be considered to be an eligible entity for purposes of section 
        673(1), the entity shall administer the community services 
        block grant program through a tripartite board described in 
        paragraph (2) that fully participates in the development and 
        implementation of the program to serve low-income communities 
        or groups.
            ``(2) Selection and composition of board.--The members of 
        the board referred to in paragraph (1) shall be selected by the 
        entity and the board shall be composed so as to assure that--
                    ``(A) \1/3\ of the members of the board are elected 
                public officials, holding office on the date of 
                selection, or their representatives, except that if the 
                number of elected officials reasonably available and 
                willing to serve on the board is less than \1/3\ of the 
                membership of the board, membership on the board of 
appointive public officials or their representatives may be counted in 
meeting such \1/3\ requirement;
                    ``(B) not fewer than \1/3\ of the members are 
                persons chosen in accordance with democratic selection 
                procedures adequate to assure that these members are 
                representative of low-income individuals and families 
                in the neighborhood served;
                    ``(C) the remainder of the members are officials or 
                members of business, industry, labor, religious, law 
                enforcement, education, or other major groups and 
                interests in the community served; and
                    ``(D)(i) each member resides in the community; and
                    ``(ii) each representative of low-income 
                individuals and families selected to represent a 
                specific neighborhood within a community under this 
                paragraph resides in the neighborhood represented by 
                the member.
    ``(b) Public Organizations.--In order for a public organization to 
be considered to be an eligible entity for purposes of section 673(1), 
the entity shall administer the community services block grant program 
through--
            ``(1) a tripartite board, which shall have members selected 
        by the organization and shall be composed so as to assure that 
        not fewer than \1/3\ of the members are persons chosen in 
        accordance with democratic selection procedures adequate to 
        assure that these members--
                    ``(A) are representative of low-income individuals 
                and families in the neighborhood served;
                    ``(B) reside in the neighborhood served; and
                    ``(C) are able to participate actively in the 
                planning and implementation of programs funded under 
                this subtitle; or
            ``(2) another mechanism specified by the State to assure 
        decisionmaking and participation by low-income individuals in 
        the planning, administration, and evaluation of programs funded 
        under this subtitle.

``SEC. 677. PAYMENTS TO INDIAN TRIBES.

    ``(a) Reservation.--If, with respect to any State, the Secretary--
            ``(1) receives a request from the governing body of an 
        Indian tribe or tribal organization within the State that 
        assistance under this subtitle be made directly to such tribe 
        or organization; and
            ``(2) determines that the members of such tribe or tribal 
        organization would be better served by means of grants made 
        directly to provide benefits under this subtitle,
the Secretary shall reserve from amounts that would otherwise be 
allotted to such State under section 675B for the fiscal year the 
amount determined under subsection (b).
    ``(b) Determination of Reserved Amount.--The Secretary shall 
reserve for the purpose of subsection (a) from amounts that would 
otherwise be allotted to such State, not less than 100 percent of an 
amount that bears the same ratio to the State allotment for the fiscal 
year involved as the population of all eligible Indians for whom a 
determination has been made under subsection (a) bears to the 
population of all individuals eligible for assistance under this 
subtitle in such State.
    ``(c) Awards.--The sums reserved by the Secretary on the basis of a 
determination made under subsection (a) shall be made available by 
grant to the Indian tribe or tribal organization serving the 
individuals for whom such a determination has been made.
    ``(d) Plan.--In order for an Indian tribe or tribal organization to 
be eligible for a grant award for a fiscal year under this section, the 
tribe or organization shall submit to the Secretary a plan for such 
fiscal year that meets such criteria as the Secretary may prescribe by 
regulation.
    ``(e) Definitions.--In this section:
            ``(1) Indian tribe; tribal organization.--The terms `Indian 
        tribe' and `tribal organization' mean a tribe, band, or other 
        organized group recognized in the State in which the tribe, 
        band, or group resides, or considered by the Secretary of the 
        Interior, to be an Indian tribe or an Indian organization for 
        any purpose.
            ``(2) Indian.--The term `Indian' means a member of an 
        Indian tribe or of a tribal organization.

``SEC. 678. OFFICE OF COMMUNITY SERVICES.

    ``(a) Office.--The Secretary shall carry out the functions of this 
subtitle through an Office of Community Services, which shall be 
established in the Department of Health and Human Services. The Office 
shall be headed by a Director.
    ``(b) Grants, Contracts, Cooperative Agreements.--The Secretary 
shall carry out functions of this subtitle through grants, contracts, 
or cooperative agreements.

``SEC. 678A. TRAINING AND TECHNICAL ASSISTANCE.

    ``(a) Activities.--The Secretary shall use the amounts reserved in 
section 674(b)(2) for training, technical assistance, planning, 
evaluation, and data collection activities related to programs carried 
out under this subtitle.
    ``(b) Process.--The process for determining the training and 
technical assistance to be carried out under this section shall--
            ``(1) ensure that the needs of eligible entities and 
        programs relating to improving program quality, including 
        financial management practices, are addressed to the maximum 
        extent feasible; and
            ``(2) incorporate mechanisms to ensure responsiveness to 
        local needs, including an ongoing procedure for obtaining input 
        from the national and State network of eligible entities.

``SEC. 678B. MONITORING OF ELIGIBLE ENTITIES.

    ``(a) In General.--In order to determine whether eligible entities 
meet the performance goals, administrative standards, financial 
management requirements, and other requirements of a State, the State 
shall conduct the following reviews of eligible entities:
            ``(1) A full onsite review of each such entity at least 
        once during each 3-year period.
            ``(2) An onsite review of each newly designated entity 
        immediately after the completion of the first year in which 
        such entity receives funds through the community services block 
        grant program.
            ``(3) Followup reviews including prompt return visits to 
        eligible entities, and their programs, that fail to meet the 
        goals, standards, and requirements established by the State.
            ``(4) Other reviews as appropriate, including reviews of 
        entities with programs that have had other Federal, State, or 
        local grants terminated for cause.
    ``(b) Requests.--The State may request training and technical 
assistance from the Secretary as needed to comply with the requirements 
of this section.

``SEC. 678C. CORRECTIVE ACTION; TERMINATION AND REDUCTION OF FUNDING.

    ``(a) Determination.--If the State determines, on the basis of a 
review pursuant to subsection 678B, that an eligible entity materially 
fails to comply with the terms of an agreement, or the State plan, to 
provide services under this subtitle or to meet appropriate standards, 
goals, and other requirements established by the State (including 
performance objectives), the State shall--
            ``(1) inform the entity of the deficiency to be corrected;
            ``(2) require the entity to correct the deficiency;
            ``(3)(A) offer training and technical assistance, if 
        appropriate, to help correct the deficiency, and prepare and 
        submit to the Secretary a report describing the training and 
        technical assistance offered; or
            ``(B) if the State determines that such training and 
        technical assistance are not appropriate, prepare and submit to 
        the Secretary a report stating the reasons for the 
        determination;
            ``(4)(A) at the discretion of the State (taking into 
        account the seriousness of the deficiency and the time 
        reasonably required to correct the deficiency), allow the 
        entity to develop and implement, within 60 days after being 
        informed of the deficiency, a quality improvement plan to 
        correct such deficiency within a reasonable period of time, as 
        determined by the State; and
            ``(B) not later than 30 days after receiving from an 
        eligible entity a proposed quality improvement plan pursuant to 
        subparagraph (A), either approve such proposed plan or specify 
        the reasons why the proposed plan cannot be approved; and
            ``(5) after providing adequate notice and an opportunity 
        for a hearing, initiate proceedings to terminate the 
        designation of or reduce the funding under this subtitle of the 
        eligible entity unless the entity corrects the deficiency.
    ``(b) Review.--A determination to terminate the designation or 
reduce the funding of an eligible entity is reviewable by the 
Secretary. The Secretary shall, upon request, review such a 
determination. The review shall be completed not later than 60 days 
after the determination to terminate the designation or reduce the 
funding. If the review is not completed within 60 days, the 
determination of the State shall become final at the end of the 60th 
day.

``SEC. 678D. FISCAL CONTROLS, AUDITS, AND WITHHOLDING.

    ``(a) Fiscal Controls, Procedures, Audits, and Inspections.--
            ``(1) In general.--A State that receives funds under this 
        subtitle shall--
                    ``(A) establish fiscal control and fund accounting 
                procedures necessary to assure the proper disbursal of 
                and accounting for Federal funds paid to the State 
                under this subtitle, including procedures for 
                monitoring the funds provided under this subtitle;
                    ``(B) ensure that cost and accounting standards of 
                the Office of Management and Budget apply to a 
recipient of funds under this subtitle;
                    ``(C) prepare, at least every year (or in the case 
                of a State with a 2-year State plan, every 2 years) in 
                accordance with paragraph (2) an audit of the 
                expenditures of the State of amounts received under 
                this subtitle and amounts transferred to carry out the 
                purposes of this subtitle; and
                    ``(D) make appropriate books, documents, papers, 
                and records available to the Secretary and the 
                Comptroller General of the United States, or any of 
                their duly authorized representatives, for examination, 
                copying, or mechanical reproduction on or off the 
                premises of the appropriate entity upon a reasonable 
                request for the items.
            ``(2) Audits.--Each audit required by subsection (a)(1)(C) 
        shall be conducted by an entity independent of any agency 
        administering activities or services carried out under this 
        subtitle and shall be conducted in accordance with generally 
        accepted accounting principles. Within 30 days after the 
        completion of each such audit in a State, the chief executive 
        officer of the State shall submit a copy of such audit to any 
        eligible entity that was the subject of the audit at no charge, 
        to the legislature of the State, and to the Secretary.
            ``(3) Repayments.--The State shall repay to the United 
        States amounts found not to have been expended in accordance 
        with this subtitle or the Secretary may offset such amounts 
        against any other amount to which the State is or may become 
        entitled under this subtitle.
    ``(b) Withholding.--
            ``(1) In general.--The Secretary shall, after providing 
        adequate notice and an opportunity for a hearing conducted 
        within the affected State, withhold funds from any State that 
        does not utilize the State allotment substantially in 
        accordance with the provisions of this subtitle, including the 
        assurances such State provided under section 676.
            ``(2) Response to complaints.--The Secretary shall respond 
        in an expeditious and speedy manner to complaints of a 
        substantial or serious nature that a State has failed to use 
        funds in accordance with the provisions of this subtitle, 
        including the assurances provided by the State under section 
        676. For purposes of this paragraph, a complaint of a failure 
        to meet any 1 of the assurances provided under section 676 that 
        constitutes disregarding that assurance shall be considered to 
        be a complaint of a serious nature.
            ``(3) Investigations.--Whenever the Secretary determines 
        that there is a pattern of complaints of failures described in 
        paragraph (2) from any State in any fiscal year, the Secretary 
        shall conduct an investigation of the use of funds received 
        under this subtitle by such State in order to ensure compliance 
        with the provisions of this subtitle.

``SEC. 678E. ACCOUNTABILITY AND REPORTING REQUIREMENTS.

    ``(a) State Accountability and Reporting Requirements.--
            ``(1) Performance measurement.--
                    ``(A) In general.--By October 1, 2001, each State 
                that receives funds under this subtitle shall 
                participate, and shall ensure that all eligible 
                entities in the State participate, in a performance 
                measurement system, which may be a performance 
                measurement system established by the Secretary 
                pursuant to subsection (b), or an alternative system 
                that meets the requirements of subsection (b).
                    ``(B) Local agencies.--The State may elect to have 
                local agencies who are subcontractors of the eligible 
                entities under this subtitle participate in the 
                performance measurement system. If the State makes that 
                election, references in this section to eligible 
                entities shall be considered to include the local 
                agencies.
            ``(2) Annual report.--Each State shall annually prepare and 
        submit to the Secretary a report on the measured performance of 
        the State and the eligible entities in the State. Each State 
        shall also include in the report an accounting of the 
        expenditure of funds received by the State through the 
        community services block grant program, including an accounting 
        of funds spent on administrative costs by the State and the 
        eligible entities, and funds spent by eligible entities on the 
        direct delivery of local services, and shall include 
        information on the number of and characteristics of clients 
        served under this subtitle in the State, based on data 
        collected from the eligible entities. The State shall also 
        include in the report a summary describing the training and 
        technical assistance offered by the State under section 
        678C(a)(3) during the year covered by the report.
    ``(b) Secretary's Accountability and Reporting Requirements.--
            ``(1) Performance measurement.--The Secretary, in 
        collaboration with the States and with eligible entities 
        throughout the Nation, shall establish 1 or more model 
        performance measurement systems, which may be used by the 
        States and by eligible entities to measure their performance in 
        carrying out the requirements of this subtitle and in achieving 
        the goals of community action plans. The Secretary shall 
        provide technical assistance, including support for the 
        enhancement of electronic data systems, to States and to 
        eligible entities to enhance their capability to collect and 
        report data for such a system and to aid in their participation 
        in such a system.
            ``(2) Reporting requirements.--At the end of each fiscal 
        year beginning after September 30, 1999, the Secretary shall, 
        directly or by grant or contract, prepare a report containing--
                    ``(A) a summary of the planned use of funds by each 
                State, and the eligible entities in the State, under 
                the community services block grant program, as 
                contained in each State plan submitted pursuant to 
                section 676;
                    ``(B) a description of how funds were actually 
                spent by the State and eligible entities in the State, 
                including a breakdown of funds spent on administrative 
                costs and on the direct delivery of local services by 
                eligible entities;
                    ``(C) information on the number of entities 
                eligible for funds under this subtitle, the number of 
                low-income persons served under this subtitle, and such 
                demographic data on the low-income populations served 
                by eligible entities as is determined by the Secretary 
                to be feasible;
                    ``(D) a comparison of the planned uses of funds for 
                each State and the actual uses of the funds;
                    ``(E) a summary of each State's performance 
                results, and the results for the eligible entities, as 
                collected and submitted by the States in accordance 
                with subsection (a)(2); and
                    ``(F) any additional information that the Secretary 
                considers to be appropriate to carry out this subtitle, 
                if the Secretary informs the States of the need for 
                such additional information and allows a reasonable 
                period of time for the States to collect and provide 
                the information.
            ``(3) Submission.--The Secretary shall submit to the 
        Committee on Education and the Workforce of the House of 
        Representatives and the Committee on Labor and Human Resources 
        of the Senate the report described in paragraph (2), and any 
        comments the Secretary may have with respect to such report. 
        The report shall include definitions of direct, indirect, and 
        administrative costs used by the Department of Health and Human 
        Services for programs funded under this subtitle.
            ``(4) Costs.--Of the funds reserved under section 
        674(b)(3), not more than $350,000 shall be available to carry 
        out the reporting requirements contained in paragraph (2) and 
        the provision of technical assistance described in paragraph 
        (1).

``SEC. 678F. LIMITATIONS ON USE OF FUNDS.

    ``(a) Construction of Facilities.--
            ``(1) Limitations.--Except as provided in paragraph (2), 
        grants made under this subtitle (other than amounts reserved 
        under section 674(b)(3)) may not be used by the State, or by 
        any other person with which the State makes arrangements to 
        carry out the purposes of this subtitle, for the purchase or 
        improvement of land, or the purchase, construction, or 
        permanent improvement (other than low-cost residential 
weatherization or other energy-related home repairs) of any building or 
other facility.
            ``(2) Waiver.--The Secretary may waive the limitation 
        contained in paragraph (1) upon a State request for such a 
        waiver, if the Secretary finds that the request describes 
        extraordinary circumstances to justify the purchase of land or 
        the construction of facilities (or the making of permanent 
        improvements) and that permitting the waiver will contribute to 
        the ability of the State to carry out the purposes of this 
        subtitle.
    ``(b) Political Activities.--
            ``(1) Treatment as a state or local agency.--For purposes 
        of chapter 15 of title 5, United States Code, any entity that 
        assumes responsibility for planning, developing, and 
        coordinating activities under this subtitle and receives 
        assistance under this subtitle shall be deemed to be a State or 
        local agency. For purposes of paragraphs (1) and (2) of section 
        1502(a) of such title, any entity receiving assistance under 
        this subtitle shall be deemed to be a State or local agency.
            ``(2) Prohibitions.--Programs assisted under this subtitle 
        shall not be carried on in a manner involving the use of 
        program funds, the provision of services, or the employment or 
        assignment of personnel, in a manner supporting or resulting in 
        the identification of such programs with--
                    ``(A) any partisan or nonpartisan political 
                activity or any political activity associated with a 
                candidate, or contending faction or group, in an 
                election for public or party office;
                    ``(B) any activity to provide voters or prospective 
                voters with transportation to the polls or similar 
                assistance in connection with any such election; or
                    ``(C) any voter registration activity.
            ``(3) Rules and regulations.--The Secretary, after 
        consultation and regulations with the Office of Personnel 
        Management, shall issue rules and regulations to provide for 
        the enforcement of this subsection, which shall include 
        provisions for summary suspension of assistance or other action 
        necessary to permit enforcement on an emergency basis.
    ``(c) Nondiscrimination.--
            ``(1) In general.--No person shall, on the basis of race, 
        color, religion, national origin, or sex be excluded from 
        participation in, be denied the benefits of, or be subjected to 
        discrimination under, any program or activity funded in whole 
        or in part with funds made available under this subtitle. Any 
        prohibition against discrimination on the basis of age under 
        the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.) or 
        with respect to an otherwise qualified individual with a 
        disability as provided in section 504 of the Rehabilitation Act 
        of 1973 (29 U.S.C. 794) or title II of the Americans with 
        Disabilities Act of 1990 (42 U.S.C. 12131 et seq.) shall also 
        apply to any such program or activity.
            ``(2) Action of secretary.--Whenever the Secretary 
        determines that a State that has received a payment under this 
        subtitle has failed to comply with paragraph (1) or an 
        applicable regulation, the Secretary shall notify the chief 
        executive officer of the State and shall request that the 
        officer secure compliance. If within a reasonable period of 
        time, not to exceed 60 days, the chief executive officer fails 
        or refuses to secure compliance, the Secretary is authorized 
        to--
                    ``(A) refer the matter to the Attorney General with 
                a recommendation that an appropriate civil action be 
                instituted;
                    ``(B) exercise the powers and functions provided by 
                title VI of the Civil Rights Act of 1964 (42 U.S.C. 
                2000d et seq.), the Age Discrimination Act of 1975 (42 
                U.S.C. 6101 et seq.), or section 504 of the 
                Rehabilitation Act of 1973 (29 U.S.C. 794), as may be 
                applicable; or
                    ``(C) take such other action as may be provided by 
                law.
            ``(3) Action of attorney general.--When a matter is 
        referred to the Attorney General pursuant to paragraph (2), or 
        whenever the Attorney General has reason to believe that the 
        State is engaged in a pattern or practice of discrimination in 
        violation of the provisions of this subsection, the Attorney 
        General may bring a civil action in any appropriate United 
        States district court for such relief as may be appropriate, 
        including injunctive relief.

``SEC. 679. OPERATIONAL RULE.

    ``(a) Faith-Based Organizations Included as Nongovernmental 
Providers.--For any program carried out by the Federal Government, or 
by a State or local government under this subtitle, the government 
shall consider, on the same basis as other nongovernmental 
organizations, faith-based organizations to provide the 
assistance under the program, so long as the program is implemented in 
a manner consistent with the Establishment Clause of the first 
amendment to the Constitution. Neither the Federal Government nor a 
State or local government receiving funds under this subtitle shall 
discriminate against an organization that provides assistance under, or 
applies to provide assistance under, this subtitle, on the basis that 
the organization has a faith-based character.
    ``(b) Additional Safeguards.--Neither the Federal Government nor a 
State or local government shall require a faith-based organization to 
remove religious art, icons, scripture, or other symbols in order to be 
eligible to provide assistance under a program described in subsection 
(a).
    ``(c) Limitations on Use of Funds for Certain Purposes.--No funds 
provided through a grant or contract to a faith-based organization to 
provide assistance under any program described in subsection (a) shall 
be expended for sectarian worship, instruction, or proselytization.
    ``(d) Fiscal Accountability.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        faith-based organization providing assistance under any program 
        described in subsection (a) shall be subject to the same 
        regulations as other nongovernmental organizations to account 
        in accord with generally accepted accounting principles for the 
        use of such funds provided under such program.
            ``(2) Limited audit.--Such organization shall segregate 
        government funds provided under such program into a separate 
        account. Only the government funds shall be subject to audit by 
        the government.

``SEC. 680. DISCRETIONARY AUTHORITY OF THE SECRETARY.

    ``(a) Grants, Contracts, Arrangements, Loans, and Guarantees.--
            ``(1) In general.--The Secretary shall, from funds reserved 
        under section 674(b)(3), make grants, loans, or guarantees to 
        States and public agencies and private, nonprofit 
        organizations, or enter into contracts or jointly financed 
        cooperative arrangements with States and public agencies and 
        private, nonprofit organizations (and for-profit organizations, 
        to the extent specified in paragraph (2)(E)) for each of the 
        objectives described in paragraphs (2) through (4).
            ``(2) Community economic development.--
                    ``(A) Economic development activities.--The 
                Secretary shall make grants described in paragraph (1) 
                on a competitive basis to private, non-profit 
                organizations that are community development 
                corporations to provide technical and financial 
                assistance for economic development activities designed 
                to address the economic needs of low-income individuals 
                and families by creating employment and business 
                development opportunities.
                    ``(B) Consultation.--The Secretary shall exercise 
                the authority provided under subparagraph (A) after 
                consultation with other relevant Federal officials.
                    ``(C) Governing boards.--For a community 
                development corporation to receive funds to carry out 
                this paragraph, the corporation shall be governed by a 
                board that shall consist of residents of the community 
                and business and civic leaders and shall have as a 
                principal purpose planning, developing, or managing 
                low-income housing or community development projects.
                    ``(D) Geographic distribution.--In making grants to 
                carry out this paragraph, the Secretary shall take into 
                consideration the geographic distribution of funding 
                among States and the relative proportion of funding 
                among rural and urban areas.
                    ``(E) Reservation.--Of the amounts made available 
                to carry out this paragraph, the Secretary may reserve 
                not more than 1 percent for each fiscal year to make 
                grants to private, nonprofit organizations or to enter 
                into contracts with private, nonprofit or for-profit 
                organizations to provide technical assistance to aid 
                community development corporations in developing or 
                implementing activities funded to carry out this 
                paragraph and to evaluate activities funded to carry 
                out this paragraph.
            ``(3) Rural community development activities.--The 
        Secretary shall provide the assistance described in paragraph 
        (1) for rural community development activities, which shall 
        include--
                    ``(A) grants to private, nonprofit corporations 
                that provide assistance concerning home repair to rural 
                low-income families and planning and developing low-
                income rural rental housing units; and
                    ``(B) grants to multistate, regional, private, 
                nonprofit organizations to provide training and 
technical assistance to small, rural communities in meeting their 
community facility needs.
            ``(4) Neighborhood innovation projects.--The Secretary 
        shall provide the assistance described in paragraph (1) for 
        neighborhood innovation projects, which shall include grants to 
        neighborhood-based private, nonprofit organizations to test or 
        assist in the development of new approaches or methods that 
        will aid in overcoming special problems identified by 
        communities or neighborhoods or otherwise assist in furthering 
        the purposes of this subtitle, and which may include projects 
        that are designed to serve low-income individuals and families 
        who are not being effectively served by other programs.
    ``(b) Evaluation.--The Secretary shall require all activities 
receiving assistance under this section to be evaluated for their 
effectiveness. Funding for such evaluations shall be provided as a 
stated percentage of the assistance or through a separate grant awarded 
by the Secretary specifically for the purpose of evaluation of a 
particular activity or group of activities.
    ``(c) Annual Report.--The Secretary shall compile an annual report 
containing a summary of the evaluations required in subsection (b) and 
a listing of all activities assisted under this section. The Secretary 
shall annually submit the report to the Chairperson of the Committee on 
Education and the Workforce of the House of Representatives and the 
Chairperson of the Committee on Labor and Human Resources of the 
Senate.

``SEC. 681. COMMUNITY FOOD AND NUTRITION PROGRAMS.

    ``(a) Grants.--The Secretary may, through grants to public and 
private, nonprofit agencies, provide for community-based, local, 
statewide, and national programs--
            ``(1) to coordinate private and public food assistance 
        resources, wherever the grant recipient determines such 
        coordination to be inadequate, to better serve low-income 
        populations;
            ``(2) to assist low-income communities to identify 
        potential sponsors of child nutrition programs and to initiate 
        such programs in underserved or unserved areas; and
            ``(3) to develop innovative approaches at the State and 
        local level to meet the nutrition needs of low-income 
        individuals.
    ``(b) Allotments and Distribution of Funds.--
            ``(1) In general.--Of the amount appropriated for a fiscal 
        year to carry out this section, the Secretary shall distribute 
        funds for grants under subsection (a) as follows:
                    ``(A) Allotments.--From 60 percent of such amount 
                (but not to exceed $3,600,000), the Secretary shall 
                allot for grants to eligible agencies for statewide 
                programs in each State the amount that bears the same 
                ratio to 60 percent of such amount as the low-income 
                and unemployed population of such State bears to the 
                low-income and unemployed population of all the States.
                    ``(B) Competitive grants.--From 40 percent of such 
                amount (but not to exceed $2,400,000), the Secretary 
                shall make grants on a competitive basis to eligible 
                agencies for local and statewide programs.
            ``(2) Greater available appropriations.--Any amounts 
        appropriated for a fiscal year to carry out this section in 
        excess of $6,000,000 shall be allotted as follows:
                    ``(A) Allotments.--The Secretary shall use 40 
                percent of such excess to make allotments for grants 
                under subsection (a) to eligible agencies for statewide 
                programs in each State in an amount that bears the same 
                ratio to 40 percent of such excess as the low-income 
                and unemployed population of such State bears to the 
                low-income and unemployed population of all the States.
                    ``(B) Competitive grants for local and statewide 
                programs.--The Secretary shall use 40 percent of such 
                excess to make grants under subsection (a) on a 
                competitive basis to eligible agencies for local and 
                statewide programs.
                    ``(C) Competitive grants for nationwide programs.--
                The Secretary shall use the remaining 20 percent of 
                such excess to make grants under subsection (a) on a 
                competitive basis to eligible agencies for nationwide 
                programs, including programs benefiting Indians as 
                defined in section 677 and migrant or seasonal 
                farmworkers.
            ``(3) Eligibility for allotments for statewide programs.--
        To be eligible to receive an allotment under paragraph (1)(A) 
        or (2)(A), an eligible agency shall demonstrate that the 
        proposed program is statewide in scope and represents a 
        comprehensive and coordinated effort to alleviate hunger within 
        the State.
            ``(4) Minimum allotments for statewide programs.--
                    ``(A) In general.--From the amounts allotted under 
                paragraphs (1)(A) and (2)(A), the minimum total 
                allotment for each State for each fiscal year shall 
                be--
                            ``(i) $15,000 if the total amount 
                        appropriated to carry out this section is not 
                        less than $7,000,000 but less than $10,000,000;
                            ``(ii) $20,000 if the total amount 
                        appropriated to carry out this section is not 
                        less than $10,000,000 but less than 
                        $15,000,000; or
                            ``(iii) $30,000 if the total amount 
                        appropriated to carry out this section is not 
                        less than $15,000,000.
                    ``(B) Definition.--In this paragraph, the term 
                `State' does not include Guam, American Samoa, the 
                United States Virgin Islands, the Commonwealth of the 
                Northern Mariana Islands, or the Freely Associated 
                States.
            ``(5) Maximum grants.--From funds made available under 
        paragraphs (1)(B) and (2)(B) for any fiscal year, the Secretary 
        may not make grants under subsection (a) to an eligible agency 
        in an aggregate amount exceeding $50,000. From funds made 
        available under paragraph (2)(C) for any fiscal year, the 
        Secretary may not make grants under subsection (a) to an 
        eligible agency in an aggregate amount exceeding $300,000.
    ``(c) Report.--For each fiscal year, the Secretary shall prepare 
and submit, to the Committee on Education and the Workforce of the 
House of Representatives and the Committee on Labor and Human Resources 
of the Senate, a report concerning the grants made under this section. 
Such report shall include--
            ``(1) a list of grant recipients;
            ``(2) information on the amount of funding awarded to each 
        grant recipient; and
            ``(3) a summary of the activities performed by the grant 
        recipients with funding awarded under this section and a 
        description of the manner in which such activities meet the 
        objectives described in subsection (a).
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $25,000,000 for fiscal year 
1999, and such sums as may be necessary for each of fiscal years 2000 
through 2003.

``SEC. 682. NATIONAL OR REGIONAL PROGRAMS DESIGNED TO PROVIDE 
              INSTRUCTIONAL ACTIVITIES FOR LOW-INCOME YOUTH.

    ``(a) General Authority.--The Secretary is authorized to make a 
grant to an eligible service provider to administer national or 
regional programs to provide instructional activities for low-income 
youth. In making such a grant, the Secretary shall give priority to 
eligible service providers that have a demonstrated ability to operate 
such a program.
    ``(b) Program Requirements.--Any instructional activity carried out 
by an eligible service provider receiving a grant under this section 
shall be carried out on the campus of an institution of higher 
education (as defined in section 1201(a) of the Higher Education Act of 
1965 (20 U.S.C. 1141(a))) and shall include--
            ``(1) access to the facilities and resources of such an 
        institution;
            ``(2) an initial medical examination and follow-up referral 
        or treatment, without charge, for youth during their 
        participation in such activity;
            ``(3) at least 1 nutritious meal daily, without charge, for 
        participating youth during each day of participation;
            ``(4) high quality instruction in a variety of sports (that 
        shall include swimming and that may include dance and any other 
        high quality recreational activity) provided by coaches and 
        teachers from institutions of higher education and from 
        elementary and secondary schools (as defined in section 14101 
        of the Elementary and Secondary Education Act of 1965 (20 
        U.S.C. 8801)); and
            ``(5) enrichment instruction and information on matters 
        relating to the well-being of youth, to include educational 
        opportunities and information on study practices, education for 
        the prevention of drug and alcohol abuse, and information on 
        health and nutrition, career opportunities, and family and job 
        responsibilities.
    ``(c) Advisory Committee; Partnerships.--The eligible service 
provider shall, in each community in which a program is funded under 
this section--
            ``(1) ensure that--
                    ``(A) a community-based advisory committee is 
                established, with representatives from local youth, 
                family, and social service organizations, schools, 
                entities providing park and recreation services, and 
                other community-based organizations serving high-risk 
                youth; or
                    ``(B) an existing community-based advisory board, 
                commission, or committee with similar membership is 
utilized to serve as the committee described in subparagraph (A); and
            ``(2) enter into formal partnerships with youth-serving 
        organizations or other appropriate social service entities in 
        order to link program participants with year-round services in 
        their home communities that support and continue the objectives 
        of this subtitle.
    ``(d) Eligible Providers.--A service provider that is a national 
private, nonprofit organization, a coalition of such organizations, or 
a private, nonprofit organization applying jointly with a business 
concern shall be eligible for a grant under this section if--
            ``(1) the applicant has demonstrated experience in 
        operating a program providing instruction to low-income youth;
            ``(2) the applicant agrees to contribute an amount (in cash 
        or in kind, fairly evaluated) of not less than 25 percent of 
        the amount requested;
            ``(3) the applicant agrees to use no funds from a grant 
        authorized under this section for administrative expenses; and
            ``(4) the applicant agrees to comply with the regulations 
        or program guidelines promulgated by the Secretary for use of 
        funds made available through the grant.
    ``(e) Applications Process.--To be eligible to receive a grant 
under this section, a service provider shall submit to the Secretary, 
for approval, an application at such time, in such manner, and 
containing such information as the Secretary may require.
    ``(f) Promulgation of Regulations or Program Guidelines.--The 
Secretary shall promulgate regulations or program guidelines to ensure 
funds made available through a grant made under this section are used 
in accordance with the objectives of this subtitle.
    ``(g) Authorization of Appropriations.--There is authorized to be 
appropriated $15,000,000 for each of fiscal years 1999 through 2003 for 
grants to carry out this section.

``SEC. 683. REFERENCES.

    ``Any reference in any provision of law to the poverty line set 
forth in section 624 or 625 of the Economic Opportunity Act of 1964 
shall be construed to be a reference to the poverty line defined in 
section 673. Any reference in any provision of law to any community 
action agency designated under title II of the Economic Opportunity Act 
of 1964 shall be construed to be a reference to an entity eligible to 
receive funds under the community services block grant program.''.

SEC. 202. CONFORMING AMENDMENTS.

    (a) Preparation.--After consultation with the appropriate 
committees of Congress and the Director of the Office of Management and 
Budget, the Secretary of Health and Human Services shall prepare 
recommended legislation containing technical and conforming amendments 
to reflect the changes made by this title.
    (b) Submission to Congress.--Not later than 6 months after the date 
of enactment of this Act, the Secretary shall submit to Congress the 
recommended legislation referred to under subsection (a).

SEC. 203. REPEALERS.

    Sections 407 and 408 of the Human Services Reauthorization Act of 
1986 (42 U.S.C 9812a and 9910b) are repealed.

              TITLE III--LOW-INCOME HOME ENERGY ASSISTANCE

SEC. 301. AUTHORIZATION.

    (a) In General.--Section 2602(b) of the Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8621(b)) is amended by striking 
``fiscal years 1995 through 1999'' and inserting ``fiscal years 1999 
through 2004''.
    (b) Program Year.--Section 2602(c) of such Act (42 U.S.C. 8621(c)) 
is amended to read as follows:
    ``(c)(1) Amounts appropriated under this section in any fiscal year 
for programs and activities under this title shall be made available 
for obligation in the succeeding fiscal year.''.
    (c) Incentive Program for Leveraging Non-Federal Resources.--
Section 2602(d) of such Act (42 U.S.C. 8621(d)) is amended--
            (1) by striking ``(d)'' and inserting ``(d)(1)'';
            (2) by striking ``$50,000,000'' and all that follows and 
        inserting the following: ``$30,000,000 for each of fiscal years 
        1999 through 2004, except as provided in paragraph (2).''; and
            (3) by adding at the end the following:
    ``(2) For any fiscal year for which the amount appropriated under 
subsection (b) is not less than $1,400,000,000, there are authorized to 
be appropriated to carry out section 2607A $50,000,000 for each of 
fiscal years 1999 through 2004.''.
    (d) Technical Amendment.--Section 2602(e) of such Act (42 U.S.C. 
8621(e)) is amended by striking ``subsection (g)'' and inserting 
``subsection (e) of such section''.

SEC. 302. DEFINITIONS.

    Section 2603(4) of the Low-Income Home Energy Assistance Act of 
1981 (42 U.S.C. 8622(4)) is amended--
            (1) by striking ``the term'' and inserting ``The term''; 
        and
            (2) by striking the semicolon and inserting a period.

SEC. 303. NATURAL DISASTERS AND OTHER EMERGENCIES.

    (a) Definitions.--Section 2603 of the Low-Income Home Energy 
Assistance Act of 1981 is amended--
            (1) by redesignating paragraphs (6) through (9) as 
        paragraphs (8) through (11), respectively;
            (2) by inserting before paragraph (8) (as redesignated in 
        paragraph (1)) the following:
            ``(7) Natural disaster.--The term `natural disaster' means 
        a weather event (relating to cold or hot weather), flood, 
        earthquake, tornado, hurricane, or ice storm, or an event 
        meeting such other criteria as the Secretary, in the discretion 
        of the Secretary, may determine to be appropriate.'';
            (3) by redesignating paragraphs (1) through (5) as 
        paragraphs (2) through (6), respectively; and
            (4) by inserting before paragraph (2) (as redesignated in 
        paragraph (3)) the following:
    ``(1) Emergency.--The term `emergency' means--
            ``(A) a natural disaster;
            ``(B) a significant home energy supply shortage or 
        disruption;
            ``(C) a significant increase in the cost of home energy, as 
        determined by the Secretary;
            ``(D) a significant increase in home energy disconnections 
        reported by a utility, a State regulatory agency, or another 
        agency with necessary data;
            ``(E) a significant increase in participation in a public 
        benefit program such as the food stamp program carried out 
        under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), the 
        national program to provide supplemental security income 
        carried out under title XVI of the Social Security Act (42 
        U.S.C. 1381 et seq.), or the State temporary assistance for 
        needy families program carried out under part A of title IV of 
        the Social Security Act (42 U.S.C. 601 et seq.), as determined 
        by the head of the appropriate Federal agency;
            ``(F) a significant increase in unemployment, layoffs, or 
        the number of households with an individual applying for 
        unemployment benefits, as determined by the Secretary of Labor; 
        or
            ``(G) an event meeting such criteria as the Secretary, in 
        the discretion of the Secretary, may determined to be 
        appropriate.''.
    (b) Considerations.--Section 2604(g) of such Act (42 U.S.C. 
8623(g)) is amended by striking the last 2 sentences and inserting the 
following: ``In determining whether to make such an allotment to a 
State, the Secretary shall take into account the extent to which the 
State was affected by the emergency or disaster involved, the 
availability to the State of other resources under the program carried 
out under this title or any other program, whether a Member of Congress 
has requested that the State receive the allotment, and such other 
factors as the Secretary may find to be relevant. Not later than 30 
days after making the determination, but prior to releasing an allotted 
amount to a State, the Secretary shall notify Congress of the 
allotments made pursuant to this subsection.''.

SEC. 304. STATE ALLOTMENTS.

    Section 2604 of the Low-Income Home Energy Assistance Act of 1981 
(42 U.S.C. 8623) is amended--
            (1) in subsection (b)(1), by striking ``the Northern 
        Mariana Islands, and the Trust Territory of the Pacific 
        Islands.'' and inserting ``the Commonwealth of the Northern 
        Mariana Islands, and the combined Freely Associated States.'';
            (2) in subsection (c)(3)(B)(ii), by striking 
        ``application'' and inserting ``applications'';
            (3) by striking subsection (f);
            (4) in subsection (g)--
                    (A) in the first sentence, by striking ``(a) 
                through (f)'' and inserting ``(a) through (d)''; and
                    (B) in the second sentence, by striking ``emergency 
                or disaster,'' and inserting ``natural disaster or 
                other emergency,''; and
            (5) by redesignating subsection (g) as subsection (e).

SEC. 305. ADMINISTRATION.

    Section 2605 of the Low-Income Home Energy Assistance Act of 1981 
(42 U.S.C. 8624) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (9)(A), by striking ``and not 
                transferred pursuant to section 2604(f) for use under 
                another block grant'';
                    (B) in paragraph (14), by striking ``; and'' and 
                inserting a semicolon;
                    (C) in the matter following paragraph (14), by 
                striking ``The Secretary may not prescribe the manner 
                in which the States will comply with the provisions of 
                this subsection.''; and
                    (D) in the matter following paragraph (16), by 
                inserting before ``The Secretary shall issue'' the 
                following: ``The Secretary may not prescribe the manner 
                in which the States will comply with the provisions of 
                this subsection.''; and
            (2) in subsection (c)(1)--
                    (A) in subparagraph (B), by striking ``States'' and 
                inserting ``State''; and
                    (B) in subparagraph (G)(i), by striking ``has'' and 
                inserting ``had''.

SEC. 306. PAYMENTS TO STATES.

    Section 2607(b)(2)(B) of the Low-Income Home Energy Assistance Act 
of 1981 (42 U.S.C. 8626(b)(2)(B)) is amended--
            (1) in the first sentence, by striking ``and not 
        transferred pursuant to section 2604(f)''; and
            (2) in the second sentence, by striking ``but not 
        transferred by the State''.

SEC. 307. RESIDENTIAL ENERGY ASSISTANCE CHALLENGE OPTION.

    (a) Evaluation.--The Comptroller General shall conduct an 
evaluation of the Residential Energy Assistance Challenge program 
described in section 2607B of the Low-Income Home Energy Assistance Act 
of 1981 (42 U.S.C. 8626b).
    (b) Report.--Not later than 2 years after the date of enactment of 
this Act, the Comptroller General shall prepare and submit to Congress 
a report containing--
            (1) the findings resulting from the evaluation described in 
        subsection (a); and
            (2) the State evaluations described in paragraphs (1) and 
        (2) of subsection (b) of such section 2607B.
    (c) Incentive Grants.--Section 2607B(b)(1) of the Low-Income Home 
Energy Assistance Act of 1981 (42 U.S.C. 8626b(b)(1)) is amended by 
striking ``For each of the fiscal years 1996 through 1999'' and 
inserting ``For each fiscal year''.
    (d) Technical Amendments.--Section 2607B of such Act (42 U.S.C. 
8626b) is amended--
            (1) in subsection (e)(2)--
                    (A) by redesignating subparagraphs (F) through (N) 
                as subparagraphs (E) through (M), respectively; and
                    (B) in clause (i) of subparagraph (I) (as 
                redesignated in subparagraph (A)), by striking ``on'' 
                and inserting ``of''; and
            (2) by redesignating subsection (g) as subsection (f).

SEC. 308. TECHNICAL ASSISTANCE, TRAINING, AND COMPLIANCE REVIEWS.

    (a) In General.--Section 2609A(a) of the Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8628a(a)) is amended--
            (1) in the matter preceding paragraph (1)--
                    (A) by striking ``$250,000'' and inserting 
                ``$300,000''; and
                    (B) by striking ``Secretary--'' and inserting 
                ``Secretary to conduct onsite compliance reviews of 
                programs supported under this title or--''; and
            (2) in paragraph (2)--
                    (A) by inserting ``or interagency agreements'' 
                after ``cooperative arrangements''; and
                    (B) by inserting ``(including Federal agencies)'' 
                after ``public agencies''.
    (b) Conforming Amendment.--The section heading of section 2609A of 
such Act (42 U.S.C. 8628a) is amended to read as follows:

      ``technical assistance, training, and compliance reviews''.

                   TITLE IV--ASSETS FOR INDEPENDENCE

SEC. 401. SHORT TITLE.

    This title may be cited as the ``Assets for Independence Act''.

SEC. 402. FINDINGS.

    Congress makes the following findings:
            (1) Economic well-being does not come solely from income, 
        spending, and consumption, but also requires savings, 
        investment, and accumulation of assets because assets can 
        improve economic independence and stability, connect 
        individuals with a viable and hopeful future, stimulate 
        development of human and other capital, and enhance the welfare 
        of offspring.
            (2) Fully \1/2\ of all Americans have either no, 
        negligible, or negative assets available for investment, just 
        as the price of entry to the economic mainstream, the cost of a 
        house, an adequate education, and starting a business, is 
        increasing. Further, the household savings rate of the United 
        States lags far behind other industrial nations presenting a 
        barrier to economic growth.
            (3) In the current tight fiscal environment, the United 
        States should invest existing resources in high-yield 
        initiatives. There is reason to believe that the financial 
        returns, including increased income, tax revenue, and decreased 
        welfare cash assistance, resulting from individual development 
        accounts will far exceed the cost of investment in those 
        accounts.
            (4) Traditional public assistance programs concentrating on 
        income and consumption have rarely been successful in promoting 
        and supporting the transition to increased economic self-
        sufficiency. Income-based domestic policy should be 
        complemented with asset-based policy because, while income-
        based policies ensure that consumption needs (including food, 
        child care, rent, clothing, and health care) are met, asset-
        based policies provide the means to achieve greater 
        independence and economic well-being.

SEC. 403. PURPOSES.

    The purposes of this title are to provide for the establishment of 
demonstration projects designed to determine--
            (1) the social, civic, psychological, and economic effects 
        of providing to individuals and families with limited means an 
        incentive to accumulate assets by saving a portion of their 
        earned income;
            (2) the extent to which an asset-based policy that promotes 
        saving for postsecondary education, homeownership, and 
        microenterprise development may be used to enable individuals 
        and families with limited means to increase their economic 
        self-sufficiency; and
            (3) the extent to which an asset-based policy stabilizes 
        and improves families and the community in which they live.

SEC. 404. DEFINITIONS.

    In this title:
            (1) Applicable period.--The term ``applicable period'' 
        means, with respect to amounts to be paid from a grant made for 
        a project year, the calendar year immediately preceding the 
        calendar year in which the grant is made.
            (2) Eligible individual.--The term ``eligible individual'' 
        means an individual who is selected to participate by a 
        qualified entity under section 409.
            (3) Emergency withdrawal.--The term ``emergency 
        withdrawal'' means a withdrawal by an eligible individual 
        that--
                    (A) is a withdrawal of only those funds, or a 
                portion of those funds, deposited by the individual in 
                the individual development account of the individual;
                    (B) is permitted by a qualified entity on a case-
                by-case basis; and
                    (C) is made for--
                            (i) expenses for medical care or necessary 
                        to obtain medical care, for the individual or a 
                        spouse or dependent of the individual described 
                        in paragraph (8)(D);
                            (ii) payments necessary to prevent the 
                        eviction of the individual from the residence 
                        of the individual, or foreclosure on the 
                        mortgage for the principal residence of the 
                        individual, as defined in paragraph (8)(B); or
                            (iii) payments necessary to enable the 
                        individual to meet necessary living expenses 
                        following loss of employment.
            (4) Household.--The term ``household'' means all 
        individuals who share use of a dwelling unit as primary 
        quarters for living and eating separate from other individuals.
            (5) Individual development account.--
                    (A) In general.--The term ``individual development 
                account'' means a trust created or organized in the 
                United States exclusively for the purpose of paying the 
                qualified expenses of an eligible individual, or 
                enabling the eligible individual to make an emergency 
                withdrawal, but only if the written governing 
                instrument creating the trust meets the following 
                requirements:
                            (i) No contribution will be accepted unless 
                        it is in cash or by check.
                            (ii) The trustee is a federally insured 
                        financial institution, or a State insured 
                        financial institution if no federally insured 
                        financial institution is available.
                            (iii) The assets of the trust will be 
                        invested in accordance with the direction of 
                        the eligible individual after consultation with 
                        the qualified entity providing deposits for the 
                        individual under section 410.
                            (iv) The assets of the trust will not be 
                        commingled with other property except in a 
                        common trust fund or common investment fund.
                            (v) Except as provided in clause (vi), any 
                        amount in the trust which is attributable to a 
                        deposit provided under section 410 may be paid 
                        or distributed out of the trust only for the 
                        purpose of paying the qualified expenses of the 
                        eligible individual, or enabling the eligible 
                        individual to make an emergency withdrawal.
                            (vi) Any balance in the trust on the day 
                        after the date on which the individual for 
                        whose benefit the trust is established dies 
                        shall be distributed within 30 days of that 
                        date as directed by that individual to another 
                        individual development account established for 
                        the benefit of an eligible individual.
                    (B) Custodial accounts.--For purposes of 
                subparagraph (A), a custodial account shall be treated 
                as a trust if the assets of the custodial account are 
                held by a bank (as defined in section 408(n) of the 
                Internal Revenue Code of 1986) or another person who 
                demonstrates, to the satisfaction of the Secretary, 
                that the manner in which such person will administer 
                the custodial account will be consistent with the 
                requirements of this title, and if the custodial 
                account would, except for the fact that it is not a 
                trust, constitute an individual development account 
                described in subparagraph (A). For purposes of this 
                title, in the case of a custodial account treated as a 
                trust by reason of the preceding sentence, the 
                custodian of that custodial account shall be treated as 
                the trustee thereof.
            (6) Project year.--The term ``project year'' means, with 
        respect to a demonstration project, any of the 4 consecutive 
        12-month periods beginning on the date the project is 
        originally authorized to be conducted.
            (7) Qualified entity.--
                    (A) In general.--The term ``qualified entity'' 
                means--
                            (i) one or more not-for-profit 
                        organizations described in section 501(c)(3) of 
                        the Internal Revenue Code of 1986 and exempt 
                        from taxation under section 501(a) of such 
                        Code; or
                            (ii) a State or local government agency, or 
                        a tribal government, submitting an application 
                        under section 405 jointly with an organization 
                        described in clause (i).
                    (B) Rule of construction.--Nothing in this 
                paragraph shall be construed as preventing an 
                organization described in subparagraph (A)(i) from 
                collaborating with a financial institution or for-
                profit community development corporation to carry out 
                the purposes of this title.
            (8) Qualified expenses.--The term ``qualified expenses'' 
        means 1 or more of the following, as provided by the qualified 
        entity:
                    (A) Postsecondary educational expenses.--
                Postsecondary educational expenses paid from an 
                individual development account directly to an eligible 
                educational institution. In this subparagraph:
                            (i) Postsecondary educational expenses.--
                        The term ``postsecondary educational expenses'' 
                        means the following:
                                    (I) Tuition and fees.--Tuition and 
                                fees required for the enrollment or 
                                attendance of a student at an eligible 
                                educational institution.
                                    (II) Fees, books, supplies, and 
                                equipment.--Fees, books, supplies, and 
                                equipment required for courses of 
                                instruction at an eligible educational 
                                institution.
                            (ii) Eligible educational institution.--The 
                        term ``eligible educational institution'' means 
                        the following:
                                    (I) Institution of higher 
                                education.--An institution described in 
                                section 481(a)(1) or 1201(a) of the 
                                Higher Education Act of 1965 (20 U.S.C. 
                                1088(a)(1) or 1141(a)), as such 
                                sections are in effect on the date of 
                                enactment of this title.
                                    (II) Postsecondary vocational 
                                education school.--An area vocational 
                                education school (as defined in 
                                subparagraph (C) or (D) of section 
                                521(4) of the Carl D. Perkins 
                                Vocational and Applied Technology 
                                Education Act (20 U.S.C. 2471(4))) 
                                which is in any State (as defined in 
                                section 521(33) of such Act), as such 
                                sections are in effect on the date of 
                                enactment of this title.
                    (B) First-home purchase.--Qualified acquisition 
                costs with respect to a principal residence for a 
                qualified first-time homebuyer, if paid from an 
                individual development account directly to the persons 
                to whom the amounts are due. In this subparagraph:
                            (i) Principal residence.--The term 
                        ``principal residence'' means a principal 
                        residence, the qualified acquisition costs of 
                        which do not exceed 100 percent of the average 
                        area purchase price applicable to such 
                        residence.
                            (ii) Qualified acquisition costs.--The term 
                        ``qualified acquisition costs'' means the costs 
                        of acquiring, constructing, or reconstructing a 
                        residence. The term includes any usual or 
                        reasonable settlement, financing, or other 
                        closing costs.
                            (iii) Qualified first-time homebuyer.--
                                    (I) In general.--The term 
                                ``qualified first-time homebuyer'' 
                                means an individual participating in 
                                the project (and, if married, the 
                                individual's spouse) who has no present 
                                ownership interest in a principal 
                                residence during the 3-year period 
                                ending on the date of acquisition of 
                                the principal residence to which this 
                                subparagraph applies.
                                    (II) Date of acquisition.--The term 
                                ``date of acquisition'' means the date 
                                on which a binding contract to acquire, 
                                construct, or reconstruct the principal 
                                residence to which this subparagraph 
                                applies is entered into.
                    (C) Business capitalization.--Amounts paid from an 
                individual development account directly to a business 
                capitalization account which is established in a 
                federally insured financial institution and is 
                restricted to use solely for qualified business 
                capitalization expenses. In this subparagraph:
                            (i) Qualified business capitalization 
                        expenses.--The term ``qualified business 
                        capitalization expenses'' means qualified 
                        expenditures for the capitalization of a 
                        qualified business pursuant to a qualified 
                        plan.
                            (ii) Qualified expenditures.--The term 
                        ``qualified expenditures'' means expenditures 
                        included in a qualified plan, including 
                        capital, plant, equipment, working capital, and 
                        inventory expenses.
                            (iii) Qualified business.--The term 
                        ``qualified business'' means any business that 
                        does not contravene any law or public policy 
                        (as determined by the Secretary).
                            (iv) Qualified plan.--The term ``qualified 
                        plan'' means a business plan, or a plan to use 
                        a business asset purchased, which--
                                    (I) is approved by a financial 
                                institution, a microenterprise 
                                development organization, or a 
                                nonprofit loan fund having demonstrated 
                                fiduciary integrity;
                                    (II) includes a description of 
                                services or goods to be sold, a 
                                marketing plan, and projected financial 
                                statements; and
                                    (III) may require the eligible 
                                individual to obtain the assistance of 
                                an experienced entrepreneurial adviser.
                    (D) Transfers to idas of family members.--Amounts 
                paid from an individual development account directly 
                into another such account established for the benefit 
                of an eligible individual who is--
                            (i) the individual's spouse; or
                            (ii) any dependent of the individual with 
                        respect to whom the individual is allowed a 
                        deduction under section 151 of the Internal 
                        Revenue Code of 1986.
            (9) Qualified savings of the individual for the period.--
        The term ``qualified savings of the individual for the period'' 
        means the aggregate of the amounts contributed by the 
        individual to the individual development account of the 
        individual during the period.
            (10) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (11) Tribal government.--The term ``tribal government'' 
        means a tribal organization, as defined in section 4 of the 
        Indian Self-Determination and Education Assistance Act (25 
        U.S.C. 450b) or a Native Hawaiian organization, as defined in 
        section 9212 of the Native Hawaiian Education Act (20 U.S.C. 
        7912).

SEC. 405. APPLICATIONS.

    (a) Announcement of Demonstration Projects.--Not later than 3 
months after the date of enactment of this title, the Secretary shall 
publicly announce the availability of funding under this title for 
demonstration projects and shall ensure that applications to conduct 
the demonstration projects are widely available to qualified entities.
    (b) Submission.--Not later than 6 months after the date of 
enactment of this title, a qualified entity may submit to the Secretary 
an application to conduct a demonstration project under this title.
    (c) Criteria.--In considering whether to approve an application to 
conduct a demonstration project under this title, the Secretary shall 
assess the following:
            (1) Sufficiency of project.--The degree to which the 
        project described in the application appears likely to aid 
        project participants in achieving economic self-sufficiency 
        through activities requiring qualified expenses. In making such 
        assessment, the Secretary shall consider the overall quality of 
        project activities in making any particular kind or combination 
        of qualified expenses to be an essential feature of any 
        project.
            (2) Administrative ability.--The experience and ability of 
        the applicant to responsibly administer the project.
            (3) Ability to assist participants.--The experience and 
        ability of the applicant in recruiting, educating, and 
        assisting project participants to increase their economic 
        independence and general well-being through the development of 
        assets.
            (4) Commitment of non-federal funds.--The aggregate amount 
        of direct funds from non-Federal public sector and from private 
        sources that are formally committed to the project as matching 
        contributions.
            (5) Adequacy of plan for providing information for 
        evaluation.--The adequacy of the plan for providing information 
        relevant to an evaluation of the project.
            (6) Other factors.--Such other factors relevant to the 
        purposes of this title as the Secretary may specify.
    (d) Preferences.--In considering an application to conduct a 
demonstration project under this title, the Secretary shall give 
preference to an application that--
            (1) demonstrates the willingness and ability to select 
        individuals described in section 408 who are predominantly from 
        households in which a child (or children) is living with the 
        child's biological or adoptive mother or father, or with the 
        child's legal guardian;
            (2) provides a commitment of non-Federal funds with a 
        proportionately greater amount of such funds committed by 
        private sector sources; and
            (3) targets such individuals residing within 1 or more 
        relatively well-defined neighborhoods or communities (including 
        rural communities) that experience high rates of poverty or 
        unemployment.
    (e) Approval.--Not later than 9 months after the date of enactment 
of this title, the Secretary shall, on a competitive basis, approve 
such applications to conduct demonstration projects under this title as 
the Secretary deems appropriate, taking into account the assessments 
required by subsections (c) and (d). The Secretary is encouraged to 
ensure that the applications that are approved involve a range of 
communities (both rural and urban) and diverse populations.
    (f) Contracts With Nonprofit Entities.--The Secretary may contract 
with an entity described in section 501(c)(3) of the Internal Revenue 
Code of 1986 and exempt from taxation under section 501(a) of such Code 
to conduct any responsibility of the Secretary under this section or 
section 412 if--
            (1) such entity demonstrates the ability to conduct such 
        responsibility; and
            (2) the Secretary can demonstrate that such responsibility 
        would not be conducted by the Secretary at a lower cost.

SEC. 406. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.

    (a) Demonstration Authority.--If the Secretary approves an 
application to conduct a demonstration project under this title, the 
Secretary shall, not later than 10 months after the date of enactment 
of this title, authorize the applicant to conduct the project for 4 
project years in accordance with the approved application and the 
requirements of this title.
    (b) Grant Authority.--For each project year of a demonstration 
project conducted under this title, the Secretary may make a grant to 
the qualified entity authorized to conduct the project. In making such 
a grant, the Secretary shall make the grant on the first day of the 
project year in an amount not to exceed the lesser of--
            (1) the aggregate amount of funds committed as matching 
        contributions by non-Federal public or private sector sources; 
        or
            (2) $1,000,000.

SEC. 407. RESERVE FUND.

    (a) Establishment.--A qualified entity under this title, other than 
a State or local government agency, or a tribal government, shall 
establish a Reserve Fund which shall be maintained in accordance with 
this section.
    (b) Amounts in Reserve Fund.--
            (1) In general.--As soon after receipt as is practicable, a 
        qualified entity shall deposit in the Reserve Fund established 
        under subsection (a)--
                    (A) all funds provided to the qualified entity by 
                any public or private source in connection with the 
                demonstration project; and
                    (B) the proceeds from any investment made under 
                subsection (c)(2).
            (2) Uniform accounting regulations.--The Secretary shall 
        prescribe regulations with respect to accounting for amounts in 
        the Reserve Fund established under subsection (a).
    (c) Use of Amounts in the Reserve Fund.--
            (1) In general.--A qualified entity shall use the amounts 
        in the Reserve Fund established under subsection (a) to--
                    (A) assist participants in the demonstration 
                project in obtaining the skills (including economic 
                literacy, budgeting, credit, and counseling) and 
                information necessary to achieve economic self-
                sufficiency through activities requiring qualified 
                expenses;
                    (B) provide deposits in accordance with section 410 
                for individuals selected by the qualified entity to 
                participate in the demonstration project;
                    (C) administer the demonstration project; and
                    (D) provide the research organization evaluating 
                the demonstration project under section 414 with such 
                information with respect to the demonstration project 
                as may be required for the evaluation.
            (2) Authority to invest funds.--
                    (A) Guidelines.--The Secretary shall establish 
                guidelines for investing amounts in the Reserve Fund 
                established under subsection (a) in a manner that 
                provides an appropriate balance between return, 
                liquidity, and risk.
                    (B) Investment.--A qualified entity shall invest 
                the amounts in its Reserve Fund that are not 
                immediately needed to carry out the provisions of 
                paragraph (1), in accordance with the guidelines 
                established under subparagraph (A).
            (3) Limitation on uses.--Not more than 9.5 percent of the 
        amounts provided to a qualified entity under section 406(b) 
        shall be used by the qualified entity for the purposes 
        described in subparagraphs (A), (C), and (D) of paragraph (1), 
        of which not more than 2 percent of the amounts shall be used 
        by the qualified entity for the purposes described in paragraph 
        (1)(D). If 2 or more qualified entities are jointly 
        administering a project, no qualified entity shall use more 
        than its proportional share for the purposes described in 
        subparagraphs (A), (C), and (D) of paragraph (1).
    (d) Unused Federal Grant Funds Transferred to the Secretary When 
Project Terminates.--Notwithstanding subsection (c), upon the 
termination of any demonstration project authorized under this section, 
the qualified entity conducting the project shall transfer to the 
Secretary an amount equal to--
            (1) the amounts in its Reserve Fund at time of the 
        termination; multiplied by
            (2) a percentage equal to--
                    (A) the aggregate amount of grants made to the 
                qualified entity under section 406(b); divided by
                    (B) the aggregate amount of all funds provided to 
                the qualified entity by all sources to conduct the 
                project.

SEC. 408. ELIGIBILITY FOR PARTICIPATION.

    (a) In General.--Any individual who is a member of a household that 
is eligible for assistance under the State temporary assistance for 
needy families program established under part A of title IV of the 
Social Security Act (42 U.S.C. 601 et seq.), or that meets each of the 
following requirements shall be eligible to participate in a 
demonstration project conducted under this title:
            (1) Income test.--The adjusted gross income of the 
        household does not exceed the earned income amount described in 
        section 32 of the Internal Revenue Code of 1986 (taking into 
        account the size of the household).
            (2) Net worth test.--
                    (A) In general.--The net worth of the household, as 
                of the end of the calendar year preceding the 
                determination of eligibility, does not exceed $10,000.
                    (B) Determination of net worth.--For purposes of 
                subparagraph (A), the net worth of a household is the 
                amount equal to--
                            (i) the aggregate market value of all 
                        assets that are owned in whole or in part by 
                        any member of the household; minus
                            (ii) the obligations or debts of any member 
                        of the household.
                    (C) Exclusions.--For purposes of determining the 
                net worth of a household, a household's assets shall 
                not be considered to include the primary dwelling unit 
                and 1 motor vehicle owned by the household.
    (b) Individuals Unable To Complete the Project.--The Secretary 
shall establish such regulations as are necessary, including 
prohibiting future eligibility to participate in any other 
demonstration project conducted under this title, to ensure compliance 
with this title if an individual participating in the demonstration 
project moves from the community in which the project is conducted or 
is otherwise unable to continue participating in that project.

SEC. 409. SELECTION OF INDIVIDUALS TO PARTICIPATE.

    From among the individuals eligible to participate in a 
demonstration project conducted under this title, each qualified entity 
shall select the individuals--
            (1) that the qualified entity deems to be best suited to 
        participate; and
            (2) to whom the qualified entity will provide deposits in 
        accordance with section 410.

SEC. 410. DEPOSITS BY QUALIFIED ENTITIES.

    (a) In General.--Not less than once every 3 months during each 
project year, each qualified entity under this title shall deposit in 
the individual development account of each individual participating in 
the project, or into a parallel account maintained by the qualified 
entity--
            (1) from the non-Federal funds described in section 
        405(c)(4), a matching contribution of not less than $0.50 and 
        not more than $4 for every $1 of earned income (as defined in 
        section 911(d)(2) of the Internal Revenue Code of 1986) 
        deposited in the account by a project participant during that 
        period;
            (2) from the grant made under section 406(b), an amount 
        equal to the matching contribution made under paragraph (1); 
        and
            (3) any interest that has accrued on amounts deposited 
        under paragraph (1) or (2) on behalf of that individual into 
        the individual development account of the individual or into a 
        parallel account maintained by the qualified entity.
    (b) Limitation on Deposits for an Individual.--Not more than $2,000 
from a grant made under section 406(b) shall be provided to any 1 
individual over the course of the demonstration project.
    (c) Limitation on Deposits for a Household.--Not more than $4,000 
from a grant made under section 406(b) shall be provided to any 1 
household over the course of the demonstration project.
    (d) Withdrawal of Funds.--The Secretary shall establish such 
guidelines as may be necessary to ensure that funds held in an 
individual development account are not withdrawn, except for 1 or more 
qualified expenses, or for an emergency withdrawal. Such guidelines 
shall include a requirement that a responsible official of the 
qualified entity conducting a project approve such withdrawal in 
writing. The guidelines shall provide that no individual may withdraw 
funds from an individual development account earlier than 6 months 
after the date on which the individual first deposits funds in the 
account.
    (e) Reimbursement.--An individual shall reimburse an individual 
development account for any funds withdrawn from the account for an 
emergency withdrawal, not later than 12 months after the date of the 
withdrawal. If the individual fails to make the reimbursement, the 
qualified entity administering the account shall transfer the funds 
deposited into the account or a parallel account under section 410 to 
the Reserve Fund of the qualified entity, and use the funds to benefit 
other individuals participating in the demonstration project involved.

SEC. 411. LOCAL CONTROL OVER DEMONSTRATION PROJECTS.

    A qualified entity under this title, other than a State or local 
government agency or a tribal government, shall, subject to the 
provisions of section 413, have sole authority over the administration 
of the project. The Secretary may prescribe only such regulations or 
guidelines with respect to demonstration projects conducted under this 
title as are necessary to ensure compliance with the approved 
applications and the requirements of this title.

SEC. 412. ANNUAL PROGRESS REPORTS.

    (a) In General.--Each qualified entity under this title shall 
prepare an annual report on the progress of the demonstration project. 
Each report shall include both program and participant information and 
shall specify for the period covered by the report the following 
information:
            (1) The number of individuals making a deposit into an 
        individual development account.
            (2) The amounts in the Reserve Fund established with 
        respect to the project.
            (3) The amounts deposited in the individual development 
        accounts.
            (4) The amounts withdrawn from the individual development 
        accounts and the purposes for which such amounts were 
        withdrawn.
            (5) The balances remaining in the individual development 
        accounts.
            (6) The savings account characteristics (such as threshold 
        amounts and match rates) required to stimulate participation in 
        the demonstration project, and how such characteristics vary 
        among different populations or communities.
            (7) What service configurations of the qualified entity 
        (such as peer support, structured planning exercises, 
        mentoring, and case management) increased the rate and 
        consistency of participation in the demonstration project and 
        how such configurations varied among different populations or 
        communities.
            (8) Such other information as the Secretary may require to 
        evaluate the demonstration project.
    (b) Submission of Reports.--The qualified entity shall submit each 
report required to be prepared under subsection (a) to--
            (1) the Secretary; and
            (2) the Treasurer (or equivalent official) of the State in 
        which the project is conducted, if the State or a local 
        government or a tribal government committed funds to the 
        demonstration project.
    (c) Timing.--The first report required by subsection (a) shall be 
submitted not later than 60 days after the end of the calendar year in 
which the Secretary authorized the qualified entity to conduct the 
demonstration project, and subsequent reports shall be submitted every 
12 months thereafter, until the conclusion of the project.

SEC. 413. SANCTIONS.

    (a) Authority To Terminate Demonstration Project.--If the Secretary 
determines that a qualified entity under this title is not operating 
the demonstration project in accordance with the entity's application 
or the requirements of this title (and has not implemented any 
corrective recommendations directed by the Secretary), the Secretary 
shall terminate such entity's authority to conduct the demonstration 
project.
    (b) Actions Required Upon Termination.--If the Secretary terminates 
the authority to conduct a demonstration project, the Secretary--
            (1) shall suspend the demonstration project;
            (2) shall take control of the Reserve Fund established 
        pursuant to section 407;
            (3) shall make every effort to identify another qualified 
        entity (or entities) willing and able to conduct the project in 
        accordance with the approved application (or, as modified, if 
        necessary to incorporate the recommendations) and the 
        requirements of this title;
            (4) shall, if the Secretary identifies an entity (or 
        entities) described in paragraph (3)--
                    (A) authorize the entity (or entities) to conduct 
                the project in accordance with the approved application 
                (or, as modified, if necessary, to incorporate the 
                recommendations) and the requirements of this title;
                    (B) transfer to the entity (or entities) control 
                over the Reserve Fund established pursuant to section 
                407; and
                    (C) consider, for purposes of this title--
                            (i) such other entity (or entities) to be 
                        the qualified entity (or entities) originally 
                        authorized to conduct the demonstration 
                        project; and
                            (ii) the date of such authorization to be 
                        the date of the original authorization; and
            (5) if, by the end of the 1-year period beginning on the 
        date of the termination, the Secretary has not found a 
        qualified entity (or entities) described in paragraph (3), 
        shall--
                    (A) terminate the project; and
                    (B) from the amount remaining in the Reserve Fund 
                established as part of the project, remit to each 
                source that provided funds under section 405(c)(4) to 
                the entity originally authorized to conduct the 
                project, an amount that bears the same ratio to the 
                amount so remaining as the amount provided by the 
                source under section 405(c)(4) bears to the amount 
                provided by all such sources under that section.

SEC. 414. EVALUATIONS.

    (a) In General.--Not later than 10 months after the date of 
enactment of this title, the Secretary shall enter into a contract with 
an independent research organization to evaluate, individually and as a 
group, all qualified entities and sources participating in the 
demonstration projects conducted under this title.
    (b) Factors To Evaluate.--In evaluating any demonstration project 
conducted under this title, the research organization shall address the 
following factors:
            (1) The effects of incentives and organizational or 
        institutional support on savings behavior in the demonstration 
        project.
            (2) The savings rates of individuals in the demonstration 
        project based on demographic characteristics including gender, 
        age, family size, race or ethnic background, and income.
            (3) The economic, civic, psychological, and social effects 
        of asset accumulation, and how such effects vary among 
        different populations or communities.
            (4) The effects of individual development accounts on 
        savings rates, homeownership, level of postsecondary education 
        attained, and self-employment, and how such effects vary among 
        different populations or communities.
            (5) The potential financial returns to the Federal 
        Government and to other public sector and private sector 
        investors in individual development accounts over a 5-year and 
        10-year period of time.
            (6) The lessons to be learned from the demonstration 
        projects conducted under this title and if a permanent program 
        of individual development accounts should be established.
            (7) Such other factors as may be prescribed by the 
        Secretary.
    (c) Methodological Requirements.--In evaluating any demonstration 
project conducted under this title, the research organization shall--
            (1) for at least 1 site, use control groups to compare 
        participants with nonparticipants;
            (2) before, during, and after the project, obtain such 
        quantitative data as are necessary to evaluate the project 
        thoroughly; and
            (3) develop a qualitative assessment, derived from sources 
        such as in-depth interviews, of how asset accumulation affects 
        individuals and families.
    (d) Reports by the Secretary.--
            (1) Interim reports.--Not later than 90 days after the end 
        of the calendar year in which the Secretary first authorizes a 
        qualified entity to conduct a demonstration project under this 
        title, and every 12 months thereafter until all demonstration 
        projects conducted under this title are completed, the 
        Secretary shall submit to Congress an interim report setting 
        forth the results of the reports submitted pursuant to section 
        412(b).
            (2) Final reports.--Not later than 12 months after the 
        conclusion of all demonstration projects conducted under this 
        title, the Secretary shall submit to Congress a final report 
        setting forth the results and findings of all reports and 
        evaluations conducted pursuant to this title.
    (e) Evaluation Expenses.--The Secretary shall expend such sums as 
may be necessary, but not more than 2 percent of the amounts 
appropriated under section 416 for a fiscal year, to carry out the 
purposes of this section.

SEC. 415. TREATMENT OF FUNDS.

    Funds (including interest accruing) deposited in individual 
development accounts shall not be considered to be income for purposes 
of determining eligibility for, or the amount of assistance furnished 
under, any Federal or federally assisted program based on need.

SEC. 416. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to carry out this title, 
$25,000,000 for each of fiscal years 1999, 2000, 2001, 2002, and 2003 
to remain available until expended.
                                 <all>
```