S. 2206

One Hundred Fifth Congress

of the

United States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Tuesday,

the twenty-seventh day of January, one thousand nine hundred and ninety-eight

An Act

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 ‘‘Community Opportunities,

Accountability, and Training and Educational Services Act of 1998’’

or the ‘‘Coats 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. Statement of purpose.

Sec. 103. Definitions.

Sec. 104. Financial assistance for Head Start programs.

Sec. 105. Authorization of appropriations.

Sec. 106. Allotment of funds.

Sec. 107. Designation of Head Start agencies.

Sec. 108. Quality standards.

Sec. 109. Powers and functions of Head Start agencies.

Sec. 110. Head Start transition.

Sec. 111. Submission of plans to Governors.

Sec. 112. Participation in Head Start programs.

Sec. 113. Early Head Start programs for families with infants and toddlers.

Sec. 114. Technical assistance and training.

Sec. 115. Professional requirements.

Sec. 116. Research and evaluation.

Sec. 117. Reports.

Sec. 118. Repeal of consultation requirement.

Sec. 119. Repeal of Head Start Transition Project Act.

TITLE II—COMMUNITY SERVICES BLOCK GRANT PROGRAM

Sec. 201. Reauthorization.

Sec. 202. Conforming amendments.

TITLE III—LOW-INCOME HOME ENERGY ASSISTANCE

Sec. 301. Short title.

Sec. 302. Authorization.

Sec. 303. Definitions.

Sec. 304. Natural disasters and other emergencies.

Sec. 305. State allotments.

Sec. 306. Administration.

Sec. 307. Payments to States.
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Sec. 308. Residential Energy Assistance Challenge option.

Sec. 309. 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. STATEMENT OF PURPOSE.

Section 636 of the Head Start Act (42 U.S.C. 9831) is amended

to read as follows:

‘‘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, based on family needs assessments, to

be necessary.’’.

SEC. 103. DEFINITIONS.

Section 637 of the Head Start Act (42 U.S.C. 9832) is amended—

(1) by redesignating paragraphs (1) and (2) as paragraphs

(16) and (17) and inserting the paragraphs at the end of the

section;

(2) by inserting before paragraph (3) the following:

‘‘(1) 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.

‘‘(2) The term ‘delegate agency’ means a public, private

nonprofit, or for-profit organization or agency to which a

grantee has delegated all or part of the responsibility of the

grantee for operating a Head Start program.’’;

(3) by striking paragraph (4);

(4) by redesignating paragraph (3) as paragraph (4);

(5) by inserting after paragraph (2) the following:

‘‘(3) The term ‘family literacy services’ means services that

are of sufficient intensity in terms of hours, and of sufficient
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duration, to make sustainable changes in a family, and that

integrate all of the following activities:

‘‘(A) Interactive literacy activities between parents and

their children.

‘‘(B) Training for parents regarding how to be the primary teacher for their children and full partners in the

education of their children.

‘‘(C) Parent literacy training that leads to economic

self-sufficiency.

‘‘(D) An age-appropriate education to prepare children

for success in school and life experiences.’’;

(6) in paragraph (6), 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.’’;

(7) by striking paragraph (12) and inserting the following:

‘‘(12) The term ‘migrant and 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 one 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.’’;

(8) by inserting after paragraph (14) the following:

‘‘(15) The term ‘scientifically based reading research’—

‘‘(A) means the application of rigorous, systematic, and

objective procedures to obtain valid knowledge relevant

to reading development, reading instruction, and reading

difficulties; and

‘‘(B) shall include research that—

‘‘(i) employs systematic, empirical methods that

draw on observation or experiment;

‘‘(ii) involves rigorous data analyses that are adequate to test the stated hypotheses and justify the

general conclusions drawn;

‘‘(iii) relies on measurements or observational

methods that provide valid data across evaluators and

observers and across multiple measurements and

observations; and

‘‘(iv) has been accepted by a peer-reviewed journal

or approved by a panel of independent experts through

a comparably rigorous, objective, and scientific

review.’’; and

(9) in paragraph (17) (as redesignated in paragraph (1))—

(A) by striking ‘‘Term’’ and inserting ‘‘term’’;

(B) by striking ‘‘Virgin Islands,’’ and inserting ‘‘Virgin

Islands of the United States, and the Commonwealth of

the Northern Mariana Islands, but for fiscal years ending
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before October 1, 2001 (and fiscal year 2002, if the legislation described in section 640(a)(2)(B)(iii) has not been

enacted before September 30, 2001), also means’’; and

(C) by striking ‘‘Palau, and the Commonwealth of the

Northern Mariana Islands.’’ and inserting ‘‘and the Republic of Palau.’’.

SEC. 104. FINANCIAL ASSISTANCE FOR HEAD START PROGRAMS.

Section 638(1) of the Head Start Act (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. 105. AUTHORIZATION OF APPROPRIATIONS.

Section 639 of the Head Start Act (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 paragraphs (1) and (2)

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 the amount that 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(g);

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. 106. ALLOTMENT OF FUNDS.

(a) ALLOTMENTS.—Section 640(a) of the Head Start Act (42

U.S.C. 9835(a)) is amended—

(1) in paragraph (2)—

(A) in subparagraph (A)—

(i) by striking ‘‘and migrant’’ the first place it

appears and all that follows through ‘‘handicapped children’’, and inserting ‘‘Head Start programs, services

for children with disabilities, and migrant and seasonal

Head Start programs’’;

(ii) by striking ‘‘and migrant’’ each other place

it appears and inserting ‘‘Head Start programs and

by migrant and seasonal’’; and

(iii) by striking ‘‘1994’’ and inserting ‘‘1998’’;

(B) in subparagraph (B), by striking ‘‘(B) payments’’

and all that follows through ‘‘Virgin Islands according’’

and inserting the following:

‘‘(B) payments, subject to paragraph (7)—

‘‘(i) to Guam, American Samoa, the Commonwealth

of the Northern Mariana Islands, and the Virgin Islands

of the United States;

‘‘(ii) for fiscal years ending before October 1, 2001,

to the Federated States of Micronesia, the Republic of

the Marshall Islands, and the Republic of Palau; and
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‘‘(iii) if legislation approving renegotiated Compacts of

Free Association for the jurisdictions described in clause

(ii) has not been enacted before September 30, 2001, for

fiscal year 2002 to those jurisdictions;

according’’;

(C) in subparagraph (C), by striking ‘‘; and’’ and inserting ‘‘, of which not less than $3,000,000 of the amount

appropriated for such fiscal year shall be made available

to carry out activities described in section 648(c)(4);’’;

(D) 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’’;

(E) by inserting after subparagraph (D) the following:

‘‘(E) payments for research, demonstration, and evaluation

activities under section 649.’’; and

(F) by adding at the end the following: ‘‘No Freely

Associated State may receive financial assistance under

this subchapter after fiscal year 2002.’’;

(2) in paragraph (3)—

(A) in subparagraph (A)(i), by striking ‘‘equal’’ and

all that follows through ‘‘amount;’’ and inserting ‘‘equal

to the sum of—

‘‘(I) 60 percent of such excess amount for fiscal year 1999,

50 percent of such excess amount for fiscal year 2000, 47.5

percent of such excess amount for fiscal year 2001, 35 percent

of such excess amount for fiscal year 2002, and 25 percent

of such excess amount for fiscal year 2003;’’;

(B) 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 Federal and State incentive and loan forgiveness programs for professional

development’’;

(iii) in clause (v), by inserting ‘‘and collaboration

efforts for such programs’’ before the period;

(iv) in clause (vi), by striking the period and inserting ‘‘, and are accessible to children with disabilities

and their parents.’’;

(v) by redesignating clause (vii) as clause (viii);

and

(vi) 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 can provide children with a variety of skills that

have been identified, through scientifically based reading

research, as predictive of later reading achievement.’’;

(C) in subparagraph (C)—
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(i) in clause (i)—

(I) in subclause (I)—

(aa) by striking ‘‘this subparagraph’’ and

inserting ‘‘this paragraph’’;

(bb) by striking ‘‘of staff’’ and inserting

‘‘of classroom teachers and other staff’’;

(cc) by striking ‘‘such staff’’ and inserting

‘‘qualified staff, including recruitment and

retention pursuant to achieving the requirements set forth in section 648A(a)’’; and

(dd) by adding at the end the following:

‘‘Preferences in awarding salary increases, in

excess of cost-of-living allowances, with such

funds shall be granted to classroom teachers

and staff who obtain additional training or

education related to their responsibilities as

employees of a Head Start program.’’;

(II) in subclause (II), by striking ‘‘the subparagraph’’ and inserting ‘‘this subparagraph’’; and

(III) by adding at the end the following:

‘‘(III) From the remainder of the amount reserved under

this paragraph (after the Secretary carries out subclause (I)),

the Secretary shall carry out any or all of the activities

described in clauses (ii) through (vii), placing the highest priority on the activities described in clause (ii).’’;

(ii) by amending clause (ii) to read as follows:

‘‘(ii) To train classroom teachers and other staff to meet

the education performance standards described in section

641A(a)(1)(B), through activities—

‘‘(I) to promote children’s language and literacy growth,

through techniques identified through scientifically based

reading research;

‘‘(II) to promote the acquisition of the English language

for non-English background children and families;

‘‘(III) to foster children’s school readiness skills through

activities described in section 648A(a)(1); and

‘‘(IV) to provide training necessary to improve the

qualifications of the staff of the Head Start agencies and

to support staff training, child counseling, and other services necessary to address the problems of children participating in Head Start programs, including children from

dysfunctional families, children who experience chronic

violence in their communities, and children who experience

substance abuse in their families.’’;

(iii) by striking clause (v); and

(iv) by redesignating clauses (vi) and (vii) as

clauses (v) and (vi), respectively; and

(D) in subparagraph (D)(i)(II), by striking ‘‘and

migrant’’ and inserting ‘‘Head Start programs and migrant

and seasonal’’;

(3) in paragraph (4)—

(A) in subparagraph (A), by striking ‘‘1981’’ and inserting ‘‘1998’’;

(B) by amending subparagraph (B) to read as follows:

‘‘(B) any amount available after all allotments are made

under subparagraph (A) for such fiscal year shall be distributed

proportionately on the basis of the number of children less
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than 5 years of age from families whose income is below the

poverty line.’’; and

(C) by adding at the end the following:

‘‘For purposes of this paragraph, for each fiscal year the Secretary

shall use the most recent data available on the number of children

less than 5 years of age from families whose income is below

the poverty line, as published by the Department of Commerce,

unless the Secretary and the Secretary of Commerce determine

that use of the most recent data available would be inappropriate

or unreliable. If the Secretary and the Secretary of Commerce

determine that some or all of the data referred to in this paragraph

are inappropriate or unreliable, the Secretaries shall issue a report

setting forth their reasons in detail.’’;

(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 to 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

‘‘(including coordination of services with those

State officials who are responsible for administering part C and section 619 of the Individuals with

Disabilities Education Act (20 U.S.C. 1431–1445,

1419)), and services for homeless children;’’; 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; and

‘‘(vi) encourage local Head Start agencies to appoint a State

level representative to represent Head Start agencies within

the State in conducting collaborative efforts described in subparagraphs (B) and (D), and in clause (v).’’;

(D) by redesignating subparagraph (D) as subparagraph (F); and

(E) by inserting after subparagraph (C) the following:
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‘‘(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 professional 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, State, and local 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 programs described in subclause (I) 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’’;

(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).’’;

and

(C) by adding at the end the following:

‘‘(B)(i) If the Secretary does not submit an interim report on

the preliminary findings of the Early Head Start impact study

currently being conducted by the Secretary (as of the date of enactment of the Head Start Amendments of 1998) to the appropriate

committees by June 1, 2001, the amount of the reserved portion

for fiscal year 2002 that exceeds the reserved portion for fiscal

year 2001, if any, shall be used for quality improvement activities

described in section 640(a)(3) and shall not be used to serve an

increased number of eligible children under section 645A.

‘‘(ii) If the Secretary does not submit a final report on the

Early Head Start impact study to the appropriate committees by

June 1, 2002, or if the Secretary finds in the report that there
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are substantial deficiencies in the programs carried out under section 645A, the amount of the reserved portion for fiscal year 2003

that exceeds the reserved portion for fiscal year 2002, if any, shall

be used for quality improvement activities described in section

640(a)(3) and shall not be used to serve an increased number

of eligible children under section 645A.

‘‘(iii) In this subparagraph:

‘‘(I) The term ‘appropriate committees’ means the Committee on Education and the Workforce and the Committee on

Appropriations of the House of Representatives and the

Committee on Labor and Human Resources and the Committee

on Appropriations of the Senate.

‘‘(II) The term ‘reserved portion’, used with respect to a

fiscal year, means the amount required to be used in accordance

with subparagraph (A) for that fiscal year.

‘‘(C)(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 adversely affecting 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 reduced to a level that requires a lower

amount to be 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) of the Head

Start Act (42 U.S.C. 9835(d)) is amended—

(1) by striking ‘‘1982’’ and inserting ‘‘1999’’;

(2) by striking ‘‘(as defined in section 602(a) of the Individuals with Disabilities Education Act)’’; and

(3) by adding at the end the following: ‘‘Such policies and

procedures shall require Head Start agencies to coordinate

programmatic efforts with efforts to implement part C and

section 619 of the Individuals with Disabilities Education Act

(20 U.S.C 1431–1445, 1419).’’.

(c) INCREASED APPROPRIATIONS.—Section 640(g) of the Head

Start Act (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);’’;
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(B) in subparagraph (C), by striking the semicolon

and inserting ‘‘, and organizations and public entities serving children with disabilities;’’;

(C) in subparagraph (D), by striking the semicolon

and inserting ‘‘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-workingday full calendar year services;’’;

(D) in subparagraph (E), by striking ‘‘program; and’’

and inserting ‘‘program or any other early childhood program;’’;

(E) in subparagraph (F), by striking the period and

inserting a semicolon; 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

‘‘(H) the extent to which the applicant, in providing services, plans 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, regarding such services

and the education services provided by such local educational

agency.’’; and

(2) by adding at the end the following:

‘‘(4) Notwithstanding subsection (a)(2), after taking into account

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 activities described in such subsection.’’.

(d) MIGRANT AND SEASONAL HEAD START PROGRAMS.—Section

640(l) (42 U.S.C. 9835(l)) is amended—

(1) by striking ‘‘(l)’’ and inserting ‘‘(l)(1)’’;

(2) by striking ‘‘migrant Head Start programs’’ each place

it appears and inserting ‘‘migrant and seasonal Head Start

programs’’;

(3) by striking ‘‘migrant families’’ and inserting ‘‘migrant

and seasonal farmworker families’’; and

(4) by adding at the end the following:

‘‘(2) For purposes of subsection (a)(2)(A), 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 migrant and seasonal 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 eligible children

of migrant farmworkers before approving an increase in the allocation of funds provided under such subsection for unserved eligible

children of seasonal farmworkers. In serving the eligible children

of seasonal farmworkers, the Secretary shall ensure that services

provided by migrant and seasonal Head Start programs do not

duplicate or overlap with other Head Start services available to

eligible children of such farmworkers.

‘‘(3) In carrying out this subchapter, the Secretary shall continue the administrative arrangement responsible for meeting the
S. 2206—11

needs of children of migrant and seasonal farmworkers and Indian

children and shall ensure that appropriate funding is provided

to meet such needs.’’.

(e) CONFORMING AMENDMENT.—Section 644(f)(2) of the Head

Start Act (42 U.S.C. 9839(f)(2)) is amended by striking ‘‘Except’’

and all that follows through ‘‘financial’’ and inserting ‘‘Financial’’.

SEC. 107. DESIGNATION OF HEAD START AGENCIES.

Section 641 of the Head Start Act (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) by inserting ‘‘(in consultation with the chief executive officer of the State involved, if such State expends

non-Federal funds to carry out Head Start programs)’’ after

‘‘Secretary’’ the last place it appears;

(2) in subsection (b), by striking ‘‘area designated by the

Bureau of Indian Affairs as near-reservation’’ and inserting

‘‘off-reservation area designated by an appropriate tribal

government in consultation with the Secretary’’;

(3) in subsection (c)—

(A) in paragraph (1)—

(i) by inserting ‘‘, in consultation with the chief

executive officer of the State involved if such State

expends non-Federal funds to carry out Head Start

programs,’’ after ‘‘shall’’;

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

and

(iii) by striking ‘‘makes a finding’’ and all that

follows through the period at the end, and inserting

the following: ‘‘determines that the agency involved

fails to meet program and financial management

requirements, performance standards described in section 641A(a)(1), results-based performance measures

developed by the Secretary under section 641A(b), or

other requirements established by the Secretary.’’;

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

with the chief executive officer of the State if such State

expends non-Federal funds to carry out Head Start programs,’’ after ‘‘shall’’; and

(C) by aligning the margins of paragraphs (2) and

(3) with the margin of paragraph (1);

(4) in subsection (d)—

(A) in the matter preceding paragraph (1), by inserting

after the first sentence the following: ‘‘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 met or exceeded such

performance standards and such results-based performance

measures.’’;

(B) in paragraph (3), by inserting ‘‘and programs under

part C and section 619 of the Individuals with Disabilities

Education Act (20 U.S.C 1431–1445, 1419)’’ after ‘‘(20

U.S.C. 2741 et seq.)’’;
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(C) in paragraph (4)—

(i) in subparagraph (A), by inserting ‘‘(at home

and in the center involved where practicable)’’ after

‘‘activities’’;

(ii) in subparagraph (D)—

(I) in clause (iii), by adding ‘‘or’’ at the end;

(II) by striking clause (iv); and

(III) by redesignating clause (v) as clause (iv);

(iii) in subparagraph (E), by striking ‘‘and (D)’’

and inserting ‘‘, (D), and (E)’’;

(iv) by redesignating subparagraphs (D) and (E)

as subparagraphs (E) and (F), respectively; and

(v) by inserting after subparagraph (C) the following:

‘‘(D) to offer to parents of participating children substance abuse counseling (either directly or through referral

to local entities), including information on drug-exposed

infants and fetal alcohol syndrome;’’;

(D) by amending paragraph (7) to read as follows:

‘‘(7) the plan of such applicant to meet the needs of nonEnglish background children and their families, including needs

related to the acquisition of the English language;’’;

(E) in paragraph (8)—

(i) by striking the period at the end and inserting

‘‘; and’’; and

(ii) by redesignating such paragraph as paragraph

(9);

(F) by inserting after paragraph (7) the following:

‘‘(8) the plan of such applicant to meet the needs of children

with disabilities;’’; and

(G) by adding at the end the following:

‘‘(10) the plan of such applicant to collaborate with other

entities carrying out early childhood education and child care

programs in the community.’’;

(5) by striking subsection (e) and inserting the following:

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

under subsection (c), and there is no qualified applicant in the

community, the Secretary shall designate a qualified 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.’’; and

(6) by adding at the end the following:

‘‘(g) If the Secretary determines that a nonprofit agency and

a for-profit agency have submitted applications for designation of

equivalent quality under subsection (d), the Secretary may give

priority to the nonprofit agency. In selecting from among qualified

applicants for designation as a Head Start agency under subsection

(d), the Secretary shall give priority to applicants that have demonstrated capacity in providing comprehensive early childhood services to children and their families.’’.

SEC. 108. QUALITY STANDARDS.

(a) QUALITY STANDARDS.—Section 641A(a) of the Head Start

Act (42 U.S.C. 9836a(a)) is amended—

(1) in paragraph (1)—
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(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), respectively; 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 language to communicate

for various purposes;

‘‘(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), respectively;

(4) in paragraph (2) (as redesignated in paragraph (3))—

(A) in subparagraph (B)(iii), by 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

Coats Human Services Reauthorization Act of 1998’’;

and

(5) in paragraph (3) (as redesignated in paragraph (3)),

by striking ‘‘to an agency (referred to in this subchapter as

the ‘delegate agency’)’’ and inserting ‘‘to a delegate agency’’.

(b) PERFORMANCE MEASURES.—Section 641A(b) of the Head

Start Act (42 U.S.C. 9836a(b)) is amended—

(1) in the heading, by inserting ‘‘RESULTS-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 inserting before ‘‘(referred’’ the following: ‘‘, and

the impact of the services provided through the programs

to children and their families’’; and
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(D) by striking ‘‘performance measures’’ and inserting

‘‘results-based performance measures’’; 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

inserting ‘‘be used to assess the impact of’’;

(D) in subparagraph (B)—

(i) by striking ‘‘to’’;

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

‘‘, peer review, and program evaluation’’; and

(iii) by inserting ‘‘, not later than July 1, 1999’’

before the semicolon;

(E) in subparagraph (C), by inserting ‘‘be developed’’

before ‘‘for other’’; and

(F) by adding at the end the following: ‘‘The performance measures shall include the performance standards

described in subsection (a)(1)(B)(ii).’’;

(4) in paragraph (3)(A), by striking ‘‘and by region’’ and

inserting ‘‘, regionally, and locally’’; and

(5) by adding at the end the following:

‘‘(4) EDUCATIONAL PERFORMANCE MEASURES.—Such resultsbased performance measures shall include educational performance measures that ensure that children participating in Head

Start programs—

‘‘(A) know that letters of the alphabet are a special

category of visual graphics that can be individually named;

‘‘(B) recognize a word as a unit of print;

‘‘(C) identify at least 10 letters of the alphabet; and

‘‘(D) associate sounds with written words.

‘‘(5) ADDITIONAL LOCAL RESULTS-BASED PERFORMANCE MEAS- URES.—In addition to other applicable results-based performance measures, Head Start agencies may establish local resultsbased educational performance measures.’’.

(c) MONITORING.—Section 641A(c) of the Head Start Act (42

U.S.C. 9836a(c)) is amended—

(1) in paragraph (1), by inserting ‘‘and results-based

performance measures developed by the Secretary under subsection (b)’’ after ‘‘standards established under this subchapter’’;

and

(2) in paragraph (2)—

(A) in subparagraph (B), by striking ‘‘and’’ at the end;

(B) in subparagraph (C)—

(i) by inserting ‘‘(including children with disabilities)’’ after ‘‘eligible children’’; and

(ii) by striking the period at the end and inserting

a semicolon; and

(C) by adding at the end the following:

‘‘(D) include as part of the reviews of the programs,

a review and assessment of program effectiveness, as measured in accordance with the results-based performance

measures developed by the Secretary pursuant to subsection (b) and with the performance standards established

pursuant to subparagraphs (A) and (B) of subsection (a)(1);

and
S. 2206—15

‘‘(E) seek information from the communities and the

States involved about the performance of the programs

and the efforts of the Head Start agencies to collaborate

with other entities carrying out early childhood education

and child care programs in the community.’’.

(d) TERMINATION.—Section 641A(d) of the Head Start Act (42

U.S.C. 9836a(d)) is amended—

(1) in paragraph (1)—

(A) by inserting ‘‘or results-based performance measures developed by the Secretary under subsection (b)’’ after

‘‘subsection (a)’’; and

(B) by amending subparagraph (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 ‘‘able to correct a deficiency immediately’’ and

inserting ‘‘required to correct a deficiency immediately or during

a 90-day period under clause (i) or (ii) of paragraph (1)(B)’’.

(e) REPORT.—Section 641A(e) of the Head Start Act (42 U.S.C.

9836a(e)) is amended by adding at the end the following: ‘‘Such

report shall be widely disseminated and available for public review

in both written and electronic formats.’’.

SEC. 109. POWERS AND FUNCTIONS OF HEAD START AGENCIES.

Section 642 of the Head Start Act (42 U.S.C. 9837) is amended—

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

(2) in subsection (b)—

(A) in paragraph (6)—

(i) by striking subparagraph (D); and

(ii) by redesignating subparagraphs (E) and (F)

and subparagraphs (D) and (E), respectively;

(B) in paragraph (8), by striking ‘‘and’’ at the end;

(C) in paragraph (9), by striking the period at the

end and inserting ‘‘; and’’;

(D) by redesignating paragraphs (6) through (9) as

paragraphs (7) through (10), respectively;

(E) by inserting after paragraph (5) the following:

‘‘(6) offer to parents of participating children substance

abuse counseling (either directly or through referral to local

entities), including information on drug-exposed infants and

fetal alcohol syndrome;’’;
S. 2206—16

(F) in paragraph (8) (as redesignated in subparagraph

(D)), by striking ‘‘paragraphs (4) through (6)’’ and inserting

‘‘paragraphs (4) through (7)’’; and

(G) by adding at the end the following:

‘‘(11)(A) inform custodial parents in single-parent families

that participate in programs, activities, or services carried out

or provided under this subchapter about the availability of

child support services for purposes of establishing paternity

and acquiring child support; and

‘‘(B) refer eligible parents to the child support offices of

State and local governments.’’;

(3) in subsection (c)—

(A) by inserting ‘‘and collaborate’’ after ‘‘coordinate’’;

(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

(C) by inserting ‘‘and programs under part C and section 619 of the Individuals with Disabilities Education

Act (20 U.S.C 1431–1445, 1419)’’ after ‘‘(20 U.S.C. 2741

et seq.)’’;

(4) in subsection (d)—

(A) in paragraph (1)—

(i) by striking ‘‘carry out’’ and all that follows

through ‘‘maintain’’ and inserting ‘‘take steps to ensure,

to the maximum extent possible, that children maintain’’;

(ii) by inserting ‘‘and educational’’ after ‘‘developmental’’; and

(iii) by striking ‘‘to build’’ and inserting ‘‘build’’;

(B) by striking paragraph (2);

(C) by redesignating paragraphs (3) through (5) as

paragraphs (2) through (4), respectively; and

(D) in subparagraph (A) of paragraph (4) (as redesignated in subparagraph (C)), by striking ‘‘the Head Start

Transition Project Act (42 U.S.C. 9855 et seq.)’’ and inserting ‘‘section 642A’’; and

(5) by adding at the end the following:

‘‘(e) Head Start agencies shall adopt, in consultation with

experts in child development and with classroom teachers, an

assessment to be used when hiring or evaluating any classroom

teacher in a center-based Head Start program. Such assessment

shall measure whether such teacher has mastered the functions

described in section 648A(a)(1).’’.

SEC. 110. 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
S. 2206—17

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 educational, 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.);

‘‘(6) assisting families, administrators, and teachers in

enhancing educational and developmental continuity between

Head Start services and elementary school classes; and

‘‘(7) linking the services provided in such Head Start program with the education services provided by such local educational agency.’’.

SEC. 111. SUBMISSION OF PLANS TO GOVERNORS.

The first sentence of section 643 of the Head Start Act (42

U.S.C. 9838) is amended—

(1) by striking ‘‘30 days’’ and inserting ‘‘45 days’’;

(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 in the State)’’;

and

(3) by inserting before the period ‘‘, as evidenced by a

written statement of the Secretary’s findings that is transmitted

to such officer’’.

SEC. 112. PARTICIPATION IN HEAD START PROGRAMS.

(a) REGULATIONS.—Section 645(a)(1) of the Head Start Act (42

U.S.C. 9840(a)(1)) is amended—

(1) by striking ‘‘provide (A) that’’ and inserting the following: ‘‘provide—

‘‘(A) that’’;

(2) by striking ‘‘assistance; and (B) pursuant’’ and inserting

the following: ‘‘assistance; and

‘‘(B) pursuant’’;

(3) in subparagraph (B), by striking ‘‘that programs’’ and

inserting ‘‘that—

‘‘(i) programs’’; and

(4) by striking ‘‘clause (A).’’ and inserting the following:

‘‘subparagraph (A); 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
S. 2206—18

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) of the Head Start Act

(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 collaborative. The copayment charged to families receiving services through

the Head Start program 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) of the Head Start Act (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.’’.

(d) OFF-RESERVATION AREA.—Section 645(d)(1)(B) of the Head

Start Act (42 U.S.C. 9840(d)(1)(B)) is amended by striking ‘‘a

community with’’ and all that follows through ‘‘Indian Affairs’’ and

inserting ‘‘a community that is an off-reservation area, designated

by an appropriate tribal government, in consultation with the Secretary’’.

SEC. 113. EARLY HEAD START PROGRAMS FOR FAMILIES WITH

INFANTS AND TODDLERS.

Section 645A of the Head Start Act (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) in paragraph (1), by striking ‘‘; and’’ and inserting

a period;

(B) by striking paragraph (2); and

(C) by striking ‘‘for—’’ and all that follows through

‘‘(1)’’ and inserting ‘‘for’’;

(3) in subsection (b)—

(A) in paragraph (5), by inserting ‘‘(including programs

for infants and toddlers with disabilities)’’ after ‘‘community’’;

(B) in paragraph (7), by striking ‘‘and’’ at the end;

(C) by redesignating paragraph (8) as paragraph (9);

and

(D) by inserting after paragraph (7) the following:

‘‘(8) ensure formal linkages with the agencies and entities

described in section 644(b) of the Individuals with Disabilities

Education Act (20 U.S.C. 1444(b)) and providers of early intervention services for infants and toddlers with disabilities under

the Individuals with Disabilities Education Act (20 U.S.C. 1400

et seq.); and’’;

(4) in subsection (c)—
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(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) in paragraph (1), by adding ‘‘and’’ at the end;

(B) by striking paragraph (2);

(C) by redesignating paragraph (3) as paragraph (2);

and

(D) in paragraph (2), as redesignated in subparagraph

(C), by inserting ‘‘or for-profit’’ after ‘‘nonprofit’’;

(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),’’;

(9) by striking subsection (h); and

(10) by adding at the end the following:

‘‘(g) MONITORING, TRAINING, TECHNICAL ASSISTANCE, AND

EVALUATION.—

‘‘(1) REQUIREMENT.—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.

‘‘(2) TRAINING AND TECHNICAL ASSISTANCE ACCOUNT.— ‘‘(A) 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.

‘‘(B) ACTIVITIES.—Funds in the account may be used

by the Secretary for purposes including—

‘‘(i) 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;

‘‘(ii) 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;

‘‘(iii) providing ongoing training and technical

assistance for existing recipients (as of the date of

such training or assistance) of grants under subsection

(a) and support and program planning and

implementation assistance for new recipients of such

grants; and

‘‘(iv) providing professional development and

personnel enhancement activities, including the provision of funds to recipients of grants under subsection
S. 2206—20

(a) for the recruitment and retention of qualified staff

with an appropriate level of education and experience.’’.

SEC. 114. TECHNICAL ASSISTANCE AND TRAINING.

(a) IN GENERAL.—Section 648 of the Head Start Act (42 U.S.C.

9843) is amended—

(1) in subsection (b)—

(A) in paragraph (1), by striking ‘‘and’’ at the end;

(B) in paragraph (2), by striking the period and inserting ‘‘; and’’; and

(C) 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.’’; and

(2) in subsection (c)—

(A) by amending paragraph (1) to read as follows:

‘‘(1) give priority consideration to—

‘‘(A) activities to correct program and management deficiencies identified through reviews carried out pursuant

to section 641A(c) (including the provision of assistance

to local programs in the development of quality improvement plans under section 641A(d)(2)); and

‘‘(B) assisting Head Start agencies in—

‘‘(i) ensuring the school readiness of children; and

‘‘(ii) meeting the educational performance measures described in section 641A(b)(4);’’;

(B) in paragraph (2), by inserting ‘‘supplement amounts

provided under section 640(a)(3)(C)(ii) in order to’’ after

‘‘(2)’’;

(C) in paragraph (4)—

(i) by inserting ‘‘and implementing’’ after ‘‘developing’’; and

(ii) 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’’;

(D) in paragraph (7), by striking ‘‘; and’’ and inserting

a semicolon;

(E) in paragraph (8), by striking the period and inserting ‘‘; and’’;

(F) by redesignating paragraphs (3) through (8) as

paragraphs (5) through (10), respectively;

(G) by inserting after paragraph (2) the following:

‘‘(3) assist Head Start agencies in the development of

collaborative initiatives with States and other entities within

the States, to foster effective early childhood professional

development systems;

‘‘(4) provide technical assistance and training, either

directly or through a grant, contract, or cooperative agreement

with an entity that has experience in the development and

operation of successful family literacy services programs, for

the purpose of—
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‘‘(A) assisting Head Start agencies providing family

literacy services, in order to improve the quality of such

family literacy services; and

‘‘(B) enabling those Head Start agencies that demonstrate effective provision of family literacy services, based

on improved outcomes for children and their parents, to

provide technical assistance and training to other Head

Start agencies and to service providers that work in

collaboration with such agencies to provide family literacy

services;’’; and

(H) by adding at the end the following:

‘‘(11) provide support for Head Start agencies (including

policy councils and policy committees, as defined in regulation)

that meet the standards described in section 641A(a) but that

have, as documented by the Secretary through reviews conducted pursuant to section 641A(c), significant programmatic,

quality, and fiscal issues to address.’’.

(b) SERVICES.—Section 648(e) of the Head Start Act (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. 115. PROFESSIONAL REQUIREMENTS.

Section 648A of the Head Start Act (42 U.S.C. 9843a) is amended—

(1) by amending subsection (a) to read as follows:

‘‘(a) CLASSROOM TEACHERS.—

‘‘(1) PROFESSIONAL REQUIREMENTS.—The Secretary shall

ensure that each Head Start classroom in a center-based program is assigned one teacher who has demonstrated competency

to perform functions that include—

‘‘(A) 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 language, their understanding and use of increasingly

complex and varied vocabulary, their appreciation of books,

and their problem solving abilities;

‘‘(B) establishing and maintaining a safe, healthy learning environment;

‘‘(C) supporting the social and emotional development

of children; and

‘‘(D) 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.

‘‘(2) DEGREE REQUIREMENTS.—

‘‘(A) IN GENERAL.—The Secretary shall ensure that not

later than September 30, 2003, at least 50 percent of all

Head Start teachers nationwide in center-based programs

have—

‘‘(i) an associate, baccalaureate, or advanced degree

in early childhood education; or

‘‘(ii) an associate, baccalaureate, or advanced

degree in a field related to early childhood education,

with experience in teaching preschool children.
S. 2206—22

‘‘(B) PROGRESS.—The Secretary shall require Head

Start agencies to demonstrate continuing progress each

year to reach the result described in subparagraph (A).

‘‘(3) ALTERNATIVE CREDENTIALING REQUIREMENTS.—The

Secretary shall ensure that, for center-based programs, each

Head Start classroom that does not have a teacher that meets

the requirements of clause (i) or (ii) of paragraph (2)(A) is

assigned one teacher who has—

‘‘(A) a child development associate credential that is

appropriate to the age of the children being served in

center-based programs;

‘‘(B) a State-awarded certificate for preschool teachers

that meets or exceeds the requirements for a child development associate credential; or

‘‘(C) a degree in a field related to early childhood

education with experience in teaching preschool children

and a State-awarded certificate to teach in a preschool

program.

‘‘(4) WAIVER.—

‘‘(A) IN GENERAL.—On request, the Secretary shall

grant a 180-day waiver of the requirements of paragraph

(3), 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 (3), with respect to an individual

who—

‘‘(i) is enrolled in a program that grants any such

credential, certificate, or degree; and

‘‘(ii) 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.

‘‘(B) LIMITATION.—The Secretary may not grant more

than one such waiver with respect to such individual.’’;

and

(2) in subsection (b)(2)(B)—

(A) by striking ‘‘staff,’’ and inserting ‘‘staff or’’; and

(B) by striking ‘‘, or that’’ and all that follows through

‘‘families’’.

SEC. 116. RESEARCH AND EVALUATION.

Section 649 of the Head Start Act (42 U.S.C. 9844) is amended—

(1) in subsection (d)—

(A) in paragraph (6), by striking ‘‘and’’ at the end;

(B) in paragraph (7), by striking the period at the

end and inserting a semicolon;

(C) by redesignating paragraphs (2) through (7) as

paragraphs (3) through (8), respectively;

(D) by inserting after paragraph (1) the following:

‘‘(2) establish evaluation methods that measure the

effectiveness and impact of family literacy services program

models, including models for the integration of family literacy

services with Head Start services;’’; and

(E) by adding at the end the following:
S. 2206—23

‘‘(9) 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; and

‘‘(10) provide for—

‘‘(A) using the Survey of Income and Program Participation to conduct an analysis of the different income levels

of Head Start participants compared to comparable persons

who did not attend Head Start programs;

‘‘(B) using the National Longitudinal Survey of Youth,

which began gathering data in 1988 on children who

attended Head Start programs, to examine the wide range

of outcomes measured within the Survey, including outcomes related to cognitive, socio-emotional, behavioral, and

academic development;

‘‘(C) using the Survey of Program Dynamics, the new

longitudinal survey required by section 414 of the Social

Security Act (42 U.S.C. 614), to begin annual reporting,

through the duration of the Survey, on Head Start program

attendees’ academic readiness performance and improvements;

‘‘(D) ensuring that the Survey of Program Dynamics

is linked with the National Longitudinal Survey of Youth

at least once by the use of a common performance test,

to be determined by the expert panel, for the greater

national usefulness of the National Longitudinal Survey

of Youth database; and

‘‘(E) disseminating the results of the analysis, examination, reporting, and linkage described in subparagraphs

(A) through (D) to persons conducting other studies under

this subchapter.

The Secretary shall ensure that an appropriate entity carries out

a study described in paragraph (9), and prepares and submits

to the appropriate committees of Congress a report containing the

results of the study, not later than September 30, 2002.’’; and

(2) by adding at the end the following:

‘‘(g) 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 Coats Human Services

Reauthorization Act of 1998;

‘‘(ii) to maintain and advise the Secretary regarding the progress of the research; and
S. 2206—24

‘‘(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 make

a grant to, or enter into a 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
S. 2206—25

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 (whether in public or private school), 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 public or private 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 two 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.
S. 2206—26

‘‘(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.

‘‘(h) 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) 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 information on—

‘‘(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 development of children receiving services under

this subchapter.’’.

SEC. 117. REPORTS.

Section 650 of the Head Start Act (42 U.S.C. 9846) is amended—

(1) by inserting ‘‘(a) STATUS OF CHILDREN.—’’ before ‘‘At’’;

(2) by striking ‘‘and Labor’’ each place it appears and

inserting ‘‘and the Workforce’’; and

(3) by adding at the end the following:

‘‘(b) FACILITIES.—At least once during every 5-year period, 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 condition, location, and ownership of facilities used, or

available to be used, by Indian Head Start agencies (including

Native Alaskan Head Start agencies) and Native Hawaiian Head

Start agencies.’’.

SEC. 118. REPEAL OF CONSULTATION REQUIREMENT.

Section 657A of the Head Start Act (42 U.S.C. 9852a) is

repealed.
S. 2206—27

SEC. 119. REPEAL OF HEAD START TRANSITION PROJECT ACT.

The Head Start Transition Project Act (42 U.S.C. 9855–9855g)

is repealed.

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 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.)); and

‘‘(2) to accomplish the goals described in paragraph (1)

through—

‘‘(A) the strengthening of community capabilities for

planning and coordinating the use of a broad range of

Federal, State, local, and other assistance (including private resources) 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 selfsufficiency;

‘‘(C) the greater use of innovative and effective community-based approaches to attacking the causes and effects

of poverty and of community breakdown;

‘‘(D) the maximum participation of residents of the

low-income communities and members of the groups served

by programs assisted through the block grants made under

this subtitle to empower such residents and members to

respond to the unique problems and needs within their

communities; and
S. 2206—28

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

directed to the elimination of poverty so as to secure a

more active role in the provision of services for—

‘‘(i) private, religious, charitable, and neighborhood-based organizations; and

‘‘(ii) individual citizens, and business, labor, and

professional groups, who are able to influence the quantity and quality of opportunities and services for the

poor.

‘‘SEC. 673. DEFINITIONS.

‘‘In this subtitle:

‘‘(1) ELIGIBLE ENTITY; FAMILY LITERACY SERVICES.—

‘‘(A) ELIGIBLE ENTITY.—The term ‘eligible entity’ means

an entity—

‘‘(i) that is an eligible entity described in section

673(1) (as in effect on the day before the date of enactment of the Coats Human Services Reauthorization

Act of 1998) as of the day before 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

‘‘(ii) that has a tripartite board or other mechanism

described in subsection (a) or (b), as appropriate, of

section 676B.

‘‘(B) FAMILY LITERACY SERVICES.—The term ‘family literacy services’ has the meaning given the term in section

637 of the Head Start Act (42 U.S.C. 9832).

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

official poverty line defined by the Office of Management and

Budget based on the most recent data available from the

Bureau of the Census. The Secretary shall revise annually

(or at any shorter interval the Secretary determines to be

feasible and desirable) the poverty line, 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 religious 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,

and the Commonwealth of the Northern Mariana Islands.
S. 2206—29

‘‘SEC. 674. AUTHORIZATION OF APPROPRIATIONS.

‘‘(a) IN GENERAL.—There are authorized to be appropriated

such sums as may be necessary for each of fiscal years 1999 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) 11⁄2 percent for activities authorized in sections 678A

through 678F, of which—

‘‘(A) not less than 1⁄2 of the amount reserved by the

Secretary under this paragraph shall be distributed directly

to eligible entities, organizations, or associations described

in section 678A(c)(2) for the purpose of carrying out activities described in section 678A(c); and

‘‘(B) 1⁄2 of the remainder of the amount reserved by

the Secretary under this paragraph shall be used by the

Secretary to carry out evaluation and to assist States in

carrying out corrective action activities and monitoring (to

correct programmatic deficiencies of eligible entities), as

described in sections 678B(c) and 678A; and

‘‘(3) 9 percent for carrying out section 680 (relating to

discretionary activities) and section 678E(b)(2).

‘‘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, and the Commonwealth of the Northern Mariana

Islands.

‘‘(b) APPLICATION.—Each jurisdiction to which subsection (a)

applies may receive a grant under this section 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 section, that is prepared in accordance with, and contains

the information described in, 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 (subject to section 677) 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—

‘‘(1) that no State shall receive less than 1⁄4 of 1 percent

of the amount appropriated under section 674(a) for such fiscal

year; and
S. 2206—30

‘‘(2) as provided in subsection (b).

‘‘(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 a

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 FISCAL YEAR 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) (as in

effect on September 30, 1989) to such State for fiscal year

1990.

‘‘(3) MAXIMUM ALLOTMENTS.—The amount allotted under

paragraph (1) to a State for a fiscal year 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

preceding fiscal year.

‘‘(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.—In this section, the term ‘State’ does not

include Guam, American Samoa, the United States Virgin Islands,

and the Commonwealth of the Northern Mariana Islands.

‘‘SEC. 675C. USES OF FUNDS.

‘‘(a) GRANTS TO ELIGIBLE ENTITIES AND OTHER ORGANIZA- TIONS.—‘‘(1) IN GENERAL.—Not less than 90 percent of the funds

made available to a State under section 675A or 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, subject

to 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.
S. 2206—31

‘‘(b) STATEWIDE ACTIVITIES.—

‘‘(1) USE OF REMAINDER.—If a State uses less than 100

percent of the grant or allotment received under section 675A

or 675B to make grants under subsection (a), the State shall

use the remainder of the grant or allotment under section

675A or 675B (subject to paragraph (2)) for activities that

may include—

‘‘(A) providing training and technical assistance to

those entities in need of such training and assistance;

‘‘(B) coordinating State-operated programs and services, and at the option of the State, locally-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;

‘‘(G) supporting State charity tax credits as described

in subsection (c); and

‘‘(H) 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 grant received

under section 675A or State allotment received under section

675B for administrative expenses, including monitoring activities. Funds to be spent for such expenses shall be taken from

the portion of the grant under section 675A or State allotment

that remains after the State makes grants to eligible entities

under subsection (a). The cost of activities conducted under

paragraph (1)(A) shall not be considered to be administrative

expenses. The startup cost and cost of administrative activities

conducted under subsection (c) shall be considered to be

administrative expenses.

‘‘(c) CHARITY TAX CREDIT.—

‘‘(1) IN GENERAL.—Subject to paragraph (2), if there is

in effect under State law a charity tax credit, the State may

use for any purpose the amount of the allotment that is available for expenditure under subsection (b).

‘‘(2) LIMIT.—The aggregate amount a State may use under

paragraph (1) during a fiscal year shall not exceed 100 percent

of the revenue loss of the State during the fiscal year that

is attributable to the charity tax credit, as determined by

the Secretary of the Treasury without regard to any such

revenue loss occurring before January 1, 1999.

‘‘(3) DEFINITIONS AND RULES.—In this subsection:
S. 2206—32

‘‘(A) CHARITY TAX CREDIT.—The term ‘charity tax credit’

means a nonrefundable credit against State income tax

(or, in the case of a State that does not impose an income

tax, a comparable benefit) that is allowable for contributions, in cash or in kind, to qualified charities.

‘‘(B) QUALIFIED CHARITY.—

‘‘(i) IN GENERAL.—The term ‘qualified charity’

means any organization—

‘‘(I) that is—

‘‘(aa) described in section 501(c)(3) of the

Internal Revenue Code of 1986 and exempt

from tax under section 501(a) of such Code;

‘‘(bb) an eligible entity; or

‘‘(cc) a public housing agency as defined

in section 3(b)(6) of the United States Housing

Act of 1937 (42 U.S.C. 1437a(b)(6));

‘‘(II) that is certified by the appropriate State

authority as meeting the requirements of clauses

(iii) and (iv); and

‘‘(III) if such organization is otherwise required

to file a return under section 6033 of such Code,

that elects to treat the information required to

be furnished by clause (v) as being specified in

section 6033(b) of such Code.

‘‘(ii) CERTAIN CONTRIBUTIONS TO COLLECTION

ORGANIZATIONS TREATED AS CONTRIBUTIONS TO QUALIFIED CHARITY.—

‘‘(I) IN GENERAL.—A contribution to a collection

organization shall be treated as a contribution to

a qualified charity if the donor designates in writing that the contribution is for the qualified charity.

‘‘(II) COLLECTION ORGANIZATION.—The term

‘collection organization’ means an organization

described in section 501(c)(3) of such Code and

exempt from tax under section 501(a) of such

Code—

‘‘(aa) that solicits and collects gifts and

grants that, by agreement, are distributed to

qualified charities;

‘‘(bb) that distributes to qualified charities

at least 90 percent of the gifts and grants

the organization receives that are designated

for such qualified charities; and

‘‘(cc) that meets the requirements of clause

(vi).

‘‘(iii) CHARITY MUST PRIMARILY ASSIST POOR

INDIVIDUALS.—

‘‘(I) IN GENERAL.—An organization meets the

requirements of this clause only if the appropriate

State authority reasonably expects that the

predominant activity of such organization will be

the provision of direct services within the United

States to individuals and families whose annual

incomes generally do not exceed 185 percent of

the poverty line in order to prevent or alleviate

poverty among such individuals and families.
S. 2206—33

‘‘(II) NO RECORDKEEPING IN CERTAIN CASES.—

An organization shall not be required to establish

or maintain records with respect to the incomes

of individuals and families for purposes of subclause (I) if such individuals or families are members of groups that are generally recognized as

including substantially only individuals and families described in subclause (I).

‘‘(III) FOOD AID AND HOMELESS SHELTERS.—

Except as otherwise provided by the appropriate

State authority, for purposes of subclause (I), services to individuals in the form of—

‘‘(aa) donations of food or meals; or

‘‘(bb) temporary shelter to homeless

individuals;

shall be treated as provided to individuals

described in subclause (I) if the location and provision of such services are such that the service

provider may reasonably conclude that the beneficiaries of such services are predominantly

individuals described in subclause (I).

‘‘(iv) MINIMUM EXPENSE REQUIREMENT.—

‘‘(I) IN GENERAL.—An organization meets the

requirements of this clause only if the appropriate

State authority reasonably expects that the annual

poverty program expenses of such organization will

not be less than 75 percent of the annual aggregate

expenses of such organization.

‘‘(II) POVERTY PROGRAM EXPENSE.—For purposes of subclause (I)—

‘‘(aa) IN GENERAL.—The term ‘poverty program expense’ means any expense in providing

direct services referred to in clause (iii).

‘‘(bb) EXCEPTIONS.—Such term shall not

include any management or general expense,

any expense for the purpose of influencing

legislation (as defined in section 4911(d) of

the Internal Revenue Code of 1986), any

expense for the purpose of fundraising, any

expense for a legal service provided on behalf

of any individual referred to in clause (iii),

any expense for providing tuition assistance

relating to compulsory school attendance, and

any expense that consists of a payment to

an affiliate of the organization.

‘‘(v) REPORTING REQUIREMENT.—The information

required to be furnished under this clause about an

organization is—

‘‘(I) the percentages determined by dividing

the following categories of the organization’s

expenses for the year by the total expenses of

the organization for the year: expenses for direct

services, management expenses, general expenses,

fundraising expenses, and payments to affiliates;

and

‘‘(II) the category or categories (including food,

shelter, education, substance abuse prevention or
S. 2206—34

treatment, job training, or other) of services that

constitute predominant activities of the organization.

‘‘(vi) ADDITIONAL REQUIREMENTS FOR COLLECTION

ORGANIZATIONS.—The requirements of this clause are

met if the organization—

‘‘(I) maintains separate accounting for revenues and expenses; and

‘‘(II) makes available to the public information

on the administrative and fundraising costs of the

organization, and information as to the organizations receiving funds from the organization and

the amount of such funds.

‘‘(vii) SPECIAL RULE FOR STATES REQUIRING TAX

UNIFORMITY.—In the case of a State—

‘‘(I) that has a constitutional requirement of

tax uniformity; and

‘‘(II) that, as of December 31, 1997, imposed

a tax on personal income with—

‘‘(aa) a single flat rate applicable to all

earned and unearned income (except insofar

as any amount is not taxed pursuant to tax

forgiveness provisions); and

‘‘(bb) no generally available exemptions or

deductions to individuals;

the requirement of paragraph (2) shall be treated as

met if the amount of the credit described in paragraph

(2) is limited to a uniform percentage (but not greater

than 25 percent) of State personal income tax liability

(determined without regard to credits).

‘‘(4) LIMITATION ON USE OF FUNDS FOR STARTUP AND

ADMINISTRATIVE ACTIVITIES.—Except to the extent provided in

subsection (b)(2), no part of the aggregate amount a State

uses under paragraph (1) may be used to pay for the cost

of the startup and administrative activities conducted under

this subsection.

‘‘(5) PROHIBITION ON USE OF FUNDS FOR LEGAL SERVICES

OR TUITION ASSISTANCE.—No part of the aggregate amount

a State uses under paragraph (1) may be used to provide

legal services or to provide tuition assistance related to compulsory education requirements (not including tuition assistance

for tutoring, camps, skills development, or other supplemental

services or training).

‘‘(6) PROHIBITION ON SUPPLANTING FUNDS.—No part of the

aggregate amount a State uses under paragraph (1) may be

used to supplant non-Federal funds that would be available,

in the absence of Federal funds, to offset a revenue loss of

the State attributable to a charity tax credit.

‘‘SEC. 676. APPLICATION AND PLAN.

‘‘(a) DESIGNATION OF LEAD AGENCY.—

‘‘(1) DESIGNATION.—The chief executive officer of a State

desiring to receive a grant or allotment under section 675A

or 675B 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
S. 2206—35

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 one

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 grant

or allotment under section 675A or 675B for the period

covered by the State plan; and

‘‘(C) conduct reviews of eligible entities under section

678B.

‘‘(3) LEGISLATIVE HEARING.—In order to be eligible to

receive a grant or allotment under section 675A or 675B, the

State shall hold at least one 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 a grant or allotment under section

675A or 675B, 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

grant or allotment will be used—

‘‘(A) to support activities that are designed to assist

low-income families and individuals, including families and

individuals receiving assistance under part A of title IV

of the Social Security Act (42 U.S.C. 601 et seq.), 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—

‘‘(i) to remove obstacles and solve problems that

block the achievement of self-sufficiency (including selfsufficiency for families and individuals who are

attempting to transition off a State program carried

out under part A of title IV of the Social Security

Act);

‘‘(ii) to secure and retain meaningful employment;

‘‘(iii) to attain an adequate education, with particular attention toward improving literacy skills of the

low-income families in the communities involved, which

may include carrying out family literacy initiatives;

‘‘(iv) to make better use of available income;

‘‘(v) to obtain and maintain adequate housing and

a suitable living environment;

‘‘(vi) to obtain emergency assistance through loans,

grants, or other means to meet immediate and urgent

family and individual needs; and

‘‘(vii) to achieve greater participation in the affairs

of the communities involved, including the development

of public and private grassroots partnerships with local
S. 2206—36

law enforcement agencies, local housing authorities,

private foundations, and other public and private partners to—

‘‘(I) document best practices based on successful grassroots intervention in urban areas, to

develop methodologies for widespread replication;

and

‘‘(II) strengthen and improve relationships

with local law enforcement agencies, which may

include participation in activities such as neighborhood or community policing efforts;

‘‘(B) to address the needs of youth in low-income

communities through youth development programs that

support the primary role of the family, give priority to

the prevention of youth problems and crime, and promote

increased community coordination and collaboration in

meeting the needs of youth, and support development and

expansion of innovative community-based youth development programs that have demonstrated success in preventing or reducing youth crime, such as—

‘‘(i) programs for the establishment of violencefree zones that would involve youth development and

intervention models (such as models involving youth

mediation, youth mentoring, life skills training, job

creation, and entrepreneurship programs); and

‘‘(ii) after-school child care programs; and

‘‘(C) to make more effective use of, and to coordinate

with, 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 grant

or 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) information provided by eligible entities in the State,

containing—

‘‘(A) a description of the service delivery system, for

services provided or coordinated with funds made available

through grants made under section 675C(a), 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

grants made under section 675C(a) will be coordinated

with other public and private resources; and

‘‘(D) a description of how the local entity will use

the funds to support innovative community and neighborhood-based initiatives related to the purposes of this subtitle, which may include fatherhood initiatives and other

initiatives with the goal of strengthening families and

encouraging effective parenting;
S. 2206—37

‘‘(4) an assurance that eligible entities in 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 and the eligible entities

in 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

and to avoid duplication of such services, and a description

of how the State and the eligible entities will coordinate the

provision of employment and training activities, as defined

in section 101 of such Act, in the State and in communities

with entities providing activities through statewide and local

workforce investment systems under the Workforce Investment

Act of 1998;

‘‘(6) an assurance that the State will ensure coordination

between antipoverty programs in each community in the State,

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 in the State

that received funding in the previous fiscal year through a

community services block grant made 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 and eligible entities in

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 religious organizations, charitable groups, and community organizations;

‘‘(10) an assurance that the State will require each eligible

entity in the State to establish procedures under which a lowincome individual, community organization, or religious

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 in the State, as a condition to receipt of funding

by the entity through a community services block grant made

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 2001, participate
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in the Results Oriented Management and Accountability System, another performance measure system for which the Secretary facilitated development pursuant to 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) FUNDING TERMINATION OR REDUCTIONS.—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

through a community services block grant 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 or a State plan, or to meet

a State requirement, as described in section 678C(a); and

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

of an eligible entity to comply with the terms of an agreement

or a State plan, or to meet a State requirement, as described

in section 678C(a).

‘‘(d) PROCEDURES AND INFORMATION.—The Secretary may prescribe procedures 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.

‘‘(f) TRANSITION.—For fiscal year 2000, to be eligible to receive

a grant or allotment under section 675A or 675B, a State shall

prepare and submit to the Secretary an application and State

plan in accordance with the provisions of this subtitle (as in effect

on the day before the date of enactment of the Coats Human

Services Reauthorization Act of 1998), rather than the provisions

of subsections (a) through (c) relating to applications and plans.

‘‘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—

‘‘(A) a private nonprofit organization (which may

include an eligible entity) that is geographically located
S. 2206—39

in the unserved area, that is capable of providing a broad

range of services designed to eliminate poverty and foster

self-sufficiency, and that meets the requirements of this

subtitle; and

‘‘(B) a private nonprofit eligible entity that is geographically located in an area contiguous to or within

reasonable proximity of the unserved area and that is

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 three 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)(B),

by members that reside in the neighborhood to be 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 eligible entities that are

providing related 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, planning,

implementation, and evaluation of the program to serve lowincome communities.

‘‘(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 such 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)(i) not fewer than 1⁄3 of the members are persons

chosen in accordance with democratic selection procedures
S. 2206—40

adequate to assure that these members are representative

of low-income individuals and families in the neighborhood

served; and

‘‘(ii) each representative of low-income individuals and

families selected to represent a specific neighborhood

within a community under clause (i) resides in the

neighborhood represented by the member; and

‘‘(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.

‘‘(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 development,

planning, implementation, and evaluation 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 development, planning, implementation, 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

through a community services block grant made 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.
S. 2206—41

‘‘(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, AND COOPERATIVE AGREEMENTS.— The Secretary shall carry out functions of this subtitle through

grants, contracts, or cooperative agreements.

‘‘SEC. 678A. TRAINING, TECHNICAL ASSISTANCE, AND OTHER ACTIVITIES.

‘‘(a) ACTIVITIES.— ‘‘(1) IN GENERAL.—The Secretary shall use amounts

reserved in section 674(b)(2)—

‘‘(A) for training, technical assistance, planning,

evaluation, and performance measurement, to assist States

in carrying out corrective action activities and monitoring

(to correct programmatic deficiencies of eligible entities),

and for reporting and data collection activities, related

to programs carried out under this subtitle; and

‘‘(B) to distribute amounts in accordance with subsection (c).

‘‘(2) GRANTS, CONTRACTS, AND COOPERATIVE AGREEMENTS.— The activities described in paragraph (1)(A) may be carried

out by the Secretary through grants, contracts, or cooperative

agreements with appropriate entities.

‘‘(b) TERMS AND TECHNICAL ASSISTANCE 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 quality of

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 networks of eligible entities.

‘‘(c) DISTRIBUTION REQUIREMENT.—

‘‘(1) IN GENERAL.—The amounts reserved under section

674(b)(2)(A) for activities to be carried out under this subsection

shall be distributed directly to eligible entities, organizations,

or associations described in paragraph (2) for the purpose of

improving program quality (including quality of financial

management practices), management information and reporting
S. 2206—42

systems, and measurement of program results, and for the

purpose of ensuring responsiveness to identified local needs.

‘‘(2) ELIGIBLE ENTITIES, ORGANIZATIONS, OR ASSOCIATIONS.— Eligible entities, organizations, or associations described in this

paragraph shall be eligible entities, or statewide or local

organizations or associations, with demonstrated expertise in

providing training to individuals and organizations on methods

of effectively addressing the needs of low-income families and

communities.

‘‘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 (other than assistance provided under this subtitle) 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.

‘‘(c) EVALUATIONS BY THE SECRETARY.—The Secretary shall conduct in several States in each fiscal year evaluations (including

investigations) of the use of funds received by the States under

this subtitle in order to evaluate compliance with the provisions

of this subtitle, and especially with respect to compliance with

section 676(b). The Secretary shall submit, to each State evaluated,

a report containing the results of such evaluations, and recommendations of improvements designed to enhance the benefit

and impact of the activities carried out with such funds for people

in need. On receiving the report, the State shall submit to the

Secretary a plan of action in response to the recommendations

contained in the report. The results of the evaluations shall be

submitted annually 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 as part of the report submitted by the Secretary

in accordance with section 678E(b)(2).

‘‘SEC. 678C. CORRECTIVE ACTION; TERMINATION AND REDUCTION OF

FUNDING.

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

of a final decision in a review pursuant to section 678B, that

an eligible entity 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—
S. 2206—43

‘‘(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 90 days

after the Secretary receives from the State all necessary documentation relating to the determination to terminate the designation

or reduce the funding. If the review is not completed within 90

days, the determination of the State shall become final at the

end of the 90th day.

‘‘(c) DIRECT ASSISTANCE.—Whenever a State violates the assurances contained in section 676(b)(8) and terminates or reduces

the funding of an eligible entity prior to the completion of the

State hearing described in that section and the Secretary’s review

as required in subsection (b), the Secretary is authorized to provide

financial assistance under this subtitle to the eligible entity affected

until the violation is corrected. In such a case, the grant or allotment

for the State under section 675A or 675B for the earliest appropriate

fiscal year shall be reduced by an amount equal to the funds

provided under this subsection to such eligible entity.

‘‘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 the funds under this subtitle;
S. 2206—44

‘‘(C) subject to paragraph (2), prepare, at least every

year, 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.—

‘‘(A) IN GENERAL.—Subject to subparagraph (B), 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.

‘‘(B) SINGLE AUDIT REQUIREMENTS.—Audits shall be

conducted under this paragraph in the manner and to

the extent provided in chapter 75 of title 31, United States

Code (commonly known as the ‘Single Audit Act Amendments of 1996’).

‘‘(C) SUBMISSION OF COPIES.—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 grant or allotment under section 675A or 675B

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 one 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.
S. 2206—45

‘‘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 for which the Secretary facilitated development pursuant to subsection (b),

or an alternative system that the Secretary is satisfied

meets the requirements of subsection (b).

‘‘(B) LOCAL AGENCIES.—The State may elect to have

local agencies that 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. Prior

to the participation of the State in the performance measurement system, the State shall include in the report any information collected by the State relating to such performance. 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 facilitate the development of one 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 their 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;
S. 2206—46

‘‘(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

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).

‘‘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
S. 2206—47

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 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, 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.), 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.), 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
S. 2206—48

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. 678G. DRUG AND CHILD SUPPORT SERVICES AND REFERRALS.

‘‘(a) DRUG TESTING AND REHABILITATION.—

‘‘(1) IN GENERAL.—Nothing in this subtitle shall be construed to prohibit a State from testing participants in programs,

activities, or services carried out or provided under this subtitle

for controlled substances. A State that conducts such testing

shall inform the participants who test positive for any of such

substances about the availability of treatment or rehabilitation

services and refer such participants for appropriate treatment

or rehabilitation services.

‘‘(2) ADMINISTRATIVE EXPENSES.—Any funds provided under

this subtitle expended for such testing shall be considered

to be expended for administrative expenses and shall be subject

to the limitation specified in section 675C(b)(2).

‘‘(3) DEFINITION.—In this subsection, the term ‘controlled

substance’ has the meaning given the term in section 102

of the Controlled Substances Act (21 U.S.C. 802).

‘‘(b) CHILD SUPPORT SERVICES AND REFERRALS.—During each

fiscal year for which an eligible entity receives a grant under

section 675C, such entity shall—

‘‘(1) inform custodial parents in single-parent families that

participate in programs, activities, or services carried out or

provided under this subtitle about the availability of child

support services; and

‘‘(2) refer eligible parents to the child support offices of

State and local governments.

‘‘SEC. 679. OPERATIONAL RULE.

‘‘(a) RELIGIOUS ORGANIZATIONS INCLUDED AS NONGOVERN- MENTAL 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, religious 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 religious character.

‘‘(b) RELIGIOUS CHARACTER AND INDEPENDENCE.—

‘‘(1) IN GENERAL.—A religious organization that provides

assistance under a program described in subsection (a) shall

retain its religious character and control over the definition,

development, practice, and expression of its religious beliefs.

‘‘(2) ADDITIONAL SAFEGUARDS.—Neither the Federal

Government nor a State or local government shall require

a religious organization—

‘‘(A) to alter its form of internal governance, except

(for purposes of administration of the community services

block grant program) as provided in section 676B; or
S. 2206—49

‘‘(B) to remove religious art, icons, scripture, or other

symbols;

in order to be eligible to provide assistance under a program

described in subsection (a).

‘‘(3) EMPLOYMENT PRACTICES.—A religious organization’s

exemption provided under section 702 of the Civil Rights Act

of 1964 (42 U.S.C. 2000e–1) regarding employment practices

shall not be affected by its participation in, or receipt of funds

from, programs described in subsection (a).

‘‘(c) LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES.—

No funds provided directly to a religious 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 religious 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.

‘‘(e) TREATMENT OF ELIGIBLE ENTITIES AND OTHER INTERMEDIATE ORGANIZATIONS.—If an eligible entity or other organization

(referred to in this subsection as an ‘intermediate organization’),

acting under a contract, or grant or other agreement, with the

Federal Government or a State or local government, is given the

authority under the contract or agreement to select nongovernmental organizations to provide assistance under the programs

described in subsection (a), the intermediate organization shall

have the same duties under this section as the government.

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

‘‘(a) GRANTS, CONTRACTS, ARRANGEMENTS, LOANS, AND GUARAN- TEES.— ‘‘(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, nonprofit organizations that

are community development corporations to provide technical and financial assistance for economic development

activities designed to address the economic needs of lowincome 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.
S. 2206—50

‘‘(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 providing—

‘‘(A) grants to private, nonprofit corporations to enable

the corporations to provide assistance concerning home

repair to rural low-income families and concerning planning

and developing low-income rural rental housing units; and

‘‘(B) grants to multistate, regional, private, nonprofit

organizations to enable the organizations to provide training and technical assistance to small, rural communities

concerning 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 providing

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 providing assistance for projects that are designed to serve lowincome 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.
S. 2206—51

‘‘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 involved 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) NOT TO EXCEED $6,000,000 IN APPROPRIATIONS.—Of the

amount appropriated for a fiscal year to carry out this section

(but not to exceed $6,000,000), the Secretary shall distribute

funds for grants under subsection (a) as follows:

‘‘(A) ALLOTMENTS.—From a portion equal to 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 such portion as the low-income and

unemployed population of such State bears to the lowincome and unemployed population of all the States.

‘‘(B) COMPETITIVE GRANTS.—From a portion equal to

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 allot for grants under subsection (a)

to eligible agencies for statewide programs in each State

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.—
S. 2206—52

‘‘(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, and the Commonwealth of the Northern

Mariana Islands.

‘‘(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 such sums as may

be necessary for each of fiscal years 1999 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;
S. 2206—53

‘‘(3) at least one 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 to apply 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, for the program funded through the

grant;

‘‘(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) APPLICATION 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
S. 2206—54

under this section are used in accordance with the objectives of

this subtitle.

‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There are 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. Except as otherwise provided, 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) OLDER AMERICANS ACT OF 1965.—Section 306(a)(6)(E)(ii)

of the Older Americans Act of 1965 (42 U.S.C. 3026(a)(6)(E)(ii))

is amended by striking ‘‘section 675(c)(3) of the Community Services

Block Grant Act (42 U.S.C. 9904(c)(3))’’ and inserting ‘‘section 676B

of the Community Services Block Grant Act’’.

(b) COMMUNITY ECONOMIC DEVELOPMENT ACT OF 1981.—

(1) SOURCE OF FUNDS.—Section 614 of the Community Economic Development Act of 1981 (42 U.S.C. 9803) is repealed.

(2) ADVISORY COMMUNITY INVESTMENT BOARD.—Section

615(a)(2) of the Community Economic Development Act of 1981

(42 U.S.C. 9804(a)(2)) is amended by striking ‘‘through the

Office’’ and all that follows and inserting ‘‘through an appropriate office.’’.

(c) HUMAN SERVICES REAUTHORIZATION ACT OF 1986.—Section

407 of the Human Services Reauthorization Act of 1986 (42 U.S.C.

9812a) is amended—

(1) in subsection (a)—

(A) by inserting after ‘‘funds available’’ the following:

‘‘(before the date of enactment of the Coats Human Services

Reauthorization Act of 1998)’’; and

(B) by inserting after ‘‘9910(a))’’ the following: ‘‘(as

in effect before such date)’’; and

(2) in subsection (b)(2)—

(A) by inserting after ‘‘funds available’’ the following:

‘‘(before the date of enactment of the Coats Human Services

Reauthorization Act of 1998)’’; and

(B) by inserting after ‘‘9910(a))’’ the following: ‘‘(as

in effect before such date)’’.

(d) ANTI-DRUG ABUSE ACT OF 1988.—Section 3521(c)(2) of the

Anti-Drug Abuse Act of 1988 (42 U.S.C. 11841(c)(2)) is amended

by striking ‘‘, such as activities authorized by section 681(a)(2)(F)

of the Community Services Block Grant Act (42 U.S.C. section

9910(a)(2)(F)),’’.
S. 2206—55

TITLE III—LOW-INCOME HOME ENERGY

ASSISTANCE

SEC. 301. SHORT TITLE.

This title may be cited as the ‘‘Low-Income Home Energy Assistance Amendments of 1998’’.

SEC. 302. 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 inserting ‘‘, such sums as may be necessary for each of fiscal

years 2000 and 2001, and $2,000,000,000 for each of fiscal years

2002 through 2004’’ after ‘‘1995 through 1999’’.

(b) PROGRAM YEAR.—Section 2602(c) of the Low-Income Home

Energy Assistance Act of 1981 (42 U.S.C. 8621(c)) is amended

to read as follows:

‘‘(c) Amounts appropriated under this section for 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 the Low-Income Home Energy

Assistance Act of 1981 (42 U.S.C. 8621(d)) is amended—

(1) by striking ‘‘(d)’’ and inserting ‘‘(d)(1)’’;

(2) by striking ‘‘are authorized’’ and inserting ‘‘is authorized’’;

(3) 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

(4) by adding at the end the following:

‘‘(2) For any of fiscal years 1999 through 2004 for which the

amount appropriated under subsection (b) is not less than

$1,400,000,000, there is authorized to be appropriated $50,000,000

to carry out section 2607A.’’.

(d) TECHNICAL AMENDMENTS.—Section 2602(e) of the LowIncome Home Energy Assistance Act of 1981 (42 U.S.C. 8621(e))

is amended—

(1) by striking ‘‘are authorized’’ and inserting ‘‘is authorized’’; and

(2) by striking ‘‘subsection (g)’’ and inserting ‘‘subsection

(e) of such section’’.

SEC. 303. 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. 304. NATURAL DISASTERS AND OTHER EMERGENCIES.

(a) DEFINITIONS.—Section 2603 of the Low-Income Home

Energy Assistance Act of 1981 (42 U.S.C. 8622) 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) The term ‘natural disaster’ means a weather event

(relating to cold or hot weather), flood, earthquake, tornado,
S. 2206—56

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) 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 determine to be

appropriate.’’.

(b) CONSIDERATIONS.—Section 2604(g) of the Low-Income Home

Energy Assistance Act of 1981 (42 U.S.C. 8623(g)) is amended

by striking the last two 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 natural disaster or other emergency involved,

the availability to the State of other resources under the program

carried out under this title or any other program, 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. 305. 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 ‘‘and the Commonwealth of the Northern Mariana

Islands.’’;

(2) in subsection (c)(3)(B)(ii), by striking ‘‘application’’ and

inserting ‘‘applications’’;

(3) by striking subsection (f);
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(4) in the first sentence of subsection (g), by striking ‘‘(a)

through (f)’’ and inserting ‘‘(a) through (d)’’; and

(5) by redesignating subsection (g) as subsection (e).

SEC. 306. 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.’’;

(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’’; and

(3) in paragraphs (1) and (2)(A) of subsection (k) by inserting ‘‘, particularly those low-income households with the lowest

incomes that pay a high proportion of household income for

home energy’’ before the period.

SEC. 307. 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. 308. RESIDENTIAL ENERGY ASSISTANCE CHALLENGE OPTION.

(a) EVALUATION.—The Comptroller General of the United States

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 of the United States 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 the LowIncome Home Energy Assistance Act of 1981 (42 U.S.C. 8626b)

is amended—
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(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. 309. 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), by striking

‘‘$250,000’’ and inserting ‘‘$300,000’’;

(2) by striking ‘‘Secretary—’’ and all that follows through

‘‘(1) to make’’ and inserting the following: ‘‘Secretary—

‘‘(1) to—

‘‘(A) make’’;

(3) by striking ‘‘organizations; or’’ and all that follows

through ‘‘(2) to enter’’ and inserting the following: ‘‘organizations; or

‘‘(B) enter’’;

(4) by striking the following:

‘‘to provide’’ and inserting the following:

‘‘to provide’’;

(5) by striking ‘‘title.’’ and inserting the following: ‘‘title;

or

‘‘(2) to conduct onsite compliance reviews of programs supported under this title.’’; and

(6) in paragraph (1)(B) (as redesignated in paragraphs (2)

and (3))—

(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 the Low-Income Home Energy Assistance Act of 1981

(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,
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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 selfsufficiency; and

(3) the extent to which an asset-based policy stabilizes

and improves families and the community in which the families

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 in a demonstration project 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-bycase 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,
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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 contains the following requirements:

(i) No contribution will be accepted unless the

contribution 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 that 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 of the account.

(6) PROJECT YEAR.—The term ‘‘project year’’ means, with

respect to a demonstration project, any of the 5 consecutive
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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 one or more of the following, as provided by a 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 101 or 102 of the

Higher Education Act of 1965.

(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 firsttime 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 main residence, the qualified

acquisition costs of which do not exceed 100 percent
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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 involved (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 that is established in a federally

insured financial institution (or in a State insured financial

institution if no federally insured financial institution is

available) 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
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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

an 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, acting through the Director of Community 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 one or more qualified expenses.

(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—
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(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 from

private sector sources; and

(3) targets such individuals residing within one 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 considers to be appropriate, taking into

account the assessments required by subsections (c) and (d). The

Secretary shall ensure, to the maximum extent practicable, 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 carry out any responsibility of the Secretary

under this section or section 412 if—

(1) such entity demonstrates the ability to carry out such

responsibility; and

(2) the Secretary can demonstrate that such responsibility

would not be carried out by the Secretary at a lower cost.

(g) GRANDFATHERING OF EXISTING STATEWIDE PROGRAMS.—Any

statewide individual asset-building program that is carried out in

a manner consistent with the purposes of this title, that is established under State law as of the date of enactment of this Act,

and that as of such date is operating with an annual State appropriation of not less than $1,000,000 in non-Federal funds, shall

be deemed to meet the eligibility requirements of this subtitle,

and the entity carrying out the program shall be deemed to be

a qualified entity. The Secretary shall consider funding the statewide program as a demonstration project described in this subtitle.

In considering the statewide program for funding, the Secretary

shall review an application submitted by the entity carrying out

such statewide program under this section, notwithstanding the

preference requirements listed in subsection (d). Any program

requirements under sections 407 through 411 that are inconsistent

with State statutory requirements in effect on the date of enactment

of this Act, governing such statewide program, shall not apply

to the program.

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 5 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
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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 from 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 that 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 from

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 skills) 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
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not less than 2 percent of the amounts shall be used by the

qualified entity for the purposes described in paragraph (1)(D).

If two 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 the 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 from 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 one

motor vehicle owned by a member of the household.

(b) INDIVIDUALS UNABLE TO COMPLETE THE PROJECT.—The Secretary shall establish such regulations as are necessary 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, including regulations prohibiting future eligibility

to participate in any other demonstration project conducted under

this title.
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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 determines 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 one 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 one 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 one

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 a withdrawal

from such an account 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 this section to the Reserve Fund of the qualified entity,

and use the funds to benefit other individuals participating in

the demonstration project involved.
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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 and characteristics 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 configurations relating to 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 a demonstration project in accordance with the

entity’s approved application under section 405 or the requirements
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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, if modification

is necessary to incorporate the recommendations, the application as modified) 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,

if modification is necessary to incorporate the recommendations, the application as modified) 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 from the source under section

405(c)(4) bears to the amount provided from 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 the demonstration projects conducted under this title, individually and as

a group, including evaluating all qualified entities participating

in and sources providing funds for 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.
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(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 one 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 2 percent of the amount appropriated under section 416 for a fiscal

year, to carry out the objectives of this section.

SEC. 415. TREATMENT OF FUNDS.

Of the funds deposited in individual development accounts for

eligible individuals, only the funds deposited by the individuals

(including interest accruing on those funds) may be considered

to be the income, assets, or resources of the individuals, for purposes

of determining eligibility for, or the amount of assistance furnished

under, any Federal or federally assisted program based on need.
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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.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.