II

105TH CONGRESS

2D SESSION S. 2206

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

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

and make improvements to those Acts, to establish demonstration

projects that provide an opportunity for persons with limited means

to accumulate assets, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 23, 1998

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

A BILL

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

that provide an opportunity for persons with limited

means to accumulate assets, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Human Services Reau5 thorization Act of 1998’’.
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1 SEC. 2. TABLE OF CONTENTS.

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

Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I—HEAD START PROGRAMS

Sec. 101. Short title.

Sec. 102. References.

Sec. 103. Statement of purpose.

Sec. 104. Definitions.

Sec. 105. Financial assistance for Head Start programs.

Sec. 106. Authorization of appropriations.

Sec. 107. Allotment of funds.

Sec. 108. Designation of Head Start agencies.

Sec. 109. Quality standards.

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

Sec. 111. Head Start transition.

Sec. 112. Submission of plans to Governors.

Sec. 113. Participation in Head Start programs.

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

Sec. 115. Technical assistance and training.

Sec. 116. Staff qualifications and development.

Sec. 117. Research, demonstration, and evaluation.

TITLE II—COMMUNITY SERVICES BLOCK GRANT PROGRAM

Sec. 201. Reauthorization.

Sec. 202. Conforming amendments.

Sec. 203. Repealers.

TITLE III—LOW-INCOME HOME ENERGY ASSISTANCE

Sec. 301. Authorization.

Sec. 302. Definitions.

Sec. 303. Natural disasters and other emergencies.

Sec. 304. State allotments.

Sec. 305. Administration.

Sec. 306. Payments to States.

Sec. 307. Residential Energy Assistance Challenge option.

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

TITLE IV—ASSETS FOR INDEPENDENCE

Sec. 401. Short title.

Sec. 402. Findings.

Sec. 403. Purposes.

Sec. 404. Definitions.

Sec. 405. Applications.

Sec. 406. Demonstration authority; annual grants.

Sec. 407. Reserve fund.

Sec. 408. Eligibility for participation.

Sec. 409. Selection of individuals to participate.

Sec. 410. Deposits by qualified entities.

Sec. 411. Local control over demonstration projects.
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Sec. 412. Annual progress reports.

Sec. 413. Sanctions.

Sec. 414. Evaluations.

Sec. 415. Treatment of funds.

Sec. 416. Authorization of appropriations.

1 TITLE I—HEAD START

2 PROGRAMS

3 SEC. 101. SHORT TITLE.

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

6 SEC. 102. REFERENCES.

7 Except as otherwise expressly provided, wherever in

8 this title an amendment or repeal is expressed in terms

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

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

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

13 SEC. 103. STATEMENT OF PURPOSE.

14 The Head Start Act is amended by striking section

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

16 ‘‘SEC. 636. STATEMENT OF PURPOSE.

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

18 school readiness by enhancing the social and cognitive de19 velopment of low-income children through the provision,

20 to low-income children and their families, of health, edu21 cational, nutritional, social, and other services that are de22 termined to be necessary, based on family needs assess23 ments.’’.
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1 SEC. 104. DEFINITIONS.

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

3 (1) by redesignating paragraphs (3) through

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

5 (2) by inserting after paragraph (2) the follow6 ing:

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

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

9 section 602(3) of the Individuals with Disabil10 ities Education Act; and

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

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

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

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

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

16 services that—

17 ‘‘(A) are provided to participants who re18 ceive the services on a voluntary basis;

19 ‘‘(B) are of sufficient intensity, and of suf20 ficient duration, to make sustainable changes in

21 a family (such as eliminating or reducing de22 pendence on income-based public assistance);

23 and

24 ‘‘(C) integrate each of—

25 ‘‘(i) interactive literacy activities be26 tween parents and their children;
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1 ‘‘(ii) training for parents on being

2 partners with their children in learning;

3 ‘‘(iii) parent literacy training, includ4 ing training that contributes to economic

5 self-sufficiency; and

6 ‘‘(iv) appropriate instruction for chil7 dren of parents receiving the parent lit8 eracy training.’’;

9 (4) in paragraph (7) (as redesignated in para10 graph (1)), by adding at the end the following:

11 ‘‘Nothing in this paragraph shall be construed to re12 quire an agency to provide services to a child who

13 has not reached the age of compulsory school attend14 ance for more than the number of hours per day

15 permitted by State law (including regulation) for the

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

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

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

19 ‘‘(13) The term ‘‘migrant or seasonal Head

20 Start program’’ means—

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

22 farmworkers, a Head Start program that serves

23 families who are engaged in agricultural labor

24 and who have changed their residence from 1
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1 geographic location to another in the preceding

2 2-year period; and

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

4 farmworkers, a Head Start program that serves

5 families who are engaged primarily in seasonal

6 agricultural labor and who have not changed

7 their residence to another geographic location in

8 the preceding 2-year period.’’; and

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

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

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

12 scientific study that—

13 ‘‘(A) includes a rigorously defined sample

14 of subjects, that is sufficiently large and rep15 resentative to support the general conclusions of

16 the study;

17 ‘‘(B) relies on measurements that meet es18 tablished standards of reliability and validity;

19 ‘‘(C) is subjected to peer review before the

20 results of the study are published; and

21 ‘‘(D) discovers effective strategies for en22 hancing the development and skills of chil23 dren.’’.
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1 SEC. 105. FINANCIAL ASSISTANCE FOR HEAD START PRO2 GRAMS.

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

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

5 the’’; and

6 (2) by striking the semicolon and inserting

7 ‘‘and attain school readiness;’’.

8 SEC. 106. AUTHORIZATION OF APPROPRIATIONS.

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

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

11 1998’’ and inserting ‘‘1999 through 2003’’; and

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

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

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

15 to carry out activities authorized under section

16 642A, not more than $35,000,000 but not less than

17 was made available for such activities for fiscal year

18 1998;

19 ‘‘(2) not more than $5,000,000 for each of fis20 cal years 1999 through 2003 to carry out impact

21 studies under section 649(f); and

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

23 1999, and such sums as may be necessary for each

24 of fiscal years 2000 through 2003, to carry out

25 other research, demonstration, and evaluation activi-
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1 ties, including longitudinal studies, under section

2 649.’’.

3 SEC. 107. ALLOTMENT OF FUNDS.

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

5 9835(a)) is amended—

6 (1) in paragraph (2)—

7 (A) in subparagraph (A)—

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

9 and inserting ‘‘children with disabilities’’;

10 (ii) by striking ‘‘migrant Head Start

11 programs’’ each place it appears and in12 serting ‘‘migrant or seasonal Head Start

13 programs’’;

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

15 ‘‘1998’’; and

16 (iv) by adding at the end the follow17 ing: ‘‘In determining the need and demand

18 for migrant and seasonal Head Start pro19 grams, and services provided through such

20 programs, the Secretary shall consult with

21 appropriate entities, including providers of

22 services for seasonal and migrant Head

23 Start programs. The Secretary shall, after

24 taking into consideration the need and de25 mand for migrant and seasonal Head Start
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1 programs, and such services, ensure that

2 there is an adequate level of such services

3 for the children of eligible migrant farm4 workers before approving an increase in

5 the allocation provided for children of eligi6 ble seasonal farmworkers.’’;

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

8 ‘‘and’’ at the end;

9 (C) in subparagraph (D), by striking ‘‘re10 lated to the development and implementation of

11 quality improvement plans under section

12 641A(d)(2)’’ and inserting ‘‘carried out under

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

14 related to correcting deficiencies and conducting

15 proceedings to terminate the designation of

16 Head Start agencies; and’’;

17 (D) by inserting after subparagraph (D)

18 the following:

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

20 evaluation activities under section 649.’’; and

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

22 carrying out this subchapter, the Secretary

23 shall continue the administrative arrangement

24 responsible for meeting the needs of migrant or

25 seasonal farmworker and Indian children and
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1 shall assure that appropriate funding is pro2 vided to meet such needs.’’;

3 (2) in paragraph (3)—

4 (A) in subparagraph (B)—

5 (i) in clause (ii)—

6 (I) by striking ‘‘adequate quali7 fied staff’’ and inserting ‘‘adequate

8 numbers of qualified staff’’; and

9 (II) by inserting ‘‘and children

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

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

12 the period the following: ‘‘, and to encour13 age the staff to continually improve their

14 skills and expertise by informing the staff

15 of the availability of State and Federal in16 centive and loan forgiveness programs for

17 professional development and by providing

18 for preferences in the awarding of salary

19 increases, in excess of cost of living allow20 ances, to staff who obtain additional train21 ing or education related to their respon22 sibilities as employees of a Head Start pro23 gram or to advance their careers within

24 the Head Start program’’;
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1 (iii) in clause (vi), by striking the pe2 riod and inserting ‘‘, and are physically ac3 cessible to children with disabilities and

4 their parents.’’;

5 (iv) by redesignating clause (vii) as

6 clause (viii); and

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

8 following:

9 ‘‘(vii) Ensuring that such programs have quali10 fied staff that can promote language skills and lit11 eracy growth of children and that provide children

12 with a variety of skills that have been identified,

13 through research that is reliable and replicable, as

14 predictive of later reading achievement.’’;

15 (B) in subparagraph (C)—

16 (i) in clause (i)(I)—

17 (I) by striking ‘‘of staff’’ and in18 serting ‘‘of classroom teachers and

19 other staff’’; and

20 (II) by striking ‘‘such staff’’ and

21 inserting ‘‘qualified staff, including re22 cruitment and retention pursuant to

23 section 648A(a)’’;

24 (ii) by striking clause (ii) and insert25 ing the following:
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1 ‘‘(ii) To supplement amounts provided under

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

3 teachers and other staff on proven techniques that

4 promote—

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

6 ‘‘(II) the acquisition of the English lan7 guage for non-English background children and

8 families.’’;

9 (iii) in clause (v), by inserting ‘‘acces10 sibility or’’ before ‘‘availability’’;

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

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

13 (iii), respectively; and

14 (v) by inserting clause (iii) (as redes15 ignated in clause (iv) of this subparagraph)

16 after clause (ii); and

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

18 ‘‘migrant Head Start programs’’ and inserting

19 ‘‘migrant or seasonal Head Start programs’’;

20 (3) in paragraph (4)(A), by striking ‘‘1981’’

21 and inserting ‘‘1998’’;

22 (4) in paragraph (5)—

23 (A) in subparagraph (A), by striking ‘‘sub24 paragraph (B)’’ and inserting ‘‘subparagraphs

25 (B) and (D)’’;
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1 (B) in subparagraph (B), by inserting be2 fore the period the following ‘‘and encourage

3 Head Start agencies to collaborate with entities

4 involved in State and local planning processes

5 (including the State lead agency administering

6 the financial assistance received under the Child

7 Care and Development Block Grant Act of

8 1990 (42 U.S.C. 9858 et seq.) and the entities

9 providing resource and referral services in the

10 State) in order to better meet the needs of low11 income children and families’’;

12 (C) in subparagraph (C)—

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

14 appropriate regional office of the Adminis15 tration for Children and Families and’’ be16 fore ‘‘agencies’’;

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

18 at the end;

19 (iii) in clause (iv)—

20 (I) by striking ‘‘education, and

21 national service activities,’’ and insert22 ing ‘‘education, and community serv23 ice activities,’’;

24 (II) by striking ‘‘and activities’’

25 and inserting ‘‘activities’’; and
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1 (III) by striking the period and

2 inserting ‘‘, and services for homeless

3 children; and’’; and

4 (iv) by adding at the end the follow5 ing:

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

7 Start Association and local Head Start agencies in

8 unified planning regarding early care and education

9 services at both the State and local levels, including

10 collaborative efforts to plan for the provision of full11 working-day, full calendar year early care and edu12 cation services for children.’’;

13 (D) by redesignating subparagraph (D) as

14 subparagraph (F); and

15 (E) by inserting after subparagraph (C)

16 the following:

17 ‘‘(D) Following the award of collaboration grants de18 scribed in subparagraph (B), the Secretary shall provide,

19 from the reserved sums, supplemental funding for collabo20 ration grants—

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

22 State Head Start Associations) develop statewide,

23 regional, or local unified plans for early childhood

24 education and child care that include the participa25 tion of Head Start agencies; and
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1 ‘‘(ii) to States that engage in other innovative

2 collaborative initiatives, including plans for collabo3 rative training and career development initiatives for

4 child care, early childhood education, and Head

5 Start service managers, providers, and staff.

6 ‘‘(E)(i) The Secretary shall—

7 ‘‘(I) review on an ongoing basis evidence of bar8 riers to effective collaboration between Head Start

9 programs and other Federal child care and early

10 childhood education programs and resources;

11 ‘‘(II) develop initiatives, including providing ad12 ditional training and technical assistance and mak13 ing regulatory changes, in necessary cases, to elimi14 nate barriers to the collaboration; and

15 ‘‘(III) develop a mechanism to resolve adminis16 trative and programmatic conflicts between such

17 programs that would be a barrier to service provid18 ers, parents, or children related to the provision of

19 unified services and the consolidation of funding for

20 child care services.

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

22 under this subchapter and another provision of law provid23 ing for Federal child care or early childhood education,

24 the use of equipment and nonconsumable supplies pur25 chased with funds made available under this subchapter
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1 or such provision shall not be restricted to children en2 rolled or otherwise participating in the program carried

3 out under that subchapter or provision, during a period

4 in which the activity is predominantly funded under this

5 subchapter or such provision.’’; and

6 (5) in paragraph (6)—

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

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

9 follows and inserting the following: ‘‘7.5 percent

10 for fiscal year 1999, 8 percent for fiscal year

11 2000, 9 percent for fiscal year 2001, 10 percent

12 for fiscal year 2002, and 10 percent for fiscal

13 year 2003, of the amount appropriated pursu14 ant to section 639(a), except as provided in

15 subparagraph (B).

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

17 determines that the amount appropriated under section

18 639(a) is not sufficient to permit the Secretary to reserve

19 the portion described in subparagraph (A) without reduc20 ing the number of children served by Head Start programs

21 or negatively impacting the quality of Head Start services,

22 relative to the number of children served and the quality

23 of the services during the preceding fiscal year, the Sec24 retary may reduce the percentage of funds required to be

25 reserved for the portion described in subparagraph (A) for
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1 the fiscal year for which the determination is made, but

2 not below the percentage required to be so reserved for

3 the preceding fiscal year.

4 ‘‘(ii) For any fiscal year for which the amount appro5 priated under section 639(a) is lowered to a level that re6 quires a reduction in the amount made available under

7 this subchapter to Head Start agencies and entities de8 scribed in section 645A, relative to the amount made avail9 able to the agencies and entities for the preceding fiscal

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

11 Secretary shall proportionately reduce—

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

13 for programs carried out under section 645A; and

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

15 agencies for Head Start programs.’’.

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

17 (42 U.S.C. 9835(d)) is amended—

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

19 and

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

21 the Individuals with Disabilities Education Act)’’.

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

23 (42 U.S.C. 9835(g)) is amended—

24 (1) in paragraph (2)—
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1 (A) in subparagraph (A), by striking the

2 semicolon and inserting ‘‘, and the performance

3 history of the applicant in providing services

4 under other Federal programs (other than the

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

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

7 semicolon and inserting ‘‘, and organizations

8 serving children with disabilities;’’;

9 (C) in subparagraph (D), by inserting be10 fore the semicolon the following: ‘‘and the ex11 tent to which, and manner in which, the appli12 cant demonstrates the ability to collaborate and

13 participate with other local community provid14 ers of child care or preschool services to provide

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

16 (D) in subparagraph (E), by striking ‘‘pro17 gram; and’’ and inserting ‘‘or any other early

18 childhood program;’’;

19 (E) in subparagraph (F), by striking the

20 period and inserting ‘‘; and’’; and

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

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

23 to foster partnerships with other service providers in

24 a manner that will enhance the resource capacity of

25 the applicant.’’; and
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1 (2) by adding at the end the following:

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

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

4 may allocate a portion of the remaining additional funds

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

6 funds available for the activities described in such sub7 section.’’.

8 (d) MIGRANT OR SEASONAL HEAD START PRO9 GRAMS.—Section 640(l) (42 U.S.C. 9835(l)) is amend10 ed—

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

12 each place it appears and inserting ‘‘migrant or sea13 sonal Head Start programs’’; and

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

15 ‘‘migrant or seasonal farmworker families’’.

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

17 (42 U.S.C. 9839(f)(2)) is amended by striking

18 ‘‘640(a)(3)(C)(v)’’ and inserting ‘‘640(a)(3)(C)(vi).’’

19 SEC. 108. DESIGNATION OF HEAD START AGENCIES.

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

21 (1) in subsection (a)—

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

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

24 and
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1 (B) in paragraph (2), by inserting ‘‘(in

2 consultation with the chief executive officer of

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

4 after ‘‘the Secretary’’;

5 (2) in subsection (c)—

6 (A) in paragraph (1)—

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

8 and inserting ‘‘shall, in consultation with

9 the chief executive officer of the State, give

10 priority’’;

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

12 ‘‘nonprofit’’; and

13 (iii) by striking ‘‘unless the Secretary

14 makes a finding’’ and all that follows and

15 inserting the following: ‘‘unless the Sec16 retary determines that the agency involved

17 fails to meet program and financial man18 agement requirements, performance stand19 ards described in section 641A(a)(1), and

20 other requirements established by the Sec21 retary.’’;

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

23 give priority’’ and inserting ‘‘shall, in consulta24 tion with the chief executive officer of the State,

25 give priority’’; and
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1 (C) by aligning the margins of paragraphs

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

3 (3) in subsection (d)—

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

5 by inserting after the first sentence the follow6 ing new sentence: ‘‘In selecting from among

7 qualified applicants for designation as a Head

8 Start agency, the Secretary shall give priority

9 to any qualified agency that functioned as a

10 Head Start delegate agency in the community

11 and carried out a Head Start program that the

12 Secretary determines has met or exceeded the

13 performance standards and outcome-based per14 formance measures described in section 641A.’’;

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

16 home and in the center involved where prac17 ticable)’’ after ‘‘activities’’;

18 (C) by redesignating paragraphs (7) and

19 (8) as paragraphs (9) and (10); and

20 (D) by inserting after paragraph (6) the

21 following:

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

23 needs of non-English background children and their

24 families, including needs related to the acquisition of

25 the English language;
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1 ‘‘(8) the plan of such applicant to meet the

2 needs of children with disabilities;’’; and

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

4 following:

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

6 designation, and there is no qualified applicant in the com7 munity, the Secretary shall designate an agency to carry

8 out the Head Start program in the community on an in9 terim basis until a qualified applicant from the community

10 is so designated.’’.

11 SEC. 109. QUALITY STANDARDS.

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

13 U.S.C. 9836a(a)) is amended—

14 (1) in paragraph (1)—

15 (A) in the matter preceding subparagraph

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

17 overall accomplishment,’’ after ‘‘regulation

18 standards’’;

19 (B) in subparagraph (A), by striking ‘‘edu20 cation,’’;

21 (C) by redesignating subparagraphs (B)

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

23 and

24 (D) by inserting after subparagraph (A)

25 the following:
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1 ‘‘(B)(i) education performance standards

2 to ensure the school readiness of children par3 ticipating in a Head Start program, on comple4 tion of the Head Start program and prior to

5 entering school; and

6 ‘‘(ii) additional education performance

7 standards to ensure that the children partici8 pating in the program, at a minimum—

9 ‘‘(I) develop phonemic, print, and

10 numeracy awareness;

11 ‘‘(II) understand and use oral lan12 guage to communicate needs, wants, and

13 thoughts;

14 ‘‘(III) understand and use increas15 ingly complex and varied vocabulary;

16 ‘‘(IV) develop and demonstrate an ap17 preciation of books; and

18 ‘‘(V) in the case of non-English back19 ground children, progress toward acquisi20 tion of the English language.’’;

21 (2) by striking paragraph (2);

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

23 paragraphs (2) and (3); and

24 (4) in paragraph (2) (as redesignated in para25 graph (3))—
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1 (A) in subparagraph (B)(iii), striking

2 ‘‘child’’ and inserting ‘‘early childhood edu3 cation and’’; and

4 (B) in subparagraph (C)—

5 (i) in clause (i)—

6 (I) by striking ‘‘not later than 1

7 year after the date of enactment of

8 this section,’’; and

9 (II) by striking ‘‘section 651(b)’’

10 and all that follows and inserting

11 ‘‘this subsection; and’’; and

12 (ii) in subclause (ii), by striking ‘‘No13 vember 2, 1978’’ and inserting ‘‘the date

14 of enactment of the Human Services Reau15 thorization Act of 1998’’.

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

17 (42 U.S.C. 9836a(b)) is amended—

18 (1) in the subsection heading, by inserting

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

20 (2) in paragraph (1)—

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

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

23 and inserting ‘‘The’’;

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

25 ‘‘early childhood education and’’;
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1 (C) by striking the period and inserting ‘‘,

2 and the impact of the services provided through

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

4 and

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

6 ‘‘The performance measures shall include the

7 performance standards described in subsection

8 (a)(1)(B)(ii).’’; and

9 (3) in paragraph (2)—

10 (A) in the paragraph heading, by striking

11 ‘‘DESIGN’’ and inserting ‘‘CHARACTERISTICS’’;

12 (B) in the matter preceding subparagraph

13 (A), by striking ‘‘shall be designed—’’ and in14 serting ‘‘shall—’’;

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

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

17 (D) in subparagraph (B)—

18 (i) by striking ‘‘to’’; and

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

20 inserting ‘‘, peer review, and program eval21 uation’’; and

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

23 developed’’ before ‘‘for other’’.

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

25 9836a(c)(2)) is amended—
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1 (1) in subparagraph (B), by striking ‘‘; and’’

2 and inserting a semicolon;

3 (2) in subparagraph (C)—

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

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

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

7 and’’; and

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

9 ‘‘(D) as part of the reviews of the pro10 grams, include a review and assessment of pro11 gram effectiveness, as measured in accordance

12 with the outcome-based performance measures

13 developed pursuant to subsection (b) and with

14 the performance standards established pursuant

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

16 (a)(1).’’.

17 (d) TERMINATION.—Section 641A(d) (42 U.S.C.

18 9836a(d)) is amended—

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

20 ‘‘(B) with respect to each identified defi21 ciency, require the agency—

22 ‘‘(i) to correct the deficiency imme23 diately, if the Secretary finds that the defi24 ciency threatens the health or safety of
27

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1 staff or program participants or poses a

2 threat to the integrity of Federal funds;

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

4 than 90 days after the identification of the

5 deficiency if the Secretary finds, in the dis6 cretion of the Secretary, that such a 90-

7 day period is reasonable, in light of the na8 ture and magnitude of the deficiency; or

9 ‘‘(iii) in the discretion of the Sec10 retary (taking into consideration the seri11 ousness of the deficiency and the time rea12 sonably required to correct the deficiency)

13 to comply with the requirements of para14 graph (2) concerning a quality improve15 ment plan; and’’; and

16 (2) in paragraph (2)(A), in the matter preced17 ing clause (i), by striking ‘‘immediately’’ and insert18 ing ‘‘immediately or during a 90-day period under

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

20 SEC. 110. POWERS AND FUNCTIONS OF HEAD START AGEN21 CIES.

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

23 (1) in subsection (a), by inserting ‘‘or for-prof24 it’’ after ‘‘nonprofit’’;

25 (2) in subsection (c)—
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1 (A) by inserting ‘‘and collaborate’’ after

2 ‘‘coordinate’’; and

3 (B) by striking ‘‘section 402(g) of the So4 cial Security Act, and other’’ and inserting ‘‘the

5 State program carried out under the Child Care

6 and Development Block Grant Act of 1990 (42

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

8 education and development’’; and

9 (3) in subsection (d)—

10 (A) in paragraph (1)—

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

12 all that follows through ‘‘maintain’’ and in13 serting ‘‘shall take steps to ensure, to the

14 maximum extent possible, that children

15 maintain’’;

16 (ii) by striking ‘‘developmental’’ and

17 inserting ‘‘developmental and educational’’;

18 and

19 (iii) by striking ‘‘to build’’ and insert20 ing ‘‘build’’;

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

22 (C) by redesignating paragraphs (3)

23 through (5) as paragraphs (2) through (4), re24 spectively.
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1 SEC. 111. HEAD START TRANSITION.

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

3 amended by inserting after section 642 the following:

4 ‘‘SEC. 642A. HEAD START TRANSITION.

5 ‘‘Each Head Start agency shall take steps to coordi6 nate with the local educational agency serving the commu7 nity involved and with schools in which children participat8 ing in a Head Start program operated by such agency will

9 enroll following such program, including—

10 ‘‘(1) developing and implementing a systematic

11 procedure for transferring, with parental consent,

12 Head Start program records for each participating

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

14 ‘‘(2) establishing channels of communication be15 tween Head Start staff and their counterparts in the

16 schools (including teachers, social workers, and

17 health staff) to facilitate coordination of programs;

18 ‘‘(3) conducting meetings involving parents,

19 kindergarten or elementary school teachers, and

20 Head Start program teachers to discuss the develop21 mental and other needs of individual children;

22 ‘‘(4) organizing and participating in joint tran23 sition-related training of school staff and Head Start

24 staff;

25 ‘‘(5) developing and implementing a family out26 reach and support program in cooperation with enti-
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1 ties carrying out parental involvement efforts under

2 title I of the Elementary and Secondary Education

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

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

5 teachers in enhancing developmental continuity be6 tween Head Start services and elementary school

7 classes.’’.

8 SEC. 112. SUBMISSION OF PLANS TO GOVERNORS.

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

10 is amended—

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

12 ‘‘within 45 days’’; and

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

14 ‘‘disapproved (for reasons other than failure of the

15 program to comply with State health, safety, and

16 child care laws, including regulations, applicable to

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

18 SEC. 113. PARTICIPATION IN HEAD START PROGRAMS.

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

20 9840(a)(1)) is amended—

21 (1) in subparagraph (B), by striking ‘‘that pro22 grams’’ and inserting ‘‘that (i) programs’’; and

23 (2) by striking the period at the end of sub24 paragraph (B) and inserting the following: ‘‘, and

25 (ii) a child who has been determined to meet the
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1 low-income criteria and who is participating in a

2 Head Start program in a program year shall be con3 sidered to continue to meet the low-income criteria

4 through the end of the succeeding program year. In

5 determining, for purposes of this paragraph, whether

6 a child who has applied for enrollment in a Head

7 Start program meets the low-income criteria, an en8 tity may consider evidence of family income during

9 the 12 months preceding the month in which the ap10 plication is submitted, or during the calendar year

11 preceding the calendar year in which the application

12 is submitted, whichever more accurately reflects the

13 needs of the family at the time of application.’’.

14 (b) SLIDING FEE SCALE.—Section 645(b) (42 U.S.C.

15 9840(b)) is amended by adding at the end the following:

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

17 program with full-working-day services in collaboration

18 with other agencies or entities may collect a family copay19 ment to support extended day services if a copayment is

20 required in conjunction with the partnership. The copay21 ment shall not exceed the copayment charged to families

22 with similar incomes and circumstances who are receiving

23 the services through participation in a program carried

24 out by another agency or entity.’’.
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1 (c) CONTINUOUS RECRUITMENT AND ACCEPTANCE

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

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

4 Head Start program operated in a community shall be

5 permitted to recruit and accept applications for enrollment

6 of children throughout the year.’’.

7 SEC. 114. EARLY HEAD START PROGRAMS FOR FAMILIES

8 WITH INFANTS AND TODDLERS.

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

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

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

12 (2) in subsection (a)—

13 (A) by striking ‘‘for—’’ and all that follows

14 through ‘‘programs providing’’ and inserting

15 ‘‘for programs providing’’;

16 (B) by striking ‘‘; and’’ and inserting a pe17 riod; and

18 (C) by striking paragraph (2);

19 (3) in subsection (b)(5), by inserting ‘‘(includ20 ing programs for infants and toddlers with disabil21 ities)’’ after ‘‘community’’;

22 (4) in subsection (c)—

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

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

25 ‘‘subsection (a)’’; and
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1 (B) in paragraph (2), by striking ‘‘3 (or

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

3 (5) in subsection (d)—

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

5 (B) by redesignating paragraph (3) as

6 paragraph (2);

7 (6) by striking subsection (e);

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

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

10 (8) in subsection (e) (as redesignated in para11 graph (7))—

12 (A) in the subsection heading, by striking

13 ‘‘OTHER’’; and

14 (B) by striking ‘‘From the balance remain15 ing of the portion specified in section 640(a)(6),

16 after making grants to the eligible entities spec17 ified in subsection (e),’’ and inserting ‘‘From

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

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

20 following:

21 ‘‘(h) MONITORING, TRAINING, TECHNICAL ASSIST22 ANCE, AND EVALUATION.—In order to ensure the success23 ful operation of programs assisted under this section, the

24 Secretary shall use funds from the portion specified in sec25 tion 640(a)(6) to monitor the operation of such programs,
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1 evaluate their effectiveness, and provide training and tech2 nical assistance tailored to the particular needs of such

3 programs.

4 ‘‘(i) TRAINING AND TECHNICAL ASSISTANCE AC5 COUNT.—

6 ‘‘(1) IN GENERAL.—Of the amount made avail7 able to carry out this section for any fiscal year, not

8 less than 5 percent and not more than 10 percent

9 shall be reserved to fund a training and technical as10 sistance account.

11 ‘‘(2) ACTIVITIES.—Funds in the account may

12 be used for purposes including—

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

14 contracts with, organizations with specialized

15 expertise relating to infants, toddlers, and fami16 lies and the capacity needed to provide direction

17 and support to a national training and technical

18 assistance system, in order to provide such di19 rection and support;

20 ‘‘(B) providing ongoing training and tech21 nical assistance for regional and program staff

22 charged with monitoring and overseeing the ad23 ministration of the program carried out under

24 this section;
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1 ‘‘(C) providing ongoing training and tech2 nical assistance for existing recipients of grants

3 under subsection (a) and support and program

4 planning and implementation assistance for new

5 recipients of such grants; and

6 ‘‘(D) providing professional development

7 and personnel enhancement activities, including

8 the provision of funds to recipients of grants

9 under subsection (a) for the recruitment and re10 tention of qualified staff with an appropriate

11 level of education and experience.’’.

12 SEC. 115. TECHNICAL ASSISTANCE AND TRAINING.

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

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

15 amended—

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

17 inserting a semicolon;

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

19 inserting ‘‘; and’’; and

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

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

22 to assist Head Start agencies, entities carrying out

23 other child care and early childhood programs, com24 munities, and States in collaborative efforts to pro25 vide quality full-working-day, full calendar year serv-
36

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1 ices, including technical assistance related to identi2 fying and assisting in resolving barriers to collabora3 tion.’’.

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

5 U.S.C. 9843(c)) is amended—

6 (1) in paragraph (4)—

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

8 ‘‘developing and implementing’’; and

9 (B) by striking ‘‘a longer day;’’ and insert10 ing the following: ‘‘the day, and assist the agen11 cies and programs in expediting the sharing of

12 information about innovative models for provid13 ing full-working-day, full calendar year services

14 for children;’’;

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

16 inserting a semicolon;

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

18 inserting ‘‘; and’’; and

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

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

21 ‘‘(A) ensuring the school readiness of chil22 dren; and

23 ‘‘(B) meeting the education performance

24 standards described in this subchapter.’’.
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1 (c) SERVICES.—Section 648(e) (42 U.S.C. 9843(e))

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

3 the acquisition of the English language)’’ after ‘‘non4 English language background children’’.

5 SEC. 116. STAFF QUALIFICATIONS AND DEVELOPMENT.

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

7 (1) in paragraph (1)—

8 (A) by redesignating subparagraphs (B)

9 through (D) as clauses (ii) through (iv), respec10 tively;

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

12 ‘‘(B)(i)’’;

13 (C) by inserting before subparagraph (B)

14 (as redesignated in subparagraph (B) of this

15 paragraph) the following:

16 ‘‘(A) demonstrated competency to perform

17 functions that include—

18 ‘‘(i) planning and implementing learn19 ing experiences that advance the intellec20 tual and physical development of children,

21 including improving the readiness of chil22 dren for school by developing their literacy

23 and phonemic, print, and numeracy aware24 ness, their understanding and use of oral

25 language, their understanding and use of
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1 increasingly complex and varied vocabu2 lary, their appreciation of books, and their

3 problem solving abilities;

4 ‘‘(ii) establishing and maintaining a

5 safe, healthy learning environment;

6 ‘‘(iii) supporting the social and emo7 tional development of children; and

8 ‘‘(iv) encouraging the involvement of

9 the families of the children in a Head

10 Start program and supporting the develop11 ment of relationships between children and

12 their families; and’’; and

13 (2) by striking paragraph (2) and inserting the

14 following:

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

16 grant a 180-day waiver of the requirements of para17 graph (1)(B), for a Head Start agency that can

18 demonstrate that the agency has unsuccessfully at19 tempted to recruit an individual who has a creden20 tial, certificate, or degree described in paragraph

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

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

23 any such credential, certificate, or degree; and

24 ‘‘(B) will receive such credential, certifi25 cate, or degree under the terms of such pro-
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1 gram not later than 180 days after beginning

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

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

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

5 U.S.C. 9844(d)) is amended—

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

7 inserting a semicolon;

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

9 inserting ‘‘; and’’; and

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

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

12 and large States with Head Start programs in order

13 to permit comparisons of children participating in

14 the programs with eligible children who did not par15 ticipate in the programs, which study—

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

17 that existed prior to the initiation of the study;

18 and

19 ‘‘(B) shall compare the educational

20 achievement, social adaptation, and health sta21 tus of the participating children and the eligible

22 nonparticipating children.

23 The Secretary shall ensure that an appropriate entity car24 ries out a study described in paragraph (8), and prepares

25 and submits to the appropriate committees of Congress
40

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

2 September 30, 2002.’’.

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

4 9844) is amended by inserting after subsection (e) the fol5 lowing:

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

7 ‘‘(1) EXPERT PANEL.—

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

9 appoint an independent panel consisting of ex10 perts in program evaluation and research, edu11 cation, and early childhood programs—

12 ‘‘(i) to review, and make recommenda13 tions on, the design and plan for the re14 search (whether conducted as a single as15 sessment or as a series of assessments),

16 described in paragraph (2), within 1 year

17 after the date of enactment of the Human

18 Services Reauthorization Act of 1998;

19 ‘‘(ii) to maintain and advise the Sec20 retary regarding the progress of the re21 search; and

22 ‘‘(iii) to comment, if the panel so de23 sires, on the interim and final research re24 ports submitted under paragraph (7).
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1 ‘‘(B) TRAVEL EXPENSES.—The members

2 of the panel shall not receive compensation for

3 the performance of services for the panel, but

4 shall be allowed travel expenses, including per

5 diem in lieu of subsistence, at rates authorized

6 for employees of agencies under subchapter I of

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

8 away from their homes or regular places of

9 business in the performance of services for the

10 panel. Notwithstanding section 1342 of title 31,

11 United States Code, the Secretary may accept

12 the voluntary and uncompensated services of

13 members of the panel.

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

15 the recommendations of the expert panel the Sec16 retary shall enter into a grant, contract, or coopera17 tive agreement with an organization to conduct inde18 pendent research that provides a national analysis of

19 the impact of Head Start programs. The Secretary

20 shall ensure that the organization shall have exper21 tise in program evaluation, and research, education,

22 and early childhood programs.

23 ‘‘(3) DESIGNS AND TECHNIQUES.—The Sec24 retary shall ensure that the research uses rigorous

25 methodological designs and techniques (based on the
42

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1 recommendations of the expert panel), including lon2 gitudinal designs, control groups, nationally recog3 nized standardized measures, and random selection

4 and assignment, as appropriate. The Secretary may

5 provide that the research shall be conducted as a

6 single comprehensive assessment or as a group of co7 ordinated assessments designed to provide, when

8 taken together, a national analysis of the impact of

9 Head Start programs.

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

11 that the research focuses primarily on Head Start

12 programs that operate in the 50 States, the Com13 monwealth of Puerto Rico, or the District of Colum14 bia and that do not specifically target special popu15 lations.

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

17 that the organization conducting the research—

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

19 Start programs have impacts consistent with

20 their primary goal of increasing the social com21 petence of children, by increasing the everyday

22 effectiveness of the children in dealing with

23 their present environments and future respon24 sibilities, and increasing their school readiness;
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1 ‘‘(ii) considers whether the Head Start

2 programs—

3 ‘‘(I) enhance the growth and develop4 ment of children in cognitive, emotional,

5 and physical health areas;

6 ‘‘(II) strengthen families as the pri7 mary nurturers of their children; and

8 ‘‘(III) ensure that children attain

9 school readiness; and

10 ‘‘(iii) examines—

11 ‘‘(I) the impact of the Head Start

12 programs on increasing access of children

13 to such services as educational, health, and

14 nutritional services, and linking children

15 and families to needed community services;

16 and

17 ‘‘(II) how receipt of services described

18 in subclause (I) enriches the lives of chil19 dren and families participating in Head

20 Start programs;

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

22 programs on participants on the date the par23 ticipants leave Head Start programs, at the end

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

25 by examining a variety of factors, including
44

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1 educational achievement, referrals for special

2 education or remedial course work, and absen3 teeism;

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

5 the population of all Head Start programs de6 scribed in paragraph (4) in selecting programs

7 for inclusion in the research; and

8 ‘‘(D) includes comparisons of individuals

9 who participate in Head Start programs with

10 control groups (including comparison groups)

11 composed of—

12 ‘‘(i) individuals who participate in

13 other early childhood programs (such as

14 preschool programs and day care); and

15 ‘‘(ii) individuals who do not partici16 pate in any other early childhood program.

17 ‘‘(6) CONSIDERATION OF SOURCES OF VARI18 ATION.—In designing the research, the Secretary

19 shall, to the extent practicable, consider addressing

20 possible sources of variation in impact of Head Start

21 programs, including variations in impact related to

22 such factors as—

23 ‘‘(A) Head Start program operations;

24 ‘‘(B) Head Start program quality;
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1 ‘‘(C) the length of time a child attends a

2 Head Start program;

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

4 Head Start program;

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

6 local educational agency or a community action

7 agency) providing services for the Head Start

8 program;

9 ‘‘(F) the number of hours and days of pro10 gram operation of the Head Start program

11 (such as whether the program is a full-working12 day, full calendar year program, a part-day pro13 gram, or a part-year program); and

14 ‘‘(G) other characteristics and features of

15 the Head Start program (such as geographic lo16 cation, location in an urban or a rural service

17 area, or participant characteristics), as appro18 priate.

19 ‘‘(7) REPORTS.—

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

21 The organization shall prepare and submit to

22 the Secretary 2 interim reports on the research.

23 The first interim report shall describe the de24 sign of the research, and the rationale for the

25 design, including a description of how potential
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1 sources of variation in impact of Head Start

2 programs have been considered in designing the

3 research. The second interim report shall de4 scribe the status of the research and prelimi5 nary findings of the research, as appropriate.

6 ‘‘(B) SUBMISSION OF FINAL REPORT.—

7 The organization shall prepare and submit to

8 the Secretary a final report containing the find9 ings of the research.

10 ‘‘(C) TRANSMITTAL OF REPORTS TO CON11 GRESS.—

12 ‘‘(i) IN GENERAL.—The Secretary

13 shall transmit, to the committees described

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

15 September 30, 1999, the second interim

16 report by September 30, 2001, and the

17 final report by September 30, 2003.

18 ‘‘(ii) COMMITTEES.—The committees

19 referred to in clause (i) are the Committee

20 on Education and the Workforce of the

21 House of Representatives and the Commit22 tee on Labor and Human Resources of the

23 Senate.

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

25 ‘impact’, used with respect to a Head Start pro-
47

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1 gram, means a difference in an outcome for a partic2 ipant in the program that would not have occurred

3 without the participation in the program.

4 ‘‘(g) QUALITY IMPROVEMENT STUDY.

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

6 study regarding the use and effects of use of the

7 quality improvement funds made available under sec8 tion 640(a)(3) of the Head Start Act (42 U.S.C.

9 9835(a)(3)) since fiscal year 1991.

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

11 and submit to Congress not later than September

12 2000 a report containing the results of the study, in13 cluding—

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

15 quality improvement funds;

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

17 quality improvement funds has accomplished

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

19 ‘‘(C) the effect of use of the quality im20 provement funds on teacher training, salaries,

21 benefits, recruitment, and retention; and

22 ‘‘(D) the effect of use of the quality im23 provement funds on the cognitive and social de24 velopment of children receiving services under

25 the this subchapter.’’.
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1 (b) CONFORMING AMENDMENT.—Section 650(13)

2 (42 U.S.C. 9846(13)) is amended by striking ‘‘, dem3 onstration,’’.

4 TITLE II—COMMUNITY SERV5 ICES BLOCK GRANT PRO6 GRAM

7 SEC. 201. REAUTHORIZATION.

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

9 9901 et seq.) is amended to read as follows:

10 ‘‘Subtitle B—Community Services

11 Block Grant Program

12 ‘‘SEC. 671. SHORT TITLE.

13 ‘‘This subtitle may be cited as the ‘Community Serv14 ices Block Grant Act’.

15 ‘‘SEC. 672. PURPOSES AND GOALS.

16 ‘‘The purposes of this subtitle are—

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

18 and local communities, working through a network

19 of community action agencies and other neighbor20 hood-based organizations, for the reduction of pov21 erty, the revitalization of low-income communities,

22 and the empowerment of low-income families and in23 dividuals in rural and urban areas to become fully

24 self-sufficient (particularly families who are attempt25 ing to transition off a State program carried out
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1 under part A of title IV of the Social Security Act

2 (42 U.S.C. 601 et seq.));

3 ‘‘(2) to accomplish the goal described in para4 graph (1) through—

5 ‘‘(A) the strengthening of community capa6 bilities for planning and coordinating the use of

7 a broad range of Federal, State, and other as8 sistance related to the elimination of poverty, so

9 that this assistance can be used in a manner re10 sponsive to local needs and conditions;

11 ‘‘(B) the organization of a range of serv12 ices related to the needs of low-income families

13 and individuals, so that these services may have

14 a measurable and potentially major impact on

15 the causes of poverty in the community and

16 may help the families and individuals to achieve

17 self-sufficiency;

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

19 community-based approaches to attacking the

20 causes and effects of poverty and of community

21 breakdown;

22 ‘‘(D) the development and implementation

23 of all programs designated to serve low-income

24 communities and groups with the maximum

25 feasible participation of residents of the com-
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1 munities and members of the groups served, so

2 as to best stimulate and take full advantage of

3 capabilities for self-advancement and assure

4 that the programs are otherwise meaningful to

5 the intended beneficiaries of the programs; and

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

7 of programs directed to the elimination of pov8 erty.

9 ‘‘SEC. 673. DEFINITIONS.

10 ‘‘In this subtitle:

11 ‘‘(1) ELIGIBLE ENTITY.—The term ‘eligible en12 tity’ means an entity—

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

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

15 the date of enactment of the Human Services

16 Reauthorization Act of 1998) as of such date of

17 enactment or is designated by the process de18 scribed in section 676A (including an organiza19 tion serving migrant or seasonal farmworkers

20 that is so described or designated); and

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

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

23 as appropriate, of section 676B.

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

25 means the official poverty line defined by the Sec-
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1 retary. The Secretary shall revise the poverty line

2 annually (or at any shorter interval the Secretary

3 determines to be feasible and desirable) which shall

4 be used as a criterion of eligibility in the community

5 services block grant program established under this

6 subtitle. The required revision shall be accomplished

7 by multiplying the official poverty line by the per8 centage change in the Consumer Price Index for All

9 Urban Consumers during the annual or other inter10 val immediately preceding the time at which the re11 vision is made. Whenever a State determines that it

12 serves the objectives of the block grant program es13 tablished under this subtitle, the State may revise

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

15 official poverty line otherwise applicable under this

16 paragraph.

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

18 The term ‘private, nonprofit organization’ includes a

19 faith-based organization, to which the provisions of

20 section 679 shall apply.

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

22 the Secretary of Health and Human Services.

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

24 the several States, the District of Columbia, the

25 Commonwealth of Puerto Rico, Guam, the United
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•S 2206 IS

1 States Virgin Islands, American Samoa, the Com2 monwealth of the Northern Mariana Islands, and

3 the combined Freely Associated States.

4 ‘‘SEC. 674. AUTHORIZATION OF APPROPRIATIONS.

5 ‘‘(a) IN GENERAL.—There are authorized to be ap6 propriated $625,000,000 for fiscal year 1999 and such

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

8 through 2003 to carry out the provisions of this subtitle

9 (other than sections 681 and 682).

10 ‘‘(b) RESERVATIONS.—Of the amounts appropriated

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

12 shall reserve—

‘‘(1) 1 13 ⁄2 of 1 percent for carrying out section

14 675A (relating to payments for territories);

‘‘(2) not less than 1 15 ⁄2 of 1 percent and not more

16 than 1 percent for activities authorized in section

17 678A (relating to training and technical assistance);

18 and

19 ‘‘(3) 9 percent for carrying out section 680 (re20 lating to discretionary activities).

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

22 ‘‘The Secretary is authorized to establish a commu23 nity services block grant program and make grants

24 through the program to States to ameliorate the causes

25 of poverty in communities within the States.
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1 ‘‘SEC. 675A. DISTRIBUTION TO TERRITORIES.

2 ‘‘(a) APPORTIONMENT.—The Secretary shall appor3 tion the amount reserved under section 674(b)(1) for each

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

5 Samoa, the United States Virgin Islands, the Common6 wealth of the Northern Mariana Islands, and the combined

7 Freely Associated States.

8 ‘‘(b) APPLICATION.—Each jurisdiction to which sub9 section (a) applies may receive a grant under this subtitle

10 for the amount apportioned under subsection (a) on sub11 mitting to the Secretary, and obtaining approval of, an

12 application containing provisions that describe the pro13 grams for which assistance is sought under this subtitle,

14 and that are consistent with the requirements of section

15 676.

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

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

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

19 for each fiscal year that remains after the Secretary makes

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

21 State an amount that bears the same ratio to such remain22 ing amount as the amount received by the State for fiscal

23 year 1981 under section 221 of the Economic Opportunity

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

25 for fiscal year 1981 under such section, except that no
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•S 2206 IS

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

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

3 ‘‘(b) ALLOTMENTS IN YEARS WITH GREATER AVAIL4 ABLE FUNDS.—

5 ‘‘(1) MINIMUM ALLOTMENTS.—Subject to para6 graphs (2) and (3), if the amount appropriated

7 under section 674(a) for each fiscal year that re8 mains after the Secretary makes the reservations re9 quired in section 674(b) exceeds $345,000,000, the

Secretary shall allot to each State not less than 1 10 ⁄2

11 of 1 percent of the amount appropriated under sec12 tion 674(a) for such fiscal year.

13 ‘‘(2) MAINTENANCE OF 1990 LEVELS.—Para14 graph (1) shall not apply with respect to a fiscal

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

16 any State for that year is less than the amount al17 lotted under section 674(a)(1) to such State for fis18 cal year 1990.

19 ‘‘(3) MAXIMUM ALLOTMENTS.—The amount al20 lotted under paragraph (1) to a State shall be re21 duced, if necessary, so that the aggregate amount al22 lotted to such State under such paragraph and sub23 section (a) does not exceed 140 percent of the aggre24 gate amount allotted to such State under the cor25 responding provisions of this subtitle for the fiscal
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•S 2206 IS

1 year preceding the fiscal year for which a determina2 tion is made under this subsection.

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

4 to eligible States for the allotments described in sub5 sections (a) and (b). The Secretary shall make payments

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

7 31, United States Code.

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

9 term ‘State’ does not include Guam, American Samoa, the

10 United States Virgin Islands, the Commonwealth of the

11 Northern Mariana Islands, and the Freely Associated

12 States.

13 ‘‘SEC. 675C. USES OF FUNDS.

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

15 ORGANIZATIONS.—

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

17 the funds allotted to a State under section 675B

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

19 purposes described in section 672 to eligible entities.

20 ‘‘(2) OBLIGATIONAL AUTHORITY.—Funds dis21 tributed to eligible entities through grants made in

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

23 be available for obligation during that fiscal year

24 and the succeeding fiscal year, in accordance with

25 paragraph (3).
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1 ‘‘(3) RECAPTURE AND REDISTRIBUTION OF UN2 OBLIGATED FUNDS.—

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

4 2000, a State may recapture and redistribute

5 funds distributed to an eligible entity through a

6 grant made under paragraph (1) that are unob7 ligated at the end of a fiscal year if such unobli8 gated funds exceed 20 percent of the amount so

9 distributed to such eligible entity for such fiscal

10 year.

11 ‘‘(B) REDISTRIBUTION.—In redistributing

12 funds recaptured in accordance with this para13 graph, States shall redistribute such funds to

14 an eligible entity, or require the original recipi15 ent of the funds to redistribute the funds to a

16 private, nonprofit organization, located within

17 the community served by the original recipient

18 of the funds, for activities consistent with the

19 purposes of this subtitle.

20 ‘‘(b) OTHER ACTIVITIES.—

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

22 than 100 percent of the State allotment to make

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

24 remainder of the allotment (subject to paragraph

25 (2)) for—
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1 ‘‘(A) providing training and technical as2 sistance to those entities in need of such train3 ing and assistance;

4 ‘‘(B) coordinating State-operated programs

5 and services targeted to low-income children

6 and families with services provided by eligible

7 entities and other organizations funded under

8 this subtitle, including detailing appropriate

9 employees of State or local agencies to entities

10 funded under this subtitle, to ensure increased

11 access to services provided by such State or

12 local agencies;

13 ‘‘(C) supporting statewide coordination and

14 communication among eligible entities;

15 ‘‘(D) analyzing the distribution of funds

16 made available under this subtitle within the

17 State to determine if such funds have been tar18 geted to the areas of greatest need;

19 ‘‘(E) supporting asset-building programs

20 for low-income individuals, such as programs

21 supporting individual development accounts;

22 ‘‘(F) supporting innovative programs and

23 activities conducted by community action agen24 cies or other neighborhood-based organizations
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1 to eliminate poverty, promote self-sufficiency,

2 and promote community revitalization; and

3 ‘‘(G) supporting other activities, consistent

4 with the purposes of this subtitle.

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

6 spend more than the greater of $55,000, or 5 per7 cent, of the portion of the State allotment that re8 mains after the State makes grants to eligible enti9 ties under subsection (a), for administrative ex10 penses, including monitoring activities. The cost of

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

12 not be considered to be administrative expenses.

13 ‘‘SEC. 676. APPLICATION AND PLAN.

14 ‘‘(a) DESIGNATION OF LEAD AGENCY.—

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

16 of a State desiring to receive an allotment under this

17 subtitle shall designate, in an application submitted

18 to the Secretary under subsection (b), an appro19 priate State agency that complies with the require20 ments of paragraph (2) to act as a lead agency for

21 purposes of carrying out State activities under this

22 subtitle.

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

24 ‘‘(A) develop the State plan to be submit25 ted to the Secretary under subsection (b);
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1 ‘‘(B) in conjunction with the development

2 of the State plan as required under subsection

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

4 sufficient time and statewide distribution of no5 tice of such hearing, to provide to the public an

6 opportunity to comment on the proposed use

7 and distribution of funds to be provided

8 through the allotment for the period covered by

9 the State plan; and

10 ‘‘(C) conduct reviews of eligible entities

11 under section 678B.

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

13 hold at least 1 legislative hearing every 3 years in

14 conjunction with the development of the State plan.

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

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

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

18 the Secretary an application and State plan covering a pe19 riod of not less than 1 fiscal year and not more than 2

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

21 30 days prior to the beginning of the first fiscal year cov22 ered by the plan, and shall contain such information as

23 the Secretary shall require, including—

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

25 through the allotment will be used to support activi-
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1 ties that are designed to assist low-income families

2 and individuals, including homeless families and in3 dividuals, migrant or seasonal farmworkers, and el4 derly low-income individuals and families, and a de5 scription of how such activities will enable the fami6 lies and individuals—

7 ‘‘(A) to remove obstacles and solve prob8 lems that block the achievement of self-suffi9 ciency;

10 ‘‘(B) to secure and retain meaningful em11 ployment;

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

13 ‘‘(D) to make better use of available in14 come;

15 ‘‘(E) to obtain and maintain adequate

16 housing and a suitable living environment;

17 ‘‘(F) to obtain emergency assistance

18 through loans, grants, or other means to meet

19 immediate and urgent individual and family

20 needs;

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

22 affairs of the community; and

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

24 programs related to the purposes of this sub25 title (including State welfare reform efforts);
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1 ‘‘(2) a description of how the State intends to

2 use discretionary funds made available from the re3 mainder of the allotment described in section

4 675C(b) in accordance with this subtitle, including a

5 description of how the State will support innovative

6 community and neighborhood-based initiatives relat7 ed to the purposes of this subtitle;

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

9 entities in the State, a description of—

10 ‘‘(A) the service delivery system, for serv11 ices provided or coordinated with funds made

12 available through the allotment, targeted to

13 low-income individuals and families in commu14 nities within the State;

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

16 developed to fill identified gaps in the services,

17 through the provision of information, referrals,

18 case management, and followup consultations;

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

20 available through the allotment will be coordi21 nated with other public and private resources;

22 and

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

24 used to support innovative community and
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1 neighborhood-based initiatives related to the

2 purposes of this subtitle;

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

4 on an emergency basis, for the provision of such

5 supplies and services, nutritious foods, and related

6 services, as may be necessary to counteract condi7 tions of starvation and malnutrition among low-in8 come individuals;

9 ‘‘(5) an assurance that the State will coordi10 nate, and establish linkages between, governmental

11 and other social services programs to assure the ef12 fective delivery of such services to low-income indi13 viduals;

14 ‘‘(6) an assurance that the State will ensure co15 ordination between antipoverty programs in each

16 community, and ensure, where appropriate, that

17 emergency energy crisis intervention programs under

18 title XXVI (relating to low-income home energy as19 sistance) are conducted in such community;

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

21 and cooperate with Federal investigations under22 taken in accordance with section 678D;

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

24 received funding in the previous fiscal year under

25 this subtitle will not have its funding terminated
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1 under this subtitle, or reduced below the propor2 tional share of funding the entity received in the

3 previous fiscal year unless, after providing notice

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

5 State determines that cause exists for such termi6 nation or such reduction, subject to review by the

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

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

9 maximum extent possible, coordinate programs with

10 and form partnerships with other organizations serv11 ing low-income residents of the communities and

12 members of the groups served by the State, includ13 ing faith-based organizations, charitable groups, and

14 community organizations;

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

16 each eligible entity to establish procedures under

17 which a low-income individual, community organiza18 tion, or faith-based organization, or representative of

19 low-income individuals that considers its organiza20 tion, or low-income individuals, to be inadequately

21 represented on the board (or other mechanism) of

22 the eligible entity to petition for adequate represen23 tation;

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

25 from each eligible entity, as a condition to receipt of
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•S 2206 IS

1 funding by the entity under this subtitle for a pro2 gram, a community action plan (which shall be sub3 mitted to the Secretary, at the request of the Sec4 retary, with the State plan) that includes a commu5 nity-needs assessment for the community served,

6 which may be coordinated with community-needs as7 sessments conducted for other programs;

8 ‘‘(12) an assurance that the State and all eligi9 ble entities in the State will, not later than fiscal

10 year 2002, participate in the Results Oriented Man11 agement and Accountability System, any other per12 formance measure system established by the Sec13 retary under section 678E(b), or an alternative sys14 tem for measuring performance and results that

15 meets the requirements of that section, and a de16 scription of outcome measures to be used to measure

17 eligible entity performance in promoting self-suffi18 ciency, family stability, and community revitaliza19 tion; and

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

21 carry out the assurances described in this sub22 section.

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

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

25 respect to—
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1 ‘‘(1) a funding reduction, the term ‘cause’ in2 cludes—

3 ‘‘(A) a statewide redistribution of funds

4 provided under this subtitle to respond to—

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

6 available census or other appropriate data;

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

8 entity; or

9 ‘‘(iii) severe economic dislocation; or

10 ‘‘(B) the failure of an eligible entity to

11 comply with the terms of an agreement to pro12 vide services under this subtitle; and

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

14 the material failure of an eligible entity to comply

15 with the terms of such an agreement and the State

16 plan to provide services under this subtitle or the

17 consistent failure of the entity to achieve perform18 ance measures as determined by the State.

19 ‘‘(d) PROCEDURES AND INFORMATION.—The Sec20 retary may prescribe procedures only for the purpose of

21 assessing the effectiveness of eligible entities in carrying

22 out the purposes of this subtitle.

23 ‘‘(e) REVISIONS AND INSPECTION.—

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

25 each State may revise any plan prepared under this
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1 section and shall submit the revised plan to the Sec2 retary.

3 ‘‘(2) PUBLIC INSPECTION.—Each plan or re4 vised plan prepared under this section shall be made

5 available for public inspection within the State in

6 such a manner as will facilitate review of, and com7 ment on, the plan.

8 ‘‘SEC. 676A. DESIGNATION AND REDESIGNATION OF ELIGI9 BLE ENTITIES IN UNSERVED AREAS.

10 ‘‘(a) QUALIFIED ORGANIZATION IN OR NEAR

11 AREA.—

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

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

14 entity under this subtitle, and if the chief executive

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

16 chief executive officer may solicit applications from,

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

18 ‘‘(A) private nonprofit organizations geo19 graphically located in the unserved area that

20 meet the requirements of this subtitle; or

21 ‘‘(B) private nonprofit organizations

22 (which may include eligible entities) located in

23 an area contiguous to or within reasonable

24 proximity of the unserved area that are already

25 providing related services in the unserved area.
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1 ‘‘(2) REQUIREMENT.—In order to serve as the

2 eligible entity for the area, an entity described in

3 paragraph (1)(B) shall agree to add additional mem4 bers to the board of the entity to ensure adequate

5 representation—

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

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

8 section 676B(a)(2), by members that reside in

9 the community comprised by the unserved area;

10 and

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

12 676B(a)(2), by members that reside in the

13 neighborhood served.

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

15 eligible entity under subsection (a), the chief executive of16 ficer shall grant the designation to an organization of

17 demonstrated effectiveness in meeting the goals and pur18 poses of this subtitle and may give priority, in granting

19 the designation, to local entities that are providing services

20 in the unserved area, consistent with the needs identified

21 by a community-needs assessment.

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

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

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

25 the unserved area as an eligible entity the chief executive
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1 officer may designate an appropriate political subdivision

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

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

4 political subdivision shall have a board or other mecha5 nism as required in section 676B(b).

6 ‘‘SEC. 676B. TRIPARTITE BOARDS.

7 ‘‘(a) PRIVATE NONPROFIT ENTITIES.—

8 ‘‘(1) BOARD.—In order for a private, nonprofit

9 entity to be considered to be an eligible entity for

10 purposes of section 673(1), the entity shall admin11 ister the community services block grant program

12 through a tripartite board described in paragraph

13 (2) that fully participates in the development and

14 implementation of the program to serve low-income

15 communities or groups.

16 ‘‘(2) SELECTION AND COMPOSITION OF

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

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

19 board shall be composed so as to assure that—

‘‘(A) 1 20 ⁄3 of the members of the board are

21 elected public officials, holding office on the

22 date of selection, or their representatives, ex23 cept that if the number of elected officials rea24 sonably available and willing to serve on the

board is less than 1 25 ⁄3 of the membership of the
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1 board, membership on the board of appointive

2 public officials or their representatives may be

counted in meeting such 1 3 ⁄3 requirement;

‘‘(B) not fewer than 1 4 ⁄3 of the members are

5 persons chosen in accordance with democratic

6 selection procedures adequate to assure that

7 these members are representative of low-income

8 individuals and families in the neighborhood

9 served;

10 ‘‘(C) the remainder of the members are of11 ficials or members of business, industry, labor,

12 religious, law enforcement, education, or other

13 major groups and interests in the community

14 served; and

15 ‘‘(D)(i) each member resides in the com16 munity; and

17 ‘‘(ii) each representative of low-income in18 dividuals and families selected to represent a

19 specific neighborhood within a community

20 under this paragraph resides in the neighbor21 hood represented by the member.

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

23 organization to be considered to be an eligible entity for

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

25 community services block grant program through—
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•S 2206 IS

1 ‘‘(1) a tripartite board, which shall have mem2 bers selected by the organization and shall be composed so as to assure that not fewer than 1 3 ⁄3 of the

4 members are persons chosen in accordance with

5 democratic selection procedures adequate to assure

6 that these members—

7 ‘‘(A) are representative of low-income indi8 viduals and families in the neighborhood served;

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

10 and

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

12 planning and implementation of programs fund13 ed under this subtitle; or

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

15 to assure decisionmaking and participation by low16 income individuals in the planning, administration,

17 and evaluation of programs funded under this sub18 title.

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

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

21 the Secretary—

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

23 of an Indian tribe or tribal organization within the

24 State that assistance under this subtitle be made di25 rectly to such tribe or organization; and
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1 ‘‘(2) determines that the members of such tribe

2 or tribal organization would be better served by

3 means of grants made directly to provide benefits

4 under this subtitle,

5 the Secretary shall reserve from amounts that would oth6 erwise be allotted to such State under section 675B for

7 the fiscal year the amount determined under subsection

8 (b).

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

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

11 from amounts that would otherwise be allotted to such

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

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

14 involved as the population of all eligible Indians for whom

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

16 to the population of all individuals eligible for assistance

17 under this subtitle in such State.

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

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

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

21 tribal organization serving the individuals for whom such

22 a determination has been made.

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

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

25 year under this section, the tribe or organization shall sub-
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1 mit to the Secretary a plan for such fiscal year that meets

2 such criteria as the Secretary may prescribe by regulation.

3 ‘‘(e) DEFINITIONS.—In this section:

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

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

6 mean a tribe, band, or other organized group recog7 nized in the State in which the tribe, band, or group

8 resides, or considered by the Secretary of the Inte9 rior, to be an Indian tribe or an Indian organization

10 for any purpose.

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

12 member of an Indian tribe or of a tribal organiza13 tion.

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

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

16 functions of this subtitle through an Office of Community

17 Services, which shall be established in the Department of

18 Health and Human Services. The Office shall be headed

19 by a Director.

20 ‘‘(b) GRANTS, CONTRACTS, COOPERATIVE AGREE21 MENTS.—The Secretary shall carry out functions of this

22 subtitle through grants, contracts, or cooperative agree23 ments.
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1 ‘‘SEC. 678A. TRAINING AND TECHNICAL ASSISTANCE.

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

3 amounts reserved in section 674(b)(2) for training, tech4 nical assistance, planning, evaluation, and data collection

5 activities related to programs carried out under this sub6 title.

7 ‘‘(b) PROCESS.—The process for determining the

8 training and technical assistance to be carried out under

9 this section shall—

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

11 and programs relating to improving program quality,

12 including financial management practices, are ad13 dressed to the maximum extent feasible; and

14 ‘‘(2) incorporate mechanisms to ensure respon15 siveness to local needs, including an ongoing proce16 dure for obtaining input from the national and State

17 network of eligible entities.

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

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

20 eligible entities meet the performance goals, administra21 tive standards, financial management requirements, and

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

23 following reviews of eligible entities:

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

25 least once during each 3-year period.
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1 ‘‘(2) An onsite review of each newly designated

2 entity immediately after the completion of the first

3 year in which such entity receives funds through the

4 community services block grant program.

5 ‘‘(3) Followup reviews including prompt return

6 visits to eligible entities, and their programs, that

7 fail to meet the goals, standards, and requirements

8 established by the State.

9 ‘‘(4) Other reviews as appropriate, including re10 views of entities with programs that have had other

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

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

13 and technical assistance from the Secretary as needed to

14 comply with the requirements of this section.

15 ‘‘SEC. 678C. CORRECTIVE ACTION; TERMINATION AND RE16 DUCTION OF FUNDING.

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

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

19 an eligible entity materially fails to comply with the terms

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

21 under this subtitle or to meet appropriate standards,

22 goals, and other requirements established by the State (in23 cluding performance objectives), the State shall—

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

25 corrected;
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•S 2206 IS

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

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

3 if appropriate, to help correct the deficiency, and

4 prepare and submit to the Secretary a report de5 scribing the training and technical assistance of6 fered; or

7 ‘‘(B) if the State determines that such training

8 and technical assistance are not appropriate, prepare

9 and submit to the Secretary a report stating the rea10 sons for the determination;

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

12 into account the seriousness of the deficiency and

13 the time reasonably required to correct the defi14 ciency), allow the entity to develop and implement,

15 within 60 days after being informed of the defi16 ciency, a quality improvement plan to correct such

17 deficiency within a reasonable period of time, as de18 termined by the State; and

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

20 from an eligible entity a proposed quality improve21 ment plan pursuant to subparagraph (A), either ap22 prove such proposed plan or specify the reasons why

23 the proposed plan cannot be approved; and

24 ‘‘(5) after providing adequate notice and an op25 portunity for a hearing, initiate proceedings to ter-
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•S 2206 IS

1 minate the designation of or reduce the funding

2 under this subtitle of the eligible entity unless the

3 entity corrects the deficiency.

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

5 designation or reduce the funding of an eligible entity is

6 reviewable by the Secretary. The Secretary shall, upon re7 quest, review such a determination. The review shall be

8 completed not later than 60 days after the determination

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

10 review is not completed within 60 days, the determination

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

12 ‘‘SEC. 678D. FISCAL CONTROLS, AUDITS, AND WITHHOLD13 ING.

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

15 INSPECTIONS.—

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

17 under this subtitle shall—

18 ‘‘(A) establish fiscal control and fund ac19 counting procedures necessary to assure the

20 proper disbursal of and accounting for Federal

21 funds paid to the State under this subtitle, in22 cluding procedures for monitoring the funds

23 provided under this subtitle;

24 ‘‘(B) ensure that cost and accounting

25 standards of the Office of Management and
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1 Budget apply to a recipient of funds under this

2 subtitle;

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

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

5 2 years) in accordance with paragraph (2) an

6 audit of the expenditures of the State of

7 amounts received under this subtitle and

8 amounts transferred to carry out the purposes

9 of this subtitle; and

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

11 papers, and records available to the Secretary

12 and the Comptroller General of the United

13 States, or any of their duly authorized rep14 resentatives, for examination, copying, or me15 chanical reproduction on or off the premises of

16 the appropriate entity upon a reasonable re17 quest for the items.

18 ‘‘(2) AUDITS.—Each audit required by sub19 section (a)(1)(C) shall be conducted by an entity

20 independent of any agency administering activities

21 or services carried out under this subtitle and shall

22 be conducted in accordance with generally accepted

23 accounting principles. Within 30 days after the com24 pletion of each such audit in a State, the chief exec25 utive officer of the State shall submit a copy of such
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1 audit to any eligible entity that was the subject of

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

3 State, and to the Secretary.

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

5 the United States amounts found not to have been

6 expended in accordance with this subtitle or the Sec7 retary may offset such amounts against any other

8 amount to which the State is or may become entitled

9 under this subtitle.

10 ‘‘(b) WITHHOLDING.—

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

12 providing adequate notice and an opportunity for a

13 hearing conducted within the affected State, with14 hold funds from any State that does not utilize the

15 State allotment substantially in accordance with the

16 provisions of this subtitle, including the assurances

17 such State provided under section 676.

18 ‘‘(2) RESPONSE TO COMPLAINTS.—The Sec19 retary shall respond in an expeditious and speedy

20 manner to complaints of a substantial or serious na21 ture that a State has failed to use funds in accord22 ance with the provisions of this subtitle, including

23 the assurances provided by the State under section

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

25 a failure to meet any 1 of the assurances provided
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1 under section 676 that constitutes disregarding that

2 assurance shall be considered to be a complaint of

3 a serious nature.

4 ‘‘(3) INVESTIGATIONS.—Whenever the Sec5 retary determines that there is a pattern of com6 plaints of failures described in paragraph (2) from

7 any State in any fiscal year, the Secretary shall con8 duct an investigation of the use of funds received

9 under this subtitle by such State in order to ensure

10 compliance with the provisions of this subtitle.

11 ‘‘SEC. 678E. ACCOUNTABILITY AND REPORTING REQUIRE12 MENTS.

13 ‘‘(a) STATE ACCOUNTABILITY AND REPORTING RE14 QUIREMENTS.—

15 ‘‘(1) PERFORMANCE MEASUREMENT.—

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

17 each State that receives funds under this sub18 title shall participate, and shall ensure that all

19 eligible entities in the State participate, in a

20 performance measurement system, which may

21 be a performance measurement system estab22 lished by the Secretary pursuant to subsection

23 (b), or an alternative system that meets the re24 quirements of subsection (b).
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1 ‘‘(B) LOCAL AGENCIES.—The State may

2 elect to have local agencies who are subcontrac3 tors of the eligible entities under this subtitle

4 participate in the performance measurement

5 system. If the State makes that election, ref6 erences in this section to eligible entities shall

7 be considered to include the local agencies.

8 ‘‘(2) ANNUAL REPORT.—Each State shall annu9 ally prepare and submit to the Secretary a report on

10 the measured performance of the State and the eligi11 ble entities in the State. Each State shall also in12 clude in the report an accounting of the expenditure

13 of funds received by the State through the commu14 nity services block grant program, including an ac15 counting of funds spent on administrative costs by

16 the State and the eligible entities, and funds spent

17 by eligible entities on the direct delivery of local

18 services, and shall include information on the num19 ber of and characteristics of clients served under this

20 subtitle in the State, based on data collected from

21 the eligible entities. The State shall also include in

22 the report a summary describing the training and

23 technical assistance offered by the State under sec24 tion 678C(a)(3) during the year covered by the re25 port.
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1 ‘‘(b) SECRETARY’S ACCOUNTABILITY AND REPORT2 ING REQUIREMENTS.—

3 ‘‘(1) PERFORMANCE MEASUREMENT.—The Sec4 retary, in collaboration with the States and with eli5 gible entities throughout the Nation, shall establish

6 1 or more model performance measurement systems,

7 which may be used by the States and by eligible en8 tities to measure their performance in carrying out

9 the requirements of this subtitle and in achieving the

10 goals of community action plans. The Secretary shall

11 provide technical assistance, including support for

12 the enhancement of electronic data systems, to

13 States and to eligible entities to enhance their capa14 bility to collect and report data for such a system

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

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

17 of each fiscal year beginning after September 30,

18 1999, the Secretary shall, directly or by grant or

19 contract, prepare a report containing—

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

21 funds by each State, and the eligible entities in

22 the State, under the community services block

23 grant program, as contained in each State plan

24 submitted pursuant to section 676;
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1 ‘‘(B) a description of how funds were actu2 ally spent by the State and eligible entities in

3 the State, including a breakdown of funds spent

4 on administrative costs and on the direct deliv5 ery of local services by eligible entities;

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

7 eligible for funds under this subtitle, the num8 ber of low-income persons served under this

9 subtitle, and such demographic data on the low10 income populations served by eligible entities as

11 is determined by the Secretary to be feasible;

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

13 funds for each State and the actual uses of the

14 funds;

15 ‘‘(E) a summary of each State’s perform16 ance results, and the results for the eligible en17 tities, as collected and submitted by the States

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

19 ‘‘(F) any additional information that the

20 Secretary considers to be appropriate to carry

21 out this subtitle, if the Secretary informs the

22 States of the need for such additional informa23 tion and allows a reasonable period of time for

24 the States to collect and provide the informa25 tion.
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1 ‘‘(3) SUBMISSION.—The Secretary shall submit

2 to the Committee on Education and the Workforce

3 of the House of Representatives and the Committee

4 on Labor and Human Resources of the Senate the

5 report described in paragraph (2), and any com6 ments the Secretary may have with respect to such

7 report. The report shall include definitions of direct,

8 indirect, and administrative costs used by the De9 partment of Health and Human Services for pro10 grams funded under this subtitle.

11 ‘‘(4) COSTS.—Of the funds reserved under sec12 tion 674(b)(3), not more than $350,000 shall be

13 available to carry out the reporting requirements

14 contained in paragraph (2) and the provision of

15 technical assistance described in paragraph (1).

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

17 ‘‘(a) CONSTRUCTION OF FACILITIES.—

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

19 paragraph (2), grants made under this subtitle

20 (other than amounts reserved under section

21 674(b)(3)) may not be used by the State, or by any

22 other person with which the State makes arrange23 ments to carry out the purposes of this subtitle, for

24 the purchase or improvement of land, or the pur25 chase, construction, or permanent improvement
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1 (other than low-cost residential weatherization or

2 other energy-related home repairs) of any building

3 or other facility.

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

5 limitation contained in paragraph (1) upon a State

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

7 the request describes extraordinary circumstances to

8 justify the purchase of land or the construction of

9 facilities (or the making of permanent improve10 ments) and that permitting the waiver will contrib11 ute to the ability of the State to carry out the pur12 poses of this subtitle.

13 ‘‘(b) POLITICAL ACTIVITIES.—

14 ‘‘(1) TREATMENT AS A STATE OR LOCAL AGEN15 CY.—For purposes of chapter 15 of title 5, United

16 States Code, any entity that assumes responsibility

17 for planning, developing, and coordinating activities

18 under this subtitle and receives assistance under this

19 subtitle shall be deemed to be a State or local agen20 cy. For purposes of paragraphs (1) and (2) of sec21 tion 1502(a) of such title, any entity receiving as22 sistance under this subtitle shall be deemed to be a

23 State or local agency.

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

25 this subtitle shall not be carried on in a manner in-
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1 volving the use of program funds, the provision of

2 services, or the employment or assignment of per3 sonnel, in a manner supporting or resulting in the

4 identification of such programs with—

5 ‘‘(A) any partisan or nonpartisan political

6 activity or any political activity associated with

7 a candidate, or contending faction or group, in

8 an election for public or party office;

9 ‘‘(B) any activity to provide voters or pro10 spective voters with transportation to the polls

11 or similar assistance in connection with any

12 such election; or

13 ‘‘(C) any voter registration activity.

14 ‘‘(3) RULES AND REGULATIONS.—The Sec15 retary, after consultation and regulations with the

16 Office of Personnel Management, shall issue rules

17 and regulations to provide for the enforcement of

18 this subsection, which shall include provisions for

19 summary suspension of assistance or other action

20 necessary to permit enforcement on an emergency

21 basis.

22 ‘‘(c) NONDISCRIMINATION.—

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

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

25 be excluded from participation in, be denied the ben-
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1 efits of, or be subjected to discrimination under, any

2 program or activity funded in whole or in part with

3 funds made available under this subtitle. Any prohi4 bition against discrimination on the basis of age

5 under the Age Discrimination Act of 1975 (42

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

7 qualified individual with a disability as provided in

8 section 504 of the Rehabilitation Act of 1973 (29

9 U.S.C. 794) or title II of the Americans with Dis10 abilities Act of 1990 (42 U.S.C. 12131 et seq.) shall

11 also apply to any such program or activity.

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

13 Secretary determines that a State that has received

14 a payment under this subtitle has failed to comply

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

16 Secretary shall notify the chief executive officer of

17 the State and shall request that the officer secure

18 compliance. If within a reasonable period of time,

19 not to exceed 60 days, the chief executive officer

20 fails or refuses to secure compliance, the Secretary

21 is authorized to—

22 ‘‘(A) refer the matter to the Attorney Gen23 eral with a recommendation that an appropriate

24 civil action be instituted;
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1 ‘‘(B) exercise the powers and functions

2 provided by title VI of the Civil Rights Act of

3 1964 (42 U.S.C. 2000d et seq.), the Age Dis4 crimination Act of 1975 (42 U.S.C. 6101 et

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

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

7 or

8 ‘‘(C) take such other action as may be pro9 vided by law.

10 ‘‘(3) ACTION OF ATTORNEY GENERAL.—When a

11 matter is referred to the Attorney General pursuant

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

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

14 pattern or practice of discrimination in violation of

15 the provisions of this subsection, the Attorney Gen16 eral may bring a civil action in any appropriate

17 United States district court for such relief as may

18 be appropriate, including injunctive relief.

19 ‘‘SEC. 679. OPERATIONAL RULE.

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

21 NONGOVERNMENTAL PROVIDERS.—For any program car22 ried out by the Federal Government, or by a State or local

23 government under this subtitle, the government shall con24 sider, on the same basis as other nongovernmental organi25 zations, faith-based organizations to provide the assistance
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1 under the program, so long as the program is implemented

2 in a manner consistent with the Establishment Clause of

3 the first amendment to the Constitution. Neither the Fed4 eral Government nor a State or local government receiving

5 funds under this subtitle shall discriminate against an or6 ganization that provides assistance under, or applies to

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

8 the organization has a faith-based character.

9 ‘‘(b) ADDITIONAL SAFEGUARDS.—Neither the Fed10 eral Government nor a State or local government shall re11 quire a faith-based organization to remove religious art,

12 icons, scripture, or other symbols in order to be eligible

13 to provide assistance under a program described in sub14 section (a).

15 ‘‘(c) LIMITATIONS ON USE OF FUNDS FOR CERTAIN

16 PURPOSES.—No funds provided through a grant or con17 tract to a faith-based organization to provide assistance

18 under any program described in subsection (a) shall be

19 expended for sectarian worship, instruction, or proselytiza20 tion.

21 ‘‘(d) FISCAL ACCOUNTABILITY.—

22 ‘‘(1) IN GENERAL.—Except as provided in para23 graph (2), any faith-based organization providing as24 sistance under any program described in subsection

25 (a) shall be subject to the same regulations as other
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1 nongovernmental organizations to account in accord

2 with generally accepted accounting principles for the

3 use of such funds provided under such program.

4 ‘‘(2) LIMITED AUDIT.—Such organization shall

5 segregate government funds provided under such

6 program into a separate account. Only the govern7 ment funds shall be subject to audit by the govern8 ment.

9 ‘‘SEC. 680. DISCRETIONARY AUTHORITY OF THE SEC10 RETARY.

11 ‘‘(a) GRANTS, CONTRACTS, ARRANGEMENTS, LOANS,

12 AND GUARANTEES.—

13 ‘‘(1) IN GENERAL.—The Secretary shall, from

14 funds reserved under section 674(b)(3), make

15 grants, loans, or guarantees to States and public

16 agencies and private, nonprofit organizations, or

17 enter into contracts or jointly financed cooperative

18 arrangements with States and public agencies and

19 private, nonprofit organizations (and for-profit orga20 nizations, to the extent specified in paragraph

21 (2)(E)) for each of the objectives described in para22 graphs (2) through (4).

23 ‘‘(2) COMMUNITY ECONOMIC DEVELOPMENT.—

24 ‘‘(A) ECONOMIC DEVELOPMENT ACTIVI25 TIES.—The Secretary shall make grants de-
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1 scribed in paragraph (1) on a competitive basis

2 to private, non-profit organizations that are

3 community development corporations to provide

4 technical and financial assistance for economic

5 development activities designed to address the

6 economic needs of low-income individuals and

7 families by creating employment and business

8 development opportunities.

9 ‘‘(B) CONSULTATION.—The Secretary

10 shall exercise the authority provided under sub11 paragraph (A) after consultation with other rel12 evant Federal officials.

13 ‘‘(C) GOVERNING BOARDS.—For a commu14 nity development corporation to receive funds to

15 carry out this paragraph, the corporation shall

16 be governed by a board that shall consist of

17 residents of the community and business and

18 civic leaders and shall have as a principal pur19 pose planning, developing, or managing low-in20 come housing or community development

21 projects.

22 ‘‘(D) GEOGRAPHIC DISTRIBUTION.—In

23 making grants to carry out this paragraph, the

24 Secretary shall take into consideration the geo25 graphic distribution of funding among States
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1 and the relative proportion of funding among

2 rural and urban areas.

3 ‘‘(E) RESERVATION.—Of the amounts

4 made available to carry out this paragraph, the

5 Secretary may reserve not more than 1 percent

6 for each fiscal year to make grants to private,

7 nonprofit organizations or to enter into con8 tracts with private, nonprofit or for-profit orga9 nizations to provide technical assistance to aid

10 community development corporations in devel11 oping or implementing activities funded to carry

12 out this paragraph and to evaluate activities

13 funded to carry out this paragraph.

14 ‘‘(3) RURAL COMMUNITY DEVELOPMENT AC15 TIVITIES.—The Secretary shall provide the assist16 ance described in paragraph (1) for rural community

17 development activities, which shall include—

18 ‘‘(A) grants to private, nonprofit corpora19 tions that provide assistance concerning home

20 repair to rural low-income families and plan21 ning and developing low-income rural rental

22 housing units; and

23 ‘‘(B) grants to multistate, regional, pri24 vate, nonprofit organizations to provide training
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1 and technical assistance to small, rural commu2 nities in meeting their community facility needs.

3 ‘‘(4) NEIGHBORHOOD INNOVATION

4 PROJECTS.—The Secretary shall provide the assist5 ance described in paragraph (1) for neighborhood in6 novation projects, which shall include grants to

7 neighborhood-based private, nonprofit organizations

8 to test or assist in the development of new ap9 proaches or methods that will aid in overcoming spe10 cial problems identified by communities or neighbor11 hoods or otherwise assist in furthering the purposes

12 of this subtitle, and which may include projects that

13 are designed to serve low-income individuals and

14 families who are not being effectively served by other

15 programs.

16 ‘‘(b) EVALUATION.—The Secretary shall require all

17 activities receiving assistance under this section to be eval18 uated for their effectiveness. Funding for such evaluations

19 shall be provided as a stated percentage of the assistance

20 or through a separate grant awarded by the Secretary spe21 cifically for the purpose of evaluation of a particular activ22 ity or group of activities.

23 ‘‘(c) ANNUAL REPORT.—The Secretary shall compile

24 an annual report containing a summary of the evaluations

25 required in subsection (b) and a listing of all activities as-
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1 sisted under this section. The Secretary shall annually

2 submit the report to the Chairperson of the Committee

3 on Education and the Workforce of the House of Rep4 resentatives and the Chairperson of the Committee on

5 Labor and Human Resources of the Senate.

6 ‘‘SEC. 681. COMMUNITY FOOD AND NUTRITION PROGRAMS.

7 ‘‘(a) GRANTS.—The Secretary may, through grants

8 to public and private, nonprofit agencies, provide for com9 munity-based, local, statewide, and national programs—

10 ‘‘(1) to coordinate private and public food as11 sistance resources, wherever the grant recipient de12 termines such coordination to be inadequate, to bet13 ter serve low-income populations;

14 ‘‘(2) to assist low-income communities to iden15 tify potential sponsors of child nutrition programs

16 and to initiate such programs in underserved or

17 unserved areas; and

18 ‘‘(3) to develop innovative approaches at the

19 State and local level to meet the nutrition needs of

20 low-income individuals.

21 ‘‘(b) ALLOTMENTS AND DISTRIBUTION OF FUNDS.—

22 ‘‘(1) IN GENERAL.—Of the amount appro23 priated for a fiscal year to carry out this section, the

24 Secretary shall distribute funds for grants under

25 subsection (a) as follows:
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1 ‘‘(A) ALLOTMENTS.—From 60 percent of

2 such amount (but not to exceed $3,600,000),

3 the Secretary shall allot for grants to eligible

4 agencies for statewide programs in each State

5 the amount that bears the same ratio to 60 per6 cent of such amount as the low-income and un7 employed population of such State bears to the

8 low-income and unemployed population of all

9 the States.

10 ‘‘(B) COMPETITIVE GRANTS.—From 40

11 percent of such amount (but not to exceed

12 $2,400,000), the Secretary shall make grants

13 on a competitive basis to eligible agencies for

14 local and statewide programs.

15 ‘‘(2) GREATER AVAILABLE APPROPRIATIONS.—

16 Any amounts appropriated for a fiscal year to carry

17 out this section in excess of $6,000,000 shall be al18 lotted as follows:

19 ‘‘(A) ALLOTMENTS.—The Secretary shall

20 use 40 percent of such excess to make allot21 ments for grants under subsection (a) to eligi22 ble agencies for statewide programs in each

23 State in an amount that bears the same ratio

24 to 40 percent of such excess as the low-income

25 and unemployed population of such State bears
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1 to the low-income and unemployed population

2 of all the States.

3 ‘‘(B) COMPETITIVE GRANTS FOR LOCAL

4 AND STATEWIDE PROGRAMS.—The Secretary

5 shall use 40 percent of such excess to make

6 grants under subsection (a) on a competitive

7 basis to eligible agencies for local and statewide

8 programs.

9 ‘‘(C) COMPETITIVE GRANTS FOR NATION10 WIDE PROGRAMS.—The Secretary shall use the

11 remaining 20 percent of such excess to make

12 grants under subsection (a) on a competitive

13 basis to eligible agencies for nationwide pro14 grams, including programs benefiting Indians

15 as defined in section 677 and migrant or sea16 sonal farmworkers.

17 ‘‘(3) ELIGIBILITY FOR ALLOTMENTS FOR

18 STATEWIDE PROGRAMS.—To be eligible to receive an

19 allotment under paragraph (1)(A) or (2)(A), an eli20 gible agency shall demonstrate that the proposed

21 program is statewide in scope and represents a com22 prehensive and coordinated effort to alleviate hunger

23 within the State.

24 ‘‘(4) MINIMUM ALLOTMENTS FOR STATEWIDE

25 PROGRAMS.—
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1 ‘‘(A) IN GENERAL.—From the amounts al2 lotted under paragraphs (1)(A) and (2)(A), the

3 minimum total allotment for each State for

4 each fiscal year shall be—

5 ‘‘(i) $15,000 if the total amount ap6 propriated to carry out this section is not

7 less than $7,000,000 but less than

8 $10,000,000;

9 ‘‘(ii) $20,000 if the total amount ap10 propriated to carry out this section is not

11 less than $10,000,000 but less than

12 $15,000,000; or

13 ‘‘(iii) $30,000 if the total amount ap14 propriated to carry out this section is not

15 less than $15,000,000.

16 ‘‘(B) DEFINITION.—In this paragraph, the

17 term ‘State’ does not include Guam, American

18 Samoa, the United States Virgin Islands, the

19 Commonwealth of the Northern Mariana Is20 lands, or the Freely Associated States.

21 ‘‘(5) MAXIMUM GRANTS.—From funds made

22 available under paragraphs (1)(B) and (2)(B) for

23 any fiscal year, the Secretary may not make grants

24 under subsection (a) to an eligible agency in an ag25 gregate amount exceeding $50,000. From funds
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1 made available under paragraph (2)(C) for any fiscal

2 year, the Secretary may not make grants under sub3 section (a) to an eligible agency in an aggregate

4 amount exceeding $300,000.

5 ‘‘(c) REPORT.—For each fiscal year, the Secretary

6 shall prepare and submit, to the Committee on Education

7 and the Workforce of the House of Representatives and

8 the Committee on Labor and Human Resources of the

9 Senate, a report concerning the grants made under this

10 section. Such report shall include—

11 ‘‘(1) a list of grant recipients;

12 ‘‘(2) information on the amount of funding

13 awarded to each grant recipient; and

14 ‘‘(3) a summary of the activities performed by

15 the grant recipients with funding awarded under this

16 section and a description of the manner in which

17 such activities meet the objectives described in sub18 section (a).

19 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There

20 are authorized to be appropriated to carry out this section

21 $25,000,000 for fiscal year 1999, and such sums as may

22 be necessary for each of fiscal years 2000 through 2003.
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1 ‘‘SEC. 682. NATIONAL OR REGIONAL PROGRAMS DESIGNED

2 TO PROVIDE INSTRUCTIONAL ACTIVITIES

3 FOR LOW-INCOME YOUTH.

4 ‘‘(a) GENERAL AUTHORITY.—The Secretary is au5 thorized to make a grant to an eligible service provider

6 to administer national or regional programs to provide in7 structional activities for low-income youth. In making such

8 a grant, the Secretary shall give priority to eligible service

9 providers that have a demonstrated ability to operate such

10 a program.

11 ‘‘(b) PROGRAM REQUIREMENTS.—Any instructional

12 activity carried out by an eligible service provider receiving

13 a grant under this section shall be carried out on the cam14 pus of an institution of higher education (as defined in

15 section 1201(a) of the Higher Education Act of 1965 (20

16 U.S.C. 1141(a))) and shall include—

17 ‘‘(1) access to the facilities and resources of

18 such an institution;

19 ‘‘(2) an initial medical examination and follow20 up referral or treatment, without charge, for youth

21 during their participation in such activity;

22 ‘‘(3) at least 1 nutritious meal daily, without

23 charge, for participating youth during each day of

24 participation;

25 ‘‘(4) high quality instruction in a variety of

26 sports (that shall include swimming and that may
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1 include dance and any other high quality rec2 reational activity) provided by coaches and teachers

3 from institutions of higher education and from ele4 mentary and secondary schools (as defined in section

5 14101 of the Elementary and Secondary Education

6 Act of 1965 (20 U.S.C. 8801)); and

7 ‘‘(5) enrichment instruction and information on

8 matters relating to the well-being of youth, to in9 clude educational opportunities and information on

10 study practices, education for the prevention of drug

11 and alcohol abuse, and information on health and

12 nutrition, career opportunities, and family and job

13 responsibilities.

14 ‘‘(c) ADVISORY COMMITTEE; PARTNERSHIPS.—The

15 eligible service provider shall, in each community in which

16 a program is funded under this section—

17 ‘‘(1) ensure that—

18 ‘‘(A) a community-based advisory commit19 tee is established, with representatives from

20 local youth, family, and social service organiza21 tions, schools, entities providing park and recre22 ation services, and other community-based orga23 nizations serving high-risk youth; or

24 ‘‘(B) an existing community-based advisory

25 board, commission, or committee with similar
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1 membership is utilized to serve as the commit2 tee described in subparagraph (A); and

3 ‘‘(2) enter into formal partnerships with youth4 serving organizations or other appropriate social

5 service entities in order to link program participants

6 with year-round services in their home communities

7 that support and continue the objectives of this sub8 title.

9 ‘‘(d) ELIGIBLE PROVIDERS.—A service provider that

10 is a national private, nonprofit organization, a coalition

11 of such organizations, or a private, nonprofit organization

12 applying jointly with a business concern shall be eligible

13 for a grant under this section if—

14 ‘‘(1) the applicant has demonstrated experience

15 in operating a program providing instruction to low16 income youth;

17 ‘‘(2) the applicant agrees to contribute an

18 amount (in cash or in kind, fairly evaluated) of not

19 less than 25 percent of the amount requested;

20 ‘‘(3) the applicant agrees to use no funds from

21 a grant authorized under this section for administra22 tive expenses; and

23 ‘‘(4) the applicant agrees to comply with the

24 regulations or program guidelines promulgated by
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1 the Secretary for use of funds made available

2 through the grant.

3 ‘‘(e) APPLICATIONS PROCESS.—To be eligible to re4 ceive a grant under this section, a service provider shall

5 submit to the Secretary, for approval, an application at

6 such time, in such manner, and containing such informa7 tion as the Secretary may require.

8 ‘‘(f) PROMULGATION OF REGULATIONS OR PROGRAM

9 GUIDELINES.—The Secretary shall promulgate regula10 tions or program guidelines to ensure funds made avail11 able through a grant made under this section are used

12 in accordance with the objectives of this subtitle.

13 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There

14 is authorized to be appropriated $15,000,000 for each of

15 fiscal years 1999 through 2003 for grants to carry out

16 this section.

17 ‘‘SEC. 683. REFERENCES.

18 ‘‘Any reference in any provision of law to the poverty

19 line set forth in section 624 or 625 of the Economic Op20 portunity Act of 1964 shall be construed to be a reference

21 to the poverty line defined in section 673. Any reference

22 in any provision of law to any community action agency

23 designated under title II of the Economic Opportunity Act

24 of 1964 shall be construed to be a reference to an entity
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1 eligible to receive funds under the community services

2 block grant program.’’.

3 SEC. 202. CONFORMING AMENDMENTS.

4 (a) PREPARATION.—After consultation with the ap5 propriate committees of Congress and the Director of the

6 Office of Management and Budget, the Secretary of

7 Health and Human Services shall prepare recommended

8 legislation containing technical and conforming amend9 ments to reflect the changes made by this title.

10 (b) SUBMISSION TO CONGRESS.—Not later than 6

11 months after the date of enactment of this Act, the Sec12 retary shall submit to Congress the recommended legisla13 tion referred to under subsection (a).

14 SEC. 203. REPEALERS.

15 Sections 407 and 408 of the Human Services Reau16 thorization Act of 1986 (42 U.S.C 9812a and 9910b) are

17 repealed.

18 TITLE III—LOW-INCOME HOME

19 ENERGY ASSISTANCE

20 SEC. 301. AUTHORIZATION.

21 (a) IN GENERAL.—Section 2602(b) of the Low-In22 come Home Energy Assistance Act of 1981 (42 U.S.C.

23 8621(b)) is amended by striking ‘‘fiscal years 1995

24 through 1999’’ and inserting ‘‘fiscal years 1999 through

25 2004’’.
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1 (b) PROGRAM YEAR.—Section 2602(c) of such Act

2 (42 U.S.C. 8621(c)) is amended to read as follows:

3 ‘‘(c)(1) Amounts appropriated under this section in

4 any fiscal year for programs and activities under this title

5 shall be made available for obligation in the succeeding

6 fiscal year.’’.

7 (c) INCENTIVE PROGRAM FOR LEVERAGING NON8 FEDERAL RESOURCES.—Section 2602(d) of such Act (42

9 U.S.C. 8621(d)) is amended—

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

11 (2) by striking ‘‘$50,000,000’’ and all that fol12 lows and inserting the following: ‘‘$30,000,000 for

13 each of fiscal years 1999 through 2004, except as

14 provided in paragraph (2).’’; and

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

16 ‘‘(2) For any fiscal year for which the amount appro17 priated under subsection (b) is not less than

18 $1,400,000,000, there are authorized to be appropriated

19 to carry out section 2607A $50,000,000 for each of fiscal

20 years 1999 through 2004.’’.

21 (d) TECHNICAL AMENDMENT.—Section 2602(e) of

22 such Act (42 U.S.C. 8621(e)) is amended by striking

23 ‘‘subsection (g)’’ and inserting ‘‘subsection (e) of such sec24 tion’’.
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1 SEC. 302. DEFINITIONS.

2 Section 2603(4) of the Low-Income Home Energy

3 Assistance Act of 1981 (42 U.S.C. 8622(4)) is amended—

4 (1) by striking ‘‘the term’’ and inserting ‘‘The

5 term’’; and

6 (2) by striking the semicolon and inserting a

7 period.

8 SEC. 303. NATURAL DISASTERS AND OTHER EMERGENCIES.

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

10 Home Energy Assistance Act of 1981 is amended—

11 (1) by redesignating paragraphs (6) through

12 (9) as paragraphs (8) through (11), respectively;

13 (2) by inserting before paragraph (8) (as redes14 ignated in paragraph (1)) the following:

15 ‘‘(7) NATURAL DISASTER.—The term ‘natural

16 disaster’ means a weather event (relating to cold or

17 hot weather), flood, earthquake, tornado, hurricane,

18 or ice storm, or an event meeting such other criteria

19 as the Secretary, in the discretion of the Secretary,

20 may determine to be appropriate.’’;

21 (3) by redesignating paragraphs (1) through

22 (5) as paragraphs (2) through (6), respectively; and

23 (4) by inserting before paragraph (2) (as redes24 ignated in paragraph (3)) the following:

25 ‘‘(1) EMERGENCY.—The term ‘emergency’ means—

26 ‘‘(A) a natural disaster;
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1 ‘‘(B) a significant home energy supply shortage

2 or disruption;

3 ‘‘(C) a significant increase in the cost of home

4 energy, as determined by the Secretary;

5 ‘‘(D) a significant increase in home energy dis6 connections reported by a utility, a State regulatory

7 agency, or another agency with necessary data;

8 ‘‘(E) a significant increase in participation in a

9 public benefit program such as the food stamp pro10 gram carried out under the Food Stamp Act of 1977

11 (7 U.S.C. 2011 et seq.), the national program to

12 provide supplemental security income carried out

13 under title XVI of the Social Security Act (42

14 U.S.C. 1381 et seq.), or the State temporary assist15 ance for needy families program carried out under

16 part A of title IV of the Social Security Act (42

17 U.S.C. 601 et seq.), as determined by the head of

18 the appropriate Federal agency;

19 ‘‘(F) a significant increase in unemployment,

20 layoffs, or the number of households with an individ21 ual applying for unemployment benefits, as deter22 mined by the Secretary of Labor; or

23 ‘‘(G) an event meeting such criteria as the Sec24 retary, in the discretion of the Secretary, may deter25 mined to be appropriate.’’.
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1 (b) CONSIDERATIONS.—Section 2604(g) of such Act

2 (42 U.S.C. 8623(g)) is amended by striking the last 2 sen3 tences and inserting the following: ‘‘In determining wheth4 er to make such an allotment to a State, the Secretary

5 shall take into account the extent to which the State was

6 affected by the emergency or disaster involved, the avail7 ability to the State of other resources under the program

8 carried out under this title or any other program, whether

9 a Member of Congress has requested that the State receive

10 the allotment, and such other factors as the Secretary may

11 find to be relevant. Not later than 30 days after making

12 the determination, but prior to releasing an allotted

13 amount to a State, the Secretary shall notify Congress of

14 the allotments made pursuant to this subsection.’’.

15 SEC. 304. STATE ALLOTMENTS.

16 Section 2604 of the Low-Income Home Energy As17 sistance Act of 1981 (42 U.S.C. 8623) is amended—

18 (1) in subsection (b)(1), by striking ‘‘the North19 ern Mariana Islands, and the Trust Territory of the

20 Pacific Islands.’’ and inserting ‘‘the Commonwealth

21 of the Northern Mariana Islands, and the combined

22 Freely Associated States.’’;

23 (2) in subsection (c)(3)(B)(ii), by striking ‘‘ap24 plication’’ and inserting ‘‘applications’’;

25 (3) by striking subsection (f);
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1 (4) in subsection (g)—

2 (A) in the first sentence, by striking ‘‘(a)

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

4 and

5 (B) in the second sentence, by striking

6 ‘‘emergency or disaster,’’ and inserting ‘‘natural

7 disaster or other emergency,’’; and

8 (5) by redesignating subsection (g) as sub9 section (e).

10 SEC. 305. ADMINISTRATION.

11 Section 2605 of the Low-Income Home Energy As12 sistance Act of 1981 (42 U.S.C. 8624) is amended—

13 (1) in subsection (b)—

14 (A) in paragraph (9)(A), by striking ‘‘and

15 not transferred pursuant to section 2604(f) for

16 use under another block grant’’;

17 (B) in paragraph (14), by striking ‘‘; and’’

18 and inserting a semicolon;

19 (C) in the matter following paragraph

20 (14), by striking ‘‘The Secretary may not pre21 scribe the manner in which the States will com22 ply with the provisions of this subsection.’’; and

23 (D) in the matter following paragraph

24 (16), by inserting before ‘‘The Secretary shall

25 issue’’ the following: ‘‘The Secretary may not
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1 prescribe the manner in which the States will

2 comply with the provisions of this subsection.’’;

3 and

4 (2) in subsection (c)(1)—

5 (A) in subparagraph (B), by striking

6 ‘‘States’’ and inserting ‘‘State’’; and

7 (B) in subparagraph (G)(i), by striking

8 ‘‘has’’ and inserting ‘‘had’’.

9 SEC. 306. PAYMENTS TO STATES.

10 Section 2607(b)(2)(B) of the Low-Income Home En11 ergy Assistance Act of 1981 (42 U.S.C. 8626(b)(2)(B))

12 is amended—

13 (1) in the first sentence, by striking ‘‘and not

14 transferred pursuant to section 2604(f)’’; and

15 (2) in the second sentence, by striking ‘‘but not

16 transferred by the State’’.

17 SEC. 307. RESIDENTIAL ENERGY ASSISTANCE CHALLENGE

18 OPTION.

19 (a) EVALUATION.—The Comptroller General shall

20 conduct an evaluation of the Residential Energy Assist21 ance Challenge program described in section 2607B of the

22 Low-Income Home Energy Assistance Act of 1981 (42

23 U.S.C. 8626b).
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1 (b) REPORT.—Not later than 2 years after the date

2 of enactment of this Act, the Comptroller General shall

3 prepare and submit to Congress a report containing—

4 (1) the findings resulting from the evaluation

5 described in subsection (a); and

6 (2) the State evaluations described in para7 graphs (1) and (2) of subsection (b) of such section

8 2607B.

9 (c) INCENTIVE GRANTS.—Section 2607B(b)(1) of the

10 Low-Income Home Energy Assistance Act of 1981 (42

11 U.S.C. 8626b(b)(1)) is amended by striking ‘‘For each of

12 the fiscal years 1996 through 1999’’ and inserting ‘‘For

13 each fiscal year’’.

14 (d) TECHNICAL AMENDMENTS.—Section 2607B of

15 such Act (42 U.S.C. 8626b) is amended—

16 (1) in subsection (e)(2)—

17 (A) by redesignating subparagraphs (F)

18 through (N) as subparagraphs (E) through

19 (M), respectively; and

20 (B) in clause (i) of subparagraph (I) (as

21 redesignated in subparagraph (A)), by striking

22 ‘‘on’’ and inserting ‘‘of’’; and

23 (2) by redesignating subsection (g) as sub24 section (f).
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1 SEC. 308. TECHNICAL ASSISTANCE, TRAINING, AND COM2 PLIANCE REVIEWS.

3 (a) IN GENERAL.—Section 2609A(a) of the Low-In4 come Home Energy Assistance Act of 1981 (42 U.S.C.

5 8628a(a)) is amended—

6 (1) in the matter preceding paragraph (1)—

7 (A) by striking ‘‘$250,000’’ and inserting

8 ‘‘$300,000’’; and

9 (B) by striking ‘‘Secretary—’’ and insert10 ing ‘‘Secretary to conduct onsite compliance re11 views of programs supported under this title

12 or—’’; and

13 (2) in paragraph (2)—

14 (A) by inserting ‘‘or interagency agree15 ments’’ after ‘‘cooperative arrangements’’; and

16 (B) by inserting ‘‘(including Federal agen17 cies)’’ after ‘‘public agencies’’.

18 (b) CONFORMING AMENDMENT.—The section head19 ing of section 2609A of such Act (42 U.S.C. 8628a) is

20 amended to read as follows:
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1 ‘‘TECHNICAL ASSISTANCE, TRAINING, AND COMPLIANCE

2 REVIEWS’’.

3 TITLE IV—ASSETS FOR

4 INDEPENDENCE

5 SEC. 401. SHORT TITLE.

6 This title may be cited as the ‘‘Assets for Independ7 ence Act’’.

8 SEC. 402. FINDINGS.

9 Congress makes the following findings:

10 (1) Economic well-being does not come solely

11 from income, spending, and consumption, but also

12 requires savings, investment, and accumulation of

13 assets because assets can improve economic inde14 pendence and stability, connect individuals with a

15 viable and hopeful future, stimulate development of

16 human and other capital, and enhance the welfare of

17 offspring.

(2) Fully 1 18 ⁄2 of all Americans have either no,

19 negligible, or negative assets available for invest20 ment, just as the price of entry to the economic

21 mainstream, the cost of a house, an adequate edu22 cation, and starting a business, is increasing. Fur23 ther, the household savings rate of the United States

24 lags far behind other industrial nations presenting a

25 barrier to economic growth.
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1 (3) In the current tight fiscal environment, the

2 United States should invest existing resources in

3 high-yield initiatives. There is reason to believe that

4 the financial returns, including increased income, tax

5 revenue, and decreased welfare cash assistance, re6 sulting from individual development accounts will far

7 exceed the cost of investment in those accounts.

8 (4) Traditional public assistance programs con9 centrating on income and consumption have rarely

10 been successful in promoting and supporting the

11 transition to increased economic self-sufficiency. In12 come-based domestic policy should be complemented

13 with asset-based policy because, while income-based

14 policies ensure that consumption needs (including

15 food, child care, rent, clothing, and health care) are

16 met, asset-based policies provide the means to

17 achieve greater independence and economic well18 being.

19 SEC. 403. PURPOSES.

20 The purposes of this title are to provide for the estab21 lishment of demonstration projects designed to deter22 mine—

23 (1) the social, civic, psychological, and economic

24 effects of providing to individuals and families with
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1 limited means an incentive to accumulate assets by

2 saving a portion of their earned income;

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

4 that promotes saving for postsecondary education,

5 homeownership, and microenterprise development

6 may be used to enable individuals and families with

7 limited means to increase their economic self-suffi8 ciency; and

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

10 stabilizes and improves families and the community

11 in which they live.

12 SEC. 404. DEFINITIONS.

13 In this title:

14 (1) APPLICABLE PERIOD.—The term ‘‘applica15 ble period’’ means, with respect to amounts to be

16 paid from a grant made for a project year, the cal17 endar year immediately preceding the calendar year

18 in which the grant is made.

19 (2) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible

20 individual’’ means an individual who is selected to

21 participate by a qualified entity under section 409.

22 (3) EMERGENCY WITHDRAWAL.—The term

23 ‘‘emergency withdrawal’’ means a withdrawal by an

24 eligible individual that—
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1 (A) is a withdrawal of only those funds, or

2 a portion of those funds, deposited by the indi3 vidual in the individual development account of

4 the individual;

5 (B) is permitted by a qualified entity on a

6 case-by-case basis; and

7 (C) is made for—

8 (i) expenses for medical care or nec9 essary to obtain medical care, for the indi10 vidual or a spouse or dependent of the in11 dividual described in paragraph (8)(D);

12 (ii) payments necessary to prevent the

13 eviction of the individual from the resi14 dence of the individual, or foreclosure on

15 the mortgage for the principal residence of

16 the individual, as defined in paragraph

17 (8)(B); or

18 (iii) payments necessary to enable the

19 individual to meet necessary living ex20 penses following loss of employment.

21 (4) HOUSEHOLD.—The term ‘‘household’’

22 means all individuals who share use of a dwelling

23 unit as primary quarters for living and eating sepa24 rate from other individuals.

25 (5) INDIVIDUAL DEVELOPMENT ACCOUNT.—
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1 (A) IN GENERAL.—The term ‘‘individual

2 development account’’ means a trust created or

3 organized in the United States exclusively for

4 the purpose of paying the qualified expenses of

5 an eligible individual, or enabling the eligible in6 dividual to make an emergency withdrawal, but

7 only if the written governing instrument creat8 ing the trust meets the following requirements:

9 (i) No contribution will be accepted

10 unless it is in cash or by check.

11 (ii) The trustee is a federally insured

12 financial institution, or a State insured fi13 nancial institution if no federally insured

14 financial institution is available.

15 (iii) The assets of the trust will be in16 vested in accordance with the direction of

17 the eligible individual after consultation

18 with the qualified entity providing deposits

19 for the individual under section 410.

20 (iv) The assets of the trust will not be

21 commingled with other property except in

22 a common trust fund or common invest23 ment fund.

24 (v) Except as provided in clause (vi),

25 any amount in the trust which is attrib-
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1 utable to a deposit provided under section

2 410 may be paid or distributed out of the

3 trust only for the purpose of paying the

4 qualified expenses of the eligible individual,

5 or enabling the eligible individual to make

6 an emergency withdrawal.

7 (vi) Any balance in the trust on the

8 day after the date on which the individual

9 for whose benefit the trust is established

10 dies shall be distributed within 30 days of

11 that date as directed by that individual to

12 another individual development account es13 tablished for the benefit of an eligible indi14 vidual.

15 (B) CUSTODIAL ACCOUNTS.—For purposes

16 of subparagraph (A), a custodial account shall

17 be treated as a trust if the assets of the custo18 dial account are held by a bank (as defined in

19 section 408(n) of the Internal Revenue Code of

20 1986) or another person who demonstrates, to

21 the satisfaction of the Secretary, that the man22 ner in which such person will administer the

23 custodial account will be consistent with the re24 quirements of this title, and if the custodial ac25 count would, except for the fact that it is not
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1 a trust, constitute an individual development

2 account described in subparagraph (A). For

3 purposes of this title, in the case of a custodial

4 account treated as a trust by reason of the pre5 ceding sentence, the custodian of that custodial

6 account shall be treated as the trustee thereof.

7 (6) PROJECT YEAR.—The term ‘‘project year’’

8 means, with respect to a demonstration project, any

9 of the 4 consecutive 12-month periods beginning on

10 the date the project is originally authorized to be

11 conducted.

12 (7) QUALIFIED ENTITY.—

13 (A) IN GENERAL.—The term ‘‘qualified en14 tity’’ means—

15 (i) one or more not-for-profit organi16 zations described in section 501(c)(3) of

17 the Internal Revenue Code of 1986 and ex18 empt from taxation under section 501(a)

19 of such Code; or

20 (ii) a State or local government agen21 cy, or a tribal government, submitting an

22 application under section 405 jointly with

23 an organization described in clause (i).

24 (B) RULE OF CONSTRUCTION.—Nothing in

25 this paragraph shall be construed as preventing
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1 an organization described in subparagraph

2 (A)(i) from collaborating with a financial insti3 tution or for-profit community development cor4 poration to carry out the purposes of this title.

5 (8) QUALIFIED EXPENSES.—The term ‘‘quali6 fied expenses’’ means 1 or more of the following, as

7 provided by the qualified entity:

8 (A) POSTSECONDARY EDUCATIONAL EX9 PENSES.—Postsecondary educational expenses

10 paid from an individual development account di11 rectly to an eligible educational institution. In

12 this subparagraph:

13 (i) POSTSECONDARY EDUCATIONAL

14 EXPENSES.—The term ‘‘postsecondary

15 educational expenses’’ means the following:

16 (I) TUITION AND FEES.—Tuition

17 and fees required for the enrollment

18 or attendance of a student at an eligi19 ble educational institution.

20 (II) FEES, BOOKS, SUPPLIES,

21 AND EQUIPMENT.—Fees, books, sup22 plies, and equipment required for

23 courses of instruction at an eligible

24 educational institution.
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1 (ii) ELIGIBLE EDUCATIONAL INSTITU2 TION.—The term ‘‘eligible educational in3 stitution’’ means the following:

4 (I) INSTITUTION OF HIGHER

5 EDUCATION.—An institution described

6 in section 481(a)(1) or 1201(a) of the

7 Higher Education Act of 1965 (20

8 U.S.C. 1088(a)(1) or 1141(a)), as

9 such sections are in effect on the date

10 of enactment of this title.

11 (II) POSTSECONDARY VOCA12 TIONAL EDUCATION SCHOOL.—An

13 area vocational education school (as

14 defined in subparagraph (C) or (D) of

15 section 521(4) of the Carl D. Perkins

16 Vocational and Applied Technology

17 Education Act (20 U.S.C. 2471(4)))

18 which is in any State (as defined in

19 section 521(33) of such Act), as such

20 sections are in effect on the date of

21 enactment of this title.

22 (B) FIRST-HOME PURCHASE.—Qualified

23 acquisition costs with respect to a principal res24 idence for a qualified first-time homebuyer, if

25 paid from an individual development account di-
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1 rectly to the persons to whom the amounts are

2 due. In this subparagraph:

3 (i) PRINCIPAL RESIDENCE.—The term

4 ‘‘principal residence’’ means a principal

5 residence, the qualified acquisition costs of

6 which do not exceed 100 percent of the av7 erage area purchase price applicable to

8 such residence.

9 (ii) QUALIFIED ACQUISITION COSTS.—

10 The term ‘‘qualified acquisition costs’’

11 means the costs of acquiring, constructing,

12 or reconstructing a residence. The term in13 cludes any usual or reasonable settlement,

14 financing, or other closing costs.

15 (iii) QUALIFIED FIRST-TIME HOME16 BUYER.—

17 (I) IN GENERAL.—The term

18 ‘‘qualified first-time homebuyer’’

19 means an individual participating in

20 the project (and, if married, the indi21 vidual’s spouse) who has no present

22 ownership interest in a principal resi23 dence during the 3-year period ending

24 on the date of acquisition of the prin-
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1 cipal residence to which this subpara2 graph applies.

3 (II) DATE OF ACQUISITION.—

4 The term ‘‘date of acquisition’’ means

5 the date on which a binding contract

6 to acquire, construct, or reconstruct

7 the principal residence to which this

8 subparagraph applies is entered into.

9 (C) BUSINESS CAPITALIZATION.—Amounts

10 paid from an individual development account di11 rectly to a business capitalization account which

12 is established in a federally insured financial in13 stitution and is restricted to use solely for

14 qualified business capitalization expenses. In

15 this subparagraph:

16 (i) QUALIFIED BUSINESS CAPITALIZA17 TION EXPENSES.—The term ‘‘qualified

18 business capitalization expenses’’ means

19 qualified expenditures for the capitalization

20 of a qualified business pursuant to a quali21 fied plan.

22 (ii) QUALIFIED EXPENDITURES.—The

23 term ‘‘qualified expenditures’’ means ex24 penditures included in a qualified plan, in-
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1 cluding capital, plant, equipment, working

2 capital, and inventory expenses.

3 (iii) QUALIFIED BUSINESS.—The term

4 ‘‘qualified business’’ means any business

5 that does not contravene any law or public

6 policy (as determined by the Secretary).

7 (iv) QUALIFIED PLAN.—The term

8 ‘‘qualified plan’’ means a business plan, or

9 a plan to use a business asset purchased,

10 which—

11 (I) is approved by a financial in12 stitution, a microenterprise develop13 ment organization, or a nonprofit loan

14 fund having demonstrated fiduciary

15 integrity;

16 (II) includes a description of

17 services or goods to be sold, a market18 ing plan, and projected financial

19 statements; and

20 (III) may require the eligible in21 dividual to obtain the assistance of an

22 experienced entrepreneurial adviser.

23 (D) TRANSFERS TO IDAS OF FAMILY MEM24 BERS.—Amounts paid from an individual devel25 opment account directly into another such ac-
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1 count established for the benefit of an eligible

2 individual who is—

3 (i) the individual’s spouse; or

4 (ii) any dependent of the individual

5 with respect to whom the individual is al6 lowed a deduction under section 151 of the

7 Internal Revenue Code of 1986.

8 (9) QUALIFIED SAVINGS OF THE INDIVIDUAL

9 FOR THE PERIOD.—The term ‘‘qualified savings of

10 the individual for the period’’ means the aggregate

11 of the amounts contributed by the individual to the

12 individual development account of the individual

13 during the period.

14 (10) SECRETARY.—The term ‘‘Secretary’’

15 means the Secretary of Health and Human Services.

16 (11) TRIBAL GOVERNMENT.—The term ‘‘tribal

17 government’’ means a tribal organization, as defined

18 in section 4 of the Indian Self-Determination and

19 Education Assistance Act (25 U.S.C. 450b) or a Na20 tive Hawaiian organization, as defined in section

21 9212 of the Native Hawaiian Education Act (20

22 U.S.C. 7912).

23 SEC. 405. APPLICATIONS.

24 (a) ANNOUNCEMENT OF DEMONSTRATION

25 PROJECTS.—Not later than 3 months after the date of
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1 enactment of this title, the Secretary shall publicly an2 nounce the availability of funding under this title for dem3 onstration projects and shall ensure that applications to

4 conduct the demonstration projects are widely available to

5 qualified entities.

6 (b) SUBMISSION.—Not later than 6 months after the

7 date of enactment of this title, a qualified entity may sub8 mit to the Secretary an application to conduct a dem9 onstration project under this title.

10 (c) CRITERIA.—In considering whether to approve an

11 application to conduct a demonstration project under this

12 title, the Secretary shall assess the following:

13 (1) SUFFICIENCY OF PROJECT.—The degree to

14 which the project described in the application ap15 pears likely to aid project participants in achieving

16 economic self-sufficiency through activities requiring

17 qualified expenses. In making such assessment, the

18 Secretary shall consider the overall quality of project

19 activities in making any particular kind or combina20 tion of qualified expenses to be an essential feature

21 of any project.

22 (2) ADMINISTRATIVE ABILITY.—The experience

23 and ability of the applicant to responsibly administer

24 the project.
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1 (3) ABILITY TO ASSIST PARTICIPANTS.—The

2 experience and ability of the applicant in recruiting,

3 educating, and assisting project participants to in4 crease their economic independence and general well5 being through the development of assets.

6 (4) COMMITMENT OF NON-FEDERAL FUNDS.—

7 The aggregate amount of direct funds from non8 Federal public sector and from private sources that

9 are formally committed to the project as matching

10 contributions.

11 (5) ADEQUACY OF PLAN FOR PROVIDING IN12 FORMATION FOR EVALUATION.—The adequacy of

13 the plan for providing information relevant to an

14 evaluation of the project.

15 (6) OTHER FACTORS.—Such other factors rel16 evant to the purposes of this title as the Secretary

17 may specify.

18 (d) PREFERENCES.—In considering an application to

19 conduct a demonstration project under this title, the Sec20 retary shall give preference to an application that—

21 (1) demonstrates the willingness and ability to

22 select individuals described in section 408 who are

23 predominantly from households in which a child (or

24 children) is living with the child’s biological or adop-
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1 tive mother or father, or with the child’s legal guard2 ian;

3 (2) provides a commitment of non-Federal

4 funds with a proportionately greater amount of such

5 funds committed by private sector sources; and

6 (3) targets such individuals residing within 1 or

7 more relatively well-defined neighborhoods or com8 munities (including rural communities) that experi9 ence high rates of poverty or unemployment.

10 (e) APPROVAL.—Not later than 9 months after the

11 date of enactment of this title, the Secretary shall, on a

12 competitive basis, approve such applications to conduct

13 demonstration projects under this title as the Secretary

14 deems appropriate, taking into account the assessments

15 required by subsections (c) and (d). The Secretary is en16 couraged to ensure that the applications that are approved

17 involve a range of communities (both rural and urban) and

18 diverse populations.

19 (f) CONTRACTS WITH NONPROFIT ENTITIES.—The

20 Secretary may contract with an entity described in section

21 501(c)(3) of the Internal Revenue Code of 1986 and ex22 empt from taxation under section 501(a) of such Code to

23 conduct any responsibility of the Secretary under this sec24 tion or section 412 if—
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1 (1) such entity demonstrates the ability to con2 duct such responsibility; and

3 (2) the Secretary can demonstrate that such re4 sponsibility would not be conducted by the Secretary

5 at a lower cost.

6 SEC. 406. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.

7 (a) DEMONSTRATION AUTHORITY.—If the Secretary

8 approves an application to conduct a demonstration

9 project under this title, the Secretary shall, not later than

10 10 months after the date of enactment of this title, au11 thorize the applicant to conduct the project for 4 project

12 years in accordance with the approved application and the

13 requirements of this title.

14 (b) GRANT AUTHORITY.—For each project year of a

15 demonstration project conducted under this title, the Sec16 retary may make a grant to the qualified entity authorized

17 to conduct the project. In making such a grant, the Sec18 retary shall make the grant on the first day of the project

19 year in an amount not to exceed the lesser of—

20 (1) the aggregate amount of funds committed

21 as matching contributions by non-Federal public or

22 private sector sources; or

23 (2) $1,000,000.
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1 SEC. 407. RESERVE FUND.

2 (a) ESTABLISHMENT.—A qualified entity under this

3 title, other than a State or local government agency, or

4 a tribal government, shall establish a Reserve Fund which

5 shall be maintained in accordance with this section.

6 (b) AMOUNTS IN RESERVE FUND.—

7 (1) IN GENERAL.—As soon after receipt as is

8 practicable, a qualified entity shall deposit in the Re9 serve Fund established under subsection (a)—

10 (A) all funds provided to the qualified en11 tity by any public or private source in connec12 tion with the demonstration project; and

13 (B) the proceeds from any investment

14 made under subsection (c)(2).

15 (2) UNIFORM ACCOUNTING REGULATIONS.—

16 The Secretary shall prescribe regulations with re17 spect to accounting for amounts in the Reserve

18 Fund established under subsection (a).

19 (c) USE OF AMOUNTS IN THE RESERVE FUND.—

20 (1) IN GENERAL.—A qualified entity shall use

21 the amounts in the Reserve Fund established under

22 subsection (a) to—

23 (A) assist participants in the demonstra24 tion project in obtaining the skills (including

25 economic literacy, budgeting, credit, and coun26 seling) and information necessary to achieve
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1 economic self-sufficiency through activities re2 quiring qualified expenses;

3 (B) provide deposits in accordance with

4 section 410 for individuals selected by the quali5 fied entity to participate in the demonstration

6 project;

7 (C) administer the demonstration project;

8 and

9 (D) provide the research organization eval10 uating the demonstration project under section

11 414 with such information with respect to the

12 demonstration project as may be required for

13 the evaluation.

14 (2) AUTHORITY TO INVEST FUNDS.—

15 (A) GUIDELINES.—The Secretary shall es16 tablish guidelines for investing amounts in the

17 Reserve Fund established under subsection (a)

18 in a manner that provides an appropriate bal19 ance between return, liquidity, and risk.

20 (B) INVESTMENT.—A qualified entity shall

21 invest the amounts in its Reserve Fund that are

22 not immediately needed to carry out the provi23 sions of paragraph (1), in accordance with the

24 guidelines established under subparagraph (A).
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1 (3) LIMITATION ON USES.—Not more than 9.5

2 percent of the amounts provided to a qualified entity

3 under section 406(b) shall be used by the qualified

4 entity for the purposes described in subparagraphs

5 (A), (C), and (D) of paragraph (1), of which not

6 more than 2 percent of the amounts shall be used

7 by the qualified entity for the purposes described in

8 paragraph (1)(D). If 2 or more qualified entities are

9 jointly administering a project, no qualified entity

10 shall use more than its proportional share for the

11 purposes described in subparagraphs (A), (C), and

12 (D) of paragraph (1).

13 (d) UNUSED FEDERAL GRANT FUNDS TRANS14 FERRED TO THE SECRETARY WHEN PROJECT TERMI15 NATES.—Notwithstanding subsection (c), upon the termi16 nation of any demonstration project authorized under this

17 section, the qualified entity conducting the project shall

18 transfer to the Secretary an amount equal to—

19 (1) the amounts in its Reserve Fund at time of

20 the termination; multiplied by

21 (2) a percentage equal to—

22 (A) the aggregate amount of grants made

23 to the qualified entity under section 406(b); di24 vided by
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1 (B) the aggregate amount of all funds pro2 vided to the qualified entity by all sources to

3 conduct the project.

4 SEC. 408. ELIGIBILITY FOR PARTICIPATION.

5 (a) IN GENERAL.—Any individual who is a member

6 of a household that is eligible for assistance under the

7 State temporary assistance for needy families program es8 tablished under part A of title IV of the Social Security

9 Act (42 U.S.C. 601 et seq.), or that meets each of the

10 following requirements shall be eligible to participate in

11 a demonstration project conducted under this title:

12 (1) INCOME TEST.—The adjusted gross income

13 of the household does not exceed the earned income

14 amount described in section 32 of the Internal Reve15 nue Code of 1986 (taking into account the size of

16 the household).

17 (2) NET WORTH TEST.—

18 (A) IN GENERAL.—The net worth of the

19 household, as of the end of the calendar year

20 preceding the determination of eligibility, does

21 not exceed $10,000.

22 (B) DETERMINATION OF NET WORTH.—

23 For purposes of subparagraph (A), the net

24 worth of a household is the amount equal to—
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1 (i) the aggregate market value of all

2 assets that are owned in whole or in part

3 by any member of the household; minus

4 (ii) the obligations or debts of any

5 member of the household.

6 (C) EXCLUSIONS.—For purposes of deter7 mining the net worth of a household, a house8 hold’s assets shall not be considered to include

9 the primary dwelling unit and 1 motor vehicle

10 owned by the household.

11 (b) INDIVIDUALS UNABLE TO COMPLETE THE

12 PROJECT.—The Secretary shall establish such regulations

13 as are necessary, including prohibiting future eligibility to

14 participate in any other demonstration project conducted

15 under this title, to ensure compliance with this title if an

16 individual participating in the demonstration project

17 moves from the community in which the project is con18 ducted or is otherwise unable to continue participating in

19 that project.

20 SEC. 409. SELECTION OF INDIVIDUALS TO PARTICIPATE.

21 From among the individuals eligible to participate in

22 a demonstration project conducted under this title, each

23 qualified entity shall select the individuals—

24 (1) that the qualified entity deems to be best

25 suited to participate; and
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1 (2) to whom the qualified entity will provide de2 posits in accordance with section 410.

3 SEC. 410. DEPOSITS BY QUALIFIED ENTITIES.

4 (a) IN GENERAL.—Not less than once every 3 months

5 during each project year, each qualified entity under this

6 title shall deposit in the individual development account

7 of each individual participating in the project, or into a

8 parallel account maintained by the qualified entity—

9 (1) from the non-Federal funds described in

10 section 405(c)(4), a matching contribution of not

11 less than $0.50 and not more than $4 for every $1

12 of earned income (as defined in section 911(d)(2) of

13 the Internal Revenue Code of 1986) deposited in the

14 account by a project participant during that period;

15 (2) from the grant made under section 406(b),

16 an amount equal to the matching contribution made

17 under paragraph (1); and

18 (3) any interest that has accrued on amounts

19 deposited under paragraph (1) or (2) on behalf of

20 that individual into the individual development ac21 count of the individual or into a parallel account

22 maintained by the qualified entity.

23 (b) LIMITATION ON DEPOSITS FOR AN INDIVID24 UAL.—Not more than $2,000 from a grant made under
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1 section 406(b) shall be provided to any 1 individual over

2 the course of the demonstration project.

3 (c) LIMITATION ON DEPOSITS FOR A HOUSEHOLD.—

4 Not more than $4,000 from a grant made under section

5 406(b) shall be provided to any 1 household over the

6 course of the demonstration project.

7 (d) WITHDRAWAL OF FUNDS.—The Secretary shall

8 establish such guidelines as may be necessary to ensure

9 that funds held in an individual development account are

10 not withdrawn, except for 1 or more qualified expenses,

11 or for an emergency withdrawal. Such guidelines shall in12 clude a requirement that a responsible official of the quali13 fied entity conducting a project approve such withdrawal

14 in writing. The guidelines shall provide that no individual

15 may withdraw funds from an individual development ac16 count earlier than 6 months after the date on which the

17 individual first deposits funds in the account.

18 (e) REIMBURSEMENT.—An individual shall reimburse

19 an individual development account for any funds with20 drawn from the account for an emergency withdrawal, not

21 later than 12 months after the date of the withdrawal.

22 If the individual fails to make the reimbursement, the

23 qualified entity administering the account shall transfer

24 the funds deposited into the account or a parallel account

25 under section 410 to the Reserve Fund of the qualified
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1 entity, and use the funds to benefit other individuals par2 ticipating in the demonstration project involved.

3 SEC. 411. LOCAL CONTROL OVER DEMONSTRATION

4 PROJECTS.

5 A qualified entity under this title, other than a State

6 or local government agency or a tribal government, shall,

7 subject to the provisions of section 413, have sole author8 ity over the administration of the project. The Secretary

9 may prescribe only such regulations or guidelines with re10 spect to demonstration projects conducted under this title

11 as are necessary to ensure compliance with the approved

12 applications and the requirements of this title.

13 SEC. 412. ANNUAL PROGRESS REPORTS.

14 (a) IN GENERAL.—Each qualified entity under this

15 title shall prepare an annual report on the progress of the

16 demonstration project. Each report shall include both pro17 gram and participant information and shall specify for the

18 period covered by the report the following information:

19 (1) The number of individuals making a deposit

20 into an individual development account.

21 (2) The amounts in the Reserve Fund estab22 lished with respect to the project.

23 (3) The amounts deposited in the individual de24 velopment accounts.
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1 (4) The amounts withdrawn from the individual

2 development accounts and the purposes for which

3 such amounts were withdrawn.

4 (5) The balances remaining in the individual

5 development accounts.

6 (6) The savings account characteristics (such as

7 threshold amounts and match rates) required to

8 stimulate participation in the demonstration project,

9 and how such characteristics vary among different

10 populations or communities.

11 (7) What service configurations of the qualified

12 entity (such as peer support, structured planning ex13 ercises, mentoring, and case management) increased

14 the rate and consistency of participation in the dem15 onstration project and how such configurations var16 ied among different populations or communities.

17 (8) Such other information as the Secretary

18 may require to evaluate the demonstration project.

19 (b) SUBMISSION OF REPORTS.—The qualified entity

20 shall submit each report required to be prepared under

21 subsection (a) to—

22 (1) the Secretary; and

23 (2) the Treasurer (or equivalent official) of the

24 State in which the project is conducted, if the State
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1 or a local government or a tribal government com2 mitted funds to the demonstration project.

3 (c) TIMING.—The first report required by subsection

4 (a) shall be submitted not later than 60 days after the

5 end of the calendar year in which the Secretary authorized

6 the qualified entity to conduct the demonstration project,

7 and subsequent reports shall be submitted every 12

8 months thereafter, until the conclusion of the project.

9 SEC. 413. SANCTIONS.

10 (a) AUTHORITY TO TERMINATE DEMONSTRATION

11 PROJECT.—If the Secretary determines that a qualified

12 entity under this title is not operating the demonstration

13 project in accordance with the entity’s application or the

14 requirements of this title (and has not implemented any

15 corrective recommendations directed by the Secretary),

16 the Secretary shall terminate such entity’s authority to

17 conduct the demonstration project.

18 (b) ACTIONS REQUIRED UPON TERMINATION.—If

19 the Secretary terminates the authority to conduct a dem20 onstration project, the Secretary—

21 (1) shall suspend the demonstration project;

22 (2) shall take control of the Reserve Fund es23 tablished pursuant to section 407;

24 (3) shall make every effort to identify another

25 qualified entity (or entities) willing and able to con-
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1 duct the project in accordance with the approved ap2 plication (or, as modified, if necessary to incorporate

3 the recommendations) and the requirements of this

4 title;

5 (4) shall, if the Secretary identifies an entity

6 (or entities) described in paragraph (3)—

7 (A) authorize the entity (or entities) to

8 conduct the project in accordance with the ap9 proved application (or, as modified, if nec10 essary, to incorporate the recommendations)

11 and the requirements of this title;

12 (B) transfer to the entity (or entities) con13 trol over the Reserve Fund established pursuant

14 to section 407; and

15 (C) consider, for purposes of this title—

16 (i) such other entity (or entities) to be

17 the qualified entity (or entities) originally

18 authorized to conduct the demonstration

19 project; and

20 (ii) the date of such authorization to

21 be the date of the original authorization;

22 and

23 (5) if, by the end of the 1-year period beginning

24 on the date of the termination, the Secretary has not
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1 found a qualified entity (or entities) described in

2 paragraph (3), shall—

3 (A) terminate the project; and

4 (B) from the amount remaining in the Re5 serve Fund established as part of the project,

6 remit to each source that provided funds under

7 section 405(c)(4) to the entity originally au8 thorized to conduct the project, an amount that

9 bears the same ratio to the amount so remain10 ing as the amount provided by the source under

11 section 405(c)(4) bears to the amount provided

12 by all such sources under that section.

13 SEC. 414. EVALUATIONS.

14 (a) IN GENERAL.—Not later than 10 months after

15 the date of enactment of this title, the Secretary shall

16 enter into a contract with an independent research organi17 zation to evaluate, individually and as a group, all quali18 fied entities and sources participating in the demonstra19 tion projects conducted under this title.

20 (b) FACTORS TO EVALUATE.—In evaluating any

21 demonstration project conducted under this title, the re22 search organization shall address the following factors:

23 (1) The effects of incentives and organizational

24 or institutional support on savings behavior in the

25 demonstration project.
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1 (2) The savings rates of individuals in the dem2 onstration project based on demographic characteris3 tics including gender, age, family size, race or ethnic

4 background, and income.

5 (3) The economic, civic, psychological, and so6 cial effects of asset accumulation, and how such ef7 fects vary among different populations or commu8 nities.

9 (4) The effects of individual development ac10 counts on savings rates, homeownership, level of

11 postsecondary education attained, and self-employ12 ment, and how such effects vary among different

13 populations or communities.

14 (5) The potential financial returns to the Fed15 eral Government and to other public sector and pri16 vate sector investors in individual development ac17 counts over a 5-year and 10-year period of time.

18 (6) The lessons to be learned from the dem19 onstration projects conducted under this title and if

20 a permanent program of individual development ac21 counts should be established.

22 (7) Such other factors as may be prescribed by

23 the Secretary.
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1 (c) METHODOLOGICAL REQUIREMENTS.—In evaluat2 ing any demonstration project conducted under this title,

3 the research organization shall—

4 (1) for at least 1 site, use control groups to

5 compare participants with nonparticipants;

6 (2) before, during, and after the project, obtain

7 such quantitative data as are necessary to evaluate

8 the project thoroughly; and

9 (3) develop a qualitative assessment, derived

10 from sources such as in-depth interviews, of how

11 asset accumulation affects individuals and families.

12 (d) REPORTS BY THE SECRETARY.—

13 (1) INTERIM REPORTS.—Not later than 90 days

14 after the end of the calendar year in which the Sec15 retary first authorizes a qualified entity to conduct

16 a demonstration project under this title, and every

17 12 months thereafter until all demonstration

18 projects conducted under this title are completed,

19 the Secretary shall submit to Congress an interim

20 report setting forth the results of the reports sub21 mitted pursuant to section 412(b).

22 (2) FINAL REPORTS.—Not later than 12

23 months after the conclusion of all demonstration

24 projects conducted under this title, the Secretary

25 shall submit to Congress a final report setting forth
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1 the results and findings of all reports and evalua2 tions conducted pursuant to this title.

3 (e) EVALUATION EXPENSES.—The Secretary shall

4 expend such sums as may be necessary, but not more than

5 2 percent of the amounts appropriated under section 416

6 for a fiscal year, to carry out the purposes of this section.

7 SEC. 415. TREATMENT OF FUNDS.

8 Funds (including interest accruing) deposited in indi9 vidual development accounts shall not be considered to be

10 income for purposes of determining eligibility for, or the

11 amount of assistance furnished under, any Federal or fed12 erally assisted program based on need.

13 SEC. 416. AUTHORIZATION OF APPROPRIATIONS.

14 There is authorized to be appropriated to carry out

15 this title, $25,000,000 for each of fiscal years 1999, 2000,

16 2001, 2002, and 2003 to remain available until expended.

Æ