II

106TH CONGRESS

2D SESSION S. 2356

To amend the Richard B. Russell National School Lunch Act to improve

management of the child and adult care food program.

IN THE SENATE OF THE UNITED STATES

APRIL 4, 2000

Mr. LUGAR (for himself and Mr. HARKIN) introduced the following bill; which

was read twice and referred to the Committee on Agriculture, Nutrition,

and Forestry

A BILL

To amend the Richard B. Russell National School Lunch

Act to improve management of the child and adult care

food program.

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; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Child and Adult Care Food Program Management Im6 provement Act of 2000’’.

7 (b) TABLE OF CONTENTS.—The table of contents of

8 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Definition of institution; exclusion of seriously deficient institutions.
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Sec. 3. Institution approval and applications.

Sec. 4. Reduction in administrative requirements for public sponsoring organizations.

Sec. 5. Temporary withholding of reimbursement.

Sec. 6. Limitations on ability of family or group day care homes to transfer

sponsoring organizations.

Sec. 7. Limitation on administrative expenses for sponsoring organizations.

Sec. 8. Reallocation of audit funds.

Sec. 9. Expansion of management support funding.

Sec. 10. Grants to improve program quality.

Sec. 11. Retention of funds collected from institutions.

Sec. 12. Study of administrative costs.

Sec. 13. Effective dates.

1 SEC. 2. DEFINITION OF INSTITUTION; EXCLUSION OF SERI2 OUSLY DEFICIENT INSTITUTIONS.

3 Section 17(a) of the Richard B. Russell National

4 School Lunch Act (42 U.S.C. 1766(a)) is amended—

5 (1) by striking ‘‘(a) The Secretary’’ and insert6 ing the following:

7 ‘‘(a) GRANT AUTHORITY AND INSTITUTION ELIGI8 BILITY.—

9 ‘‘(1) GRANT AUTHORITY.—The Secretary’’;

10 (2) by striking the second and third sentences

11 and inserting the following:

12 ‘‘(2) DEFINITION OF INSTITUTION.—In this

13 section, the term ‘institution’ means—

14 ‘‘(A) any public or private nonprofit orga15 nization providing nonresidential child care or

16 day care outside school hours for school chil17 dren, including any child care center, settlement

18 house, recreational center, Head Start center,
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1 and institution providing child care facilities for

2 children with disabilities;

3 ‘‘(B) any other private organization pro4 viding nonresidential child care or day care out5 side school hours for school children for which

6 the organization receives compensation from

7 amounts granted to the States under title XX

8 of the Social Security Act (42 U.S.C. 1397 et

9 seq.) (but only if the organization receives com10 pensation under that title for at least 25 per11 cent of its enrolled children or 25 percent of its

12 licensed capacity, whichever is less);

13 ‘‘(C) any public or private nonprofit orga14 nization acting as a sponsoring organization for

15 1 or more of the organizations described in sub16 paragraph (A) or (B) or for an adult day care

17 center (as defined in subsection (o)(2));

18 ‘‘(D) any other private organization acting

19 as a sponsoring organization for, and that is

20 part of the same legal entity as, 1 or more or21 ganizations that are—

22 ‘‘(i) described in subparagraph (B); or

23 ‘‘(ii) proprietary title XIX or title XX

24 centers (as defined in subsection (o)(2));
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1 ‘‘(E) any public or private nonprofit orga2 nization acting as a sponsoring organization for

3 1 or more family or group day care homes; and

4 ‘‘(F) any emergency shelter (as defined in

5 subsection (t)).’’;

6 (3) by striking ‘‘Except as provided in sub7 section (r),’’ and inserting the following:

8 ‘‘(3) AGE LIMIT.—Except as provided in sub9 section (r),’’;

10 (4) by striking ‘‘The Secretary may establish

11 separate guidelines’’ and inserting the following:

12 ‘‘(4) ADDITIONAL GUIDELINES.—The Secretary

13 may establish separate guidelines’’;

14 (5) by striking ‘‘For purposes of determining’’

15 and all that follows through ‘‘an institution’’ and in16 serting the following:

17 ‘‘(5) LICENSING.—In order to be eligible, an in18 stitution’’;

19 (6) by striking ‘‘standards; and’’ and inserting

20 ‘‘standards.’’;

21 (7) by striking ‘‘(2) no institution’’ and insert22 ing the following:

23 ‘‘(6) ELIGIBILITY CRITERIA.—No institution’’;

24 and
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1 (8) in paragraph (6) (as amended by paragraph

2 (7)), by striking subparagraph (B) and inserting the

3 following:

4 ‘‘(B) has not been seriously deficient, as

5 determined by the State agency responsible for

6 administering the child and adult care food pro7 gram authorized under this section, in the ad8 ministration or operation of any Federal, State,

9 or local government program during the pre10 vious 5-year period, or such other period as is

11 determined by the Secretary to be appro12 priate;’’.

13 SEC. 3. INSTITUTION APPROVAL AND APPLICATIONS.

14 (a) IN GENERAL.—Section 17(d) of the Richard B.

15 Russell National School Lunch Act (42 U.S.C. 1766(d))

16 is amended by striking the subsection designation and all

17 that follows through the end of paragraph (1) and insert18 ing the following:

19 ‘‘(d) INSTITUTION APPROVAL AND APPLICATIONS.—

20 ‘‘(1) INSTITUTION APPROVAL.—

21 ‘‘(A) ADMINISTRATIVE CAPABILITY.—The

22 State agency may approve an institution that

23 meets the requirements of this section for par24 ticipation in the child and adult care food pro-
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1 gram only if the State agency determines

2 that—

3 ‘‘(i) the institution is administratively

4 capable of operating the program described

5 in the application of the institution; and

6 ‘‘(ii) the participation of the institu7 tion is necessary to ensure the adequate

8 availability of child and adult care food

9 program benefits to eligible participants.

10 ‘‘(B) CRITERIA FOR SELECTION.—The

11 State agency shall establish criteria for select12 ing among institutions for participation in the

13 child and adult care food program if the num14 ber of eligible institutions exceeds the number

15 of eligible institutions necessary to ensure the

16 adequate availability of program benefits to eli17 gible participants.

18 ‘‘(C) NOTIFICATION TO APPLICANT.—Not

19 later than 30 days after the date on which an

20 applicant institution files a completed applica21 tion with the State agency, the State agency

22 shall notify the applicant institution whether

23 the institution has been approved or dis24 approved to participate in the child and adult

25 care food program.
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1 ‘‘(D) APPROVAL OF PRIVATE INSTITU2 TIONS.—

3 ‘‘(i) IN GENERAL.—Subject to clause

4 (ii), the State agency may approve an ap5 plicant institution for participation in the

6 child and adult care food program only if

7 the State agency conducts a satisfactory

8 inspection of the institution prior to ap9 proval to participate in the program and

10 the institution—

11 ‘‘(I) has tax exempt status under

12 the Internal Revenue Code of 1986;

13 ‘‘(II) is operating a Federal pro14 gram requiring nonprofit status to

15 participate in the program; or

16 ‘‘(III) is described in subsection

17 (a)(2)(B).

18 ‘‘(ii) EXCEPTION FOR FAMILY OR

19 GROUP DAY CARE HOMES.—Clause (i) shall

20 not apply to a family or group day care

21 home.’’.

22 (b) CONFORMING AMENDMENT.—Section

23 17(d)(2)(B) of the Richard B. Russell National School

24 Lunch Act (42 U.S.C. 1766(d)(2)(B)) is amended by
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1 striking ‘‘subsection (a)(1)’’ and inserting ‘‘subsection

2 (a)(5)’’.

3 SEC. 4. REDUCTION IN ADMINISTRATIVE REQUIREMENTS

4 FOR PUBLIC SPONSORING ORGANIZATIONS.

5 Section 17(d) of the Richard B. Russell National

6 School Lunch Act (42 U.S.C. 1766(d)) is amended by

7 adding at the end the following:

8 ‘‘(3) INCENTIVES FOR PUBLIC SPONSORING OR9 GANIZATIONS.—

10 ‘‘(A) COST COMPARISONS.—The Secretary

11 shall not require a public organization acting as

12 a sponsoring organization for 1 or more family

13 or group day care homes to compare costs to

14 receive administrative reimbursement under

15 subsection (f)(3)(B).

16 ‘‘(B) BIENNIAL BUDGETS.—The Secretary

17 shall permit a public organization described in

18 subparagraph (A) to submit on a biennial basis

19 the budget of the organization for administra20 tive costs.’’.

21 SEC. 5. TEMPORARY WITHHOLDING OF REIMBURSEMENT.

22 Section 17(e) of the Richard B. Russell National

23 School Lunch Act (42 U.S.C. 1766(e)) is amended—

24 (1) in paragraph (2), by striking ‘‘(2) A State

25 is not’’ and inserting the following:
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1 ‘‘(2) EXCEPTIONS.—

2 ‘‘(A) FEDERAL AUDITS.—

3 ‘‘(i) IN GENERAL.—A State shall not

4 be’’;

5 (2) in paragraph (3), by striking ‘‘(3) If a State

6 does not’’ and inserting the following:

7 ‘‘(ii) FEDERAL HEARINGS PRO8 VIDED.—If a State does not’’; and

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

10 ‘‘(B) TEMPORARY WITHHOLDING OF REIM11 BURSEMENT.—

12 ‘‘(i) IN GENERAL.—Subject to clause

13 (ii), a State agency shall not be required to

14 provide a hearing to an institution con15 cerning the decision of the State agency to

16 temporarily withhold reimbursement based

17 on a finding that—

18 ‘‘(I) the institution has failed to

19 comply with program requirements; or

20 ‘‘(II) a claim for reimbursement

21 may not be valid.

22 ‘‘(ii) LIMITATIONS.—The State agen23 cy shall provide a hearing to an institution

24 described in clause (i) if the State

25 agency—
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1 ‘‘(I) withholds reimbursement

2 from the institution for more than 90

3 days beyond the date on which the re4 imbursement would be payable but for

5 the withholding; or

6 ‘‘(II) denies the claim for reim7 bursement.’’.

8 SEC. 6. LIMITATIONS ON ABILITY OF FAMILY OR GROUP

9 DAY CARE HOMES TO TRANSFER SPON10 SORING ORGANIZATIONS.

11 Section 17(f)(3) of the Richard B. Russell National

12 School Lunch Act (42 U.S.C. 1766(f)(3)) is amended by

13 striking subparagraph (D) and inserting the following:

14 ‘‘(D) LIMITATIONS ON ABILITY OF FAMILY

15 OR GROUP DAY CARE HOMES TO TRANSFER

16 SPONSORING ORGANIZATIONS.—

17 ‘‘(i) IN GENERAL.—Subject to clause

18 (ii), a State agency shall limit the ability

19 of a family or group day care home to

20 transfer from a sponsoring organization

21 to—

22 ‘‘(I) another sponsoring organiza23 tion more frequently than once a year;

24 or
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1 ‘‘(II) a sponsoring organization

2 that ceases to participate in the child

3 and adult care food program.

4 ‘‘(ii) EXTENUATING CIR5 CUMSTANCES.—The State agency may per6 mit or require a family or group day care

7 home to transfer from a sponsoring organi8 zation to another sponsoring organization

9 more frequently than once a year in the

10 case of extenuating circumstances (as de11 termined by the State agency).’’.

12 SEC. 7. LIMITATION ON ADMINISTRATIVE EXPENSES FOR

13 SPONSORING ORGANIZATIONS.

14 Section 17(f) of the Richard B. Russell National

15 School Lunch Act (42 U.S.C. 1766(f)) is amended by add16 ing at the end the following:

17 ‘‘(5) LIMITATION ON ADMINISTRATIVE EX18 PENSES FOR SPONSORING ORGANIZATIONS.—

19 ‘‘(A) IN GENERAL.—Subject to subpara20 graph (B), a sponsoring organization for a child

21 care or adult day care center may retain a por22 tion of the funds provided under paragraph (1)

23 for use only to pay the costs incurred by the

24 sponsoring organization in administering the

25 child and adult care food program.
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1 ‘‘(B) LIMITATION.—

2 ‘‘(i) IN GENERAL.—Subject to clause

3 (ii), the State agency shall establish a limi4 tation on the amount of funds a spon5 soring organization may retain under sub6 paragraph (A) that does not exceed 15

7 percent of the total amount of funds dis8 bursed to the sponsoring organization

9 under paragraph (1).

10 ‘‘(ii) CONSIDERATION OF STUDY RE11 SULTS.—Based on the results of the study

12 of administrative costs required under sec13 tion 12 of the Child and Adult Care Food

14 Program Management Improvement Act of

15 2000, the Secretary shall—

16 ‘‘(I) evaluate the maximum limi17 tation established under clause (i);

18 and

19 ‘‘(II) make such adjustments to

20 the limitation as the Secretary deter21 mines to be necessary.’’.

22 SEC. 8. REALLOCATION OF AUDIT FUNDS.

23 Section 17(i) of the Richard B. Russell National

24 School Lunch Act (42 U.S.C. 1766(i)) is amended—
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1 (1) by striking ‘‘(i) The Secretary shall’’ and

2 inserting the following:

3 ‘‘(i) AUDIT FUNDS.—

4 ‘‘(1) IN GENERAL.—The Secretary shall’’; and

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

6 ‘‘(2) REALLOCATION OF FUNDS.—

7 ‘‘(A) RETURN TO THE SECRETARY.—For

8 each fiscal year, any amounts allocated to a

9 State under this subsection that are not obli10 gated during the fiscal year shall be returned to

11 the Secretary in accordance with procedures es12 tablished by the Secretary.

13 ‘‘(B) REALLOCATION BY THE SEC14 RETARY.—The Secretary shall allocate any

15 amounts returned under subparagraph (A)

16 among States that demonstrate a need for the

17 amounts, for the purposes described in para18 graph (1), in accordance with procedures estab19 lished by the Secretary.’’.

20 SEC. 9. EXPANSION OF MANAGEMENT SUPPORT FUNDING.

21 Section 17(q) of the Richard B. Russell National

22 School Lunch Act (42 U.S.C. 1766(q)) is amended by

23 striking paragraph (2) and inserting the following:

24 ‘‘(2) FUNDING.—To carry out paragraph (1),

25 the Secretary shall reserve from amounts made
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1 available to carry out this section an amount equal

to 1 2 ⁄8 of 1 percent of the amounts made available for

3 fiscal year 2001 and each succeeding fiscal year.’’.

4 SEC. 10. GRANTS TO IMPROVE PROGRAM QUALITY.

5 Section 17 of the Richard B. Russell National School

6 Lunch Act (42 U.S.C. 1766) is amended by adding at the

7 end the following:

8 ‘‘(u) GRANTS TO IMPROVE PROGRAM QUALITY.—

9 ‘‘(1) IN GENERAL.—From the amounts made

10 available to carry out this subsection for fiscal year

11 2001, the Secretary shall reserve $3,000,000 to pro12 vide grants to State agencies.

13 ‘‘(2) USE OF GRANTS.—A State agency receiv14 ing a grant under this subsection shall use the grant

15 funds to collaborate with State and local licensing

16 agencies and lead agencies that administer grants

17 under the Child Care and Development Block Grant

18 Act of 1990 (42 U.S.C. 9858 et seq.) for the pur19 pose of establishing State or local licensing require20 ments for all categories of family or group day care

21 homes and child care centers located within the

22 State.

23 ‘‘(3) LIMITATIONS.—
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1 ‘‘(A) MAXIMUM NUMBER OF STATE AGEN2 CIES.—Grants under this subsection may be

3 made to not more than 5 State agencies.

4 ‘‘(B) MINIMUM REQUIREMENTS FOR STATE

5 AGENCIES.—A grant under this subsection may

6 be made only to a State agency that, at the

7 time of application—

8 ‘‘(i) does not have any State or local

9 licensing requirements for certain cat10 egories of family or group day care homes

11 or for certain categories of child care cen12 ters;

13 ‘‘(ii) has at least some family or group

14 day care homes or child care centers that

15 meet alternate approval standards adminis16 tered by the State agency; and

17 ‘‘(iii) can provide an assurance to the

18 Secretary that the lead agency that admin19 ister a grant in the State under the Child

20 Care and Development Block Grant Act of

21 1990 (42 U.S.C. 9858 et seq.) will—

22 ‘‘(I) participate in the adminis23 tration of the grant under this sub24 section; and
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1 ‘‘(II) provide funding from the

2 grant received under that Act in sup3 port of grant activities under this sub4 section.’’.

5 SEC. 11. RETENTION OF FUNDS COLLECTED FROM INSTI6 TUTIONS.

7 Section 17 of the Richard B. Russell National School

8 Lunch Act (42 U.S.C. 1766) (as amended by section 10)

9 is amended by adding at the end the following:

10 ‘‘(v) RETENTION OF COLLECTED FUNDS.—

11 ‘‘(1) IN GENERAL.—A State agency may retain

12 not more than 50 percent of any program funds col13 lected as a result of audits or reviews conducted by

14 the State agency of institutions participating in the

15 child and adult care food program.

16 ‘‘(2) USE OF FUNDS.—A State agency may use

17 funds retained under this subsection to pay for pro18 gram costs incurred by the State agency to improve

19 the management and operation of the child and

20 adult care food program within the State.

21 ‘‘(3) FISCAL YEAR.—The State agency may ob22 ligate funds retained under this subsection during—

23 ‘‘(A) the fiscal year in which a claim arose;

24 ‘‘(B) the fiscal year in which the funds are

25 collected; or
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1 ‘‘(C) the fiscal year following the fiscal

2 year in which the funds are collected.’’.

3 SEC. 12. STUDY OF ADMINISTRATIVE COSTS.

4 (a) IN GENERAL.—The Secretary of Agriculture, act5 ing through the Administrator of the Food and Nutrition

6 Service, shall conduct a study of the administrative rate

7 structure and the administrative costs of institutions act8 ing as sponsoring organizations of family or group day

9 care homes and sponsoring organizations of organizations

10 described in subsections (a)(2)(A), (a)(2)(B), and

11 (o)(2)(A) of section 17 of the Richard B. Russell National

12 School Lunch Act (42 U.S.C. 1766).

13 (b) COMPONENTS.—The study shall include an eval14 uation of—

15 (1) the types and amounts of administrative

16 costs incurred by sponsoring organizations;

17 (2) the types and amounts of administrative

18 costs being claimed by sponsoring organizations; and

19 (3) alternative systems for compensating the

20 sponsoring organizations for administrative costs.

21 (c) REPORT.—Not later than 1 year after the date

22 of enactment of this Act or September 30, 2001, which23 ever is later, the Secretary shall submit to the Committee

24 on Agriculture of the House of Representatives and the

25 Committee on Agriculture, Nutrition, and Forestry of the
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1 Senate a report that describes the results of the study con2 ducted under this section.

3 (d) FUNDING.—The Secretary shall reserve to carry

4 out this section $1,500,000 from amounts made available

5 for fiscal year 2001 to carry out section 17 of the Richard

6 B. Russell National School Lunch Act (42 U.S.C. 1766).

7 SEC. 13. EFFECTIVE DATES.

8 (a) IN GENERAL.—Except as provided in subsection

9 (b), this Act and the amendments made by this Act take

10 effect on October 1, 2000.

11 (b) STUDY OF ADMINISTRATIVE COSTS.—Section 12

12 takes effect on the date of enactment of this Act.

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