individuals and families in the service area; 
and 
‘‘(II) each member who is a represent-
ative of low-income individuals and families 
and is also selected to represent a specific 
geographic area under subclause (I) resides 
in such area; and 
‘‘(iii) the remainder of the members 
are representatives of business, industry, 
labor, religious, educational, charitable, or 
other significant private groups in the 
community. 
‘‘(D) 
EXPERTISE.—The 
eligible 
entity 
shall ensure that the members of the board in-
clude, or have direct access to, individuals with 
expertise in financial management, accounting, 
and law. 
‘‘(E) COMPLIANCE WITH TAX-EXEMPT AND 
OTHER REQUIREMENTS.—The board of a pri-
vate, nonprofit organization shall ensure that 
the board operates and conducts activities 
under 
the 
subgrant 
made 
under 
section 
680A(a) in a manner that complies with— 
‘‘(i) the requirements for maintaining 
tax-exempt status under section 501(a) of 
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the Internal Revenue Code of 1986 (26 
U.S.C. 501(a)) regarding the governance 
of charities under section 501(c)(3) of the 
Internal Revenue Code of 1986 (26 U.S.C. 
501(c)(3)); and 
‘‘(ii) applicable requirements of State 
law. 
‘‘(2) PUBLIC ORGANIZATIONS.— 
‘‘(A) BOARD.—In order for a public orga-
nization to be considered to be an eligible entity 
for purposes of section 673(1), the organization 
shall administer a program, project, or service 
under the supervision of a tripartite board de-
scribed in subparagraph (C). 
‘‘(B) SELECTION.—The members of the 
board referred to in subparagraph (A) shall be 
selected by the organization. 
‘‘(C) COMPOSITION OF BOARD.—The board 
shall be composed so as to assure that— 
‘‘(i) not more than 1⁄3 of the members 
of the board are employees or officials, in-
cluding elected officials, of the unit of gov-
ernment in which the organization is lo-
cated; 
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‘‘(ii)(I) not fewer than 1⁄3 of the mem-
bers are persons chosen in accordance with 
democratic selection procedures adequate 
to assure that the members referred to in 
this clause are representative of low-income 
individuals and families in the service area; 
and 
‘‘(II) each member who is a represent-
ative of low-income individuals and families 
and is also selected to represent a specific 
geographic area under subclause (I) resides 
in such area; and 
‘‘(iii) the remainder of the members 
are representatives of business, industry, 
labor, religious, educational, charitable, or 
other significant private groups in the 
community. 
‘‘(D) EXPERTISE.—The organization shall 
ensure that the members of the board include 
or have direct access to individuals with exper-
tise in financial management, accounting, and 
law. 
‘‘(E) COMPLIANCE WITH STATE REQUIRE-
MENTS AND POLICY.—The board of a public or-
ganization shall ensure that the board operates 
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in a manner that complies with State require-
ments for open meetings, financial trans-
parency, and State open records policy. 
‘‘(d) OPERATIONS AND DUTIES OF THE BOARD.— 
The duties of a board described in paragraph (1) or (2) 
of subsection (b) shall include— 
‘‘(1) in the case of a board for a private, non-
profit organization that is an eligible entity, having 
and legal and financial responsibility for admin-
istering overseeing the eligible entity, including mak-
ing proper use of Federal funds; 
‘‘(2) ensuring that the guidance regarding orga-
nizational performance disseminated by the Sec-
retary under section 682(c)(8) is implemented; 
‘‘(3) adopting practices that assure active, inde-
pendent, and informed governance of the eligible en-
tity, including establishing terms for officers and 
adopting a code of ethical conduct, including a con-
flict of interest policy for board members; 
‘‘(4) participating in each comprehensive com-
munity needs assessment, developing and adopting 
as a policy for the corresponding eligible entity a 
community action strategic plan, including provi-
sions for the use of funds under this subtitle, and 
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preparing the community action program plan for 
the use of funds under this subtitle; 
‘‘(5) ensuring that the eligible entity manages 
its activities based on a system of performance 
measurement; 
‘‘(6) ensuring compliance by the eligible entity 
with Federal, and applicable State and local, laws, 
including regulations; 
‘‘(7) overseeing financial management, account-
ing, and reporting policies, and complying with laws 
regarding financial statements, including— 
‘‘(A) selecting an auditor; and 
‘‘(B) monitoring corrective action required 
by audit findings and taking other necessary 
actions to enable the eligible entity to comply 
with accounting policies and laws about finan-
cial statements; 
‘‘(8) reviewing all major financial expenditures 
of the eligible entity, including annually approving 
the eligible entity’s operating budget; 
‘‘(9) reviewing all major policies of the eligible 
entity, including— 
‘‘(A) conducting annual performance re-
views of the eligible entity’s chief executive offi-
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cer (or individual holding an equivalent posi-
tion); and 
‘‘(B) conducting assessments of the eligible 
entity’s progress in carrying out programmatic 
and fiscal provisions in the community action 
program plan, and in taking any corrective ac-
tion; 
‘‘(10) adopting personnel policies and proce-
dures, including policies and procedures for hiring, 
annual evaluation, compensation, and termination, 
of eligible entity’s chief executive officer (or indi-
vidual holding a similar position); and 
‘‘(11) adopting and periodically updating writ-
ten conflict of interest policies for members of the 
board. 
‘‘SEC. 682. OFFICE OF COMMUNITY SERVICES. 
‘‘(a) OFFICE.— 
‘‘(1) The Secretary shall establish an Office of 
Community Services in the Department of Health 
and Human Services (referred to in this subtitle as 
the ‘Department’) to carry out the functions of this 
subtitle. 
‘‘(2) The Office shall be headed by a Director 
(referred to in this subtitle as the ‘Director’). 
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‘‘(b) GRANTS, CONTRACTS, 
AND
COOPERATIVE 
AGREEMENTS.—The Secretary, acting through the Direc-
tor, shall carry out the functions of this subtitle through 
grants, contracts, or cooperative agreements. 
‘‘(c) DUTIES, MANAGEMENT, AND INTEGRATION.— 
The Secretary shall— 
‘‘(1) coordinate the activities of all personnel 
and contractors of the Department, concerning mon-
itoring (including inspecting) eligible entities that re-
ceive subgrants under this subtitle and are funded 
or monitored by an office of the Department other 
than the Office of Community Services, in order to 
efficiently organize oversight visits, inspections, and 
audits of such entities by conducting joint oversight 
operations, as practicable; 
‘‘(2) promulgate skill requirements, for Depart-
ment officials with responsibility for monitoring and 
approving State programs under this subtitle, re-
garding the knowledge, skills, and abilities required 
to assess and provide technical assistance regarding 
the operations of private, nonprofit organizations re-
sponsible for implementing multiple Federal and 
other community-based initiatives; 
‘‘(3) ensure that personnel and contractors of 
the Department with responsibility for State pro-
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grams under this subtitle acquire the knowledge, 
skills, and abilities described in paragraph (2); 
‘‘(4) establish minimum requirements for the 
knowledge and skills of State personnel responsible 
for overseeing the activities authorized by this sub-
title; 
‘‘(5) promulgate performance indicators for 
State management of the funds, operations and pro-
grammatic requirements of this subtitle; 
‘‘(6) establish and publish uniform procedures 
for use by Federal and State monitors of the activi-
ties authorized by this subtitle; 
‘‘(7) promulgate regulations with respect to the 
procedures for State and local corrective action 
plans described in section 687 (including promul-
gating a definition of a serious deficiency for pur-
poses of that section) to ensure prompt resolution of 
deficiencies and adherence to the uniform adminis-
trative requirements, cost principles, and audit re-
quirements described in section 676(b); and 
‘‘(8) disseminate or cause to be disseminated 
guidance regarding the organizational practices and 
performance of eligible entities developed jointly by 
the Director and the community services network or-
ganizations. 
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‘‘(d) FEDERAL PERFORMANCE BENCHMARKS.—The 
Secretary shall, prior to the beginning of each fiscal year, 
publish Federal performance benchmarks for the Office of 
Community Services for such year, which shall include tar-
gets for— 
‘‘(1) the timeliness of— 
‘‘(A) apportionments and allotments of ap-
propriated funds to States; and 
‘‘(B) the use of funds reserved pursuant to 
section 692(b); 
‘‘(2) the timeliness of approvals or notifications 
concerning State plans and plan revisions described 
in section 680; 
‘‘(3) the timeliness of scheduled monitoring of 
States and implementation of State corrective action 
plans described in section 687; 
‘‘(4) the implementation of the requirements of 
the uniform administrative requirements, cost prin-
ciples, and audit requirements described in section 
676(b) by the Department, the States, and other 
grantees; 
‘‘(5) the implementation of the requirements for 
coordinated audits and monitoring by multiple of-
fices of the Department; 
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‘‘(6) the improvement achieved by Federal per-
sonnel in acquiring the knowledge, skills, and abili-
ties described in subsection (c)(2) and needed to ef-
fectively carry out subsection (c)(1); 
‘‘(7) the progress made by the Office of Com-
munity Services in achieving each of the require-
ments of this subtitle; and 
‘‘(8) the timeliness of reports required by this 
subtitle. 
‘‘SEC. 683. TRAINING, TECHNICAL ASSISTANCE, AND RE-
LATED ACTIVITIES. 
‘‘(a) ACTIVITIES.— 
‘‘(1) The Secretary shall, in accordance with 
the plan described in subsection (d)(2)— 
‘‘(A) use amounts reserved under section 
692(c)(2)(A) for training, technical assistance, 
planning, evaluation, and performance measure-
ment, through States and other community 
services network organizations to assist in— 
‘‘(i) development or replication of in-
novative initiatives; 
‘‘(ii) carrying out professional develop-
ment activities that expand the capacity of 
eligible entities; 
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‘‘(iii) carrying out performance meas-
urement, reporting, and data collection ac-
tivities related to programs carried out 
under this subtitle; and 
‘‘(iv) correcting programmatic defi-
ciencies, including such deficiencies of eli-
gible entities; and 
‘‘(B) the Secretary shall distribute the 
amounts reserved under section 692(c)(2)(B) 
directly to States, eligible entities, or other com-
munity services network organizations and their 
partners, including institutions of higher edu-
cation, that carry out activities to achieve the 
goals of the plan described in subsection (b)(2) 
for— 
‘‘(i) professional development for key 
personnel; 
‘‘(ii) activities to improve program 
and financial management practices (in-
cluding practices related to performance 
management information systems); 
‘‘(iii) activities that train individuals 
and organizations to effectively address the 
needs of low-income families and commu-
nities through place-based strategies for 
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coordinated investment and integrated 
service delivery; and 
‘‘(iv) provided that 7.5 percent of 
such reserved amount remain available 
until the end of the second quarter of the 
year for which funds are appropriated for 
grants by the Secretary which shall be 
awarded to States upon approval of an ap-
plication by the State as described in sec-
tion 680(b) for funds to support the one- 
time costs incurred by two or more eligible 
entities for legal, financial and other activi-
ties required to effect a merger of oper-
ations and programs that achieves greater 
efficiency and impact for the use of funds 
appropriated under this subtitle. Any funds 
not designated for such merger incentives 
by the end of the second quarter of the fis-
cal year shall be available for other author-
ized purposes of this subsection. 
‘‘(b) LIMITATION.—None of the funds allocated 
under subsection (a) may be used for expenses or salaries 
of Federal employees. 
‘‘(c) GRANTS, CONTRACTS, 
AND
COOPERATIVE 
AGREEMENTS.—The activities described in paragraph 
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(1)(A) shall be carried out by the Secretary through 
grants, contracts, or cooperative agreements with appro-
priate entities, which shall include all statewide associa-
tions of eligible entities that meet the requirements for 
receipt of Federal funds. 
‘‘(d) TRAINING AND TECHNICAL ASSISTANCE PROC-
ESS.— 
‘‘(1) IN GENERAL.—In order to determine the 
training, technical assistance, and other activities to 
be provided or supported under subsection (a), the 
Secretary, acting through the Director, shall develop 
and carry out the strategic plan described in para-
graph (2), and the activities described in paragraph 
(3). 
‘‘(2) OFFICE OF COMMUNITY SERVICES STRA-
TEGIC TRAINING PLAN.— 
‘‘(A) IN GENERAL.—Not less often than 
every fourth year the Secretary, acting through 
the Director and in consultation with commu-
nity service network organizations, shall de-
velop, publish, and carry out a strategic plan 
for the use of funds reserved for use under sec-
tion 692(c)(2). 
‘‘(B) CONTENTS.—Such a plan shall de-
scribe— 
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‘‘(i) the activities that will be sup-
ported (including their goals), the partner-
ships, if any, required to conduct such ac-
tivities, the role of each partner partici-
pating, the system for delivering the in-
tended results, and the timing of such ac-
tivities; 
‘‘(ii) the manner in which the plan en-
sures that the Secretary complies with 
each requirement of this subtitle related to 
training and technical assistance; 
‘‘(iii) the manner in which the plan 
reflects coordination of activities funded 
under this section with related training 
and technical assistance provided by the 
Department, 
especially 
for 
programs, 
projects, and services other than those 
funded under this subtitle operated by eli-
gible entities; 
‘‘(iv) the manner in which the results 
of such activities will be measured; 
‘‘(v) quality standards for training 
and trainers to ensure that only effective 
training is funded under this section; and 
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‘‘(vi) to the maximum extent feasible, 
how the activities funded under this section 
address— 
‘‘(I) the needs of eligible entities 
and State lead agencies relating to 
skills and techniques to ensure the 
quality (including quality of financial 
management practices) of programs, 
projects, and services supported under 
this subtitle; and 
‘‘(II) other professional develop-
ment needs of the eligible entities re-
lated to carrying out this subtitle. 
‘‘(3) EVALUATION
OF
TRAINING
AND
TECH-
NICAL ASSISTANCE.—The Secretary, acting through 
the Director— 
‘‘(A) shall establish a procedure for evalu-
ating the quality and effectiveness of training 
and technical assistance provided under this 
section related to professional development, 
local organizational development and manage-
ment including, but not limited to financial 
management, and State government manage-
ment; and 
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‘‘(B) shall use the results of the evalua-
tions as significant criteria for selecting recipi-
ents of funds under this section. 
‘‘SEC. 684. STATE MONITORING OF ELIGIBLE ENTITIES. 
‘‘(a) MONITORING BY STATES.—In order to deter-
mine whether eligible entities receiving subgrants under 
this subtitle meet performance benchmarks described in 
section 680(f)(2), administrative standards, financial 
management requirements, and other requirements under 
this subtitle, the State shall conduct the following reviews 
of eligible entities: 
‘‘(1) A full onsite review of each eligible entity 
at least once during each 3-year period. 
‘‘(2) An onsite review of each newly designated 
eligible entity immediately after the completion of 
the first year in which such entity receives funds 
through the community services block grant program 
under this subtitle. 
‘‘(3) Follow-up reviews, including onsite reviews 
scheduled in a corrective action plan (including re-
turn visits), within a calendar quarter for eligible en-
tities with programs, projects, or services that fail to 
meet the State’s performance criteria, standards, fi-
nancial management requirements, and other signifi-
cant requirements established under this subtitle. 
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‘‘(4) Other reviews as appropriate, including re-
views of eligible entities with programs, projects, and 
services that have had other Federal, State, or local 
grants (other than assistance provided under this 
subtitle) terminated for cause. 
‘‘(b) TRAINING AND TECHNICAL ASSISTANCE FOR 
MONITORING.—The State may request training and tech-
nical assistance from the Secretary as needed to comply 
with the requirements of this section. 
‘‘SEC. 685. EVALUATIONS; CORRECTIVE ACTION; WITH-
HOLDING, REDUCTION, OR ELIMINATION OF 
FUNDING. 
‘‘(a) EVALUATIONS
OF
STATES
BY
THE
SEC-
RETARY.— 
‘‘(1) IN GENERAL.—The Secretary shall con-
duct, in not fewer than 1⁄3 of the States in each fis-
cal year, evaluations (including investigations) of 
State compliance with this subtitle, including re-
quirements relating to the use of funds received 
under this subtitle, and especially with respect to 
compliance with the requirements of State plans 
submitted under section 680(b) and the uniform ad-
ministrative requirements, cost principles, and audit 
requirements described in section 676(b) as applied 
to funds received under this subtitle. 
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‘‘(2) REPORT TO STATES.—The Secretary shall 
submit, to each State evaluated, a report con-
taining— 
‘‘(A) the results of such evaluation; and 
‘‘(B)(i) recommendations for improvements 
designed to enhance the benefit and impact of 
the activities carried out with such funds; and 
‘‘(ii) in the event a serious deficiency is 
found regarding a State’s compliance with this 
subtitle, including requirements relating to the 
use of funds received under this subtitle, a pro-
posed corrective action plan that meets the re-
quirements of subsection (b)(2)(B). 
‘‘(3) STATE
RESPONSE.—Not later than 45 
days after receiving a report under paragraph (2)— 
‘‘(A) a State that received recommenda-
tions under paragraph (2)(B)(i) shall submit to 
the Secretary a plan of action in response to 
the recommendations; and 
‘‘(B) a State that received a proposed cor-
rective action plan under paragraph (2)(B)(ii) 
shall carry out the State’s responsibilities under 
subsection (b)(2). 
‘‘(4) REPORT
TO
CONGRESS.—The Secretary 
shall submit the results of the evaluations annually, 
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as part of the report submitted by the Secretary in 
6 accordance with section 689(b)(2). 
‘‘(b) DETERMINATION OF STATE FAILURE TO COM-
PLY.— 
‘‘(1) DUTIES OF THE SECRETARY.—If the Sec-
retary finds, on the basis of an evaluation pursuant 
to subsection (a), that there is a serious deficiency 
regarding a State’s compliance with this subtitle, the 
Secretary shall— 
‘‘(A) inform the State, through the report 
described in subsection (a)(2) and any proposed 
corrective action plan submitted under sub-
section (a)(2)(B), of the deficiency; 
‘‘(B) provide assistance consistent with 
section 685 and subsection (c); 
‘‘(C) with respect to each identified serious 
deficiency, require that the State— 
‘‘(i) correct the deficiency immediately 
if the Secretary finds that the deficiency 
threatens the ability of eligible entities to 
carry out their community action program 
plans or threatens the integrity of Federal 
funds; or 
‘‘(ii) correct the deficiency not later 
than 90 days after the identification of the 
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deficiency if the Secretary finds, in the dis-
cretion of the Secretary, that such a 90- 
day period is reasonable, in light of the na-
ture and magnitude of the deficiency; and 
‘‘(D) require that the State carry out— 
‘‘(i) the corrective action plan pre-
pared by the Secretary under subsection 
(a)(2)(B)(ii); or 
‘‘(ii) a State-proposed corrective ac-
tion plan that is approved under paragraph 
(2)(C). 
‘‘(2) CORRECTIVE ACTION PLANS.— 
‘‘(A) IN GENERAL.—A State that is found 
under paragraph (1) to have a serious defi-
ciency shall— 
‘‘(i) agree to implement the corrective 
action plan proposed by the Secretary 
under subsection (a)(2)(B)(ii); or 
‘‘(ii) propose to the Secretary a dif-
ferent corrective action plan, developed by 
the State in a timely manner that the 
State will implement upon approval by the 
Secretary under subparagraph (C). 
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‘‘(B) CONTENTS.—Any corrective action 
plan proposed under this paragraph shall speci-
fy— 
‘‘(i) the serious and other deficiencies 
to be corrected; 
‘‘(ii) the actions to be taken to correct 
such deficiencies; and 
‘‘(iii) the timetable for accomplish-
ment of the corrective actions specified, 
which shall provide that each serious defi-
ciency is corrected by not later than 90 
days after the date the State received no-
tice of the finding under subsection (a) 
and of the specific deficiency to be cor-
rected. 
‘‘(C) APPROVAL PROCESSES.— 
‘‘(i) IN GENERAL.—Not later than 15 
days after the Secretary receives a State 
proposed corrective action plan in accord-
ance with subparagraph (A), the Secretary 
shall act— 
‘‘(I) by approving the proposed 
plan; or 
‘‘(II) by notifying the State that 
the proposed plan cannot be approved, 
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providing the reasons for the dis-
approval, and proposing an alternative 
corrective action plan. 
‘‘(ii) STATE RESPONSE.— 
‘‘(I) 
IN
GENERAL.—A 
State 
whose corrective action plan has not 
been approved under clause (i) shall 
respond by agreeing to implement the 
alternative corrective action plan, or 
by submitting a different proposed 
corrective action plan not later than 
15 days after receiving notification 
from the Secretary under clause (i). 
‘‘(II) INADEQUATE
DIFFERENT 
PROPOSED
PLAN.—If the Secretary 
determines the different proposed plan 
to be inadequate, the Secretary shall 
use the procedures to withhold fund-
ing described in paragraph (3)(A) 
until the State and the Secretary 
agree on, and the State implements a 
satisfactory corrective action plan. If 
the Secretary makes that determina-
tion, the Director, pursuant to para-
graph (3)(C), shall ensure that the af-
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fected funds are obligated and made 
available to eligible entities on the 
same schedule as the State would 
have been required to follow if the 
Secretary had not made the deter-
mination. 
‘‘(3) ENFORCEMENT.— 
‘‘(A) WITHHOLDING OF FUNDING.—If the 
Secretary determines that a State fails to meet 
the requirements of this subsection, including a 
failure to comply with the terms of a corrective 
action plan described in subsection (a)(2)(B) or 
approved under paragraph (2) or a failure to 
correct a serious deficiency in accordance with 
the timing requirements of paragraph (1)(C), 
the Secretary may initiate proceedings to with-
hold all or a portion of the amount of the fund-
ing described in section 680A(b)(2)(A), includ-
ing prohibiting the State from using other 
funds awarded under this subtitle to carry out 
the activities described in such section, until the 
State complies with all requirements of this 
subsection. 
‘‘(B) REDUCTION
OR
ELIMINATION
OF 
FUNDING.—If the Secretary determines, on the 
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basis of a final decision in a review conducted 
under this section that a State fails to meet the 
requirements of this subsection, the Secretary 
may, after providing adequate notice and an op-
portunity for a hearing, initiate proceedings to 
reduce or eliminate the amount of funding de-
scribed in section 680A(b)(2)(A), including pro-
hibiting the State from using other funds 
awarded under this subtitle to carry out the ac-
tivities described in such section, unless the 
State corrects the failure to meet the require-
ments. 
‘‘(C) USE OF FUNDS.— 
‘‘(i) If the Secretary delays, reduces, 
or eliminates funding to a State under sub-
paragraph (B), the Secretary shall award 
the amount of the funding to eligible enti-
ties and/or community services network or-
ganizations in the State, to carry out the 
activities described in section 680A(b). 
‘‘(ii) In the event a State elects not to 
receive funding under this subtitle, includ-
ing a refusal to submit a plan meeting the 
Secretary’s requirements, the Secretary 
shall provide funding directly by grant or 
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