115
(C) includes the coordination of 2 or more 
qualified programs. 
(2) PROVISIONS EXCLUDED FROM WAIVER AU-
THORITY.—A waiver shall not be granted under 
paragraph (1)—
(A) with respect to any provision of law re-
lating to—
(i) civil rights or prohibition of dis-
crimination; 
(ii) purposes or goals of any program; 
(iii) maintenance of effort require-
ments; 
(iv) health or safety; 
(v) labor standards under the Fair 
Labor Standards Act of 1938; or 
(vi) environmental protection; 
(B) with respect to section 241(a) of the 
Adult Education and Family Literacy Act; 
(C) in the case of a program under the 
United States Housing Act of 1937 (42 U.S.C. 
1437 et seq.), with respect to any requirement 
under section 5A of such Act (42 U.S.C. 
1437c–1; relating to public housing agency 
plans and resident advisory boards);
116
(D) in the case of a program under the 
Workforce Investment Act, with respect to any 
requirement the waiver of which would violate 
section 189(i)(4)(A)(i) of such Act; 
(E) in the case of the food stamp program 
(as defined in section 3(h) of the Food Stamp 
Act of 1977 (7 U.S.C. 2012(h)), with respect to 
any requirement under—
(i) section 6 (if waiving a requirement 
under such section would have the effect of 
expanding eligibility for the program), 7(b) 
or 16(c) of the Food Stamp Act of 1977 
(7 U.S.C. 2011 et seq.); or 
(ii) title IV of the Personal Responsi-
bility and Work Opportunity Reconciliation 
Act of 1996 (8 U.S.C. 1601 et seq.); 
(F) with respect to any requirement that a 
State pass through to a sub-State entity part or 
all of an amount paid to the State; 
(G) if the waiver would waive any funding 
restriction or limitation provided in an appro-
priations Act, or would have the effect of trans-
ferring appropriated funds from 1 appropria-
tions account to another; or
117
(H) except as otherwise provided by stat-
ute, if the waiver would waive any funding re-
striction applicable to a program authorized 
under an Act which is not an appropriations 
Act (but not including program requirements 
such as application procedures, performance 
standards, reporting requirements, or eligibility 
standards), or would have the effect of transfer-
ring funds from a program for which there is 
direct spending (as defined in section 250(c)(8) 
of the Balanced Budget and Emergency Deficit 
Control Act of 1985) to another program. 
(3) AGREEMENT OF EACH ADMINISTERING SEC-
RETARY REQUIRED.—
(A) IN GENERAL.—An applicant may not 
conduct a demonstration project under this sec-
tion unless each administering Secretary with 
respect to any program proposed to be included 
in the project has approved the application to 
conduct the project. 
(B) AGREEMENT WITH RESPECT TO FUND-
ING AND IMPLEMENTATION.—Before approving 
an
application
to
conduct
a
demonstration 
project under this section, an administering 
Secretary shall have in place an agreement with
118
the applicant with respect to the payment of 
funds and responsibilities required of the ad-
ministering
Secretary
with
respect
to
the 
project. 
(4) COST-NEUTRALITY REQUIREMENT.—
(A)
GENERAL
RULE.—Notwithstanding 
any other provision of law (except subparagraph 
(B)), the total of the amounts that may be paid 
by the Federal Government for a fiscal year 
with respect to the programs in the State in 
which an entity conducting a demonstration 
project under this section is located that are af-
fected by the project shall not exceed the esti-
mated total amount that the Federal Govern-
ment would have paid for the fiscal year with 
respect to the programs if the project had not 
been conducted, as determined by the Director 
of the Office of Management and Budget. 
(B) SPECIAL RULE.—If an applicant sub-
mits to the Director of the Office of Manage-
ment and Budget a request to apply the rules 
of this subparagraph to the programs in the 
State in which the applicant is located that are 
affected by a demonstration project proposed in 
an application submitted by the applicant pur-
119
suant to this section, during such period of not 
more than 5 consecutive fiscal years in which 
the project is in effect, and the Director deter-
mines, on the basis of supporting information 
provided by the applicant, to grant the request, 
then, notwithstanding any other provision of 
law, the total of the amounts that may be paid 
by the Federal Government for the period with 
respect to the programs shall not exceed the es-
timated total amount that the Federal Govern-
ment would have paid for the period with re-
spect to the programs if the project had not 
been conducted. 
(5) 90-DAY APPROVAL DEADLINE.—
(A) IN
GENERAL.—If an administering 
Secretary receives an application to conduct a 
demonstration project under this section and 
does not disapprove the application within 90 
days after the receipt, then—
(i)
the
administering
Secretary
is 
deemed to have approved the application 
for such period as is requested in the ap-
plication, except to the extent inconsistent 
with subsection (e); and
120
(ii) any waiver requested in the appli-
cation which applies to a qualified program 
that is identified in the application and is 
administered by the administering Sec-
retary is deemed to be granted, except to 
the extent inconsistent with paragraph (2) 
or (4) of this subsection. 
(B) DEADLINE EXTENDED IF ADDITIONAL 
INFORMATION IS SOUGHT.—The 90-day period 
referred to in subparagraph (A) shall not in-
clude any period that begins with the date the 
Secretary requests the applicant to provide ad-
ditional information with respect to the applica-
tion and ends with the date the additional in-
formation is provided. 
(e)
DURATION
OF
PROJECTS.—A
demonstration 
project under this section may be approved for a term of 
not more than 5 years. 
(f) REPORTS TO CONGRESS.—
(1)
REPORT
ON
DISPOSITION
OF
APPLICA-
TIONS.—Within 90 days after an administering Sec-
retary receives an application submitted pursuant to 
this section, the administering Secretary shall sub-
mit to each Committee of the Congress which has 
jurisdiction over a qualified program identified in
121
the application notice of the receipt, a description 
of the decision of the administering Secretary with 
respect to the application, and the reasons for ap-
proving or disapproving the application. 
(2)
REPORTS
ON
PROJECTS.—Each
admin-
istering Secretary shall provide annually to the Con-
gress a report concerning demonstration projects ap-
proved under this section, including—
(A) the projects approved for each appli-
cant; 
(B) the number of waivers granted under 
this section, and the specific statutory provi-
sions waived; 
(C) how well each project for which a waiv-
er is granted is improving or enhancing pro-
gram achievement from the standpoint of qual-
ity, cost-effectiveness, or both; 
(D) how well each project for which a 
waiver is granted is meeting the performance 
objectives specified in subsection (c)(3)(B); 
(E) how each project for which a waiver is 
granted is conforming with the cost-neutrality 
requirements of subsection (d)(4); and 
(F) to the extent the administering Sec-
retary deems appropriate, recommendations for
122
modification of programs based on outcomes of 
the projects. 
(g) AMENDMENT TO UNITED STATES HOUSING ACT 
OF 1937.—Section 5A(d) of the United States Housing 
Act of 1937 (42 U.S.C. 1437c–1(d)) is amended—
(1) by redesignating paragraph (18) as para-
graph (19); and 
(2) by inserting after paragraph (17) the fol-
lowing new paragraph: 
‘‘(18) PROGRAM
COORDINATION
DEMONSTRA-
TION PROJECTS.—In the case of an agency that ad-
ministers
an
activity
referred
to
in
section 
701(b)(2)(H) of the Personal Responsibility, Work, 
and Family Promotion Act of 2003 that, during 
such fiscal year, will be included in a demonstration 
project under section 701 of such Act, the informa-
tion that is required to be included in the application 
for the project pursuant to paragraphs (1) through 
(4) of section 701(b) of such Act.’’. 
SEC. 602. STATE FOOD ASSISTANCE BLOCK GRANT DEM-
ONSTRATION PROJECT. 
The Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) 
is amended by adding at the end the following:
123
‘‘SEC. 28. STATE FOOD ASSISTANCE BLOCK GRANT DEM-
ONSTRATION PROJECT. 
‘‘(a) ESTABLISHMENT.—The Secretary shall estab-
lish a program to make grants to States in accordance 
with this section to provide—
‘‘(1) food assistance to needy individuals and 
families residing in the State; 
‘‘(2) funds to operate an employment and train-
ing program under subsection (g) for needy individ-
uals under the program; and 
‘‘(3) funds for administrative costs incurred in 
providing the assistance. 
‘‘(b) ELECTION.—
‘‘(1) IN GENERAL.—A State may elect to par-
ticipate in the program established under subsection 
(a). 
‘‘(2)
ELECTION
REVOCABLE.—A
State
that 
elects to participate in the program established 
under subsection (a) may subsequently reverse the 
election of the State only once thereafter. Following 
the reversal, the State shall only be eligible to par-
ticipate in the food stamp program in accordance 
with the other sections of this Act and shall not re-
ceive a block grant under this section. 
‘‘(3) PROGRAM
EXCLUSIVE.—A State that is 
participating in the program established under sub-
124
section (a) shall not be subject to, or receive any 
benefit under, this Act except as provided in this 
section. 
‘‘(c) LEAD AGENCY.—
‘‘(1) DESIGNATION.—A State desiring to par-
ticipate in the program established under subsection 
(a) shall designate, in an application submitted to 
the Secretary under subsection (d)(1), an appro-
priate State agency that complies with paragraph 
(2) to act as the lead agency for the State. 
‘‘(2) DUTIES.—The lead agency shall—
‘‘(A) administer, either directly, through 
other State agencies, or through local agencies, 
the assistance received under this section by the 
State; 
‘‘(B) develop the State plan to be sub-
mitted to the Secretary under subsection (d)(1); 
and 
‘‘(C) coordinate the provision of food as-
sistance under this section with other Federal, 
State, and local programs. 
‘‘(d) APPLICATION AND PLAN.—
‘‘(1) APPLICATION.—To be eligible to receive 
assistance under this section, a State shall prepare 
and submit to the Secretary an application at such
125
time, in such manner, and containing such informa-
tion as the Secretary shall by regulation require, in-
cluding—
‘‘(A) an assurance that the State will com-
ply with the requirements of this section; 
‘‘(B) a State plan that meets the require-
ments of paragraph (2); and 
‘‘(C) an assurance that the State will com-
ply with the requirements of the State plan 
under paragraph (2). 
‘‘(2) REQUIREMENTS OF PLAN.—
‘‘(A) LEAD AGENCY.—The State plan shall 
identify the lead agency. 
‘‘(B) USE OF BLOCK GRANT FUNDS.—The 
State plan shall provide that the State shall use 
the amounts provided to the State for each fis-
cal year under this section—
‘‘(i)
to
provide
food
assistance
to 
needy individuals and families residing in 
the State, other than residents of institu-
tions who are ineligible for food stamps 
under section 3(i); 
‘‘(ii) to administer an employment 
and training program under subsection (g) 
for needy individuals under the program
126
and to provide reimbursements to needy 
individuals and families as would be al-
lowed under section 16(h)(3); and 
‘‘(iii) to pay administrative costs in-
curred in providing the assistance. 
‘‘(C) ASSISTANCE FOR ENTIRE STATE.—
The State plan shall provide that benefits under 
this section shall be available throughout the 
entire State. 
‘‘(D) NOTICE AND HEARINGS.—The State 
plan shall provide that an individual or family 
who applies for, or receives, assistance under 
this section shall be provided with notice of, and 
an opportunity for a hearing on, any action 
under this section that adversely affects the in-
dividual or family. 
‘‘(E) OTHER ASSISTANCE.—
‘‘(i) COORDINATION.—The State plan 
may coordinate assistance received under 
this section with assistance provided under 
the State program funded under part A of 
title IV of the Social Security Act (42 
U.S.C. 601 et seq.). 
‘‘(ii) PENALTIES.—If an individual or 
family is penalized for violating part A of
127
title IV of the Act, the State plan may re-
duce the amount of assistance provided 
under this section or otherwise penalize the 
individual or family. 
‘‘(F)
ELIGIBILITY
LIMITATIONS.—The 
State plan shall describe the income and re-
source eligibility limitations that are established 
for the receipt of assistance under this section. 
‘‘(G) RECEIVING BENEFITS IN MORE THAN 
1 JURISDICTION.—The State plan shall estab-
lish a system to verify and otherwise ensure 
that no individual or family shall receive bene-
fits under this section in more than 1 jurisdic-
tion within the State. 
‘‘(H) PRIVACY.—The State plan shall pro-
vide for safeguarding and restricting the use 
and disclosure of information about any indi-
vidual or family receiving assistance under this 
section. 
‘‘(I)
OTHER
INFORMATION.—The
State 
plan shall contain such other information as 
may be required by the Secretary. 
‘‘(3) APPROVAL OF APPLICATION AND PLAN.—
During fiscal years 2004 through 2008, the Sec-
retary may approve the applications and State plans
128
that satisfy the requirements of this section of not 
more than 5 States for a term of not more than 5 
years. 
‘‘(e)
CONSTRUCTION
OF
FACILITIES.—No
funds 
made available under this section shall be expended for 
the purchase or improvement of land, or for the purchase, 
construction, or permanent improvement of any building 
or facility. 
‘‘(f) BENEFITS FOR ALIENS.—No individual shall be 
eligible to receive benefits under a State plan approved 
under subsection (d)(3) if the individual is not eligible to 
participate in the food stamp program under title IV of 
the Personal Responsibility and Work Opportunity Rec-
onciliation Act of 1996 (8 U.S.C. 1601 et seq.). 
‘‘(g) EMPLOYMENT
AND TRAINING.—Each State 
shall implement an employment and training program for 
needy individuals under the program. 
‘‘(h) ENFORCEMENT.—
‘‘(1) REVIEW
OF
COMPLIANCE
WITH
STATE 
PLAN.—The Secretary shall review and monitor 
State compliance with this section and the State 
plan approved under subsection (d)(3). 
‘‘(2) NONCOMPLIANCE.—
129
‘‘(A) IN GENERAL.—If the Secretary, after 
reasonable notice to a State and opportunity for 
a hearing, finds that—
‘‘(i) there has been a failure by the 
State to comply substantially with any pro-
vision or requirement set forth in the State 
plan approved under subsection (d)(3); or 
‘‘(ii) in the operation of any program 
or activity for which assistance is provided 
under this section, there is a failure by the 
State to comply substantially with any pro-
vision of this section, the Secretary shall 
notify the State of the finding and that no 
further payments will be made to the State 
under this section (or, in the case of non-
compliance in the operation of a program 
or activity, that no further payments to the 
State will be made with respect to the pro-
gram or activity) until the Secretary is sat-
isfied that there is no longer any failure to 
comply or that the noncompliance will be 
promptly corrected. 
‘‘(B) OTHER SANCTIONS.—In the case of a 
finding of noncompliance made pursuant to 
subparagraph (A), the Secretary may, in addi-
130
tion to, or in lieu of, imposing the sanctions de-
scribed in subparagraph (A), impose other ap-
propriate sanctions, including recoupment of 
money improperly expended for purposes pro-
hibited or not authorized by this section and 
disqualification from the receipt of financial as-
sistance under this section. 
‘‘(C) NOTICE.—The notice required under 
subparagraph (A) shall include a specific identi-
fication of any additional sanction being im-
posed under subparagraph (B). 
‘‘(3) ISSUANCE
OF
REGULATIONS.—The Sec-
retary shall establish by regulation procedures for—
‘‘(A)
receiving,
processing,
and
deter-
mining the validity of complaints concerning 
any failure of a State to comply with the State 
plan or any requirement of this section; and 
‘‘(B) imposing sanctions under this sec-
tion. 
‘‘(i) PAYMENTS.—
‘‘(1) IN GENERAL.—For each fiscal year, the 
Secretary shall pay to a State that has an applica-
tion approved by the Secretary under subsection 
(d)(3) an amount that is equal to the allotment of 
the State under subsection (l)(2) for the fiscal year.
131
‘‘(2) METHOD
OF
PAYMENT.—The Secretary 
shall make payments to a State for a fiscal year 
under this section by issuing 1 or more letters of 
credit for the fiscal year, with necessary adjustments 
on account of overpayments or underpayments, as 
determined by the Secretary. 
‘‘(3) SPENDING OF FUNDS BY STATE.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), payments to a State from an 
allotment under subsection (l)(2) for a fiscal 
year may be expended by the State only in the 
fiscal year. 
‘‘(B) CARRYOVER.—The State may reserve 
up to 10 percent of an allotment under sub-
section (l)(2) for a fiscal year to provide assist-
ance under this section in subsequent fiscal 
years, except that the reserved funds may not 
exceed 30 percent of the total allotment re-
ceived under this section for a fiscal year. 
‘‘(4)
PROVISION
OF
FOOD
ASSISTANCE.—A 
State may provide food assistance under this section 
in any manner determined appropriate by the State 
to provide food assistance to needy individuals and 
families in the State, such as electronic benefits 
transfer limited to food purchases, coupons limited
132
to food purchases, or direct provision of commod-
ities. 
‘‘(5) DEFINITION
OF
FOOD
ASSISTANCE.—In 
this section, the term ‘food assistance’ means assist-
ance that may be used only to obtain food, as de-
fined in section 3(g). 
‘‘(j) AUDITS.—
‘‘(1) REQUIREMENT.—After the close of each 
fiscal year, a State shall arrange for an audit of the 
expenditures of the State during the program period 
from amounts received under this section. 
‘‘(2) INDEPENDENT AUDITOR.—An audit under 
this section shall be conducted by an entity that is 
independent of any agency administering activities 
that receive assistance under this section and be in 
accordance with generally accepted auditing prin-
ciples. 
‘‘(3) PAYMENT ACCURACY.—Each annual audit 
under this section shall include an audit of payment 
accuracy under this section that shall be based on a 
statistically valid sample of the caseload in the 
State. 
‘‘(4) SUBMISSION.—Not later than 30 days 
after the completion of an audit under this section,
133
the State shall submit a copy of the audit to the 
legislature of the State and to the Secretary. 
‘‘(5) REPAYMENT
OF
AMOUNTS.—Each State 
shall repay to the United States any amounts deter-
mined through an audit under this section to have 
not been expended in accordance with this section or 
to have not been expended in accordance with the 
State plan, or the Secretary may offset the amounts 
against any other amount paid to the State under 
this section. 
‘‘(k) NONDISCRIMINATION.—
‘‘(1) IN
GENERAL.—The Secretary shall not 
provide
financial
assistance
for
any
program, 
project, or activity under this section if any person 
with responsibilities for the operation of the pro-
gram, project, or activity discriminates with respect 
to the program, project, or activity because of race, 
religion, color, national origin, sex, or disability. 
‘‘(2) ENFORCEMENT.—The powers, remedies, 
and procedures set forth in title VI of the Civil 
Rights Act of 1964 (42 U.S.C. 2000d et seq.) may 
be used by the Secretary to enforce paragraph (1). 
‘‘(l) ALLOTMENTS.—
‘‘(1) DEFINITION OF STATE.—In this section, 
the term ’State’ means each of the 50 States, the
134
District of Columbia, Guam, and the Virgin Islands 
of the United States. 
‘‘(2) STATE ALLOTMENT.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), from the amounts made 
available under section 18 of this Act for each 
fiscal year, the Secretary shall allot to each 
State participating in the program established 
under subsection (a) an amount that is equal to 
the sum of—
‘‘(i) the greater of, as determined by 
the Secretary—
‘‘(I) the total dollar value of all 
benefits issued under the food stamp 
program established under this Act by 
the State during fiscal year 2003; or 
‘‘(II) the average per fiscal year 
of the total dollar value of all benefits 
issued under the food stamp program 
by the State during each of fiscal 
years 2001 through 2003; and 
‘‘(ii) the greater of, as determined by 
the Secretary—
‘‘(I) the total amount received by 
the State for administrative costs and
135
the employment and training program 
under subsections (a) and (h), respec-
tively, of section 16 of this Act for fis-
cal year 2003; or 
‘‘(II) the average per fiscal year 
of the total amount received by the 
State for administrative costs and the 
employment
and
training
program 
under subsections (a) and (h), respec-
tively, of section 16 of this Act for 
each of fiscal years 2001 through 
2003. 
‘‘(B) INSUFFICIENT FUNDS.—If the Sec-
retary finds that the total amount of allotments 
to which States would otherwise be entitled for 
a fiscal year under subparagraph (A) will ex-
ceed the amount of funds that will be made 
available to provide the allotments for the fiscal 
year, the Secretary shall reduce the allotments 
made to States under this subsection, on a pro 
rata basis, to the extent necessary to allot 
under this subsection a total amount that is 
equal to the funds that will be made available.’’.
136
TITLE VII—ABSTINENCE 
EDUCATION 
SEC. 701. EXTENSION OF ABSTINENCE EDUCATION PRO-
GRAM. 
(a)
EXTENSION
OF
APPROPRIATIONS.—Section 
510(d) (42 U.S.C. 710(d)) is amended by striking ‘‘2002’’ 
and inserting ‘‘2008’’. 
(b) ALLOTMENT
OF FUNDS.—Section 510(a) (42 
U.S.C. 710(a)) is amended—
(1) in the matter preceding paragraph (1), by 
striking ‘‘an application for the fiscal year under 
section 505(a)’’ and inserting ‘‘, for the fiscal year, 
an application under section 505(a), and an applica-
tion under this section (in such form and meeting 
such terms and conditions as determined appropriate 
by the Secretary),’’; and 
(2) in paragraph (2), to read as follows: 
‘‘(2) the percentage that would be determined 
for the State under section 502(c)(1)(B)(ii) if the 
calculation under such section took into consider-
ation only those States that transmitted both such 
applications for such fiscal year.’’. 
(c) REALLOTMENT
OF FUNDS.—Section 510 (42 
U.S.C. 710(a)) is amended by adding at the end the fol-
lowing new subsection: