I 113th CONGRESS 2d Session H. R. 3854 IN THE HOUSE OF REPRESENTATIVES January 13, 2014 Mr. Fitzpatrick (for himself, Ms. McCollum , and Mr. Costa ) introduced the following bill; which was referred to the Committee on Education and the Workforce A BILL To amend the Community Services Block Grant Act to reauthorize and modernize the Act.

1. Short title This Act may be cited as the Community Economic Opportunity Act of 2014 . 2. Reauthorization The Community Services Block Grant Act (42 U.S.C. 8 9901 et seq.) is amended to read as follows: B Community Services Block Grant Program 671. Short title This subtitle may be cited as the Community Services Block Grant Act . 672. Purposes The purposes of this subtitle are— (1) to reduce poverty in United States communities by supporting the activities of community action agencies that reduce the causes and conditions of poverty and persistent economic insecurity by— (A) providing individuals and families with opportunities to become economically secure; and (B) developing new economic opportunities in the communities in which low- and moderate-income individuals live; and (2) to accomplish the objectives described in paragraph (1) by— (A) strengthening community capabilities for identifying poverty conditions and opportunities to alleviate such conditions and planning Federal, State, local, and other assistance, including private resources, related to the reduction of poverty so that resources can be used in a manner responsive to local needs and conditions; (B) organizing and coordinating multiple services and resources so as to have a measurable and significant impact on the causes of poverty in the community and to help families and individuals find and utilize opportunities to become economically secure; (C) using innovative community-based approaches to attack the causes and effects of poverty and to build community social and economic assets; (D) empowering residents to respond to the unique problems and needs within their communities through civic participation and partnerships; (E) broadening the sources and number of resources directed to the elimination of poverty, so as to promote statewide, regional, and local partnerships that— (i) achieve the purposes of this subtitle; and (ii) include— (I) private, religious, charitable, and neighborhood-based organizations; (II) individuals, businesses, labor organizations, professional organizations, and other organizations engaged in expanding opportunities for all individuals; and (III) local government leaders; and (F) by ensuring the maximum feasible participation of residents of low-income communities and of members of the groups served by programs, projects, and services under this subtitle, in advising and assessing the eligible entities and in designing their programs, projects, and services funded under this subtitle. 673. Definitions In this subtitle: (1) Community action agency; community services network organization; eligible entity (A) Community action agency The term community action agency means an eligible entity (which meets the requirements of paragraph (1) or (2), as appropriate, of section 681(c)) that is a public charity (other than an organization described in section 509(a)(4) of the Internal Revenue Code of 1986) and that delivers multiple programs, projects, or services to a variety of low-income groups. (B) Community services network organization The term community services network organization means any of the following organizations funded under this subtitle— (i) a grantee; (ii) an eligible entity; or (iii) an organization organized by multiple grantees or eligible entities, that is governed by a Board of Directors of which at least 3/4 of the members— (I) are employees or other designees of such a grantee or eligible entity; and (II) are selected by an open and democratic process by the members of the organization. (C) Eligible entity The term eligible entity means an entity— (i) that is an eligible entity described in section 673(1) as in effect on October 26, 1998, or has been designated by the process described in section 681(a) (including an organization serving migrant or seasonal farmworkers that is so described or designated); and (ii) that has a tripartite board or other mechanism described in paragraph (1) or (2), as appropriate, of section 681(c). (2) Community action program plan community action program plan means a detailed plan, including a budget, for expenditures of funds appropriated for a fiscal year under this title for the activities supported directly or indirectly by such funds. (3) Community action strategic plan The term community action strategic plan means a plan that is adopted as the policy of an eligible entity and that— (A) establishes goals for a period of not less than 4 years that are based on meeting needs identified by the entity in consultation with the residents of the community through a process of comprehensive community needs assessment; (B) provides detail on how all activities of an eligible entity under this subtitle will contribute to meeting such goals including, but not limited to, how such entity will use funding received under this subtitle to reduce the impact of the causes of poverty in the community; and (C) specifies how such activities will be managed, funded, and measured by the performance measurement system of such entity. (4) Grantee The term grantee means a recipient of a grant under section 677 or 678 or a corresponding provision of this subtitle (as in effect on the day before the date of enactment of the Community Economic Opportunity Act of 2014). (5) Performance benchmark The term performance benchmark means a measurable objective for the operations and activities set out in a community action program plan or a State plan under this subtitle. Such annual objectives may be part of, but not the entirety of, the outcomes identified by the performance measurement system in which a community services network organization participates. (6) Performance measurement system The term performance measurement system means a management information system that collects and reports information about the outcomes of activities and investments funded in whole or in part with funds appropriated under this subtitle, including but not limited to annual performance benchmarks, compares the actual outcomes with the intended outcomes, and is used as a basis for management decisions regarding future use of resources provided under this subtitle. (7) Poverty line (A) In general The term poverty line means the official poverty line defined by the Office of Management and Budget, based on the most recent data available from the Bureau of the Census, subject to subparagraphs (C) and (D). The Secretary shall revise the poverty line annually (or at any shorter interval the Secretary determines to be feasible and desirable). The required revision shall be accomplished by multiplying the official poverty line by the percentage change in the Consumer Price Index for All Urban Consumers during the annual or other interval immediately preceding the time at which the revision is made. (B) Community services block grant eligibility criterion Subject to subparagraphs (C) and (D), the poverty line, as defined in subparagraph (A), shall be used as a criterion of eligibility in the community services block grant program established under this subtitle. (C) Waivers for state use of higher eligibility level Whenever a community action plan provides that a program, project, or service funded under this subtitle requires use of a higher eligibility standard than the standard otherwise applicable under this paragraph, for the purpose of ensuring (for the purposes of this subtitle) coordination of activities carried out under with other programs or activities of eligible entities that are delivered to low-income individuals, the State shall, as part of the annual application described in section 680, apply to the Secretary for a waiver that allows use of that standard with respect to that program, project, or service, and the Secretary may approve the waiver pursuant to the procedures in section 680. (D) Procedures for continued eligibility A State may establish procedures to ensure that a participant in a program, project, or service funded under this subtitle remains eligible to participate as long as the participant is successfully progressing towards achievement of the goals of the program, project, or service, regardless of the participant's continuing eligibility under subparagraphs (A) through (C). (9) Private, nonprofit organization The term private nonprofit organization includes a religious organization to which the provisions of section 690 shall apply. (10) Public charity The term public charity means a domestic or foreign organization that is— (A) described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code; and (B) described in paragraph (1), (2), (3), or (4) of section 509(a) of the Internal Revenue Code of 1986. (11) Secretary The term Secretary means the Secretary of Health and Human Services. (12) Service area The term service area means the unique geographic area which the State has designated as the area to be served by an eligible entity. (13) State The term State means any of the several States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the United States Virgin Islands, American Samoa, or the Commonwealth of the Northern Mariana Islands. 676. Establishment of community services block grant program (a) The Secretary is authorized to establish a community services block grant program and to make grants through the program, under sections 677 and 678 to States to support local community action program plans carried out by eligible entities to ameliorate the conditions that cause poverty in the communities served by such entities. (b) The Secretary is authorized to carry out other community programs described in section 693 of this title. (c) Uniform administrative requirements Notwithstanding any other provision of the Omnibus Budget Reconciliation Act of 1981 ( Public Law 97–35 ), funds appropriated under this subtitle shall be subject to the Uniform Administrative Requirements for Grants and Cooperative Agreements to State, Local, and Tribal Governments (part 92 of title 45, Code of Federal Regulations or any corresponding similar regulation or ruling) and all other Federal laws and regulation related to intergovernmental financial transactions and to administration of federally funded grants and cooperative agreements between States and nonprofit organizations. 677. Grants to territories (a) Apportionment The Secretary shall apportion the amount reserved under section 692(c)(1) for each fiscal year on the basis of need to eligible jurisdictions, among Guam, American Samoa, the United States Virgin Islands, and the Commonwealth of the Northern Mariana Islands. (b) Grants The Secretary shall make a grant to each eligible jurisdiction to which subsection (a) applies for the amount apportioned under subsection (a). 678. Allotments and grants to States (a) Allotments in general From the amount appropriated under section 692(a) for each fiscal year and remaining after the Secretary makes the reservations required by section 692(c), the Secretary shall allot to each eligible State (subject to section 679), an amount that bears the same ratio to such remaining amount as the amount received by the State for fiscal year 1981 under section 221 of the Economic Opportunity Act of 1964 bore to the total amount received by all States for fiscal year 1981 under such section, except as provided in subsection (b). (b) Minimum allotments (1) In general The Secretary shall allot to each State not less than 1/2 of 1 percent of the amount appropriated under section 692(a) for such fiscal year except as provided in section 692(c)(1). (2) Years with greater available funds If the amount appropriated under section 692(a) for a fiscal year and remaining after the Secretary makes the reservations required by section 692(b) exceeds $850,000,000, no State shall receive under this section less than 3/4 of 1 percent of the remaining amount. (c) Grants and payments Subject to section 679, the Secretary shall make grants to eligible States for the allotments described in subsections (a) and (b). The Secretary shall make payments for the grants in accordance with section 6503(a) of title 31, United States Code. (d) Definition In this section, the term State does not include Guam, American Samoa, the United States Virgin Islands, and the Commonwealth of the Northern Mariana Islands. 679. Payments to Indian tribes (a) Definitions In this section: (1) Indian The term Indian means a member of an Indian tribe or of a tribal organization. (2) Indian tribe; tribal organization The terms Indian tribe and tribal organization mean a tribe, band, or other organized group recognized in the State in which the tribe, band, or group resides, or considered by the Secretary of the Interior, to be an Indian tribe or an Indian organization for any purpose. (b) Reservation (1) Application Paragraph (2) shall apply only if, with respect to any State, the Secretary— (A) receives a request from the governing body of an Indian tribe or tribal organization within such State that assistance under this subtitle be made available directly to such tribe or organization; and (B) determines that the members of such Indian tribe or tribal organization would be better served by means of grants made directly to such tribe or organization to provide benefits under this subtitle. (2) Amount The Secretary shall reserve from amounts allotted to a State under section 678 for a fiscal year, not less than the amount that bears the same ratio to the State allotment for the fiscal year as the population of all eligible Indians for whom a determination has been made under paragraph (1)(B) bears to the population of all individuals eligible for assistance through a grant made under section 678 to such State. (c) Awards The amount reserved by the Secretary on the basis of a determination made under subsection (b)(1)(B) shall be made available by grant to the Indian tribe or tribal organization serving the Indians for whom the determination has been made under subsection (b)(1)(B). (d) Plan In order for an Indian tribe or tribal organization to be eligible for a grant award for a fiscal year under this section, the tribe or organization shall submit to the Secretary a plan for such fiscal year that meets such criteria as the Secretary may prescribe by regulation. (e) Alternative performance measurement system The Secretary may promulgate alternative requirements for tribal implementation of the requirements of section 680(c). 680. State plans and applications; community action program plans and applications (a) State lead agency (1) Designation The chief executive officer of a State desiring to receive a grant under section 677 or 678 shall designate, in an application submitted to the Secretary under subsection (b), an appropriate State agency that agrees to comply with the requirements of paragraph (2), to act as a lead agency for purposes of carrying out State activities under this subtitle. (2) Duties of lead state agencies The lead agency shall— (A) be authorized by the chief executive officer to convene State agencies and coordinate— (i) information and activities funded under this subtitle; and (ii) information and activities of any State agencies whose State programs are intended to reduce poverty, including agencies administering resources that support development of jobs and housing in communities; (B) develop the State plan to be submitted to the Secretary under subsection (b), which shall be based primarily on the community action program plans of eligible entities, submitted to the State as a condition of receiving funding under this subtitle for approval by the State; (C) assist eligible entities— (i) in conducting periodic comprehensive community needs assessments, not less often than every 4 years; (ii) in developing community action program plans; and (iii) in developing community action strategic plans; (D) coordinate plans for the activities of the State and other organizations under this subtitle, and activities of recipients of training or technical assistance with the community action program plans; (E) in conjunction with the development of the State plan as required under subsection (b)— (i) hold at least one hearing in the State on the proposed plan, to provide to the public an opportunity to comment on the public record on the proposed use and distribution of funds under the plan; and (ii) not less than 15 days prior to the hearing, distribute notice of the hearing and a copy of the proposed plan statewide to the public and directly to the chief executive officer and the chairperson of the Board of Directors of the eligible entities (or designees) and any subgrantees (or designees) and other interested parties; (F) not less often than every 3 years, in conjunction with the development of the State plan, hold at least 1 legislative hearing; (G) conduct reviews of eligible entities as required under section 684; (H) adopt and report on State performance benchmarks, as described in section 680(c); and (I) provided further that, in the event a lead agency chooses to exercise its option to delegate one or more of its duties to another organization by contract, grant, or cooperative agreement, such delegation shall not include its duties under subsection (G). (b) State application for State program and State plan Beginning with the first fiscal year following the transition year, to be eligible to receive a grant under section 677 or 678, a State shall prepare and submit to the Secretary for approval an application containing a State plan covering a period of not more than two fiscal years. The application shall be submitted not later than 30 days prior to the beginning of the first fiscal year covered by the plan, and shall contain such information as the Secretary shall require, including— (1) a description of the manner in which funds made available through the grant under section 677 or 678 will be used to carry out the State activities described in section 680A(b) and the State’s community action program plans; (2) a summary of the community action program plans of the eligible entities serving the State; (3) an assurance that each plan responds to needs identified in the comprehensive community needs assessment for the service area assigned to the entity and is consistent with one or more purposes described in section 672 and that the plan has been adopted by the governing body of each eligible entity; (4) an assurance that the State has approved all such community action program plans that are consistent with the purposes and requirements of this subtitle; (5) at the State’s option, a statewide strategic plan that— (A) includes the State’s strategy for implementing its responsibilities under section 680(a); and (B) may include the community action strategic plans of the eligible entities and such other matters as the State shall determine to be necessary to complete its strategic plan; (6) a description of the State’s performance measurement system; (7) a plan for the State’s oversight of eligible entities, including, but not limited to— (A) the training provided to State over-sight personnel regarding Federal law, regulations and policy, and applicable State practices; (B) the policies and procedures adopted for the State’s monitoring: (C) the State’s system for implementing the training and, when necessary, requiring a corrective action plan for eligible entities; (D) the management training and technical assistance made available to eligible entities; and (E) the method used for assessing the quality of such training; (8) an assurance that any eligible entity in the State that received, in the previous fiscal year, funding through a grant made under section 677 or 678 will not have such funding withheld, nor reduced below the proportional share of funding the entity received from the State in the previous fiscal year, nor eliminated— (A) except according to the procedures set forth in subsection (b), (c), (d), or (e) of section 685; or (B) unless the Secretary, in approving an application under this section, approves a change in the proportional distribution of funds under section 680(A)(a)(1) when included as part of a State’s application submitted under section 680(b); (9) a description of the State’s requirements that ensure that each eligible entity serving the State establishes procedures that permit low-income individuals, or a community organization or religious organization, that considers low-income individuals or the organization, respectively, to be inadequately represented on the Board of Directors of the eligible entity, to petition for adequate representation of such individuals or organization, respectively, on the Board; (10) a description of the State’s requirements, and financial or other support, for each community action program plan and community action strategic plan of an eligible entity in the State and for the comprehensive community needs assessment described in subsection (a)(2)(C) on which the community action program plans are based, which assessment may be coordinated with community needs assessments conducted for programs other than the program carried out under this subtitle; (11) an assurance that the State and all eligible entities in the State will participate in a performance measurement system that meets the requirements of this subtitle, and a description of the management and program information that will be used to measure State and eligible entity performance in achieving the goals of the State plan and the community action program plans, respectively; and (12) an assurance that the State’s performance measurement system for eligible entities is based, for each eligible entity, upon the results of implementing the entity’s own community action program plan and the achievement of the goals of the plan and performance benchmarks described in subsection (c) as adjusted, if necessary, for changes in available funding. (c) State performance requirements and benchmarks (1) Performance requirements Consistent with the requirements of section 687, following the transition period described in subsection 691(a), in order to be eligible for a grant under section 677 or 678, each State shall adopt performance requirements and the performance benchmarks described in paragraph (2), to be included as part of the performance measurement system described in section 687 and shall provide related training for State personnel carrying out a State program under this subtitle. (2) Annual state performance benchmarks Each State shall include in the State plan submitted under subsection (b), for each fiscal year after the transition period, performance measurements for lead agency management quality including those promulgated by the Secretary, and the State annual performance benchmarks regarding programmatic activities described in section 680A(b) and other performance measures which shall include— (A) indicators of timely distribution and effective management of Federal funds by the lead agency and of the compliance with the requirements for State personnel and for management of activities funded under this subtitle (other than this subsection); and (B) indicators concerning the results of activities funded by the State under this subsection. (d) Approval The Secretary shall notify the chief executive officer of each State submitting an application containing a State plan under this section, of the approval, disapproval, or approval in part, of the application, within 30 days after receiving the application. (1) In the event of a partial approval, the Secretary’s notification shall include a description of changes necessary for final approval but the Secretary shall not require submission of the State strategic plan described in subsection (b)(4). In the event of such partial approval, the Secretary may allow grantee use of funds for activities included in the portions of the plan which the Secretary has approved. (2) In the event a State application fails to be approved in whole or in part before the end of the third month of the State program covered by such plan the Secretary may allocate funds as provided in section 685(b)(3)(C). (e) Revision and inspection (1) Revisions The chief executive officer of a State may revise a State plan submitted under this section and shall submit an application containing the revised plan to the Secretary for approval according to the procedures described in subsections (b) and (c). (2) Public inspection Each plan and revision to a State plan prepared under this section shall be distributed for public inspection as required under subsection (a)(2)(E), but a State application for merger incentive funds shall not be considered a revision. (f) Application for community action program and community action program plan Beginning with the first fiscal year following the transition year, to be eligible to receive a subgrant under section 680A(a), each eligible entity shall prepare and submit to the State for approval an application containing a community action program plan or plans covering a period of not more than two fiscal years. Such application shall be submitted no later than 90 days before the date for submission of the State application to the Secretary. The application shall contain information on the intended implementation of the eligible entity’s activities, including demonstrating— (1) how the program— (A) meets needs identified in the most recent comprehensive community needs assessment, and is consistent with the entity’s community action strategic plan for that period; and (B) achieves the purposes of this subtitle through programs, projects, and services, which may include the activities described in section 683. (2) Eligible entity performance requirements and benchmarks Not later than the end of the period described in section 691(a), each eligible entity participating in a program funded under this subtitle shall— (A) adopt performance benchmarks that include indicators concerning attainment of the goals of the entity’s annual community action program plans described in section 673(2), indicators of timely and effective management of Federal and other funds, and indicators of compliance with the requirements of this subtitle; (B) participate in a statewide performance measurement system under section 687, including— (i) contributing to reports on indicators of results as measured by the statewide system; (ii) establishing and tracking performance on indicators concerning attainment of the goals of the entity’s community action strategic plan and community action program plan; (ii) measuring the entity’s performance regarding governance, organizational development, and professional development of agency personnel; and (iv) establishing an internal management system that incorporates information regarding results into subsequent plans, procedures, and budgets; and (C) conduct community-wide comprehensive community needs assessments including assessments of local opportunities to reduce poverty and use the results as a basis for community action strategic plans, for programs, projects, and services provided by the entity, for public engagement in addressing the causes of poverty and the expansion of local economic opportunities, and for the development of linkages among partners that will reinforce initiatives funded under this subtitle. 680A. State and local uses of funds (a) State subgrants to eligible entities and other organizations (1) In general A State that receives a grant under section 677 or 678 shall reserve 2 percent of the funds made available through the grant for the Community Action Innovations Program described in subsection (c) and, of the remainder, use not less than 90 percent to make subgrants to eligible entities to enable the entities to implement programs, projects, or services for a purpose described in section 672. (2) Obligational requirements (A) Date of obligation The State shall obligate the funds from the portion described in paragraph (1) to make subgrants under paragraph (1) not later than the later of— (i) the 30th day after the date on which the State receives from the Secretary a Notice of Funding Availability for the State’s approved State application under section 680; or (ii) the first day of the State program year for which such funds are approved to be expended under the State application. (B) Availability Funds allocated to eligible entities through subgrants made in accordance with paragraph (1) for a fiscal year shall be available for obligation by the eligible entity during that fiscal year and the succeeding fiscal year, subject to paragraph (3). (3) Recapture and redistribution of unobligated funds (A) Recapturing funds A State may recapture and redistribute funds distributed to an eligible entity for a fiscal year through a subgrant made under paragraph (1) that are unobligated at the end of the fiscal year if such unobligated funds exceed 20 percent of the amount of funds so distributed to such eligible entity for such fiscal year unless the community action program plan approved by the State included a higher percentage of unobligated funds. (B) Redistributing funds In redistributing funds recaptured in accordance with this paragraph, a State shall redistribute such funds to another eligible entity that is a community action agency and is capable of providing services similar to the services provided by the original recipient of funds in the area served. If no such community action agency is available, the State may redistribute the funds to a private, nonprofit organization that has demonstrated capacity to deliver similar services to residents of the community and that is located in that service area, for activities consistent with the objectives of this subtitle. (b) Statewide activities (1) Use of remainder (A) In general A State that receives a grant under section 677 or 678 shall, after carrying out subsection (a), use the remainder of the grant funds for activities described in the State’s application approved by the Secretary under section 680(b) as described in subparagraphs (B) and (C) and for administrative expenses subject to the limitations in paragraph (2). (B) Training and technical assistance After applying subsection (a) and subparagraph (C), the State may use the remaining grant funds for the purposes of— (i) providing to eligible entities training and technical assistance and resources to respond to specific statewide or regional conditions that create economic insecurity, including, but not limited to, emergency conditions; (ii) supporting professional development activities for eligible entities that enhance the skills of their local personnel (including skills of members of the board of directors of such entities) that such personnel need to manage private, nonprofit organizations, including skills for designing and delivering effective support to individuals seeking opportunities for economic security, and skills for designing and managing programs, projects, or services that lead to change in the economic and social assets and opportunities of the community, giving priority to activities carried out through partnerships of the organizations with institutions of higher education; (iii) supporting information and communication resources for the comprehensive community needs assessments described in section 680(a)(2)(C); (iv) supporting performance measurement systems consistent with the requirements of sections 680(c) and 682(b), including establishing systems to measure the effectiveness of training delivered under clause (i), and publishing the results of measurements taken under the systems; (v) promoting coordination and cooperation among eligible entities in the State including supporting activities of a statewide association of community services network organizations; and (vi) supporting the activities of private non-profit organizations which meet the purposes of this title and which coordinate such activities with community services network organizations in the State. (C) Innovative projects to reduce poverty (i) In general The State shall use amounts reserved under section 680A(a)(1) for a Community Action Innovations Program to award subgrants, contracts, or cooperative agreements to eligible entities, or their associations, to carry out innovative projects to test or replicate promising new practices designed to reduce poverty conditions and to disseminate the results of such projects for public use. (ii) Expenses The funds reserved for projects under this subparagraph may be used for reasonable expenses, of States and subgrantees, associated with administration of such projects and dissemination of their results. (iii) Awards and obligation A State shall award and obligate funds reserved for projects under this subparagraph during the first program year for which the funds are appropriated. Funds provided under this subparagraph shall remain available until expended for an innovative project if the period for that expenditure is specified in an approved plan described in subparagraph (D) for that innovative project. (iv) Matching requirements In the case of innovative projects that are funded in part by funds authorized under a Federal law other than this subtitle, that includes requirements for matching the Federal funds with non-Federal funds, funds made available under this subsection may be deemed to be local funding for purposes of requirements of such law. (v) Real property Land or facilities improved through a project receiving an award under this subparagraph, for which the amount of the award is less than 50 percent of the total project cost, shall not be subject to the provisions of section 688(a). (vi) Eligibility Activities funded under this section may include participants with incomes not exceeding 80 percent of the area median income. (D) Plan for state use of training, technical assistance, and innovation funds To be eligible to use grant funds as described in subparagraph (B) or (C), each State shall submit, not later than the end of the transition period described in section 691(a), as part of the annual State plan submitted under section 680(b), a training, technical assistance, and innovation plan, developed in consultation with the community service network organizations in the State, that— (i) shall cover up to 2 years; and (ii) shall set forth information describing the way the requirements of that subparagraph will be implemented and a quality assurance system for providers of the training, technical assistance, or innovation project involved. (2) Administrative cap (A) Limitation No State may spend more than 5 percent of the remainder of the funds after the reservation for the State community action innovations fund as described in section 680A(a)(1) for administrative expenses. (B) Definition In this paragraph, the term administrative expenses — (i) means the costs incurred by the State’s lead agency for carrying out planning and management activities, including monitoring, oversight, and reporting as required by this Act; and (ii) does not include the cost of activities conducted under paragraph (1)(B) other than monitoring. (c) Eligible entity use of funds An eligible entity that receives a subgrant under section 680A(a) shall use the subgrant funds to carry out a community action program plan with programs, projects, and services that shall include— (1) the activities described in section 680(a)(2)(C) regarding periodic assessment of poverty conditions and opportunities to alleviate such conditions in connection with convening community-wide planning activities; and activities that achieve greater participation of the residents of the communities served in the affairs of the community and the organization and one of more of the activities in subsection (2) or (3); (2) programs, projects, or services that are designed to assist low-income individuals and families by providing access to local opportunities for achieving and maintaining economic security, which may include opportunities for the individuals and families— (A) to secure and retain meaningful employment at a family-supporting wage; (B) to secure an adequate education, improve literacy and language ability, and obtain job-related skills; (C) to make better use of available income and build assets; (D) to obtain and maintain adequate housing and a healthy living environment, including addressing the heath care needs of individuals and families with services and through changes in local institutions and workplaces (including institutions and workplaces managed by the eligible entity); and (E) to obtain emergency materials or other assistance to meet immediate individual or community urgent needs and prevent greater or more prolonged economic instability; and (3) programs, projects, or services that improve living conditions, increase employment, and expand other economic opportunities in the community served, which may include— (A) activities that develop and maintain partnerships for the purpose of changing community, economic, and social conditions of poverty, between the eligible entity and— (i) State and local public entities (such as schools, institutions of higher education, housing authorities, and law enforcement agencies); and (ii) private partners, including statewide and local businesses, associations of private employers, and private charitable and civic organizations; (B) activities that establish linkages among organizations for coordinating initiatives, services, and investments so as to avoid duplication, and maximize the effective use of community resources for creating economic opportunity, including developing lasting social and economic assets; and (C) activities that mobilize new investments in the community to reduce the incidence of poverty, including developing lasting social and economic assets. 681. Eligible entities and tripartite boards (a) Designation and redesignation of eligible entities in unserved areas (1) In general If any geographic area of a State is not, or ceases to be, served by an eligible entity the lead agency shall, in consultation with local officials and organizations representing the area, solicit one or more applications and designate a new community action agency to provide programs, projects, or services to the area that is— (A) a community action agency that is geographically located in an area within reasonable proximity of or contiguous to the unserved area that is already providing similar programs, projects, or services, and that has demonstrated financial capacity to manage and account for Federal funds; or (B) if no community action agency described in subparagraph (A) is available, a private, nonprofit organization (which may include an eligible entity) that is geographically located in, or in reasonable proximity to, the unserved area and that is capable of providing a broad range of programs, projects, or services designed to achieve the purposes of this subtitle as stated in section 672. (2) Requirement In order to serve as the eligible entity for the service area, an entity described in paragraph (1) shall agree to ensure that the governing board of directors of the entity will meet the requirements of subsection (b)(1)(C). (3) Community A service area referred to in this subsection or a portion thereof shall be treated as a community for purposes of this subtitle. (b) Mergers of eligible entities (1) In general If two or more eligible entities determine that the geographic areas of a State which they serve can be more effectively served under a single corporate structure, a State shall assist in developing a plan for implementing such merger, including a budget for transitional costs not to exceed two years duration, and, upon approving such plans, may notify the Secretary that the entities are in need of and eligible for funds from the merger incentive fund established in section 683(a)(1)(B)(iv). (2) Plans States may establish requirements for merger plans and for a determination that the merged entity, or entities, will be capable of conducting a program consistent with the comprehensive needs assessments for the areas served. (c) Tripartite boards (1) Private, nonprofit organizations (A) Board In order for a private, nonprofit organization to be considered to be an eligible entity for purposes of section 673(1), the entity shall be governed by a tripartite board of directors described in subparagraph (C) that fully participates in the development, planning, implementation, oversight, and evaluation of the program, project, or service carried out or provided through the subgrant made under section 680A(a) and all activities of the entity. (B) Selection The members of the board referred to in subparagraph (A) shall be selected by the entity. (C) Composition of board The board shall be composed so as to assure that— (i) 1/3 of the members of the board are elected public officials holding office on the date of selection, or their representatives; (ii) (I) not fewer than 1/3 of the members 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 representative of low-income individuals and families and is also selected to represent a specific subarea 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 include 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 private, 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 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 organization 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 of directors described 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 of the unit of government in which the organization is located, including elected officials; (ii) (I) not fewer than 1/3 of the members 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 representative of low-income individuals and families and is also selected to represent a specific subarea 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 individuals with expertise in financial management, accounting, and law. (E) Compliance with state requirements and policy The board of a public organization shall ensure that the board operates in a manner that complies with State requirements for open meetings, financial transparency, and State open records policy. (c) 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, nonprofit organization that is an eligible entity, having and legal and financial responsibility for administering overseeing the eligible entity, including making proper use of Federal funds; (2) ensuring that the guidance regarding organizational performance disseminated by the Secretary under section 682(c)(8) is implemented; (3) adopting practices that assure active, independent, and informed governance of the eligible entity, including establishing a limited number of terms for officers and adopting a code of ethical conduct for members; (4) participating in each comprehensive community needs assessment, developing and adopting as a policy for the corresponding eligible entity a community action strategic plan, including provisions for the use of funds under this subtitle, and 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 management; (6) ensuring compliance by the eligible entity with Federal, and applicable State and local, laws, including regulations; (7) overseeing financial management, accounting, 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 financial 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 reviews; 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 action; (10) adopting personnel policies and procedures, including policies and procedures for hiring, annual evaluation, compensation, and termination, of the Executive Director of the eligible entity; and (11) adopting and periodically updating written conflict of interest policies for members of the board. 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 ). (b) Grants, contracts, and cooperative agreements The Secretary, acting through the Director, 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 monitoring (including inspecting) eligible entities that receive 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 Department officials with responsibility for monitoring and approving State programs under this subtitle, regarding the knowledge, skills, and abilities required to assess and provide technical assistance regarding the operations of private, nonprofit organizations responsible for implementing multiple Federal and other community-based initiatives; (3) ensure that personnel and contractors of the Department with responsibility for State programs 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 subtitle; (5) promulgate performance indicators for State management of the funds, operations and programmatic requirements of this subtitle; (6) establish and publish uniform procedures for use by Federal and State monitors of the activities authorized by this subtitle; (7) promulgate regulations with respect to the procedures for State and local corrective action plans described in section 687 (including promulgating a definition of a serious deficiency for purposes of that section) to ensure prompt resolution of deficiencies and adherence to the uniform administrative requirements 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 organizations. (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 targets for— (1) the timeliness of— (A) apportionments and allotments of appropriated 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 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 offices of the Department; (6) the improvement achieved by Federal personnel in acquiring the knowledge, skills, and abilities described in subsection (c)(2) and needed to effectively carry out subsection (c)(1); (7) the progress made by the Office of Community Services in achieving each of the requirements of this subtitle; and (8) the timeliness of reports required by this subtitle. 683. Training, technical assistance, and related 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 measurement, through States and other community services network organizations to assist in— (i) development or replication of innovative initiatives; (ii) carrying out professional development activities that expand the capacity of eligible entities; (iii) carrying out performance measurement, reporting, and data collection activities related to programs carried out under this subtitle; and (iv) correcting programmatic deficiencies, including such deficiencies of eligible entities; and (B) the Secretary shall distribute the amounts reserved under section 692(c)(2)(B) directly to States, eligible entities, or other community services network organizations and their partners, including institutions of higher education, 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 (including practices related to performance management information systems); (iii) activities that train individuals and organizations to effectively address the needs of low-income families and communities through place-based strategies for 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 application by the State as described in section 680(b) for funds to support the one-time costs incurred by two or more eligible entities for legal, financial and other activities required to effect a merger of operations 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 fiscal year shall be available for other authorized 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 (1)(A) shall be carried out by the Secretary through grants, contracts, or cooperative agreements with appropriate entities, which shall include all statewide associations of eligible entities that meet the requirements for receipt of Federal funds. (d) Training and technical assistance process (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 paragraph (2), and the activities described in paragraph (3). (2) Office of community services strategic training plan (A) In general Not less often than every fourth year the Secretary, acting through the Director and in consultation with community service network organizations, shall develop, publish, and carry out a strategic plan for the use of funds reserved for use under section 692(c)(2). (B) Contents Such a plan shall describe— (i) the activities that will be supported (including their goals), the partnerships, if any, required to conduct such activities, the role of each partner participating, the system for delivering the intended results, and the timing of such activities; (ii) the manner in which the plan ensures 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 eligible 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 (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 development needs of the eligible entities related to carrying out this subtitle. (3) Evaluation of training and technical assistance The Secretary, acting through the Director— (A) shall establish a procedure for evaluating the quality and effectiveness of training and technical assistance provided under this section related to professional development, local organizational development and management including, but not limited to financial management, and State government management; and (B) shall use the results of the evaluations as significant criteria for selecting recipients of funds under this section. 684. State monitoring of eligible entities (a) Monitoring by States In order to determine 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 return visits), within a calendar quarter for eligible entities with programs, projects, or services that fail to meet the State’s performance criteria, standards, financial management requirements, and other significant requirements established under this subtitle. (4) Other reviews as appropriate, including reviews 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 technical assistance from the Secretary as needed to comply with the requirements of this section. 685. Evaluations; corrective action; withholding, reduction, or elimination of funding (a) Evaluations of States by the secretary (1) In general The Secretary shall conduct, in not fewer than 1/3 of the States in each fiscal year, evaluations (including investigations) of State compliance with this subtitle, including requirements 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 administrative requirements described in section 676(b) as applied to funds received under this subtitle. (2) Report to states The Secretary shall submit, to each State evaluated, a report containing— (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 proposed corrective action plan that meets the requirements 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 recommendations 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 corrective 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, as part of the report submitted by the Secretary in 6 accordance with section 689(b)(2). (b) Determination of State failure To comply (1) Duties of the secretary If the Secretary 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 subsection (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 deficiency if the Secretary finds, in the discretion of the Secretary, that such a 90-day period is reasonable, in light of the nature and magnitude of the deficiency; and (D) require that the State carry out— (i) the corrective action plan prepared by the Secretary under subsection (a)(2)(B)(ii); or (ii) a State-proposed corrective action 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 deficiency 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 different corrective action plan, developed by the State in a timely manner that the State will implement upon approval by the Secretary under subparagraph (C). (B) Contents Any corrective action plan proposed under this paragraph shall specify— (i) the serious and other deficiencies to be corrected; (ii) the actions to be taken to correct such deficiencies; and (iii) the timetable for accomplishment of the corrective actions specified, which shall provide that each serious deficiency is corrected by not later than 90 days after the date the State received notice of the finding under subsection (a) and of the specific deficiency to be corrected. (C) Approval processes (i) In general Not later than 15 days after the Secretary receives a State proposed corrective action plan in accordance 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, providing the reasons for the disapproval, 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 funding 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 determination, the Director, pursuant to paragraph (3)(C), shall ensure that the affected 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 determination. (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 withhold all or a portion of the amount of the funding described in section 680A(b)(2)(A), including 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 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 opportunity for a hearing, initiate proceedings to reduce or eliminate the amount of funding described in section 680A(b)(2)(A), including prohibiting the State from using other funds awarded under this subtitle to carry out the activities described in such section, unless the State corrects the failure to meet the requirements. (C) Use of funds (i) If the Secretary delays, reduces, or eliminates funding to a State under subparagraph (B), the Secretary shall award the amount of the funding to eligible entities and/or community services network organizations 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, including a refusal to submit a plan meeting the Secretary's requirements, the Secretary shall provide funding directly by grant or cooperative agreement to eligible entities in good standing at the end of the last fiscal year for which the State received an allocation under this subtitle. (4) Training and technical assistance The Secretary shall provide training and technical assistance to States with respect to the development or implementation of the States’ corrective action plans. (c) Determination of local agency failure To comply (1) Corrective action by local agencies If the State determines, on the basis of a review pursuant to section 684 or section 686, that there is a serious deficiency regarding an eligible entity’s compliance with this subtitle, the State shall— (A) inform the entity of the serious deficiencies that shall be corrected and provide technical assistance for the corrective action; (B) with respect to each identified serious deficiency, require that the eligible entity— (i) correct the deficiency immediately if the State finds that the deficiency threatens the ability of the eligible entity to carry out the entity’s community action program plan or threatens the integrity of Federal funds; (ii) correct the deficiency not later than 90 days after the identification of the deficiency if the State finds that such a 90-day period is reasonable, in light of the nature and magnitude of the deficiency; or (iii) in the discretion of the State (taking into consideration the seriousness of the deficiency and the time reasonably required to correct the deficiency), comply with the requirements of paragraph (2) concerning a corrective action plan; (C) initiate proceedings to withhold, reduce, or eliminate the funding described in section 680A(a) including, in the case of elimination of funding, terminating the designation under this subtitle of the eligible entity unless the entity corrects the deficiency as required; and (D) ensure that the State’s definitions, procedures, and requirements under this section regarding serious deficiencies of eligible entities are in accordance with policies and regulations promulgated by the Secretary to implement the uniform administrative requirements described in section 676(b) with respect to this subtitle. (2) Local corrective action plans (A) In general An eligible entity that is found to have a serious deficiency under paragraph (1) shall develop, in a timely manner, a corrective action plan that shall be subject to the approval of the State, and that shall specify— (i) the deficiencies to be corrected; (ii) the actions to be taken to correct such deficiencies; and (iii) the timetable for accomplishment of the corrective actions specified. (B) Approval process (i) In general Not later than 15 days after the State receives an entity’s proposed corrective action plan in accordance with subparagraph (A), the State shall review the proposed plan and act— (I) by approving the proposed plan; or (II) by notifying the entity that the proposed plan cannot be approved, providing the reasons for the disapproval, and proposing an alternative corrective action plan. (ii) Entity’s response An entity 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 10 working days after receiving notification from the State under clause (i). (iii) Inadequate different proposed plan If the State determines the different proposed plan to be inadequate, the State may withhold funding as described in paragraph (3) until the entity implements a satisfactory corrective action plan. (3) Final decision If the State determines, on the basis of a final decision in a review conducted under section 684(a)(3), that an eligible entity fails to comply with the terms of a corrective action plan under paragraph (2) relating to correction of a serious deficiency for the eligible entity, the State may, after providing adequate notice and an opportunity for a hearing, initiate proceedings to withhold, reduce, or eliminate the funding provided under section 680A(a) to the eligible entity (including, in the case of elimination of funding, terminating the designation under this subtitle of the eligible entity) unless the entity corrects the serious deficiency. (4) Training and technical assistance The State shall provide training and technical assistance to eligible entities with respect to the development or implementation of the entities’ corrective action plans. (5) Special circumstance In the event the State has credible evidence that funds have been expended with fraudulent or other criminal intent, funding may be suspended while the procedures to review such evidence are conducted by appropriate investigative entities or until the State determines funds will not be at risk, whichever is earlier. (d) Review (1) In general A State’s determination under subsection (c) to terminate such designation or reduce such funding of an eligible entity may be reviewed by the Secretary. The Secretary shall, upon request, by a community services network organization, review such a determination. The review shall be completed not later than 60 days after the Secretary receives from the State all necessary documentation relating to the determination except as provided in paragraph (2). (2) Failure to provide documentation If the State fails to provide such documentation within 30 days after the Secretary’s request, the State may not expend funds for the purposes described in section 680A(b)(2) until the State provides such documentation. The Secretary shall respond to the State with a decision not later than 30 days after receiving the documentation. (e) Direct assistance Whenever the Secretary determines that a State has violated the assurances described in paragraphs (8), (11), or (12) of section 680(b) and has withheld, reduced, or eliminated the funding provided under section 680A(a) to an eligible entity prior to the completion of the State proceedings described in subsection (c)(3) and the Secretary’s review as required in subsection (d), the Secretary shall provide financial assistance under this subtitle to the eligible entity until the violation is corrected by the State. In such a case, the grant for the State under section 677 or 678 for the earliest appropriate fiscal year shall be reduced by an amount equal to the financial assistance provided under this subsection to such eligible entity. 686. State and local fiscal controls, audits, and withholding (a) Fiscal controls, procedures, audits, and inspections (1) In general A State that receives funds under this subtitle shall— (A) establish fiscal control and fund accounting procedures necessary to assure the proper disbursal of and accounting for Federal funds paid to the State under this subtitle, including procedures for monitoring the funds provided under this subtitle; (B) subject to paragraphs (2) and (3), prepare, not less than once each year, an audit of the expenditures of the State of amounts received under this subtitle; and (C) make appropriate books, documents, papers, and records available to the Secretary and the Comptroller General of the United States, or any of their duly authorized representatives, for examination, copying, or mechanical reproduction on or off the premises of the appropriate entity upon a reasonable request for the items. (2) Independent entity Subject to paragraph (3), each audit required by paragraph (1)(B) shall be conducted by an entity independent of any agency administering activities or services under this subtitle and shall be conducted in accordance with generally accepted accounting principles. (3) Single audit requirements (A) In general Any audit under this subsection shall be conducted in the manner and to the extent provided in chapter 75 of title 31, United States Code (commonly known as the Single Audit Act Amendments of 1986 ) except in the event a serious financial deficiency is identified. (B) Serious financial deficiency In the event that such a deficiency is identified, the Secretary shall order— (i) an audit conducted as described in subparagraph (A); or (ii) an audit of each of the accounts involved, in accordance with paragraphs (2) and (4). (4) Submission of copies Not later than 30 days after the completion of each such audit in a State, the chief executive officer of the State shall submit copies of such audit, at no charge, to any eligible entity that was the subject of the audit, to the legislature of the State, and to the Secretary. (5) Repayments If the Secretary, after review of the audit, finds that a State has not expended an amount of funds in accordance with this subtitle, the State shall immediately use an amount of State funds equal to the amount of improperly expended funds for the original purposes for which the grant funds were intended. (6) Response to complaints The Secretary shall respond in an expeditious and speedy manner to complaints of a substantial or serious nature that a State has failed to use grant funds received under section 677 or 678 in accordance with the provisions of this subtitle. (7) Investigations Whenever the Secretary determines that there is a pattern of complaints regarding failures described in paragraph (6) or a complaint of a serious deficiency concerning any State, the Secretary shall conduct an investigation of the use of the funds received under this subtitle by such State in order to ensure compliance with the provisions of this subtitle. (b) State funds (1) Corrective action plan In the event the Secretary withholds, reduces, or eliminates funding pursuant to section 685(b)(3)(A), the Secretary shall subsequently make the withheld, reduced, or eliminated funding available to the State not later than 90 days after the date for correction of the serious deficiency specified in such plan if the State complies with a corrective action plan described in section 685(b)(2)(A). (2) Application For purposes of paragraph (1), failures described in paragraph (1)(a)(6) shall be considered to be serious deficiencies. 687. Accountability and reporting requirements (a) State accountability and reporting requirements (1) Performance measurement (A) In general By October 1, 2014, each State that receives funds under this subtitle shall participate, and shall ensure that all eligible entities in the State participate, in a performance measurement system that the Secretary is satisfied meets the requirements of paragraphs (11) and (12) of section 680(b). (B) Local organizations The State may elect to have local organizations that are subgrantees of the eligible entities under this subtitle participate in the performance measurement system. If the State makes that election, references in this section to eligible entities shall be considered to include the local organizations. (C) Eligible entity reports Eligible entities shall provide the results measured by their performance measurement system, reports on the achievement of their annual benchmarks and such other reports as the State may require. (2) Annual report Each State receiving funds under this subtitle shall annually prepare, and submit to the Secretary by March 31 of each year, a report on the performance of the State and eligible entities in the State, including achievement with respect to the State lead agency performance benchmarks and the local performance benchmarks respectively and to other performance measurements that were used by community service network organizations in the State for the prior year. Each State shall also include in the report— (A) an accounting of the expenditure of funds received by the State through the community services block grant program, including an accounting of funds spent on administrative or indirect costs by the State and the eligible entities and funds spent by the eligible entities on local programs, projects, and services; (B) information on the number and characteristics of clients served under this subtitle in the State, based on data collected from the eligible entities; (C) a summary describing the training and technical assistance offered by the State under section 680A(b)(1)(B) and 680A(b)(1)(D) during the year covered by the report and the State's progress toward meeting its training and technical assistance plan goals; (D) the State's management performance benchmark results; (E) information on the total budget and activities of the eligible entities receiving subgrants from the State under this subtitle, including local and private resources available for a purpose described in section 672; (F) a report on the Community Action Innovations Program in the State; and (G) a report on the manner in which the State and eligible entities and other recipients of funds under this subtitle have implemented results oriented management practices based on their performance measurement systems. (b) Reporting requirements (1) Contents Not later than September 30 of each fiscal year, the Secretary shall, directly or by grant or contract, prepare a report containing— (A) the information included in the State annual reports under subsection (a)(2) for the preceding fiscal year; (B) a report on the performance of the Department in the preceding fiscal year regarding the performance benchmarks established under section 682(d); (C) a description of the training and technical assistance activities funded by the Secretary under section 683 and the results of those activities, including a report on progress toward achieving the goals of the Secretary's strategic plan for training and technical assistance described in section 683(d)(2); and (D) any additional information that the Secretary considers to be appropriate to carry out this subtitle. (2) Submission The Secretary shall submit to the Committee on Education and the Workforce of the House of Representatives and to the Committee on Health, Education, Labor, and Pensions of the Senate the report described in paragraph (1) and any recommendations the Secretary may have with respect to such report. (3) Electronic data system for reports to states and eligible entities The Secretary shall provide technical assistance, including support for development and maintenance of an electronic data system for the reports under this section, to the States and eligible entities to enhance the quality and timeliness of reports submitted under this subtitle. The system shall be coordinated and consistent with the data systems established for other programs of the Department that are managed by eligible entities, including all programs of the Administration for Children and Families or successor administrative units in which the office is located. 688. Limitations on use of funds (a) Construction of facilities (1) Limitations Except as provided in paragraph (2) and in section 680(b)(1)(C), grants or subgrants made under this subtitle may not be used by the State, or by any other person with which the State makes arrangements to carry out a purpose described in section 672, for the purchase or improvement of any building or other facility. (2) Waiver The Secretary may waive the limitation contained in paragraph (1) upon a State request for such a waiver if the Secretary finds that the request describes extraordinary circumstances to justify the purchase or improvement of land, or the purchase, construction or permanent improvement of any building or other facilities, and that permitting the waiver will contribute to the ability of the State and eligible entities to carry out a purpose described in section 672 at substantially reduced costs. (b) Political activities (1) Treatment as a state or local agency For purposes of chapter 15 of title 5, United States Code, any entity that assumes responsibility for planning, developing, and coordinating activities under this subtitle and receives assistance under this subtitle shall be deemed to be a State or local agency. For purposes of paragraphs (1) and (2) of section 1502(a) of such title, any entity receiving assistance under this subtitle shall be deemed to be a State or local agency. (2) Prohibitions An entity carrying out a program, project, or service assisted under this subtitle, and any individual employed by, or assigned to or in, such a program, project, or service (during the hours in which the individual is working on behalf of the program, project, or service) shall not engage in— (A) any partisan or nonpartisan political activity or any political activity associated with a candidate, or contending faction or group, in an election for public or party office; or (B) any activity to provide voters or prospective voters with transportation to the polls or similar assistance in connection with any such election. (3) Registration None of the funds appropriated to carry out this subtitle may be used to conduct voter registration activities. (c) Nondiscrimination (1) In general No person shall, on the basis of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any program, project, or service funded in whole or in part with funds made available under this subtitle. Any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 9 ( 42 U.S.C. 6101 et seq. ) or with respect to an otherwise qualified individual with a disability as provided in section 504 of the Rehabilitation Act of 1973 (29 12 U.S.C. 794 ), or title II of the Americans with Disabilities Act of 1990 ( 42 U.S.C. 12131 et seq. ) shall also apply to any such program, project, or service. (2) Action of secretary Whenever the Secretary determines that a State that has received a payment under this subtitle has failed to comply with paragraph (1) or an applicable regulation, the Secretary shall notify the chief executive officer of the State and shall request that the officer secure compliance. If within a reasonable period of time, not to exceed 60 days, the chief executive officer fails or refuses to secure compliance, the Secretary is authorized to— (A) refer the matter to the Attorney General with a recommendation that an appropriate civil action be instituted; (B) exercise the powers and functions provided by title VI of the Civil Rights Act of 1964 ( 42 U.S.C. 2000d et seq. ), the Age Discrimination Act of 1975 ( 42 U.S.C. 6101 et seq. ), section 504 of the Rehabilitation Act of 1973 ( 29 U.S.C. 794 ), or title II of the Americans with Disabilities Act of 1990 (42 U.S.C. 11 12131 et seq.), as may be applicable; or (C) take such other action as may be provided by law. (3) Action of attorney general When a matter is referred to the Attorney General pursuant to paragraph (2), or whenever the Attorney General has reason to believe that the State is engaged in a pattern or practice of discrimination in violation of the provisions of this subsection, the Attorney General may bring a civil action in any appropriate United States district court for such relief as may be appropriate, including injunctive relief. 689. Drug and child support services and referrals (a) Drug testing and rehabilitation (1) In general Nothing in this subtitle shall be construed to prohibit a State from testing participants in programs, projects, or services carried out or provided under this subtitle for controlled substances. A State that conducts such testing shall inform the participants who test positive for any of such substances about the availability of treatment or rehabilitation services and refer such participants for appropriate treatment or rehabilitation services. (2) Non-administrative expenses Any funds provided under this subtitle expended for such testing shall not be considered to be expended for administrative expenses and shall not be subject to the limitation specified in section 680A(b)(2). (3) Definition In this subsection, the term controlled substance has the meaning given the term in section 102 of the Controlled Substances Act ( 21 U.S.C. 802 ). (b) Child support services and referrals During each fiscal year for which an eligible entity receives a subgrant under section 680A(a), such entity shall— (1) inform custodial parents in single-parent families that participate in programs, projects, or services carried out or provided under this subtitle about the availability of child support services; and (2) refer eligible parents to the child support offices of State and local governments. 690. Operational rules (a) Religious organizations included as nongovernmental providers For any program carried out by the Federal Government, or by a State or local government under this subtitle, the government shall consider, on the same basis as other nongovernmental organizations, religious organizations to provide the assistance under the program, so long as the program is implemented in a manner consistent with the Establishment Clause of the first amendment to the Constitution. Neither the Federal Government nor a State or local government receiving funds under this subtitle shall discriminate against an organization that provides assistance under, or applies to provide assistance under, this subtitle, on the basis that the organization has a religious character. (b) Religious character and independence (1) In general A religious organization that provides assistance under a program described in subsection (a) shall retain its religious character and control over the definition, development, practice, and expression of its religious beliefs. (2) Additional safeguards Neither the Federal Government nor a State or local government shall require a religious organization— (A) to alter its form of internal governance, except (for purposes of administration of the community services block grant program) as provided in section 681C; or (B) to remove religious art, icons, scripture, or other symbols; in order to be eligible to provide assistance under a program described in subsection (a). (3) Employment practices A religious organization's exemption provided under section 702 of the Civil Rights Act of 1964 ( 42 U.S.C. 2000e–1 ) regarding employment practices shall not be affected by its participation in, or receipt of funds from, programs described in subsection (a). (c) Nondiscrimination against beneficiaries A religious organization providing assistance under any program described in subsection (a) of this section shall not, in providing such assistance, discriminate against a program beneficiary or prospective program beneficiary on the basis of religion or religious belief. (d) Limitations on use of funds for certain purposes No funds provided directly to a religious organization to provide assistance under any program described in subsection (a) shall be expended for sectarian worship, instruction, or proselytization. (e) Fiscal accountability (1) In general Except as provided in paragraph (2), any religious organization providing assistance under any program described in subsection (a) shall be subject to the same regulations as other nongovernmental organizations to account in accord with generally accepted accounting principles for the use of such funds provided under such program. (2) Limited audit Such organization shall segregate government funds provided under such program into a separate account. Only the government funds shall be subject to audit by the government. (f) Treatment of eligible entities and other intermediate organizations If an eligible entity or other organization (referred to in this subsection as an intermediate organization ), acting under a contract, or grant or other agreement, with the Federal Government or a State or local government, is given the authority under the contract or agreement to select nongovernmental organizations to provide assistance under the programs described in subsection (a), the intermediate organization shall have the same duties under this section as the government. 691. Regulations and transition period (a) Transition period The Secretary shall expeditiously announce a schedule for adopting any changes in regulation, procedure and reporting required by this subtitle and for the availability of Federal training for States and eligible entities, especially with respect to adopting Uniform Practices for Administration, which period may not extend further than 3 months prior to the start of the second fiscal year after the effective date of this subtitle and may include final adoption of new requirements prior to the final date of the period as determined by the Secretary to be appropriate. (b) Regulations The Secretary shall promulgate regulations implementing this subtitle, by administrative hearing open to the public including regulations regarding— (1) State and community action programs and plans including the form and information required for State and community action programs and plans; (2) State monitoring of eligible entities; and (3) reports to the Secretary described in section 687. (c) Guidance The Secretary shall promulgate guidance regarding State and community performance measurement systems including— (1) State management performance benchmarks The Secretary, in consultation with community service network organizations, shall promulgate common State management performance indicators which shall include indicators concerning— (A) timely obligation and distribution and effective oversight of Federal funds; (B) compliance with the requirements for minimum skills of State personnel and compliance with the uniform administrative requirements described in section 676(b); (C) effective management of the activities funded under this subtitle; and (D) the results of activities funded by the State under this subsection 680A(b). (2) Comprehensive analysis of poverty conditions The Secretary shall provide guidance (including models) for comprehensive community needs assessments described in subsection 680(a)(2)(C) that are used in conjunction with community action strategic plans. The guidance shall include methods for preparing an analysis of all poverty conditions affecting the community and of local and regional assets for alleviating such conditions; and (3) Such other guidance as may be required by this subtitle. 692. Authorization of appropriations (a) In general There are authorized to be appropriated to carry out sections 671 through 691 of this subtitle $850,000,000 for each of fiscal years 2014 through 2018 and such sums as may be necessary for fiscal years 2019 through 2023. (b) There are authorized to be appropriated such sums as may be necessary to carry out section 693 for fiscal years 2014 through 2023. (c) Reservations by the secretary Of the amounts appropriated under subsection (a) for each fiscal year, the Secretary shall reserve— (1) 1/2 of 1 percent for carrying out section 677 (relating to grants to territories); and (2) 2 percent for activities authorized in section 683, of which— (A) not less than 1/2 of the amount reserved by the Secretary under this paragraph shall be awarded through grants, contracts, or cooperative agreements under section 683(c), to eligible entities, community action agencies, and State and regional community service network organizations, for the purpose of carrying out activities described in section 683(a)(1)(A); and (B) the remainder of the amount reserved under this paragraph shall be distributed under section 683(a)(1)(B)(c) to States, eligible entities, other community services network organizations, or other entities, for the purpose of carrying out activities described in section 683(a)(1)(B). 693. Discretionary community programs (a) Grants, contracts, arrangements, loans, and guarantees (1) In general The Secretary shall, from funds appropriated under section 692(b), make grants, loans, or guarantees to States and public agencies and private, nonprofit organizations, or enter into contracts or jointly financed cooperative arrangements with States and public agencies and private, nonprofit organizations (and for-profit organizations, to the extent specified in paragraph (2)(E)) for each of the objectives described in paragraphs (2) through (4). (2) Community economic development (A) Economic development activities The Secretary shall make grants described in paragraph (1) on a competitive basis to private, nonprofit organizations that are community development corporations to provide technical and financial assistance for economic development activities designed to address the economic needs of low-income individuals and families by creating employment and business development opportunities. (B) Consultation The Secretary shall exercise the authority provided under subparagraph (A) after consultation with other relevant Federal officials. (C) Governing boards For a community development corporation to receive funds to carry out this paragraph, the corporation shall be governed by a board that shall consist of residents of the community and business and civic leaders and shall have as a principal purpose planning, developing, or managing low-income housing or community development projects. (D) Geographic distribution In making grants to carry out this paragraph, the Secretary shall take into consideration the geographic distribution of funding among States and the relative proportion of funding among rural and urban areas. (E) Reservation Of the amounts made available to carry out this paragraph, the Secretary may reserve not more than 1 percent for each fiscal year to make grants to private, nonprofit organizations or to enter into contracts with private, nonprofit or for-profit organizations to provide technical assistance to aid community development corporations in developing or implementing activities funded to carry out this paragraph and to evaluate activities funded to carry out this paragraph. (3) Rural community development activities The Secretary shall provide the assistance described in paragraph (1) for rural community development activities, which shall include providing— (A) grants to private, nonprofit corporations to enable the corporations to provide assistance concerning home repair to rural low-income families and concerning planning and developing low-income rural rental housing units; and (B) grants to multistate, regional, private, nonprofit organizations to enable the organizations to provide training and technical assistance to small, rural communities concerning meeting their community facility needs. (4) Neighborhood innovation projects The Secretary shall provide the assistance described in paragraph (1) for neighborhood innovation projects, which shall include providing grants to neighborhood-based private, nonprofit organizations to test or assist in the development of new approaches or methods that will aid in overcoming special problems identified by communities or neighborhoods or otherwise assist in furthering the purposes of this subtitle, and which may include providing assistance for projects that are designed to serve low-income individuals and families who are not being effectively served by other programs. (b) Evaluation The Secretary shall require all activities receiving assistance under this section to be evaluated for their effectiveness. Funding for such evaluations shall be provided as a stated percentage of the assistance or through a separate grant awarded by the Secretary specifically for the purpose of evaluation of a particular activity or group of activities. (c) Annual report The Secretary shall compile an annual report containing a summary of the evaluations required in subsection (b) and a listing of all activities assisted under this section. The Secretary shall annually submit the report to the Chairperson of the Committee on Education and the Workforce of the House of Representatives and the Chairperson of the Committee on Health, Education, Labor, and Pensions of the Senate. .