II 113th CONGRESS 2d Session S. 2248 IN THE SENATE OF THE UNITED STATES April 10, 2014 Mr. Franken introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966 to increase the number of children eligible for free school meals, with a phased-in transition period, with an offset.

1. Short title This Act may be cited as the Expand School Meals Act of 2014 . I Transition period 101. Phased-in increase in States providing free school lunches and breakfasts Section 11 of the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1759a ) is amended by adding at the end the following: (h) Phased-In increase in States providing free school lunches and breakfasts (1) In general The Secretary shall expand the service of free lunches and breakfasts provided at schools participating in the school lunch program under this Act and the school breakfast program under section 4 of the Child Nutrition Act of 1966 ( 42 U.S.C. 1773 ) in States selected by the Secretary in accordance with paragraph (2). (2) Selection of States (A) In general A State that elects to participate in the program under this subsection shall submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require. (B) First year For the school year beginning July 1, 2014, the Secretary shall enroll in the program under this subsection any State that, as of April 10, 2014, has enacted a law under which, in compliance with this Act and the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.) (as appropriate), school food authorities in the State provide free breakfasts or lunches in lieu of reduced-price breakfasts or lunches in schools statewide. (C) Subsequent years (i) In general The Secretary shall enroll in the program under this subsection not more than— (I) for the school year beginning July 1, 2015, 5 additional States; (II) for the school year beginning July 1, 2016, 5 additional States; (III) for the school year beginning July 1, 2017, 5 additional States; (IV) for the school year beginning July 1, 2018, 5 additional States; and (V) for the school year beginning July 1, 2019, 5 additional States. (ii) Priority In enrolling States, the Secretary shall give priority to States that— (I) have enacted a law described in subparagraph (B) after April 10, 2014; (II) have school food authorities that provide free breakfasts or lunches in lieu of reduced-price breakfasts or lunches in schools in the State; or (III) have high levels of participation in the free or reduced-price lunch program, as determined by the Secretary. (3) Income eligibility For any State enrolled in the program under this subsection, the income guidelines for determining eligibility for free lunches or breakfasts in the State shall be 185 percent of the applicable family size income levels contained in the nonfarm income poverty guidelines prescribed by the Office of Management and Budget, as adjusted annually in accordance with section 9(b)(1)(B). (4) Relationship to universal meal service in high poverty areas A school for which a local educational agency has elected to receive special assistance payments under subsection (a)(1)(F) may not receive any additional payments under this subsection. . 102. Period of effectiveness The amendments made by section 101 shall be effective only during the period beginning on the date of enactment of this Act and ending on June 30, 2019. II Permanent change 201. Free lunch eligibility (a) In general Section 9(b)(1) of the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1758(b)(1) ) is amended— (1) by redesignating subparagraph (B) as subparagraph (D); (2) by striking (b)(1)(A) Not and inserting the following: (b) Income eligibility guidelines (1) Establishment (A) In general Not ; (3) in subparagraph (A)— (A) in the first sentence, by striking and reduced price ; (B) in the second sentence— (i) by striking The income guidelines for determining eligibility for free lunches shall be 130 percent and inserting the following: (B) Free lunches The income guidelines for determining eligibility for free lunches shall be 185 percent ; and (ii) by striking subparagraph (B) and inserting subparagraph (D) ; (C) by striking the third sentence; and (D) in the last sentence, by striking The Office and inserting the following: (C) Frequency of revisions The Office ; and (4) in subparagraph (D) (as redesignated by paragraph (1))— (A) by striking (D) The and inserting the following: (D) Amount of revisions The ; and (B) by striking subparagraph (A) of this paragraph and inserting subparagraph (C) . (b) Conforming amendments (1) Section 9 of the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1758 ) is amended— (A) in subsection (b)— (i) by striking free and reduced price each place it appears (other than paragraph (7)) and inserting free ; (ii) by striking free or reduced price each place it appears and inserting free ; (iii) in paragraph (2)(B)(i), by striking , and shall contain and all that follows through or reduced price lunches ; (iv) in paragraph (3)— (I) in subparagraph (E)(iii), by striking free or reduced-price each place it appears and inserting free ; and (II) in subparagraph (F)— (aa) in clause (i), by striking Subject to clauses (ii) and (iii), and inserting Subject to clause (ii), ; (bb) in clause (ii)(II), by striking 133 percent both places it appears in items (aa) and (bb) and inserting 185 percent ; (cc) by striking clause (iii); and (dd) by redesignating clauses (iv) and (v) as clauses (iii) and (iv), respectively; (v) in paragraph (7)— (I) in the paragraph heading, by striking and reduced price and inserting meals ; (II) by striking and reduced price policy each place it appears and inserting meals policy ; and (III) in subparagraph (B), by striking and reduced price meals and inserting meals ; (vi) in paragraph (9)— (I) in the paragraph heading, by striking and reduced price ; (II) by striking subparagraph (B); and (III) by redesignating subparagraph (C) as subparagraph (B); (vii) in paragraph (10), by striking or a reduced price lunch ; and (viii) in paragraph (11), in the first sentence, by striking or reduced price lunches ; (B) in subsection (c), in the third sentence, by striking or at a reduced cost ; (C) in subsection (d), by striking or reduced price each place it appears; and (D) in subsection (e), by striking , reduced price, . (2) Section 11 of the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1759a ) is amended— (A) in subsection (a)— (i) in paragraph (1)— (I) in subparagraph (A)— (aa) by striking the sum of ; and (bb) by striking and the product obtained by multiplying and all that follows through for such fiscal year ; (II) in subparagraph (B)— (aa) by striking or reduced price lunches the first place it appears; (bb) by striking or reduced price lunches, as the case may be, ; and (cc) by striking and reduced price lunches ; (III) in subparagraph (C)— (aa) in clause (ii), by striking or reduced price lunches or breakfasts each place it appears; and (bb) in clause (iii), by striking or reduced price ; and (IV) in subparagraph (D), by striking and reduced price lunches each place it appears in clauses (iii) and (iv); and (ii) in paragraph (2), by striking and the special assistance factor for reduced price and all that follows through free lunches ; (B) in subsection (b), in the first sentence, by striking and reduced price ; (C) in subsection (d), by striking and the average number of children who received reduced price lunches each place it appears paragraphs (1) and (2); and (D) in subsection (e)— (i) in the second sentence, by striking , and shall serve meals at a reduced price and all that follows through such section ; and (ii) in the third sentence, by striking or reduced priced . (3) Section 12(l)(4) of the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1760(l)(4) ) is amended— (A) in subparagraph (C), by striking and reduced price ; (B) by striking subparagraph (D); (C) in subparagraph (H), by striking or reduced price ; and (D) by redesignating subparagraphs (E) through (M) as subparagraphs (D) through (L), respectively. (4) Section 13 of the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1761 ) is amended— (A) in subsection (a)— (i) in paragraph (1)(A)(i), by striking or reduced price each place it appears; and (ii) in paragraph (5), by striking or reduced price ; and (B) in subsection (f)(3), by striking or reduced price . (5) Section 17 of the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1766 ) is amended— (A) in subsection (a)(2)(B)(i), by striking or reduced price ; (B) in subsection (c)— (i) in paragraph (1), by inserting (as calculated on the day before the date of enactment of the Expand School Meals Act of 2014 ) after lunches, reduced price lunches ; (ii) in paragraph (2), by inserting (as calculated on the day before the date of enactment of the Expand School Meals Act of 2014 ) after breakfasts, reduced price breakfasts ; and (iii) by striking paragraph (4) and inserting the following: (4) Determinations (A) Free meals Determinations with regard to eligibility for free meals and supplements shall be made in accordance with the income eligibility guidelines for free lunches under section 9. (B) Reduced price meals Determinations with regard to eligibility for reduced price meals and supplements shall be made in accordance with the income eligibility guidelines for reduced price lunches under section 9, as in effect on the day before the date of enactment of the Expand School Meals Act of 2014 . ; (C) in subsection (f)(3)— (i) by striking or reduced price each place it appears; and (ii) in subparagraph (A)(iii)(II)(aa), in the item heading, by striking or reduced price ; and (D) in subsection (r)(1)(B), by striking or reduced price . (6) Section 17A(c)(1) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1766a(c)(1)) is amended in the matter preceding subparagraph (A) by striking or reduced price . (7) Section 18 of the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1769 ) is amended by striking subsection (j). (8) Section 19 of the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1769a ) is amended— (A) by striking or reduced price each place it appears; and (B) by striking and reduced price each place it appears. (9) Section 20(b) of the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1769b(b) ) is amended by striking and reduced price . (10) Section 21(a)(1)(B) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1769b–1(a)(1)(B)) is amended— (A) in the matter preceding clause (i), by striking or reduced price ; and (B) in clause (iii), by striking and reduced price . (c) Transition rules The Secretary of Agriculture shall carry out the amendments made by paragraphs (2) and (8) of subsection (b) in accordance with transition rules established by the Secretary. 202. Free breakfast eligibility (a) In general Section 4 of the Child Nutrition Act of 1966 ( 42 U.S.C. 1773 ) is amended— (1) in subsection (b)— (A) in paragraph (1)— (i) in subparagraph (A)(i)(II)— (I) by striking , for reduced price breakfasts, ; (II) by striking or reduced price ; and (III) by striking clause (B) of this paragraph and inserting subparagraph (B) ; (ii) in subparagraph (B)— (I) in the third sentence, by striking or reduced price ; and (II) by striking the second sentence; (iii) by striking subparagraph (C); (iv) by redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D), respectively; and (v) in subparagraph (D) (as so redesignated)— (I) in the subparagraph heading, by striking and reduced price and inserting meals ; (II) by striking and reduced price policy each place it appears and inserting meals policy ; and (III) by striking and reduced price meals and inserting meals ; and (B) in paragraph (2)— (i) in subparagraph (A), by striking or reduced price ; and (ii) by striking subparagraph (C); and (2) in subsections (d)(1)(A) and (e)(1)(A), by striking or at a reduced price each place it appears. (b) Conforming amendments (1) Section 7 of the Child Nutrition Act of 1966 ( 42 U.S.C. 1776 ) is amended— (A) in subsection (e)(2)(B)(ii), by striking or reduced price ; (B) in subsection (g)(2)(B)(i)(I), by striking and reduced price ; and (C) in subsection (i), by striking and reduced price each place it appears in paragraphs (2)(B)(iii) and (3)(B)(i). (2) Section 17(d)(2)(A)(i) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(d)(2)(A)(i)) is amended by striking and reduced price . (3) Section 20(b) of the Child Nutrition Act of 1966 ( 42 U.S.C. 1789(b) ) is amended by striking and reduced-price . (4) Section 23(d)(2) of the Child Nutrition Act of 1966 ( 42 U.S.C. 1793(d)(2) ) is amended by striking or reduced price . 203. Period of effectiveness The amendments made by this title shall be effective beginning on July 1, 2019. III Offset 301. Denial of deduction for punitive damages (a) Disallowance of Deduction (1) In general Section 162(g) of the Internal Revenue Code of 1986 is amended— (A) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, (B) by striking If and inserting: (1) Treble damages If , and (C) by adding at the end the following new paragraph: (2) Punitive damages No deduction shall be allowed under this chapter for any amount paid or incurred for punitive damages in connection with any judgment in, or settlement of, any action. This paragraph shall not apply to punitive damages described in section 104(c). . (2) Conforming amendment The heading for section 162(g) of such Code is amended by inserting or Punitive Damages after Laws . (b) Inclusion in Income of Punitive Damages Paid by Insurer or Otherwise (1) In general Part II of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 91. Punitive damages compensated by insurance or otherwise Gross income shall include any amount paid to or on behalf of a taxpayer as insurance or otherwise by reason of the taxpayer’s liability (or agreement) to pay punitive damages. . (2) Reporting requirements Section 6041 of such Code is amended by adding at the end the following new subsection: (h) Section To Apply to Punitive Damages Compensation This section shall apply to payments by a person to or on behalf of any corporation, individual, partnership, or other entity, as insurance or otherwise, by reason of such corporation, individual, partnership, or entity’s liability (or agreement) to pay punitive damages. . (3) Conforming amendment The table of sections for part II of subchapter B of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 91. Punitive damages compensated by insurance or otherwise. . (c) Effective Date The amendments made by this section shall apply to damages paid or incurred on or after the date of the enactment of this Act.