Coats Human Services Reauthorization Act of 1998
PL 105-285 (S.2206), enacted 10/27/1998

112 STAT. 2702 
PUBLIC LAW 105-285—OCT. 27, 1998 
Public Law 105-285 
105th Congress 
Oct. 27. 1998 
[S. 2206] 
Community 
Opportunities, 
Acootmtability, 
and Training and 
Educational 
Services Act of 
1998. 
Children, youth, 
and families. 
Education. 
Grants. 
Housing. 
Inter-
governmental 
relations. 
42 use 9801 
note. 
An Act 
To amend the Head Start Act, the Low-Income Home Energy Assistance Act of 
1981, and the Community Services Block Grant Act to reauthorize and make 
improvements to those Acts, to establish demonstration projects that provide 
an opportunity for persons with limited means to accumulate assets, and for 
other purposes. 
Be it enacted by the Senate and House of Representatives of 
the United States of 
America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the "Community Opportunities, 
Accountability, and Training and Educational Services Act of 1998" 
or the "Coats Human Services Reauthorization Act of 1998". 
SEC. 2. TABLE OF CONTENTS. 
The table of contents for this Act is as follows: 
Sec. 
Sec. 
Short title. 
Table of contents. 
TITLE I—HEAD START PROGRAMS 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
101. Short title. 
102. Statement of purpose. 
103. Definitions. 
104. Financial assistance for Head Start programs. 
105. Authorization of appropriations. 
106. Allotment of funds. 
107. Designation of Head Start agencies. 
108. Quality standards. 
109. Powers and functions of Head Start agencies. 
110. Head Start transition. 
111. Submission of plans to Governors. 
112. Participation in Head Start programs. 
113. Early Head Start programs tor families with infants and toddlers. 
114. Technical assistance and training. 
115. Professional requirements. 
116. Research and evaluation. 
117. Reports. 
118. Repeal of consultation requirement. 
119. Repeal of Head Start Transition Project Act. 
TITLE II—COMMUNITY SERVICES BLOCK GRANT PROGRAM 
201. Reauthorization. 
202. Conforming amendments. 
TITLE III—LOW-INCOME HOME ENERGY ASSISTANCE 
301. Short title. 
302. Authorization. 
303. Definitions. 
304. Natural disasters and other emergencies. 
305. State allotments. 
306. Administration. 
307. Payments to States. 
PUBLIC LAW 105-285—OCT. 27,1998 
112 STAT. 2703 
Sec. 308. Residential Eneigy Assutance CSiaUenge option. -
Sec. 309. Tedinical assistance, training, and oon^liance reviews. 
TITLE IV—ASSETS FOR INDEPENDENCE 
Sec. 401. Short title. 
Sec. 402. Findings. 
Sec. 403. Purposes. 
Sec. 404. Demutions. 
Sec. 405. Applications. 
-t.-
Sec. 406. Demonstration authority; annual grants. 
Sec. 407. Reserve Fund. 
Sec. 408. Eligibility 
for 
particq>ation. 
Sec. 409. Selection of inoividaals to participate. 
Sec. 410. Deposits by qualified entities. 
Sec. 411. Local control over demonstration projects. 
Sec. 412. Annual progress repozts. 
Sec. 413. Sanctions. 
Sec. 414. Evaluations. 
Sec. 415. Treatment of fimds. 
Sec. 416. Authorization of appropriations. 
TITLE I—HEAD START PROGRAMS 
H
e
a
d s
t
a
r
t 
Amendments of 
SEC. 101. SHORT TITLE. 
42 USC 9801 
This title may be cited as the "Head Start Amendments of ^^^ 
1998". 
SEC. 102. STATEBSENT OF PURPOl^. 
Section 636 of the Head Start Act (42U.S.C. 9831) is amended 
to read as follows: 
''SEC. 636. STATEMENT OF PURPOSE. 
"It is the purpose of this subchapter to promote school readiness 
by enhancing the social and cognitive development of low-income 
children through the provision, to low-income children and their 
famiUes, of health, educational, nutritional, social, and other serv-
ices that are determined, based on family needs assessments, to ^ 
be necessary,". 
SEC. 103. DEFINITIONS. 
Section 637 of the Head Start Act (42 U.S.C. 9832) is 
amended— 
(1) by redesignating paragraphs (1) and (2) as paragraphs 
(16) and (17) and inserting me paragraphs at the end of the 
section; 
(2) by inserting before paragraph (3) the following: 
"(1) The term 'child with a disability' means— 
"(A) a child with a disabiUty, as defined in section 
602(3) of the Individuals with Disabilities Education Act; 
•' 
a n d 
"(B) an infant or toddler with a disabiUty, as defined 
in section 632(5) of such Act. 
"(2)^ The term 'delegate s^ency' means a public, private 
nonprofit, or for-profit organization or £igency to which a 
grantee has delegated all or part of the responsibility of tlie 
grantee for operating a Head Start program."; 
(3) by striking paragraph (4); 
(4) by redesignating paragraph (3) as paragraph (4); 
(5) by inserting after paragraph (2) the following: 
! 
"(3) The term 'family Uteracy services' means services that 
are of sufficient intensity in terms of houirs, and of sufficient 
112 STAT. 2704 
PUBLIC LAW 105-285—OCT. 27, 1998 
duration, to make sustainable changes in a family, and that 
integrate all of the following activities: 
"(A) Interactive literacy activities between parents and 
their children. 
"(B) Training for parents regarding how to be the pri-
mary teacher for their children and ftiU partners in the 
education of their children. 
"(C) Parent literacy training that leads to economic 
self-sufficiency. 
"(D) An age-appropriate education to prepare children 
for success in school and Ufe experiences."; 
(6) in pan^iraph (6), by adding at the end the following: 
"Nothhig in th^ paragraph shall be construed to require an 
agency to provide services to a child who has not reached 
the age of compulsory school attendance for more than the 
number of hours per day permitted by State law (including 
regulation) for the provision of services to such a child."; 
' 
(7) by striking paragraph (12) and inserting the following: 
"(12) The term 'migrant and seasonal Head Start program' 
means— 
"(A) with respect to services for migrant farmworkers, 
a Head Start program that serves families who are engaged 
in agricultural Ismor and who have changed their residence 
from one geographic location to another in the preceding 
2-year period; and 
"(B) with respect to services for seasonal farmworkers, 
a Head Start program that serves families who are engaged 
primarily in seasonal agricultural labor and who have not 
changed their residence to another geographic location in 
^ the preceding 2-year period."; 
~ (8) by inserting after paragraph (14) the following: 
"(15) The term'scientifically based reading research'— 
"(A) means the application of 
rigorous, 
systematic, and 
^ 
• 
olgective procedures to obtain valid knowledge relevant 
to reading development, reading instruction, and reading 
difficulties; and 
"(B) shall include research that— 
"(i) employs systematic, empirical methods that 
draw on observation or experiment; 
"(ii) involves rigorous data anal3rses that are ade-
quate to test the stated hypotheses and justify the 
general conclusions drawn; 
"(iii) relies on measurements or observational 
methods tliat provide valid data across evaluators and 
observers and across multiple measurements and 
observations; and 
"(iv) has been accepted by a peer-reviewed journal 
or approved by a panel of independent experts tiirough 
a comparably rigorous, objective, and scientific 
review.*; and 
(9) in paragraph (17) (as redesignated in paragraph (1))— 
(A) by striking "Term" and inserting "term"; 
(B) by striking "Virgin Islands," and inserting "Virgin 
Islands of the United States, and the Commonwealth of 
tiie Northern Mariana Islands, but for fiscal years ending 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2705 
before October 1, 2001 (and fiscal vear 2002, if the legisla-
tion described in section 640(a)(2)(B)(iii) has not been 
enacted before September 30, 2001), also means"; and 
(C) by striking "Palau, and the Commonwealth of the 
Northern Mariana Islands." and inserting "and the Repub-
lic of Palau.". 
SEC. 104. FINANCIAL ASSISTANCE FOR HEAD START PROGRAMS. 
Section 638(1) of the Head Start Act (42 U.S.C. 9833(1)) is 
amended— 
(1) by striking "aid the" and inserting "enable the"; and 
(2) by striking the semicolon and inserting "and attain 
school readiness;". 
SEC. 105. AUTHORIZATION OF APPROPRIATIONS. 
Section 639 of the Head Start Act (42 U.S.C. 9834) is 
amended— 
(1) in subsection (a), by striking "1995 through 1998" and 
inserting "1999 through 2003"; and 
(2) in subsection (b), by striking paragraphs (1) and (2) 
and inserting the following: 
"(1) for each of fiscal yeeirs 1999 through 2003 to csu-ry 
out activities authorized under section 642A, not more than 
$35,000,000 but not less than the amount that was made avjul-
able for such activities for fiscal year 1998; 
"(2) not more than $5,000,000 for each of fiscal years 1999 
through 2003 to carry out impact studies under section 649(g); 
and 
"(3) not more than $12,000,000 for fiscal year 1999, and 
such sums as may be necessary for each of fiscal years 2000 
through 2003, to carry out other research, demonstration, and 
evaluation activities, including longitudinal studies, under sec-
tion 649.". 
SEC. 106. ALLOTMENT OF FUNDS. 
(a) ALLOTMENTS.—Section 640(a) of the Head Start Act (42 
U.S.C. 9835(a)) is amended— 
(1) in paragraph (2)— 
(A) in subpara^aph (A)— 
(i) by striking "and migrant" the first place it 
; 
appears and all that follows through "handicapped chil-
dren", and inserting "Head Start programs, services 
for children with disabilities, and migrant and seasonal 
Head Start programs"; 
(ii) by striking "and migrant" each other place 
it appears and inserting "Head Start programs and 
by migrant and seasonal, and 
(iii) by striking "1994" and inserting "1998"; 
(B) in subparagraph (B), by striking "(B) payments" 
and all that follows through "Virgin Islands according" 
and inserting the following: 
"(B) payments, subject to paragraph (7)— 
"(i) to Guam, American Samoa, the Commonwealth 
of the Northern Mariana Islands, and the Virgin Islands 
of the United States; 
"(ii) for fiscal years ending before October 1, 2001, 
to the Federated States of Micronesia, the Republic of 
the Marshall Islands, and the Republic of Palau; and 
112 STAT. 2706 
PUBLIC LAW 105-285—OCT. 27, 1998 
"(iii) if legislation approving renegotiated Compacts of 
Free Association for the jurisdictions described in clause 
(ii) has not been enacted before September 30, 2001, for 
fiscal year 2002 to those jurisdictions; 
according"; 
(C) in subparagraph (C), by striking "; and" and insert-
ing ", of which not less than $3,000,000 of the amount 
appropriated for such fiscal year shall be made available 
to carry out activities described in section 648(c)(4);"; 
(D) in subparagraph (D), by striking "related to the 
development and implementation of quality improvement 
plans under section 641A(d)(2)." and inserting "carried out 
under paragraph (1), (2), or (3) of section 641A(d) related 
to correcting deficiencies and conducting proceedings to 
terminate the designation of Head Start agencies; and"; 
(E) by inserting after subpeiragraph (D) the following: 
"(E) pa3rments for research, demonstration, and evaluation 
activities under section 649."; and 
(F) by adding at the end the following: "No Freely 
Associated State may receive financial assistance under 
this subchapter after fiscal year 2002."; 
(2) in paragraph (3)— 
(A) in subparagraph (A)(i), by striking "equal" and 
all that follows through "amount;" and inserting "equal 
to the simi of— 
"(I) 60 percent of such excess amount for fiscal year 1999, 
50 percent of such excess amount for fiscal year 2000, 47.5 
percent of such excess amount for fiscal year 2001, 35 percent 
of such excess amount for fiscal year 2002, and 25 percent 
of such excess amount for fiscal yeeir 2003;"; 
(B) in subparagraph (B)— 
(i) in clause (ii)— 
(I) by striking "adequate qualified staff' and 
inserting "adequate numbers of qualified staff'; 
and 
(II) by inserting "and children with disabil-
ities" before ", when*^ 
(ii) in clause (iv), by inserting before the period 
the following: ", and to encourage the staff to contin-
ually improve tlieir skills and expertise by informing 
the staff of the availability of Federal and State incen-
tive and loan forgiveness programs for professional 
development"; 
(iii) in clause (v), by inserting "and collaboration 
efforts for such programs' before the period; 
(iv) in clause (vi), by striking the period and insert-
ing ", and are accessible to children with disabilities 
and their parents."; 
(v) by redesignating clause (vii) as clause (viii); 
and 
(vi) by inserting after clause (vi) the following: 
"(vii) Ensuring that such programs have qualified staff 
that can promote language skills and literacy growth of children 
and that can provide cnildren with a variety of skills that 
have been identified, through scientifically based reading 
research, as predictive of later reading achievement."; 
(C) m subparagraph (C)— 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2707 
(i) in clause (i)— 
(I) in subclause (I)— 
(aa) by striking "this subparagraph" and 
inserting "this paragraph"; 
(bb) by striking "of staff' and inserting 
"of classroom teachers and other staff'; 
(cc) by striking "such staff' and inserting 
"qualified staff, including recruitment and 
retention pursuant to acmeving the require-
ments set forth in section 648A(a)"; and 
(dd) by adding at the end the following: 
"Preferences in awarding salary increases, in 
excess of cost-of-Uving allowances, with such 
funds shall be granted to classroom teachers 
and staff who obtain additional training or 
education related to their responsibilities as 
employees of a Head Start program."; 
(ID in subclause (II), by striking "the subpara-
graph" and inserting "this subparagraph"; and 
(III) by adding at the end the following: 
"(III) From the remainder of the amount reserved under 
this paragraph (after the Secretary carries out subclause (I)), 
the Secreta^ shall carry out any or all of the activities 
described in clauses (ii) through (vii), placing the highest prior-
ity on the activities described in clause (ii)."; 
(ii) by amending clause (ii) to read as follows: 
"(ii) To train classroom teachers and other staff to meet 
the education performance standards described in section 
641A(a)(l)(B), through activities— 
"(I) to promote children's language and literacy growth, 
through techniques identified through scientifically based 
reading research; 
"(II) to promote the acquisition of the English language 
for non-English background children and families; 
"(III) to foster children's school readiness skills through 
activities described in section 648A(a)(l); and 
"(IV) to provide training necessary to improve the 
qualifications of the staff of the Head Start agencies and 
to support staff training, child counseling, and other serv-
ices necessary to address the problems of children partici-
pating in Head Start programs, including children from 
dysfunctional families, children who experience chronic 
violence in their communities, and children who experience 
substance abuse in their families."; 
(iii) by striking clause (v); and 
(iv) by redesignating clauses (vi) and (vii) as 
clauses (v) and (vi), respectively; and 
(D) in subparagraph 
(D)(i)(II), by striking "and 
migrant" and inserting "Head Start programs and migrant 
and seasonal"; 
(3) in paragraph (4)— 
(A) in subparagraph (A), by striking "1981" and insert-
ing "1998"; 
(B) by amending subparagraph (B) to read as follows: 
"(B) any £unount available after all allotments are made 
under subparagraph (A) for such fiscal year shall be distributed 
proportionately on the basis of the number of children less 
112 STAT. 2708 
PUBLIC LAW 105-285—OCT. 27, 1998 
than 5 years of age from families whose income is below the 
poverty line."; and 
(C) by adding at the end the following: 
"For purposes of this paragraph, for each fiscal year the Secretary 
shall use the most recent data available on the number of children 
less than 5 years of age from families whose income is below 
the poverty Une, as published by the Department of Commerce, 
unless the Secretary and the Secretary of Commerce determine 
that use of the most recent data available would be inappropriate 
or unreliable. If tihie Secretary and the Secretary of Commerce 
determine that some or all of the data referred to in this paragraph 
are inappropriate or unreliable, the Secretaries shall issue a report 
setting forth their reasons in detail."; 
(4) in paragraph (5)— 
(A) in subparagraph (A), by striking "subparagraph 
(B)" and inserting "subparagraphs (B) and (D)"; 
(B) in subparagraph (B), by inserting before the period 
the following: "and to encourage Head Start agencies to 
collaborate with entities involved in State and local plan-
ning processes (including the State lead agency administer-
ing the financial assistance received under the Child Care 
and Development Block Grant Act of 1990 (42 U.S.C. 9858 
et seq.) and the entities providing resource and referral 
services in the State) in order to better meet the needs 
of low-income children and families"; 
(C) in subparagraph (C)— 
(i) in clause (i)(I), by inserting "the appropriate 
regional office of the Administration for Children and 
Families and" before "agencies"; 
(ii) in clause (iii), by striking "and" at the end; 
(iii) in clause (iv)— 
(I) by striking "education, and national service 
activities," and inserting "education, and commu-
nity service activities,"; 
(II) by striking "and activities" and inserting 
"activities"; and 
(III) by striking the period and inserting 
"(including coordination of services with those 
State officials who are responsible for administer-
ing part C and section 619 of the Individuals with 
Disabihties Education Act (20 U.S.C. 1431-1445, 
1419)), and services for homeless children;"; and 
(iv) by adding at the end the following: 
"(v) include representatives of the State Head Start 
Association and local Head Start agencies in unified planning 
regarding early care and education services at both the State 
and local levels, including collaborative efforts to plan for the 
provision of full-working-day, full calendar year early care and 
education services for children; and 
"(vi) encourage local Head Start agencies to appoint a State 
level representative to represent Head Start agencies within 
the State in conducting collaborative efforts described in sub-
paragraphs (B) and (D), and in clause (v)."; 
(D) by redesignating subparagraph (D) as subpara-
graph (F); and 
(E) by inserting after subparagraph (C) the following: 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2709 
"(D) Following the award of collaboration grants described in 
subparagraph (B), the Secretary shall provide, from the reserved 
sums, supplemental funding for collaboration grants— 
"(i) to States that (in consultation with their State Head 
Start Associations) develop statewide, regional, or local unified 
plans for early childhood education and child care that include 
the participation of Head Start agencies; and 
"(ii) to States that engage in other innovative collaborative 
initiatives, including plans for collaborative training £uid profes-
sional development initiatives for child care, early childhood 
education and Head Start service managers, providers, and 
staff. 
"(E)(i) The Secretary shall— 
"(I) review on an ongoing basis evidence of barriers to 
effective collaboration between Head Start programs and other 
Federal, State, and local child care and early childhood edu-
cation programs and resources; 
"(II) develop initiatives, including providing additional 
training and technical assistance and making regulatory 
changes, in necessary cases, to eliminate barriers to the 
collaboration; and 
"(III) develop a mechanism to resolve administrative and 
programmatic conflicts between programs described in sub-
clause (I) that would be a barrier to service providers, parents, 
or children related to the provision of unified services £ind 
the consolidation of funding for child care services. 
"(ii) In the case of a collaborative activity ftinded under this 
subchapter and another provision of law providing for Federal child 
care or early childhood education, the use of equipment and 
nonconsumable supplies purchased with funds made available 
under this subchapter or such provision shall not be restricted 
to children enrolled or otherwise participating in the program car-
ried out under that subchapter or provision, during a period in 
which the activity is predominantly funded under this subchapter 
or such provision."; and 
(5) in paragraph (6)— 
(A) by inserting "(A)" before "From"; 
(B) by striking "3 percent" and all that follows and 
inserting the following: "7.5 percent for fiscal year 1999, 
8 percent for fiscal year 2000, 9 percent for fiscal year 
2001, 10 percent for fiscal year 2002, and 10 percent for 
fiscal year 2003, of the amount appropriated pursuant to 
section 639(a), except as provided in subparagraph (B)."; 
and 
(C) by adding at the end the following: 
"(B)(i) If the Secretary does not submit an interim report on 
the preliminary findings of the Early Head Start impact study 
currently being conducted by the Secretary (as of the date of enact-
ment of the Head Start Amendments of 1998) to the appropriate 
committees by June 1, 2001, the amount of the reserved portion 
for fiscal year 2002 that exceeds the reserved portion for fiscal 
year 2001, if any, shall be used for quality improvement activities 
described in section 640(a)(3) and shall not be used to serve an 
increased number of eligible children under section 645A. 
"(ii) If the Secretary does not submit a final report on the 
Early Head Start impact study to the appropriate committees by 
June 1, 2002, or if the Secretary finds in the report that there 
59-194 O - 98 - 32 : QL 3 Part 4 
112 STAT. 2710 
PUBLIC LAW 105-285—OCT. 27, 1998 
are substantial deficiencies in the programs carried out under sec-
tion 645A, the amount of the reserved portion for fiscal year 2003 
that exceeds the reserved portion for fiscal year 2002, if any, shall 
be used for quaUty improvement activities described in section 
640(a)(3) and shall not be used to serve an increased number 
of eligible children under section 645A. 
"(iii) In this subparagraph: 
"(I) The term 'appropriate committees' means the Commit-
tee on Education and the Workforce and the Committee on 
Appropriations of the House of Representatives and the 
Committee on Labor and Human Resources and the Committee 
on Appropriations of the Senate. 
"(II) The term 'reserved portion', used v^rith respect to a 
fiscal year, means the amount required to be used in accordance 
vrith subparagraph (A) for that fiscal year. 
"(C)(i) For any fiscal year for virhich the Secretary determines 
that the amount appropriated under section 639(a) is not sufficient 
to permit the Secretary to reserve the portion described in subpara-
graph (A) without reducing the number of children served by Head 
Start programs or adversely affecting the quality of Head Start 
services, relative to the number of children served and the quality 
of the services during the preceding fiscal year, the Secretary may 
reduce the percentage of funds required to be reserved for the 
portion described in subparagraph (A) for the fiscal year for vrhich 
the determination is made, but not belovr the percentage required 
to be so reserved for the preceding fiscal year. 
"(ii) For any fiscal year for which the amount appropriated 
under section 639(a) is reduced to a level that requires a lower 
amount to be made available under this subchapter to Head Start 
agencies and entities described in section 645A, relative to the 
amount made available to the agencies and entities for the preced-
ing fiscal year, adjusted as described in paragraph (3)(A)(ii), the 
Secretary shall proportionately reduce— 
"(I) the amounts made available to the entities for programs 
carried out under section 645A; and 
"(II) the amounts made available to Head Start agencies 
for Head Start programs.". 
(b) CHILDREN WITH DISABILITIES.—Section 640(d) of the Head 
Start Act (42 U.S.C. 9835(d)) is amended— 
(1) by striking " 1982" and inserting " 1999"; 
(2) by striking "(as defined in section 602(a) of the Individ-
uals with Disabilities Education Act)"; and 
(3) by adding at the end the following: "Such policies and 
procedures shall require Head Start agencies to coordinate 
programmatic efforts with efforts to implement part C and 
section 619 of the Individuals with Disabilities Education Act 
(20 U.S.C 1431-1445, 1419).". 
(c) INCREASED APPROPRIATIONS.—Section 640(g) of the Head 
Start Act (42 U.S.C. 9835(g)) is amended— 
(1) in paragraph (2)— 
(A) in subparagraph (A), by striking the semicolon 
and inserting ", and the performance history of the 
applicant in providing services under other Federal pro-
grams (other than the program carried out under this 
subchapter);"; 
'.-Si^^iiS':' 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT, 2711 
(B) in subparagraph (C), by striking the semicolon 
and inserting ", and organizations and public entities serv-
ing children with disabilities;"; 
(C) in subparagraph (D), by striking the semicolon 
and inserting "and the extent to which, and manner in 
which, the applicant demonstrates the ability to collaborate 
and participate with other local community providers of 
child care or preschool services to provide full-working-
day full calendar year services;"; 
(D) in subparagraph (E), by striking "program; and" 
and inserting "program or any other early childhood pro-
gram;"; 
(E) in subparagraph (F), by striking the period and 
inserting a semicolon; and 
(F) by adding at the end the following: 
"(G) the extent to which the applicant proposes to foster 
partnerships with other service providers in a manner that 
will enhance the resource capacity of the applicant; and 
"(H) the extent to which the applicant, in providing serv-
ices, plans to coordinate with the local educational agency serv-
ing the community involved and with schools in which children 
participating in a Head Start program operated by such agency 
will enroll following such program, regarding such services 
and the education services provided by such local educational 
agency."; and 
(2) by adding at the end the following: 
"(4) Notwithstanding subsection (a)(2), after taking into account 
paragraph (1), the Secretary may allocate a portion of the remaining 
additional funds under subsection (a)(2)(A) for the purpose of 
increasing funds available for activities described in such sub-
section.". 
(d) MIGRANT AND SEASONAL HEAD START PROGRAMS.—Section 
640(1) (42 U.S.C. 9835(1)) is amended— 
(1) by striking "(1)" and inserting "(1)(1)"; 
(2) by striking "migrant Head Start programs" each place 
it appears and inserting "migrant and seasonal Head Start 
programs"; 
(3) by striking "migrant families" and inserting "migrant 
and seasonal farmworker families"; and 
(4) by adding at the end the following: 
"(2) For purposes of subsection (a)(2)(A), in determining the 
need and demand for migrant and seasonal Head Start programs 
(and services provided through such programs), the Secretary shall 
consult with appropriate entities, including providers of services 
for migrant and seasonal Head Start programs. The Secretary shall, 
after taking into consideration the need and demand for migrant 
and seasonal Head Start programs (and such services), ensure 
that there is an adequate level of such services for eligible children 
of migrant farmworkers before approving an increase in the alloca-
tion of funds provided under such subsection for unserved eligible 
children of seasonal farmworkers. In serving the eligible children 
of seasonal fsirmworkers, the Secretary shall ensure that services 
provided by migrant and seasonal Head Start programs do not 
duplicate or overlap with other Head Start services available to 
eligible children of such farmworkers. 
"(3) In carrying out this subchapter, the Secretary shall con-
tinue the administrative arrangement responsible for meeting the 
112 STAT. 2712 
PUBLIC LAW 105-285—OCT. 27, 1998 
needs of children of migrant and seasonal farmworkers and Indian 
children gind shall ensure that appropriate funding is provided 
to meet such needs.". 
(e) CONFORMING AMENDMENT.—Section 644(f)(2) of the Head 
Start Act (42 U.S.C. 9839(f)(2)) is amended by striking "Except" 
and all that follows through "financial" and inserting "Financial". 
SEC. 107. DESIGNATION OF HEAD START AGENCIES. 
Section 641 of the Head Start Act (42 U.S.C. 9836) is 
amended— 
(1) in subsection (a)— 
(A) in the matter preceding paragraph (1), by inserting 
"or for-profit" after "nonprofit"; and 
(B) by inserting "(in consultation with the chief execu-
tive officer of the State involved, if such State expends 
non-Federal funds to carry out Head Start programs)' after 
"Secretary" the last place it appears; 
(2) in subsection (b), by strilang "area designated by the 
Bureau of Indian Affairs as near-reservation" and inserting 
"off-reservation 
area designated by an appropriate tribal 
government in consultation with the Secretary'; 
(3) in subsection (c)— 
(A) in paragraph (1)— 
(i) by inserting ", in consultation with the chief 
executive officer of the State involved if such State 
expends non-Federal funds to carry out Head Start 
programs," after "shall"; 
(ii) by inserting "or for-profit" after "nonprofit"; 
and 
(iii) by striking "makes a finding" and all that 
follows through the period at the end, and inserting 
the following: "determines that the agency involved 
fails to meet program and 
financial 
management 
requirements, performgmce standards described in sec-
tion 641A(a)(l), results-based performance measures 
developed by the Secretary under section 641A(b), or 
other requirements established by the Secretary."; 
(B) in paragraph (2), by inserting ", in consultation 
with the chief executive officer of the State if such State 
expends non-Federal funds to carry out Head Start pro-
grams," after "shall"; and 
(C) by aligning the margins of paragraphs (2) and 
(3) with the margin of paragraph (1); 
(4) in subsection (d)— 
(A) in the matter preceding paragraph (1), by inserting 
after the first sentence the following: "In selecting from 
among qualified applicants for designation as a Head Start 
agency, the Secretary shall give priority to any qualified 
agency that functioned as a Head Start delegate agency 
in the community and carried out a Head Start program 
that the Secretary determines met or exceeded such 
performance standards and such results-based performance 
measures."; 
(B) in paragraph (3), by inserting "and programs under 
part C and section 619 of the Individuals with Disabilities 
Education Act (20 U.S.C 1431-1445, 1419)" after "(20 
U.S.C. 2741 et seq.)"; 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2713 
(C) in paragraph (4)— 
(i) in subparagraph (A), by inserting "(at home 
and in the center involved where practicable)" after 
"activities"; 
(ii) in subparagraph (D)— 
(I) in clause (iii), by adding "or" at the end; 
(II) by striking clause (iv); and 
(III) by redesignating clause (v) as clause (iv); 
(iii) in subparagraph (E), by striking "and (D)" 
and inserting ", (D), and (E)"; 
(iv) by redesignating subparagraphs (D) and (E) 
as subparagraphs (E) and (F), respectively; and 
(v) by inserting after subparagraph (C) the follow-
ing: 
"(D) to offer to parents of participating children sub-
stance abuse counseling (either directly or through referral 
to local entities), including information on drug-exposed 
infants and fetal alcohol s3mdrome;"; 
(D) by amending paragraph (7) to read as follows: 
"(7) the plan of such applicant to meet the needs of non-
English background children and their fgimiUes, including needs 
related to the acquisition of the EngUsh language;"; 
(E) in paragraph (8)— 
(i) by striking the period at the end and inserting 
"; and"; and 
(ii) by redesignating such paragraph as paragraph 
(9); 
(F) by inserting after paragraph (7) the following: 
"(8) the plan of such applicant to meet the needs of children 
with disabihties;"; and 
(G) by adding at the end the following: 
"(10) the plan of such applicant to collaborate with other 
entities carrying out early childhood education and child care 
programs in the community."; 
(5) by striking subsection (e) and inserting the following: 
"(e) If no agency in the community receives priority designation 
under subsection (c), and there is no qualified applicant in the 
community, the Secretary shall designate a qualified agency to 
carry out the Head Start program in tiie community on an interim 
basis until a qualified applicant from the community is so des-
ignated."; and 
(6) by adding at the end the following: 
"(g) If the Secretary determines that a nonprofit agency and 
a for-profit agency have submitted appUcations for designation of 
equivalent quality under subsection (d), the Secretary may give 
priority to the nonprofit agency. In selecting from among quahfied 
applicants for designation as a Head Start agency under subsection 
(d), the Secretary shall give priority to applicants that have dem-
onstrated capacity in providing comprehensive early childhood serv-
ices to children and their famifies.". 
SEC. 108. QUALITY STANDARDS. 
(a) QUALITY STANDAEDS.—Section 641A(a) of the Head Start 
Act (42 U.S.C. 9836a(a)) is amended— 
(1) in paragraph (1)— 
112 STAT. 2714 
PUBLIC LAW 105-285—OCT. 27, 1998 
(A) in the matter preceding subparagraph (A), by 
inserting ", including minimum levels of overall accomplish-
ment," after "regulation standards"; 
(B) in subparagraph (A), by striking "education,"; 
(C) by redesignating subparagraphs (B) through (D) 
as subparagraphs (C) through (E), respectively; and 
(D) by inserting after subparagraph (A) the following: 
"(B)(i) education performance standards to ensure the 
school readiness of children participating in a Head Start 
program, on completion of the Head Start program and 
prior to entering school; and 
"(ii) additional education performance standards to 
ensure that the children participating in the program, at 
a minimum— 
"(I) develop phonemic, print, and numeracy aware-
ness; 
"(H) understand and use language to communicate 
for various purposes; 
"(HI) understand and use increasingly complex and 
varied vocabulary; 
"(IV) develop and demonstrate an appreciation of 
books; and 
"(V) in the case of non-English background chil-
dren, progress toward acquisition of the English lan-
guage."; 
(2) by striking paragraph (2); 
(3) by redesignating paragraphs (3) and (4) as paragraphs 
(2) and (3), respectively; 
(4) in paragraph (2) (as redesignated in paragraph (3))— 
(A) in subparagraph (B)(iii), by striking "child" and 
inserting "early childhood education and"; and 
(B) in subparagraph (C)— 
(i) in clause (i)— 
(I) by striking "not later than 1 yesir after 
the date of enactment of this section,"; and 
(II) by striking "section 651(b)" 2ind all that 
follows and inserting "this subsection; and"; and 
(ii) in subclause (ii), by striking "November 2, 
1978" and inserting "the date of enactment of the 
Goats Human Services Reauthorization Act of 1998"; 
and 
(5) in paragraph (3) (as redesignated in paragraph (3)), 
by striking "to an agency (referred to in this subchapter as 
the 'delegate agency')" and inserting "to a delegate agency". 
(b) PERFORMANCE MEASURES.—Section 641A(b) of the Head 
Start Act (42 U.S.C. 9836a(b)) is amended— 
(1) in the heading, by inserting "RESULTS-BASED" before 
"PERFORMANCE"; 
(2) in paragraph (1)— 
(A) by striking "Not later than 1 year after the date 
of enactment of this section, the" and inserting "The"; 
(B) by striking "child" and inserting "early childhood 
education and"; 
(C) by inserting before "(referred" the following: ", and 
the impact of the services provided through the programs 
to children and their families"; and 
- •tls''^^ 
-
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2715 
(D) by striking "performance measures" and inserting 
"results-based performance measures"; and 
(3) in paragraph (2)— 
(A) in the paragraph heading, by striking "DESIGN" 
and inserting "CHARACTERISTICS"; 
(B) in the matter preceding subpgiragraph (A), by strik-
ing "shall be designed—" and inserting "shall—"; 
(C) in subparagraph (A), by striking "to assess" and 
inserting "be used to assess the impact of; 
(D) in subparagraph (B)— 
(i) by striking "to"; 
(ii) by striking "and peer review" and inserting 
", peer review, and program evaluation"; and 
(iii) by inserting ", not later than July 1, 1999" 
before the semicolon; 
(E) in subparagraph (C), by inserting "be developed" 
before "for other"; and 
(F) by adding at the end the following: "The perform-
ance measures shall include the performance stsuidards 
described in subsection (a)(l)(B)(ii)."; 
(4) in paragraph (3)(A), by starildng "and by region" and 
inserting ", regionally, and locally"; and 
(5) by ad(Sng at the end the following: 
"(4) EDUCATIONAL PERFORMANCE MEASURES.—Such results-
based performance measures shall include educational perform-
ance measures that ensure that children participating in Head 
Start programs— 
"(A) know that letters of the alphabet are a special 
category of visual graphics that can be individually named; 
'(B) recognize a word as a unit of print; 
"(C) identify at least 10 letters of the alphabet; and 
"(D) associate sounds with written words. 
"(5) ADDITIONAL LOCAL RESULTS-BASED PERFORMANCE MEAS-
URES.—In addition to other applicable results-based perform-
ance measures, Head Start agencies may establish local results-
based educational performance measures.". 
(c) MONITORING.—Section 641A(c) of the Head Start Act (42 
U.S.C. 9836a(c)) is amended— 
(1) in paragraph (1), by inserting "and results-based 
performance measures developed by the Secretary under sub-
section (b)" after "standards established under this subchapter"; 
and 
(2) in paragraph (2)— 
(A) in subpgiragraph (B), by striking "and" at the end; 
(B) in subparagraph (C)— 
(i) by inserting "(including children with disabil-
ities)" after "eligible children"; and 
(ii) by striking the period at the end and inserting 
a semicolon; and 
(C) by adding at the end the following: 
"(D) include as part of the reviews of the programs, 
a review and assessment of program effectiveness, as meas-
ured in accordance with the results-based performance 
measures developed by the Secretary pursuant to sub-
section (b) and with the performance standards established 
pursuant to subparagraphs (A) and (B) of subsection (a)(1); 
and 
112 STAT. 2716 
PUBLIC LAW 105-285—OCT. 27, 1998 
"(E) seek information from the communities and the 
States involved about the performance of the programs 
and the efforts of the Head Start agencies to collaborate 
with other entities carrying out early childhood education 
and child care programs in the community.", 
(d) TERMINATION.—Section 641A(d) of the Head Start Act (42 
U.S.C. 9836a(d)) is amended— 
(1) in paragraph (1)— 
(A) by inserting "or results-based performance meas-
ures developed by the Secretary under subsection (b)" after 
"subsection (a)"; and 
(B) by amending subparagraph (B) to read as follows: 
"(B) with respect to each identified deficiency, require 
the agency— 
"(i) to correct the deficiency immediately, if the 
Secretary finds that the deficiency threatens the health 
or safety of staff or program participants or poses 
a threat to the integrity of Federal funds; 
"(ii) to 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; or 
"(iii) in the discretion of the Secretary (taking into 
consideration the seriousness of the deficiency and the 
time reasonably required to correct the deficiency), to 
comply with the requirements of paragraph (2) concern-
ing a quality improvement plan; and"; and 
(2) in paragraph (2)(A), in the matter preceding clause 
(i), by striking 'able to correct a deficiency immediately £ind 
inserting "required to correct a deficiency immediately or during 
a 90-day period under clause (i) or (ii) of paragraph (1)(B)". 
Public 
(e) REPORT.—Section 641A(e) of the Head Start Act (42 U.S.C. 
information. 
9836a(e)) is amended by adding at the end the following: "Such 
Internet. 
report shall be widely disseminated and available for public review 
in both written and electronic formats.". 
SEC. 109. POWERS AND FUNCTIONS OF HEAD START AGENCIES. 
Section 642 of the Head Start Act (42 U.S.C. 9837) is 
amended— 
(1) in subsection (a), by inserting "or for-profit" after "non-
profit"; 
(2) in subsection (b)— 
(A) in paragraph (6)— 
(i) by striking subparagraph (D); and 
(ii) by redesignating subpeiragraphs (E) and (F) 
and subparagraphs (D) and (E), respectively; 
(B) in pEiragraph (8), by striking "and" at the end; 
(C) in paragraph (9), by striking the period at the 
end and inserting "; and"; 
(D) by redesignating paragraphs (6) through (9) as 
paragraphs (7) through (10), respectively; 
(E) by inserting after paragraph (5) the following: 
"(6) offer to parents of participating children substance 
abuse counseling (either directly or through referral to local 
entities), including information on drug-exposed infants and 
fetal alcohol syndrome;"; 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2717 
(F) in paragraph (8) (as redesignated in subparagraph 
(D)), by striking "paragraphs (4) through (6)" and inserting 
"paragraphs (4) t h r o u ^ (7)"; and 
(G) by adding at the end the following: 
"(11)(A) inform custodial parents in single-parent families 
that participate in programs, activities, or services carried out 
or provided under this subchapter about the availability of 
child support services for purposes of establishing paternity 
and acquiring child support; and 
"(B) refer eligible parents to the child support offices of 
State and local governments."; 
(3) in subsection (c)— 
(A) by inserting "and collaborate" after "coordinate"; 
(B) by striking "section 402(g) of the Social Security 
Act, and other" and inserting "the State program carried 
out under the Child Care and Development Block Grant 
Act of 1990 (42 U.S.C. 9858 et seq.), and other early child-
hood education and development"; and 
(C) by inserting "and programs under part C and sec-
tion 619 of the Individuals with Disabilities Education 
Act (20 U.S.C 1431-1445, 1419)" after "(20 U.S.C. 2741 
et seq.)"; 
(4) in subsection (d)— 
(A) in paragraph (1)— 
(i) by striking "carry out" and all that follows 
through ' maintain' and inserting "take steps to ensure, 
to the maximum extent possible, that children main-
tain"; 
(ii) by inserting "and educational" after "develop-
mental"; and 
(iii) by striking "to build" and inserting "build"; 
(B) by striking paragraph (2); 
(C) by redesignating paragraphs (3) through (5) as 
',. 
para^aphs (2) through (4), respectively; and 
(D) in subparagraph (A) of paragraph (4) (as redesig-
nated in subparagraph (C)), by striking "the Head Start 
Transition Project Act (42 U.S.C. 9855 et seq.)" and insert-
ing "section 642A"; and 
(5) by adding at the end the following: 
"(e) Head Start agencies shall adopt, in consultation with 
experts in child development and with classroom teachers, an 
assessment to be used when hiring or evaluating any classroom 
teacher in a center-based Head Start program. Such assessment 
shall measure whether such teacher ha,s iftastered the functions 
described in section 648A(a)(l).". 
SEC. 110. HEAD START TRANSITION. 
The Head Start Act (42 U.S.C. 9831 et seq.) is amended by 
inserting after section 642 the following: 
"SEC. 642A. HEAD START TRANSITION. 
42 USC 9837a. 
"Each Head Start agency shall take steps to coordinate with 
the local educational agency serving the community involved and 
with schools in which children participating in a Head Start pro-
gram operated by such agency will enroll following such program, 
including— 
"(1) developing and implementing a systematic procedure 
for transferring, with parental consent. Head Start program 
112 STAT. 2718 
PUBLIC LAW 105-285—OCT. 27, 1998 
records for each participating child to the school in which 
such child will enroll; 
"(2) establishing channels of communication between Head 
Start staff and their counterparts in the schools (including 
teachers, social workers, and health staff) to facilitate coordina-
tion of programs; 
"(3) conducting meetings involving parents, kindergarten 
or elementary school teachers, and Head Start program teach-
ers to discuss the educational, developmental, and other needs 
of individual children; 
"(4) organizing and psirticipating in joint transition-related 
training of school staff and Head Start staff; 
"(5) developing and implementing a family outreach and 
support program in cooperation with entities carrying out 
parental involvement efforts under title I of the Elementary 
and Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.); 
"(6) assisting families, administrators, and teachers in 
enhancing educational and developmental continuity between 
Head Start services and elementary school classes; and 
"(7) linking the services provided in such Head Start pro-
gram with the education services provided by such local edu-
cational agency.". 
SEC. 111. SUBMISSION OF PLANS TO GOVERNORS. 
The first sentence of section 643 of the Head Start Act (42 
U.S.C. 9838) is amended— 
(1) by striking "30 days" and inserting "45 days"; 
(2) by striking "so disapproved" and inserting "disapproved 
(for reasons other than failure of the program to comply with 
State health, safety, and child care laws, including regulations 
applicable to comparable child care programs in the State)"; 
and 
(3) by inserting before the period ", as evidenced by a 
written statement of the Secretary s findings that is transmitted 
to such officer". 
SEC. 112. PARTICIPATION IN HEAD START PROGRAMS. 
(a) REGULATIONS.—Section 645(a)(1) of the Head Start Act (42 
U.S.C. 9840(a)(1)) is amended— 
(1) by striking "provide (A) that" and inserting the follow-
ing: "provide— 
"(A) that"; 
(2) by striking "assistance; and (B) pursuant" and inserting 
the following: "assistance; and 
"(B) pursuant"; 
(3) in subparagraph (B), by striking "that programs" and 
inserting "that— 
"(i) programs"; and 
(4) by striking "clause (A)." and inserting the following: 
"subparagraph (A); and 
"(ii) a child who has been determined to meet the 
low-income criteria and who is participating in a Head 
Start program in a program year shall be considered to 
continue to meet the low-income criteria through the end 
of the succeeding program year. 
In determining, for purposes of this paragraph, whether a child 
who has applied for enrollment in a Head Start program meets 
the low-income criteria, an entity may consider evidence of family 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2719 
income during the 12 months preceding the month in which the 
apphcation is submitted, or during the calendar year preceding 
the calendar year in which the application is submitted, whichever 
more accurately reflects the needs of the family at the time of 
application.". 
(b) SLroiNG FEE SCALE.—Section 645(b) of the Head Start Act 
(42 U.S.C. 9840(b)) is amended by adding at the end the following: 
"A Head Start agency that provides a Head Start program with 
full-working-day services in collaboration with other agencies or 
entities may collect a family copayment to support extended day 
services if a copa3rment is required in conjunction with the collabo-
rative. The copa3nnent charged to families receiving services through 
the Head Start program shall not exceed the copajntnent chairged 
to families with similar incomes and circumstances who are receiv-
ing the services through participation in a program carried out 
by another agency or entity.". 
(c) CONTINUOUS RECRUITMENT AND ACCEPTANCE OF APPLICA-
TIONS.—Section 645(c) of the Head Start Act (42 U.S.C. 9840(c)) 
is amended by adding at the end the following: "Each Head Start 
program operated in a community shall be permitted to recruit 
and accept applications for enrollment of children throughout the 
year.". 
(d) OFF-RESERVATION AREA.—Section 645(d)(1)(B) of the Head 
Start Act (42 U.S.C. 9840(d)(1)(B)) is amended by striking "a 
community with" and all that follows through "Indian Affairs" and 
inserting "a community that is an off-reservation area, designated 
by an appropriate tribal government, in consultation with the Sec-
retary". 
SEC. 113. EARLY HEAD START PROGRAMS FOR FAMILIES WITH 
INFANTS AND TODDLERS. 
Section 645A of the Head Start Act (42 U.S.C. 9840a) is 
amended— 
(1) in the section heading, by inserting "EARLY HEAD 
START" before "PROGRAMS FOR"; 
(2) in subsection (a)— 
(A) in paragraph (1), by striking "; £ind" and inserting 
a period; 
(B) by striking paragraph (2); and 
(C) by striking "for—" and all that follows through 
"(1)" and inserting "for"; 
(3) in subsection (b)— 
(A) in paragraph (5), by inserting "(including programs 
for infants and toddlers with disabilities)" after "commu-
nity"; 
(B) in paragraph (7), by striking "and" at the end; 
(C) by redesignating paragraph (8) as paragraph (9); 
and 
(D) by inserting after paragraph (7) the following: 
"(8) ensure formal linkages with the agencies Eind entities 
described in section 644(b) of the Individuals with Disabilities 
Education Act (20 U.S.C. 1444(b)) and providers of early inter-
vention services for infants and toddlers with disabilities under 
the Individuals with Disabilities Education Act (20 U.S.C. 1400 
et seq.); and"; 
(4) in subsection (c)— 
112 STAT. 2720 
PUBLIC LAW 105-285—OCT. 27, 1998 
(A) in the matter preceding paragraph (1), by striking 
"subsection (a)(1)" and inserting "subsection (a)"; and 
(B) in paragraph (2), by striking "3 (or under" and 
all that follows and inserting "3;"; 
(5) in subsection (d)— 
(A) in paragraph (1), by adding "and" at the end; 
(B) by striking paragraph (2); 
(C) by redesignating paragraph (3) as paragraph (2); 
and 
(D) in paragraph (2), as redesignated in subparagraph 
(C), by inserting "or for-profit" after "nonprofit"; 
(6) by striking subsection (e); 
(7) by redesignating subsections (f) and (g) as subsections 
(e) and (f), respectively; 
(8) in subsection (e) (as redesignated in paragraph (7))— 
(A) in the subsection heading, by striking "OTHER"; 
and 
(B) by striking "From the balance remaining of the 
portion specified in section 640(a)(6), after making grants 
to the eligible entities specified in subsection (e)," and 
inserting "From the portion specified in section 640(a)(6),"; 
(9) by striking subsection (h); and 
(10) by adding at the end the following: 
"(g) 
MONITORING, TRAINING, TECHNICAL ASSISTANCE, AND 
EVALUATION.— 
"(1) REQUIREMENT.—In order to ensure the successful oper-
ation of programs assisted under this section, the Secretary 
shall use funds from the portion specified in section 640(a)(6) 
to monitor the operation of such programs, evaluate their 
effectiveness, and provide training and technical assistance tai-
lored to the particular needs of such programs. 
"(2) TRAINING AND TECHNICAL ASSISTANCE ACCOUNT.— 
"(A) IN GENERAL.—Of the amount made available to 
carry out this section for 8iny fiscal year, not less than 
5 percent and not more than 10 percent shall be reserved 
to fund a training and technical assistance account. 
"(B) ACTIVITIES.—Funds in the account may be used 
by the Secretary for purposes including— 
"(i) making grants to, and entering into contracts 
with, organizations with specialized expertise relating 
to infants, toddlers, and families and the capacity 
needed to provide direction and support to a national 
training and technical assistance system, in order to 
provide such direction and support; 
"(ii) providing ongoing training and technical 
assistance for regional and program staff charged with 
monitoring and overseeing the administration of the 
program carried out under this section; 
"(iii) providing ongoing training and technical 
assistance for existing recipients (as of the date of 
such training or assistance) of grants under subsection 
(a) 
and 
support 
and 
program 
planning 
and 
implementation assistance for new recipients of such 
grants; and 
"(iv) providing 
professional 
development gutid 
personnel enhancement activities, including the provi-
sion of funds to recipients of grants under subsection 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2721 
(a) for the recruitment and retention of qualified staff 
with an appropriate level of education and experience.". 
SEC. 114. TECHNICAL ASSISTANCE AND TRAINING. 
(a) IN GENERAL.—Section 648 of the Head Start Act (42 U.S.C. 
9843) is amended— 
(1) in subsection (b)— 
(A) in paragraph (1), by striking "and" at the end; 
(B) in paragraph (2), by striking the period and insert-
ing "; and"; and 
(C) by adding at the end the following: 
"(3) ensure the provision of technical assistance to assist 
Head Start agencies, entities carrjdng out other child care 
and early childhood programs, conmiunities, and States in 
collaborative efforts to provide quality fiill-working-day, full 
calendar year services, including technical assistance related 
to identif3dng and assisting in resolving barriers to collabora-
tion."; and 
(2) in subsection (c)— 
(A) by amending paragraph (1) to read as follows: 
"(1) give priority consideration to— 
"(A) activities to correct program and management defi-
ciencies identified through reviews carried out pursuant 
to section 641A(c) (including the provision of assistance 
to local programs in the development of quality improve-
ment plans under section 641A(d)(2)); and 
"(B) assisting Head Start agencies in— 
"(i) ensuring the school readiness of children; and 
"(ii) meeting the educational performance meas-
ures described in section 641A(b)(4);'; 
(B) in paragraph (2), by inserting "supplement amounts 
provided under section 640(a)(3)(CXii) in order to" after 
^^(2)"; 
(C) in paragraph (4)— 
(i) by inserting "and implementing" after "develop-
ing"; and 
(ii) by striking "a longer day" and inserting the 
following: "the day, and assist the agencies and pro-
grams in expediting the sharing of information about 
innovative models for providing full-working-day, full 
calendar year services for children"; 
(D) in paragraph (7), by striking "; and" and inserting 
a semicolon; 
(E) in paragraph (8), by striking the period and insert-
ing "; and"; 
(F) by redesignating paragraphs (3) through (8) as 
paragraphs (5) through (10), respectively; 
(G) by inserting after paragraph (2) the following: 
"(3) assist Head Start agencies in the development of 
collaborative initiatives with States and other entities within 
the States, to foster effective early childhood professional 
development systems; 
"(4) provide technical assistance and training, either 
directly or through a grsint, contract, or cooperative agreement 
with an entity Qiat has experience in the development and 
operation of successful family literacy services programs, for 
the purpose of— 
112 STAT. 2722 
PUBLIC LAW 105-285—OCT. 27, 1998 
"(A) assisting Head Start agencies providing family 
literacy services, in order to improve the quality of such 
family literacy services; and 
"(B) enabling those Head Start agencies that dem-
onstrate effective provision of family literacy services, based 
on improved outcomes for children and their parents, to 
provide technical assistsmce and training to other Head 
Start agencies and to service providers that work in 
collaboration with such agencies to provide family literacy 
services;"; and 
(H) by adding at the end the following: 
"(11) provide support for Head Start agencies (including 
policy councils and policy committees, as defined in regulation) 
that meet the standards described in section 641A(a) but that 
have, as documented by the Secretary through reviews con-
ducted pursuant to section 641A(c), significant programmatic, 
quality, and fiscal issues to address.". 
(b) SERVICES.—Section 648(e) of the Head Start Act (42 U.S.C. 
9843(e)) is amended by inserting "(including services to promote 
the acquisition of the English language)" after "non-English lan-
guage background children'. 
SEC. 115. PROFESSIONAL REQUIREMENTS. 
Section 648A of the Head Start Act (42 U.S.C. 9843a) is 
amended— 
(1) by amending subsection (a) to read as follows: 
"(a) CLASSROOM TEACHERS.— 
"(1) PROFESSIONAL REQUIREMENTS.—The Secretary shall 
ensure that each Head Start classroom in a center-based pro-
gram is assigned one teacher who has demonstrated competency 
to perform functions that include— 
"(A) planning and implementing learning experiences 
that advance the intellectual and physical development 
of children, including improving the readiness of children 
for school by developing their literacy and phonemic, print, 
and numeracy awareness, their understanding and use 
of language, their understanding and use of increasingly 
complex and varied vocabulary, their appreciation of books, 
and their problem solving abilities; 
"(B) establishing and maintaining a safe, healthy learn-
ing environment; 
"(C) supporting the social and emotional development 
of children; and 
"(D) encouraging the involvement of the families of 
the children in a Head Start program and supporting the 
development of relationships between children and their 
families. 
"(2) DEGREE REQUIREMENTS.— 
Deadline. 
"(A) IN GENERAL.—^The Secretary shall ensure that not 
later than September 30, 2003, at least 50 percent of all 
Head Start teachers nationwide in center-based programs 
have— 
"(i) an associate, baccalaureate, or advanced degree 
in early childhood education; or 
"(ii) an associate, baccalaureate, or advanced 
degree in a field related to early childhood education, 
with experience in teaching preschool children. 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2723 
"(B) PROGRESS.—^The Secretary shall require Head 
Start agencies to demonstrate continuing progress each 
year to reach the result described in subparagraph (A). 
"(3) 
ALTERNATIVE 
CREDENTIALING 
REQUIREMENTS.—^The 
Secretary shall ensure that, for center-based programs, each 
Head Start classroom that does not have a teacher that meets 
the requirements of clause (i) or (ii) of paragraph (2)(A) is 
assigned one teacher who has— 
"(A) a child development associate credential that is 
appropriate to the age of the children being served in 
center-based programs; 
"(B) a State-awarded certificate for preschool teachers 
that meets or exceeds the requirements for a child develop-
ment associate credential; or 
"(C) a degree in a field related to early childhood 
education with experience in teaching preschool children 
and a State-awarded certificate to teach in a preschool 
program. 
"(4) WAIVER.— 
"(A) IN GENERAL.—On request, the Secretary shall 
grant a 180-day waiver of the requirements of paragraph 
(3), for a Head Start agency that can demonstrate that 
the agency has unsuccessfully attempted to recruit an 
individual who has a credential, certificate, or degree 
described in paragraph (3), with respect to an individual 
who— 
"(i) is enrolled in a program that grants any such 
credential, certificate, or degree; and 
"(ii) will receive such credential, certificate, or 
degree under the terms of such program not later 
than 180 days after beginning employment as a teacher 
with such agency. 
"(B) LIMITATION.—^The Secretary may not grant more 
than one such waiver with respect to such individual."; 
and 
(2) in subsection (b)(2)(B)— 
(A) by striking "staff," and inserting "staff or"; and 
(B) by striking ", or that" and all that follows through 
"families". 
SEC. 116. RESEARCH AND EVALUATION. 
Section 649 of the Head Start Act (42 U.S.C. 9844) is 
amended— 
(1) in subsection (d)— 
(A) in paragraph (6), by striking "and" at the end; 
(B) in paragraph (7), by striking the period at the 
end and inserting a semicolon; 
(C) by redesignating paragraphs (2) through (7) as 
paragraphs (3) through (8), respectively; 
(D) by inserting after paragraph (1) the following: 
"(2) establish 
evaluation methods that measure the 
effectiveness and impact of family literacy services program 
models, including models for the integration of family literacy 
services with Head Start services;"; and 
(E) by adding at the end the following: 
112 STAT. 2724 
PUBLIC LAW 105-285—OCT. 27, 1998 
"(9) study the experiences of small, medium, and large 
States with Head Start programs in order to permit compari-
sons of children participating in the programs with eligible 
children who did not participate in the programs, which study— 
"(A) may include the use of a data set that existed 
prior to the initiation of the study; and 
"(B) shall compare the educational achievement, social 
adaptation, and health status of the participating children 
and the eligible nonparticipating children; and 
"(10) provide for— 
"(A) using the Survey of Income and Program Partici-
pation to conduct an analysis of the different income levels 
of Head Start participants compared to comparable persons 
who did not attend Head Start programs; 
"(B) using the National Longitudinal Survey of Youth, 
which began gathering data in 1988 on children who 
attended Head Start programs, to examine the wide range 
of outcomes measured within the Survey, including out-
comes related to cognitive, socio-emotional, behavioral, and 
academic development; 
"(C) using the Survey of Program Djmamics, the new 
longitudinal survey required by section 414 of the Social 
Security Act (42 tJ.S.C. 614), to begin annual reporting, 
through the duration of the Survey, on Head Start program 
attendees' academic readiness performance and improve-
ments; 
"(D) ensuring that the Survey of Program Dynamics 
is linked with the National Longitudinal Survey of Youth 
at least once by the use of a common performance test, 
to be determined by the expert panel, for the greater 
national usefulness of the National Longitudinal Survey 
of Youth database; and 
"(E) disseminating the results of the analysis, examina-
tion, reporting, and linkage described in subparagraphs 
(A) through (D) to persons conducting other studies under 
this subchapter. 
Reports. 
The Secretary shall ensure that an appropriate entity carries out 
a study described in paragraph (9), and prepares and submits 
to the appropriate committees of Congress a report containing the 
results of the study, not later than September 30, 2002."; and 
(2) by adding at the end the following: 
"(g) NATIONAL HEAD START IMPACT RESEARCH.— 
"(1) EXPERT PANEL.— 
"(A) IN GENERAL.—^The Secretary shall appoint an 
independent panel consisting of experts in progrgim evalua-
tion 
and 
research, 
education, 
aind 
early 
childhood 
programs— 
"(i) to review, and mgike recommendations on, the 
design and plan for the research (whether conducted 
as a single assessment or as a series of assessments) 
described in paragraph (2), within 1 year after the 
date of enactment of the Coats Human Services 
Reauthorization Act of 1998; 
"(ii) to maintain and advise the Secretary regard-
ing the progress of the research; and 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2725 
"(iii) to comment, if the panel so desires, on the 
interim and final research reports submitted under 
paragraph (7). 
"(B) TRAVEL EXPENSES.—^The members of the panel 
shall not receive compensation for the performance of serv-
ices for the panel, but shall be allowed travel expenses, 
including per diem in lieu of subsistence, at rates author-
ized for employees of agencies under subchapter I of chapter 
57 of title 5, United States Code, while away from their 
homes or regular places of business in the performance 
of services for the panel. Notwithstanding section 1342 
of title 31, United States Code, the Secretary may accept 
the voluntary and uncompensated services of members of 
the panel. 
"(2) 
GENERAL 
AUTHORITY,—^After 
reviewing 
the 
rec- Contracts. 
ommendations of the expert panel, the Secretary shall msike 
a grant to, or enter into a contract or cooperative agreement 
with, an organization to conduct independent research that 
provides a national analysis of the impact of Head Start pro-
grams. The Secretary shall ensure that the organization shall 
have expertise in program evaluation, and reseeirch, education, 
and eaily childhood programs. 
"(3) DESIGNS AND TECHNIQUES.—The Secretary shall ensure 
that the research uses rigorous methodological designs and 
techniques (based on the recommendations of the expert panel), 
including longitudinal designs, control groups, nationally recog-
nized standardized measures, and random selection and assign-
ment, as appropriate. The Secretary may provide that the 
research shall be conducted as a single comprehensive assess-
ment or as a group of coordinated assessments designed to 
provide, when taken together, a national analysis of the impact 
of Head Start programs. 
"(4) PROGRAMS.—^The Secretary shall ensure that the 
research focuses primarily on Head Start programs that operate 
in the 50 States, the Commonwealth of Puerto Rico, or the 
District of Columbia and that do not specifically target special 
populations. 
"(5) ANALYSIS.—The Secretary shall ensure that 
the 
organization conducting the research— 
"(A)(i) determines if, overall, the Head Start programs 
have impacts consistent with their primary goal of increas-
ing the social competence of children, by increasing the 
everyday effectiveness of the children in dealing with their 
present environments and future responsibilities, and 
increasing their school readiness; 
"(ii) considers whether the Head Start programs— 
"(I) enhance the growth and development of chil-
dren in cognitive, emotional, and physical health areas; 
"(H) strengthen families as the primary nurturers 
of their children; and 
"(HI) ensure that children attain school readiness; 
and 
"(iii) examines— 
"(I) the impact of the Head Start programs on 
increasing access of children to such services as edu-
cational, health, and nutritional services, and linking 
112 STAT. 2726 
PUBLIC LAW 105-285—OCT. 27, 1998 
children and families to needed community services; 
and 
"(II) how receipt of services described in subclause 
(I) enriches the lives of children and families participat-
ing in Head Start programs; 
"(B) examines the impact of Head Start programs on 
participants on the date the participants leave Head Start 
progrgmis, at the end of kindergarten and at the end of 
first grade (whether in public or private school), by examin-
ing a variety of factors, including educational achievement, 
referrals for special education or remedial course work, 
and absenteeism; 
"(C) makes use of random selection from the population 
of all Head Start programs described in paragraph (4) 
in selecting programs for inclusion in the research; and 
"(D) includes comparisons of individuals who partici-
pate in Head Start programs with control groups (including 
comparison groups) composed o
f
— 
"(i) individuals who participate in other early child-
hood programs (such as public or private preschool 
programs and day care); and 
"(ii) individuals who do not participate in any other 
early childhood program. 
"(6) CoNsroERATioN OF SOURCES OP VARIATION.—In design-
ing the research, the Secretary shall, to the extent practicable, 
consider addressing possible sources of variation in impact of 
Head Start programs, including variations in impact related 
to such factors as— 
"(A) Head Start program operations; 
"(B) Head Start program quality; 
"(C) the length of time a child attends a Head Start 
program; 
"(D) the age of the child on entering the Head Start 
program; 
"(E) the type of organization (such as a local edu-
cational agency or a community action agency) providing 
services for the Head Start program; 
"(F) the number of hours and days of program oper-
ation of the Head Start program (such as whether the 
program is a full-working-day, full calendar year program, 
a part-day program, or a part-year program); and 
"(G) other characteristics and features of the Head 
Start program (such as geographic location, location in 
an urban or a rural service area, or participsmt characteris-
tics), as appropriate. 
"(7) REPORTS.— 
"(A) SUBMISSION OP INTERIM REPORTS.—The organiza-
tion shall prepare and submit to the Secretary two interim 
reports on the research. The first interim report shall 
describe the design of the research, and the rationale for 
the design, including a description of how potential sources 
of variation in impact of Head Start programs have been 
considered in designing the research. The second interim 
report shall describe the status of the research and prelimi-
nary findings of the research, as appropriate. 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2727 
"(B) SUBMISSION OF FINAL REPORT.^The organization 
shall prepare and submit to the Secretary a final report 
containing the findings of the research. 
"(C) TRANSMITTAL OF REPORTS TO CONGRESS.— 
"(i) IN GENERAL.—The Secretary shall transmit, 
to the committees described in clause (ii), the first 
interim report by September 30, 1999, the second 
interim report by September 30, 2001, and the final 
report by September 30, 2003. 
"(ii) COMMITTEES.—The committees referred to in 
clause (i) are the Committee on Education and the 
Workforce of the House of Representatives and the 
Committee on Labor and Human Resources of the Sen-
ate. 
"(8) DEFINITION.—In this subsection, the term Impact', 
used with respect to a Head Start program, means a difference 
in an outcome for a participant in the program that would 
not have occurred without the participation in the program. 
"(h) QUALITY IMPROVEMENT STUDY.— 
"(1) STUDY.—The Secretary shall conduct a study regarding 
the use and effects of use of the quality improvement funds 
made available under section 640(a)(3) since fiscal year 1991. 
"(2) REPORT.—^The Secretary shall prepare and submit to Deadline. 
Congress not later than September 2000 a report containing 
the results of the study, including information on— 
"(A) the types of activities funded with the quality 
improvement funds; 
"(B) the extent to which the use of the quality improve-
ment ifunds has accomplished the goals of section 
640(a)(3)(B); 
"(C) the effect of use of the quality improvement funds 
on teacher training, salaries, benefits, recruitment, and 
retention; and 
"(D) the effect of use of the quality improvement funds 
on the development of children receiving services under 
this subchapter.". 
SEC. 117. REPORTS. 
Section 650 of the Head Start Act (42 U.S.C. 9846) is 
amended— 
(1) by inserting "(a) STATUS OF CHILDREN.—" before "At"; 
(2) by striking "and Labor" each place it appears and 
inserting "and the Workforce"; and 
(3) by adding at the end the following: 
"(b) FACiLmES.—^At least once during every 5-year period, the 
Secretary shall prepare and submit, to the Committee on Education 
and the Workforce of the House of Representatives and the Commit-
tee on Labor and Human Resources of the Senate, a report concern-
ing the condition, location, and ownership of facilities used, or 
available to be used, by Indian Head Start agencies (including 
Native Alaskan Head Start agencies) and Native Hawaiian Head 
Start agencies.". 
, , 
SEC. 118. REPEAL OP CONSULTATION REQUIREMENT. 
Section 657A of the Head Start Act (42 U.S.C. 9852a) is 
repealed. 
112 STAT. 2728 
PUBLIC LAW 105-285—OCT. 27, 1998 
42 use 9801 
SEC. 119. REPEAL OF HEAD START TRANSITION PROJECT ACT. 
°°*^" 
The Head Start Transition Project Act (42 U.S.C. 9855-9855g) 
is repealed. 
TITLE II—COMMUNITY SERVICES 
BLOCK GRANT PROGRAM 
SEC. 201. REAUTHORIZATION. 
The Community Services Block Grant Act (42 U.S.C. 9901 
et seq.) is amended to read as follows: 
commumtv 
"Subtitlc B—Conununity Services Block 
Services Block 
^^ 
j -B-k 
Grant Act. 
Graiit Program 
42 use 9901 
"SEC. 671. SHORT TITLE. 
'This subtitle may be cited as the 'Community Services Block 
Grant Act'. 
42 use 9901. 
"SEC. 672. PURPOSES AND GOALS. 
"The purposes of this subtitle are— 
"(1) to provide assistance to States and local communities, 
working through a network of community action agencies and 
other neighborhood-based organizations, for the reduction of 
poverty, the revitalization of low-income communities, and the 
empowerment of low-income families Eind individuals in rural 
and urban areas to become fully self-sufficient (particularly 
families who are attempting to transition off a State program 
carried out under part A of title IV of the Social Security 
Act (42 U.S.C. 601 et seq.)); and 
"(2) to accomplish the goals described in paragraph (1) 
through— 
"(A) the strengthening of community capabilities for 
planning and coordinating the use of a broad range of 
Federal, State, local, and other assistance (including pri-
vate resources) related to the elimination of poverty, so 
that this assistance can be used in a mEumer responsive 
to local needs and conditions; 
"(B) the organization of a range of services related 
to the needs of low-income families and individuals, so 
that these services may have a measurable and potentially 
major impact on the causes of poverty in the community 
and may help the families and individuals to achieve self-
sufficiency; 
"(C) the greater use of innovative and effective commu-
nity-based approaches to attacking the causes and effects 
of poverty and of community breakdown; 
"(D) the maximum participation of residents of the 
low-income communities and members of the groups served 
by programs assisted through the block grants made under 
this subtitle to empower such residents and members to 
respond to the unique problems and needs within their 
communities; and 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2729 
"(E) the broadening of the resource base of programs 
directed to the elimination of poverty so as to secure a 
more active role in the provision of services for— 
"(i) private, religious, charitable, and neighbor-
hood-based organizations; and 
"(ii) individual citizens, and business, labor, and 
professional groups, who are able to influence the quan-
tity and quality of opportunities and services for the 
poor. 
*SEC. 673. DEFINITIONS. 
42 USC 9902. 
"In this subtitle: 
"(1) ELIGIBLE ENTITY; FAMILY LITERACY SERVICES.— 
"(A) ELIGIBLE ENTITY.—^The term 'eligible entity' means 
an entity— 
"(i) that is an eligible entity described in section 
673(1) (as in effect on the day before the date of enact-
ment of the Coats Human Services Reauthorization 
Act of 1998) as of the day before such date of enactment 
or is designated by the process described in section 
676A (including an organization serving migrant or 
seasonal farmworkers that is so described or des-
ignated); and 
"(ii) that has a tripartite board or other mechanism 
described in subsection (a) or (b), as appropriate, of 
section 676B. 
"(B) FAMILY LITERACY SERVICES.—The term 'family lit-
eracy services' has the meaning given the term in section 
637 of the Head Start Act (42 U.S.C. 9832). 
"(2) POVERTY LINE.—^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. The Secretary shall revise annually 
(or at 8iny shorter interval the Secretary determines to be 
feasible and desirable) the poverty line, which shall be used 
as a criterion of eligibility in the community services block 
grant program established under this subtitle. The required 
revision shall be accomplished by multiplying the official pov-
erty 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. Whenever a State determines that it serves the objec-
tives of the block grant program established under this subtitle, 
the State may revise the poverty line to not to exceed 125 
percent of the official poverty line otherwise applicable under 
this paragraph. 
"(3) PRIVATE, NONPROFIT ORGANIZATION.—The term 'pri-
vate, nonprofit organization' includes a religious organization, 
to which the provisions of section 679 shall apply. 
"(4) SECRETARY.—^The term 'Secretary* means the Secretary 
of Health and Human Services. 
"(5) STATE.—^The term 'State' means each of the several 
States, the District of Columbia, the Commonwealth of Puerto 
Rico, Guam, the United States Virgin Islands, American Samoa, 
and the Commonwealth of the Northern Mariana Islands. 
112 STAT. 2730 
PUBLIC LAW 105-285—OCT. 27, 1998 
42 use 9903. 
"SEC. 674. AUTHORIZATION OF APPROPRIATIONS. 
"(a) IN GENERAL.—^There are authorized to be appropriated 
such sums as may be necessary for each of fiscal years 1999 through 
2003 to carry out the provisions of this subtitle (other than sections 
681 and 682). 
"(b) RESERVATIONS.—Of the amounts appropriated under sub-
section (a) for each fiscal year, the Secretary shall reserve— 
"(1) V
2 of 1 percent for carrying out section 675A (relating 
to payments for territories); 
'(2) IV2 percent for activities authorized in sections 678A 
through 678F, of which— 
"(A) not less than V2 of the amount reserved by the 
Secretary under this paragraph shall be distributed directly 
to eligible entities, organizations, or associations described 
in section 678A(c)(2) for the purpose of carrying out activi-
ties described in section 678A(c); and 
"(B) V2 of the remainder of the amount reserved by 
the Secretary under this paragraph shall be used by the 
Secretary to carry out evaluation and to assist States in 
carr5dng out corrective action activities and monitoring (to 
correct programmatic deficiencies of eligible entities), as 
described in sections 678B(c) and 678A; and 
"(3) 9 percent for carrying out section 680 (relating to 
discretionary activities) and section 678E(b)(2). 
42 use 9904. 
"SEC. 675. ESTABLISHMENT OF BLOCK GRANT PROGRAM. 
"The Secretary is authorized to establish a community services 
block grant program and make grants through the program to 
States to ameliorate the causes of poverty in communities within 
the States. 
42 use 9905. 
"SEC. 675A. DISTRIBUTION TO TERRITORIES. 
"(a) APPORTIONMENT.—^The Secretary 
shall apportion 
the 
amount reserved under section 674(b)(1) for each fiscal year on 
the basis of need among Guam, American Samoa, the United States 
Virgin Islands, and the Commonwealth of the Northern Mariana 
Islands. 
"(b) APPLICATION.—Each jurisdiction to which subsection (a) 
applies may receive a grant under this section for the amount 
apportioned under subsection (a) on submitting to the Secretary, 
and obtaining approval of, an application, containing provisions 
that describe the programs for which assistance is sought under 
this section, that is prepared in accordance with, and contains 
the information described in, section 676. 
42 use 9906. 
"SEC. 675B. ALLOTMENTS AND PAYMENTS TO STATES. 
"(a) ALLOTMENTS IN GENERAL.—The Secretary shall, from the 
amount appropriated under section 674(a) for each fiscal year that 
remgiins after the Secretary makes the reservations required in 
section 674(b), allot to each State (subject to section 677) 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 yeair 1981 under such section, 
except— 
"(1) that no State shall receive less than V4 of 1 percent 
of the amount appropriated under section 674(a) for such fiscal 
year; and 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2731 
"(2) as provided in subsection (b). 
"(b) ALLOTME^^^s IN YEARS WITH GREATER AVAILABLE FUNDS.— 
"(1) MINIMUM ALLOTMENTS.—Subject to paragraphs (2) and 
(3), if the amount appropriated under section 674(a) for a 
fiscal year that remains after the Secretary makes the reserva-
tions required in section 674(b) exceeds $345,000,000, the Sec-
retary shall allot to each State not less than Vi of 1 percent 
of the simount appropriated under section 674(a) for such fiscal 
year. 
"(2) MAINTENANCE OP FISCAL YEAR 1990 LEVELS.—Paragraph 
(1) shall not apply with respect to a fiscal year if the amount 
allotted under subsection (a) to any State for that year is 
less than the amount allotted under section 674(a)(1) (as in 
effect on September 30, 1989) to such State for fiscal year 
1990. 
"(3) MAXIMUM ALLOTMENTS.—^The amount allotted under 
paragraph (1) to a State for a fiscal year shall be reduced, 
if necessary, so that the aggregate amount allotted to such 
State under such pgiragraph and subsection (a) does not exceed 
140 percent of the aggregate amount allotted to such State 
under the corresponcnng provisions of this subtitle for the 
preceding fiscal year. 
"(c) PAYMENTS.—^The Secretary shall make grants to eligible 
States for the allotments describea in subsections (a) £ind (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. 
"SEC. 675C. USES OF FUNDS. 
42USC9907. 
"(a) 
GRANTS TO ELIGIBLE ENTITIES AND OTHER ORGANIZA-
TIONS.— 
"(1) IN GENERAL.—Not less than 90 percent of the funds 
made available to a State under section 675A or 675B shall 
be used by the State to make grants for the purposes described 
in section 672 to eligible entities. 
"(2) 
OBLIGATIONAL 
AUTHORITY.—Funds 
distributed 
to 
eligible entities through grants made in accordance with para-
graph (1) for a fiscal year shall be available for obligation 
during that fiscal year and the succeeding fiscal year, subject 
to paragraph (3). 
"(3) 
RECAPTURE AND REDISTRIBUTION OP UNOBLIGATED 
FUNDS.— 
"(A) AMOUNT.—Beginning on October 1, 2000, a State 
may recapture and redistribute funds distributed to an 
eligible entity through a grant made under paragraph (1) 
that are unobligated at the end of a fiscal year ii such 
unobligated funds exceed 20 percent of the sonount so 
distributed to such eligible entity for such fiscal year. 
"(B) REDISTRIBUTION.—In redistributing funds recap-
tured in accordance with this paragraph, States shall 
redistribute such funds to an eligible entity, or require 
the original recipient of the funds to redistribute the funds 
to a private, nonprofit organization, located within the 
community served by the original recipient of the funds, 
for activities consistent with the purposes of this subtitle. 
112 STAT. 2732 
PUBLIC LAW 105-285—OCT. 27, 1998 
"(b) STATEwroE ACTIVITIES.— 
"(1) USE OP REMAINDER.—If a State uses less than 100 
percent of the grant or allotment received under section 675A 
or 675B to make grants under subsection (a), the State shall 
use the remainder of the grant or allotment under section 
675A or 675B (subject to paragraph (2)) for activities that 
may include— 
"(A) providing training and technical assistance to 
those entities in need of such training and assistance; 
"(B) coordinating State-operated programs and serv-
ices, and at the option of the State, locally-operated pro-
grams and services, targeted to low-income children and 
families with services provided by eligible entities and other 
organizations funded under this subtitle, including detail-
ing appropriate employees of State or local agencies to 
entities funded under this subtitle, to ensure increased 
access to services provided by such State or local agencies; 
"(C) supporting statewide coordination and communica-
tion among eligible entities; 
"(D) analyzing the distribution of funds made available 
under this subtitle within the State to determine if such 
funds have been targeted to the areas of greatest need; 
"(E) supporting asset-building programs for low-income 
individuals, such 
as programs 
supporting 
individual 
development accounts; 
"(F) supporting innovative programs and activities con-
ducted by community action agencies or other neighbor-
hood-based organizations to eliminate poverty, promote 
self-sufficiency, and promote community revitalization; 
"(G) supporting State charity tax credits as described 
in subsection (c); and 
"(H) supporting other activities, consistent with the 
purposes of this subtitle. 
"(2) ADMINISTRATIVE CAP.—No State may spend more than 
the greater of $55,000, or 5 percent, of the grant received 
under section 675A or State allotment received under section 
675B for administrative expenses, including monitoring activi-
ties. Funds to be spent for such expenses shall be taken from 
the portion of the grant under section 675A or State allotment 
that remains after the State makes grants to eligible entities 
under subsection (a). The cost of activities conducted under 
paragraph (1)(A) shall not be considered to be administrative 
expenses. The startup cost and cost of administrative activities 
conducted under subsection (c) shall be considered to be 
administrative expenses. 
"(c) CHARITY TAX CREDIT.— 
"(1) IN GENERAL.—Subject to paragraph (2), if there is 
in effect under State law a charity tax credit, the State may 
use for any purpose the amount of the allotment that is avail-
able for expenditure under subsection (b). 
"(2) LIMIT.—^The aggregate amount a State may use under 
paragraph (1) during a fiscal year shall not exceed 100 percent 
of the revenue loss of the State during the fiscal year that 
is attributable to the charity tax credit, as determined by 
the Secretary of the Treasury without regard to any such 
revenue loss occurring before January 1, 1999. 
"(3) DEFINITIONS AND RULES.—In this subsection: 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2733 
"(A) CHARITY TAX CREDIT.—^The term 'charity tax credit' 
means a nonrefundable credit against State income tax 
(or, in the case of a State that does not impose an income 
tax, a comparable benefit) that is allowable for contribu-
tions, in cash or in kind, to qualified charities. 
"(B) QUALIFIED CHARITY.— 
"(i) IN GENERAL.—^The term 'quahfied charity' 
means any organization— 
"(I) that is— 
"(aa) described in section 501(c)(3) of the 
Internal Revenue Code of 1986 and exempt 
from tax under section 501(a) of such Code; 
"(bb) an eligible entity; or 
"(cc) a public housing agency as defined 
in section 3(D)(6) of the United States Housing 
Act of 1937 (42 U.S.C. 1437a(b)(6)); 
"(II) that is certified by the appropriate State 
authority as meeting the requirements of clauses 
(iii) and (iv); and 
"(III) if such organization is otherwise required 
to file a return under section 6033 of such Code, 
that elects to treat the information required to 
be furnished by clause (v) as being specified in 
section 6033(b) of such Code. 
"(ii) 
CERTAIN 
CONTRIBUTIONS 
TO 
COLLECTION 
ORGANIZATIONS TREATED AS CONTRIBUTIONS TO QUALI-
FIED CHARITY.— 
"(I) IN GENERAL.—^A contribution to a collection 
organization shall be treated as a contribution to 
a qualified charity if the donor designates in writ-
ing that the contribution is for the qualified char-
ity. 
"(II) COLLECTION ORGANIZATION.—^The term 
'collection organization' means an organization 
described in section 501(c)(3) of such Code and 
exempt from tax under section 501(a) of such 
Code— 
"(aa) that solicits £ind collects gifts and 
grants that, by agreement, are distributed to 
qualified charities; 
"(bb) that distributes to qualified charities 
at least 90 percent of the gifts and grants 
the organization receives that are designated 
for such qualified charities; and 
"(cc) that meets the requirements of clause 
(vi). 
"(iii) 
CHARITY 
MUST 
PRIMARILY 
ASSIST 
POOR 
INDIVIDUALS.— 
"(I) IN GENERAL.—^An orggmization meets the 
requirements of this clause only if the appropriate 
State 
authority 
reasonably 
expects that 
the 
predominant activity of such organization will be 
the provision of direct services within the United 
States to individuals and families whose annual 
incomes generally do not exceed 185 percent of 
the poverty line in order to prevent or alleviate 
poverty among such individuals and families. 
112 STAT. 2734 
PUBLIC LAW 105-285—OCT. 27, 1998 
"(II) N o RECORDKEEPING IN CERTAIN CASES.— 
An organization shall not be required to establish 
or maintain records with respect to the incomes 
of individuals and families for purposes of sub-
clause (I) if such individuals or families are mem-
bers of groups that are generally recognized as 
including substantially only individuals and fami-
lies described in subclause (I). 
"(Ill) FOOD AID AND HOMELESS SHELTERS.— 
Except as otherwise provided by the appropriate 
State authority, for purposes of subclause (I), serv-
ices to individuals in the form of— 
"(aa) donations of food or meals; or 
"(bb) 
temporary 
shelter 
to 
homeless 
individuals; 
shall be treated 
as provided to 
individuals 
described in subclause (I) if the location and provi-
sion of such services are such that the service 
provider may reasonably conclude that the bene-
ficiaries 
of such 
services are 
predominantly 
individuals described in subclause (I), 
"(iv) MINIMUM EXPENSE REQUIREMENT.— 
"(I) IN GENERAL.—^An organization meets the 
requirements of this clause only if the appropriate 
State authority reasonably expects that the annual 
poverty program expenses of such organization will 
not be less man 75 percent of the annual aggregate 
expenses of such organization. 
"(II) POVERTY PROGRAM EXPENSE.—For pur-
poses of subclause (I)— 
"(aa) IN GENERAL.—The term 'poverty pro-
gram expense' means any expense in providing 
direct services referred to in clause (iii). 
"(bb) EXCEPTIONS.—Such term shall not 
include any management or general expense, 
any expense for the purpose of influencing 
legislation (as defined in section 4911(d) of 
the Internal Revenue Code of 1986), any 
expense for the purpose of fundraising, any 
expense for a legal service provided on behalf 
of any individual referred to in clause (iii), 
any expense for providing tuition assistance 
relating to compulsory school attendsuice, and 
any expense that consists of a payment to 
an affiliate of the organization. 
"(v) REPORTING REQUIREMENT.—The information 
required to be furnished under this clause about 2in 
organization is— 
"(I) the percentages determined by dividing 
the following categories of the 
organization's 
expenses for the year by the total expenses of 
the organization for the year: expenses for direct 
services, msinagement expenses, general e^enses, 
fundraising expenses, and payments to affiliates; 
and 
"(II) the category or categories (including food, 
shelter, education, substance abuse prevention or 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2735 
treatment, job training, or other) of services that 
constitute predominant activities of the organiza-
tion. 
"(vi) ADDITIONAL REQUIREMENTS FOR COLLECTION 
ORGANIZATIONS.—^The requirements of this clause are 
metif the organization— 
"(I) maintains separate accounting for reve-
nues and expenses; and 
"(11) msdtes available to the public information 
on the administrative and fundraising costs of the 
organization, and information as to the org£iniza-
tions receiving funds from the organization and 
the amount of such funds. 
"(vii) SPECIAL RULE FOR STATES REQUIRING TAX 
UNIFORMITY.—In the case of a State— 
"(I) that has a constitutional requirement of 
tax uniformity; £ind 
"(II) that, as of December 31, 1997, imposed 
a tax on personal income with— 
"(aa) a single flat rate applicable to all 
earned and unearned income (except insofaur 
as any amount is not taxed pursuant to tax 
forgiveness provisions); and 
"(bb) no generally available exemptions or 
deductions to individuals; 
the requirement of paragraph (2) shall be treated as 
met if the amount of the credit described in paragraph 
(2) is limited to a uniform percentage (but not greater 
than 25 percent) of State personal income tax liability 
(determined without regard to credits). 
"(4) 
LIMITATION ON USE OF FUNDS FOR STARTUP AND 
ADMINISTRATIVE ACTIVITIES.—Except to the extent provided in 
subsection (b)(2), no part of the aggregate amount a State 
uses under paragraph (1) may be used to pay for the cost 
of the startup and administrative activities conducted under 
this subsection. 
"(5) PROHIBmON ON USE OF FUNDS FOR LEGAL SERVICES 
OR TUITION ASSISTANCE.—^No part of the aggregate amount 
a State uses under paragraph (1) may be used to provide 
legal services or to provide tuition assistance related to compul-
sory education requirements (not including tuition assistance 
for tutoring, camps, skills development, or other supplemental 
services or training). 
"(6) PROHIBITION ON SUPPLANTING FUNDS.—No part of the 
aggregate amount a State uses under paragraph (1) may be 
used to supplant non-Federal funds that would be available, 
in the absence of Federal funds, to offset a revenue loss of 
the State attributable to a charity tax credit. 
••SEC. 676. APPLICATION AND PLAN. 
42 USC 9908. 
"(a) DESIGNATION OF LEAD AGENCY.— 
"(1) DESIGNATION.—The chief executive officer of a State 
desiring to receive a grant or allotment under section 675A 
or 675B shall designate, in an application submitted to the 
Secretary under subsection (b), an appropriate State agency 
that complies with the requirements of paragraph (2) to act 
112 STAT. 2736 
PUBLIC LAW 105-285—OCT. 27, 1998 
as a lead agency for purposes of carrying out State activities 
under this subtitle. 
"(2) DUTIES.—The lead agency shall— 
"(A) develop the State plan to be submitted to the 
Secretary under subsection (b); 
"(B) in conjunction with the development of the State 
plan as required under subsection (b), hold at least one 
hearing in the State with sufficient time and statewide 
distribution of notice of such hearing, to provide to the 
public an opportunity to comment on the proposed use 
and distribution of funds to be provided through the grant 
or allotment under section 67oA or 675B for the period 
covered by the State plan; and 
"(C) conduct reviews of ehgible entities under section 
678B. 
"(3) LEGISLATIVE HEARING.—In order to be eligible to 
receive a grant or allotment under section 675A or 675B, the 
State shall hold at least one legislative hearing every 3 years 
in conjunction with the development of the State plan. 
"(b) STATE APPLICATION AND PLAN.—Beginning with fiscal year 
2000, to be eligible to receive a grant or allotment under section 
675A or 675B, a State shall prepare and submit to the Secretary 
an application and State plan covering a period of not less than 
1 fiscal year and not more than 2 fiscal years. The plan 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 tne Secretary shall require, including— 
"(1) an assurance that funds made available through the 
grant or allotment will be used— 
"(A) to support activities that are designed to assist 
low-income famiUes and individuals, including families and 
individuals receiving assistsmce under part A of title IV 
of the Social Security Act (42 U.S.C. 601 et seq.), homeless 
families and individuals, migrant or seasonal farmworkers, 
and elderly low-income individuals and famihes, and a 
description of how such activities will enable the families 
and individuals— 
"(i) to remove obstacles and solve problems that 
block the achievement of self-sufficiency (including self-
sufficiency 
for families 
and individuals who 
are 
attempting to transition off a State program carried 
out under part A of title IV of the Social Security 
Act); 
"(ii) to secure and retain meanin^^l employment; 
"(iii) to attain an adequate education, with particu-
lar attention toward improving literacy skills of the 
low-income families in the communities involved, which 
may include carrying out family hteracy initiatives; 
"(iv) to make better use of available income; 
"(v) to obtain and maintain adequate housing and 
a suitable hving environment; 
"(vi) to obtain emergency assistance through loans, 
grants, or other means to meet immediate and urgent 
family and individual needs; and 
"(vii) to achieve greater participation in the affairs 
of the communities involved, including the development 
of public and private grassroots partnerships with local 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2737 
law enforcement agencies, local housing authorities, 
private foundations, and other public and private part-
ners to— 
"(I) document best practices based on success-
ful grassroots intervention in urban areas, to 
develop methodologies for widespread replication; 
and 
"(11) strengthen and improve relationships 
with local law enforcement agencies, which may 
include participation in activities such as neighbor-
hood or community pohcing efforts; 
"(B) to address the needs of youth in low-income 
commimities through youth development programs that 
support the primary role of the family, give priority to 
the prevention of youth problems and crime, and promote 
increased community coordination and collaboration in 
meeting the needs of youth, and support development and 
expansion of innovative community-based youth develop-
ment programs that have demonstrated success in prevent-
ing or reducing youth crime, such as— 
"(i) programs for the establishment of violence-
free zones that would involve youth development and 
intervention models (such as models involving youth 
mediation, youth mentoring, life skills training, job 
creation, and entrepreneurship programs); and 
"(ii) after-school child care programs; and 
"(C) to make more effective use of, and to coordinate 
with, other programs related to the purposes of this subtitle 
(including State welfare reform efforts); 
"(2) a description of how the State intends to use discre-
tionary funds made available from the remainder of the grant 
or allotment described in section 675C(b) in accordance with 
this subtitle, including a description of how the State will 
support innovative community and neighborhood-based initia-
tives related to the purposes of this subtitle; 
"(3) information provided by eligible entities in the State, 
containing— 
"(A) a description of the service delivery system, for 
services provided or coordinated with funds miade available 
through grants made under section 675C(a), targeted to 
low-income individuals and famiUes in communities within 
the State; 
"(B) a description of how linkages will be developed 
to fill identified gaps in the services, through the provision 
of information, referrals, case management, and foUowup 
consultations; 
"(C) a description of how funds made available through 
grants made under section 675C(a) will be coordinated 
with other public and private resources; and 
"(D) a description of how the local entity will use 
the funds to support innovative community £ind neighbor-
hood-based initiatives related to the purposes of this sub-
title, which may include fatherhood initiatives and other 
initiatives with the goal of strengthening families and 
encouraging effective parenting; 
112 STAT. 2738 
PUBLIC LAW 105-285—OCT. 27, 1998 
"(4) an assurance that eligible entities in the State will 
provide, on an emergency basis, for the provision of such sup-
plies and services, nutritious foods, and related services, as 
may be necessary to counteract conditions of starvation and 
malnutrition among low-income individuals; 
"(5) an assurance that the State and the eligible entities 
in the State will coordinate, and establish linkages between, 
governmental and other social services programs to assure the 
effective delivery of such services to low-income individuals 
and to avoid duplication of such services, and a description 
of how the State and the eligible entities will coordinate the 
provision of employment ana training activities, as defined 
in section 101 of such Act, in the State and in communities 
with entities providing activities through statewide and local 
workforce investment systems under the Workforce Investment 
Act of 1998; 
"(6) an assurance that the State will ensure coordination 
between antipoverty programs in each community in the State, 
and ensure, where appropriate, that emergency energy crisis 
intervention programs under title XXVI (relating to low-income 
home energy assistance) are conducted in such community; 
"(7) an assurance that the State will permit and cooperate 
with Federal investigations undertaken in accordance with sec-
tion 678D; 
"(8) an assurance that any eligible entity in the State 
that received funding in the previous fiscal year through a 
community services block grant made under tnis subtitle will 
not have its funding terminated under this subtitle, or reduced 
below the proportional share of funding the entity received 
in the previous fiscal year unless, after providing notice and 
an opportunity for a hearing on the record, the State determines 
that cause exists for such termination or such reduction, subject 
to review by the Secretary as provided in section 678C;(b); 
"(9) an assurance that the State and eligible entities in 
the State will, to the maximum extent possible, coordinate 
programs with and form partnerships with other organizations 
serving low-income residents of the communities and members 
of the groups served by the State, including religious organiza-
tions, charitable groups, and community organizations; 
"(10) an assurance that the State will require each eligible 
entity in the State to establish procedures under which a low-
income 
individual, 
community 
organization, 
or 
religious 
organization, or representative of low-income individuals that 
considers its organization, or low-income individuals, to be inad-
equately represented on the board (or other mechanism) of 
the eligible entity to petition for adequate representation; 
"(11) an assurance that the State will secure from each 
eligible entity in the State, as a condition to receipt of funding 
by the entity through a community services block grant made 
under this subtitle for a program, a community action plan 
(which shall be submitted to the Secretary, at the request 
of the Secretary, with the State plan) that includes a commu-
nity-needs assessment for the community served, which may 
be coordinated with community-needs assessments conducted 
for other programs; 
"(12) an assurance that the State and all eligible entities 
in the State will, not later than fiscal year 2001, participate 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2739 
in the Results Oriented Management suid Accountability Sys-
tem, £inother performance measure system for which the Sec-
retary facilitated development pursuant to section 678E(b), or 
an alternative system for measuring performance and results 
that meets the requirements of that section, and a description 
of outcome measures to be used to measure eligible entity 
performance in promoting self-sufficiency, family stability, and 
community revitalization; and 
"(13) information describing how the State will carry out 
the assurances described in this subsection. 
"(c) FUNDING TERMINATION OR REDUCTIONS.—For purposes of 
making a determination in accordance with subsection (b)(8) with 
respect to— 
"(1) a funding reduction, the term 'cause' includes— 
"(A) a statewide redistribution of funds provided 
through a community services block grant under this sub-
title to respond to— 
"(i) the results of the most recently available cen-
sus or other appropriate data; 
"(ii) the designation of a new eligible entity; or 
"(iii) severe economic dislocation; or 
"(B) the failure of an eligible entity to comply with 
the terms of an agreement or a State plan, or to meet 
a State requirement, as described in section 678C(a); and 
"(2) a termination, the term 'cause' includes the failure 
of an eligible entity to comply with the terms of an agreement 
or a State plan, or to meet a State requirement, as described 
in section 678C(a). 
"(d) PROCEDURES AND INFORMATION.—The Secretary may pre-
scribe procedures for the purpose of assessing the effectiveness 
of eligible entities in carrying out the purposes of this subtitle. 
"(e) REVISIONS AND INSPECTION.— 
"(1) REVISIONS.—The chief executive officer of each State 
may revise any plan prepared under this section and shall 
submit the revised plan to the Secretary. 
"(2) PUBLIC INSPECTION.—Each plan or revised plan pre-
pared under this section shall be made available for public 
inspection within the State in such a manner as will facilitate 
review of, £ind comment on, the plan. 
"(f) TRANSITION.—^For fiscal year 2000, to be eligible to receive 
a grant or allotment under section 675A or 675B, a State shall 
prepare and submit to the Secretary an application and State 
plan in accordance with the provisions of this subtitle (as in effect 
on the day before the date of enactment of the Coats Human 
Services Reauthorization Act of 1998), rather than the provisions 
of subsections (a) through (c) relating to applications and plans. 
"SEC. e76A. DESIGNATION AND REDESIGNATION OF ELIGIBLE ENTI- 
42 USC 9909. 
TIES IN UNSERVED AREAS. 
"(a) QUALIFIED ORGANIZATION IN OR NEAR AREA.— 
"(1) IN GENERAL.—If any geographic area of a State is 
not, or ceases to be, served by an eligible entity under this 
subtitle, and if the chief executive officer of the State decides 
to serve such area, the chief executive officer may solicit 
applications from, and designate as an eligible entity— 
"(A) a private nonprofit organization (which may 
include an eligible entity) that is geographically located 
112 STAT. 2740 
PUBLIC LAW 105-285—OCT. 27, 1998 
in the unserved area, that is capable of providing a broad 
range of services designed to eliminate poverty and foster 
self-sufficiency, and that meets the requirements of this 
subtitle; and 
"(B) a private nonprofit eligible entity that is geo-
graphically located in an area contiguous to or within 
reasonable proximity of the unserved area and that is 
already providing related services in the unserved area. 
"(2) REQUIREMENT.—In order to serve as the eligible entity 
for the area, an entity described in paragraph (1)(B) shall 
agree to add additional members to the board of the entity 
to ensure adequate representation— 
"(A) in each of the three required categories described 
in subparagraphs (A), (B), £ind (C) of section 676B(a)(2), 
by members that reside in the community comprised by 
the unserved area; and 
"(B) in the category described in section 676B(a)(2)(B), 
by members that reside in the neighborhood to be served. 
"(b) SPECIAL CONSIDERATION.—In designating an eligible entity 
under subsection (a), the chief executive officer shall grant the 
designation to an organization of demonstrated effectiveness in 
meeting the goals and purposes of this subtitle and may give 
priority, in granting the designation, to eligible entities that are 
providing related services in the unserved area, consistent with 
the needs identified by a community-needs assessment. 
"(c) No 
QUALIFIED ORGANIZATION IN OR NEAR AREA.—If no 
private, nonprofit organization is identified or determined to be 
qualified under subsection (a) to serve the unserved area as an 
eligible entity the chief executive officer may designate an appro-
priate political subdivision of the State to serve as an eligible 
entity for the area. In order to serve as the eligible entity for 
that area, the political subdivision shall have a board or other 
mechanism as required in section 676B(b). 
42 use 9910. 
"SEC. 676B. TRIPARTITE BOARDS. 
"(a) PRIVATE NONPROFIT ENTITIES.— 
"(1) BOARD.—In order for a private, nonprofit entity to 
be considered to be an eligible entity for purposes of section 
673(1), the entity shall admmister the community services block 
grant program through a tripartite board described in para-
graph (2) that fully participates in the development, planning, 
implementation, and evaluation of the program to serve low-
income communities. 
"(2) SELECTION AND COMPOSITION OP BOARD.—^The members 
of the board referred to in paragraph (1) shall be selected 
by the entity and the board shall be composed so as to assure 
thatr— 
"(A) Vs of the members of the board are elected public 
officials, holding office on the date of selection, or their 
representatives, except that if the number of such elected 
officials reasonably available and willing to serve on the 
board is less than Va of the membership of the board, 
membership on the board of appointive public officials or 
their representatives may be counted in meeting such Vs 
requirement; 
"(B)(i) not fewer than Va of the members are persons 
chosen in accordance with democratic selection procedures 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2741 
adequate to assure that these members are representative 
of low-income individuals £ind families in the neighborhood 
served; and 
"(ii) each representative of low-income individuals and 
families selected to represent a specific neighborhood 
within a community under clause (i) resides in the 
neighborhood represented by the member; and 
"(C) the remainder of the members are officials or 
members of business, industry, labor, religious, law enforce-
ment, education, or other major groups and interests in 
the community served. 
"(b) PUBLIC ORGANIZATIONS.—In order for a public organization 
to be considered to be an eligible entity for purposes of section 
673(1), the entity shall administer the community services block 
grant program through— 
"(1) a tripartite board, which shall have members selected 
by the organization and shall be composed so as to assure 
that not fewer than Vs of the members are persons chosen 
in accordance with democratic selection procedures adequate 
to assure that these members— 
"(A) are representative of low-income individuals and 
families in the neighborhood served; 
"(B) reside in the neighborhood served; and 
^ 
"(C) are able to participate actively in the development, 
planning, implementation, and evaluation of programs 
funded under this subtitle; or 
"(2) another mechanism specified by the State to assure 
decisionmaking and participation by low-income individuals in 
the development, planning, implementation, and evaluation of 
programs funded under this subtitle. 
"SEC. 677. PAYMENTS TO INDIAN TRIBES. 
42 USC 9911. 
"(a) 
RESERVATION.—If, 
with 
respect 
to 
any 
State, 
the 
Secretary— 
"(1) receives a request from the governing body of an Indian 
tribe or tribal organization within the State that assistance 
under this subtitle be made directly to such tribe or organiza-
tion; and 
"(2) determines that the members of such tribe or tribal 
organization would be better served by means of grants made 
directly to provide benefits under this subtitle, 
the Secretary shall reserve from amounts that would otherwise 
be allotted to such State under section 675 
B for the fiscal year 
the amount determined under subsection (b). 
"(b) 
DETERMINATION OF RESERVED AMOUNT.—The Secretary 
shall reserve for the purpose of subsection (a) from amounts that 
would otherwise be allotted to such State, not less than 100 percent 
of an amount that bears the same ratio to the State allotment 
for the fiscal year involved as the population of all eligible Indians 
for whom a determination has been made under subsection (a) 
bears to the population of all individuals eligible for assistance 
through a community services block grant made under this subtitle 
in such State. 
"(c) AWARDS.—The sums reserved by the Secretary on the basis 
of a determination made under subsection (a) shall be made avail-
able by grant to the Indian tribe or tribal organization serving 
the individuals for whom such a determination has been made. 
- 33: QL 3 Part 4 
112 STAT. 2742 
PUBLIC LAW 105-285—OCT. 27, 1998 
"(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) DEFINITIONS.—In this section: 
"(1) 
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. 
"(2) INDIAN.—^The term 'Indian' means a member of an 
Indian tribe or of a tribal organization. 
42 use 9912. 
"SEC. 678. OFFICE OF COMMUNITY SERVICES. 
Establishment. 
"(a) OFFICE.—^The Secretary shall carry out the functions of 
this subtitle through an Office of Community Services, which shall 
be established in the Department of Health and Human Services. 
The Office shall be headed by a Director. 
"(b) GRANTS, CONTRACTS, AND COOPERATIVE AGREEMENTS.— 
The Secretary shall carry out functions of this subtitle through 
grants, contracts, or cooperative agreements. 
42 use 9913. 
"SEC. 678A. TRAINING, TECHNICAL ASSISTANCE, AND OTHER ACTIVI-
TIES. 
"(a) ACTIVITIES.— 
"(1) IN GENERAL.—The Secretary shall use amounts 
reserved in section 674(b)(2)— 
"(A) for training, technical 
assistance, 
planning, 
evaluation, and performance measurement, to assist States 
in carrying out corrective action activities and monitoring 
(to correct programmatic deficiencies of eligible entities), 
and for reporting and data collection activities, related 
to programs carried out under this subtitle; and 
"(B) to distribute amounts in accordance with sub-
section (c). 
"(2) GRANTS, CONTRACTS, AND COOPERATIVE AGREEMENTS.— 
The activities described in paragraph (1)(A) may be carried 
out by the Secretary through grants, contracts, or cooperative 
agreements with appropriate entities. 
"(b) TERMS AND TECHNICAL ASSISTANCE PROCESS.—The process 
for determining the training and technical assistance to be carried 
out under this section shall— 
"(1) ensure that the needs of eligible entities and programs 
relating to improving program quality (including quality of 
financial management practices) are addressed to the maximum 
extent feasible; and 
"(2) incorporate mechanisms to ensure responsiveness to 
local needs, including an ongoing procedure for obtaining input 
from the national and State networks of eligible entities. 
"(c) DISTRIBUTION REQUIREMENT.— 
"(1) IN GENERAL.—^The amounts reserved under section 
674(b)(2)(A) for activities to be carried out under this subsection 
shall be distributed directly to eligible entities, organizations, 
or associations described in paragraph (2) for the purpose of 
improving program quality (including quality of 
financial 
management practices), management information and reporting 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2743 
systems, and measurement of program results, and for the 
purpose of ensuring responsiveness to identified local needs. 
"(2) ELIGIBLE ENTITIES, ORGANIZATIONS, OR ASSOCIATIONS.— 
Eligible entities, organizations, or associations described in this 
paragraph shall be eligible entities, or statewide or local 
organizations or associations, with demonstrated expertise in 
providing training to individuals and organizations on methods 
of effectively addressing the needs of low-income families and 
communities. 
"SEC. 678B. MONITORING OF ELIGIBLE ENTITIES. 
42 USC 9914. 
"(a) IN GENERAL.—In order to determine whether eligible enti-
ties meet the performance goals, administrative standards, financial 
management requirements, and other requirements of a State, the 
State shall conduct the following reviews of eligible entities: 
"(1) A full onsite review of each such entity at least once 
during each 3-year period. 
"(2) An onsite review of each newly designated entity imme-
diately after the completion of the first year in which such 
entity receives funds through the community services block 
grant program. 
"(3) FoUowup reviews including prompt return visits to 
eligible entities, and their programs, that fail to meet the 
goals, standards, and requirements established by the State. 
"(4) Other reviews as appropriate, including reviews of 
entities with programs that have had other Federal, State, 
or local grants (other than assistance provided under this sub-
title) terminated for cause. 
"(b) REQUESTS.—^The State may request training and technical 
assistance from the Secretary as needed to comply with the require-
ments of this section. 
"(c) EVALUATIONS BY THE SECRETARY.—The Secretary shall con-
duct in several States in each fiscal year evaluations (including 
investigations) of the use of funds received by the States under 
this subtitle in order to evaluate compUance with the provisions 
of this subtitle, and especially with respect to compliance with 
section 676(b). The Secretsuy shall submit, to each State evaluated. Reports. 
a report containing the results of such evaluations, and rec-
ommendations of improvements designed to enhance the benefit 
and impact of the activities carried out with such funds for people 
in neea. On receiving the report, the State shall submit to the 
Secretary a plan of action in response to the recommendations 
contained in the report. The results of the evaluations shall be 
submitted annually to the Chairperson of the Committee on Edu-
cation and the Workforce of the House of Representatives and 
the Chairperson of the Committee on Labor and Human Resources 
of the Senate as part of the report submitted by the Secretary 
in accordsince with section 678E(b)(2). 
**SEC. 678C. CORRECTIVE ACTION; TERMINATION AND REDUCTION OF 42 USC 9915. 
FUNDING. 
"(a) DETERMINATION.—If the State determines, on the basis 
of a final decision in a review pursuant to section 678B, that 
an eligible entity fails to comply with the terms of an agreement, 
or the State plan, to provide services under this subtitle or to 
meet appropriate standards, goals, and other requirements estab-
lished by the State (including performance objectives), the State 
shall— 
112 STAT. 2744 
PUBLIC LAW 105-285—OCT. 27, 1998 
"(1) inform the entity of the deficiency to be corrected; 
"(2) require the entity to correct the deficiency; 
"(3)(A) offer training and technical assistance, if appro-
priate, to help correct the deficiency, and prepare and submit 
to the Secretary a report describing the training and technical 
assistance offered; or 
"(B) if the State determines that such training and tech-
nical assistance are not appropriate, prepare and submit to 
the Secretary a report stating the reasons for the determination; 
"(4)(A) at the discretion of the State (taking into account 
the seriousness of the deficiency and the time reasonably 
required to correct the deficiency), allow the entity to develop 
and implement, within 60 days after being informed of the 
deficiency, a quality improvement plan to correct such defi-
ciency within a reasonable period of time, as determined by 
the State; and 
"(B) not later than 30 days after receiving fi*om an eligible 
entity a proposed^ quality improvement plan pursuant to 
subparagraph (A), either approve such proposed plan or specify 
the reasons why the proposed plan cannot be approved; and 
"(5) after providing adequate notice and an opportunity 
for a hearing, initiate proceedings to terminate the designation 
of or reduce the funding under this subtitle of the eligible 
entity unless the entity corrects the deficiency. 
"(b) REVIEW.—^A determination to terminate the designation 
or reduce the funding of an eligible entity is reviewable by the 
Secretary. The Secretary shall, upon request, review such a deter-
Deadline. 
mination. The review shall be completed not later than 90 days 
after the Secretary receives from the State all necessary documenta-
tion relating to the determination to terminate the designation 
or reduce the funding. If the review is not completed within 90 
days, the determination of the State shall become final at the 
end of the 90th day. 
"(c) DIRECT ASSISTANCE.—Whenever a State violates the assur-
ances contained in section 676(b)(8) and terminates or reduces 
the funding of an eligible entity prior to the completion of the 
State hearing described in that section and the Secretary's review 
as required in subsection (b), the Secretary is authorized to provide 
financial assistance under this subtitle to the eligible entity affected 
until the violation is corrected. In such a case, the grant or allotment 
for the State under section 675A or 675B for the earliest appropriate 
fiscal year shall be reduced by an amount equal to the funds 
provided under this subsection to such eligible entity. 
42 use 9916. 
"SEC. 678D. FISCAL CONTROLS, AUDITS, AND WITHHOLDING. 
"(a) 
FISCAL CONTROLS, PROCEDURES, AUDITS, AND INSPEC-
TIONS.— 
"(1) IN GENERAL.—A State that receives funds under this 
subtitle shall— 
"(A) establish fiscal control and fund accounting proce-
dures necessary to assure the proper disbursal of £ind 
accounting for Federal funds paid to the State under this 
subtitle, including procedures for monitoring the funds pro-
vided under this suDtitle; 
"(B) ensure that cost and accounting standards of the 
Ofiice of Management and Budget apply to a recipient 
of the funds under this subtitle; 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2745 
"(C) subject to paragraph (2), prepare, at least every 
year, an audit of the expenditures of the State of amounts 
received under this subtitle and amounts transferred to 
carry out the purposes of this subtitle; and 
"(D) make appropriate books, documents, papers, and 
records available to the Secretary and the Comptroller 
General of the United States, or any of their duly author-
ized representatives, for examination, copjdng, or mechani-
cal reproduction on or off the premises of the appropriate 
entity upon a reasonable request for the items. 
"(2) AUDITS.— 
"(A) IN GENERAL.—Subject to subparagraph (B), each 
audit required by subsection (a)(1)(C) shall be conducted 
by an entity independent of any agency administering 
activities or services carried out under this subtitle and 
shall be conducted in accordance with generally accepted 
accounting principles. 
"(B) SINGLE AUDIT REQUIREMENTS.—^Audits shall be 
conducted under this paragraph in the manner and to 
the extent provided in chapter 75 of title 31, United States 
Code (commonly known as the 'Single Audit Act Amend-
ments of 1996'). 
"(C) SUBMISSION OP COPIES.—Within 30 days after the 
completion of each such audit in a State, the chief executive 
officer of the State shall submit a copy of such audit to 
any eligible entity that was the subject of the audit at 
no charge, to the legislature of the State, and to the Sec-
retary. 
"(3) REPAYMENTS.—The State shall repay to the United 
States amounts found not to have been expended in accordance 
with this subtitle or the Secretary may offset such amounts 
against any other amount to which the State is or may become 
entitled under this subtitle. 
"(b) WITHHOLDING.— 
"(1) IN GENERAL.—^The Secretary shall, after providing ade-
quate notice and an opportunity for a hearing conducted within 
the affected State, withhold funds from any State that does 
not utilize the grant or allotment under section 675A or 675B 
in accordance with the provisions of this subtitle, including 
the assurances such State provided under section 676. 
"(2) 
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 funds in accordance with the provisions of this subtitle, 
including the assurances provided by the State under section 
676. For purposes of this paragraph, a complaint of a failure 
to meet any one of the assurances provided under section 
676 that constitutes disregarding that assurance shall be 
considered to be a complaint of a serious nature. 
"(3) INVESTIGATIONS.—Whenever the Secretary determines 
that there is a pattern of complaints of failures described in 
paragraph (2) from any State in any fiscal year, the Secretary 
shall conduct an investigation of the use of funds received 
under this subtitle by such State in order to ensure compUance 
with the provisions of this subtitle. 
112 STAT. 2746 
PUBLIC LAW 105-285—OCT. 27, 1998 
42 use 9917. 
"SEC. 678E. ACCOUNTABILITY AND REPORTING REQUIREMENTS. 
"(a) STATE ACCOUNTABILITY AND REPORTING REQUIREMENTS.— 
"(1) PERFORMANCE MEASUREMENT.— 
"(A) IN GENERAL.—By October 1, 2001, each State that 
receives funds under this subtitle shall participate, and 
shall ensure that all eligible entities in the State partici-
pate, in a performance measurement system, which may 
be a performance measurement system for which the Sec-
retary facilitated development pursuant to subsection (b), 
or an alternative system that the Secretary is satisfied 
meets the requirements of subsection (b). 
"(B) LOCAL AGENCIES.—The State may elect to have 
local agencies that are subcontractors of the eligible entities 
under this subtitle participate in the performance measure-
ment system. If the State makes that election, references 
in this section to eligible entities shall be considered to 
include the local agencies. 
"(2) ANNUAL REPORT.—Each State shall annually prepare 
and submit to the Secretary a report on the measured perform-
ance of the State and the eligible entities in the State. Prior 
to the participation of the State in the performance measure-
ment system, the State shall include in the report any informa-
tion collected by the State relating to such performance. Each 
State shall also include in the report an accounting of the 
expenditure of funds received by the State through the commu-
nity services block grant program, including an accounting 
of funds spent on administrative costs by the State and the 
eligible entities, and funds spent by eligible entities on the 
direct delivery of local services, and shall include information 
on the number of and characteristics of clients served under 
this subtitle in the State, based on data collected from the 
eligible entities. The State shall also include in the report 
a summary describing the training and technical assistance 
offered by the State under section 678C(a)(3) during the year 
povered by the report. 
"(b) 
SECRETARY'S ACCOUNTABILITY AND REPORTING REQUIRE-
MENTS.— 
"(1) 
PERFORMANCE 
MEASUREMENT.—^The Secretary, 
in 
collaboration with the States and with eligible entities through-
out the Nation, shall facilitate the development of one or more 
model performance measurement systems, which may be used 
by the States and by eligible entities to measure their perform-
ance in carrying out the requirements of this subtitle and 
in achieving the goals of their community action plans. The 
Secretary shall provide technical assistance, including support 
for the enhancement of electronic data systems, to States and 
to eligible entities to enhance their capability to collect and 
report data for such a system and to aid in their participation 
in such a system. 
"(2) REPORTING REQUIREMENTS.—At the end of each fiscal 
year beginning after September 30, 1999, the Secretary shall, 
directly or by grant or contract, prepare a report containing— 
"(A) a summary of the planned use of funds by each 
State, £uid the eligible entities in the State, under the 
community services block grant program, as contained in 
each State plan submitted pursuaint to section 676; 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2747 
"(B) a description of how funds were actually spent 
by the State and eligible entities in the State, including 
a breakdown of funds spent on administrative costs and 
on the direct delivery of local services by eligible entities; 
"(C) information on the number of entities eligible for 
funds under this subtitle, the number of low-income persons 
served under this subtitle, £uid such demographic data 
on the low-income populations served by eligible entities 
as is determined by the Secretary to be feasible; 
"(D) a comparison of the planned uses of funds for 
each State and the actual uses of the funds; 
"(E) a summary of each State's performance results, 
and the results for the eligible entities, as collected and 
submitted by the States in accordance with subsection 
(a)(2); and 
"(F) any additional information that the Secretary 
considers to be appropriate to carry out this subtitle, if 
the Secretary informs the States of the need for such addi-
tional information and allows a reasonable period of time 
for the States to collect and provide the information. 
"(3) SUBMISSION.—^The Secretary shall submit to the 
Committee on Education and the Workforce of the House of 
Representatives £uid the Committee on Labor and Human 
Resources of the Senate the report described in paragraph 
(2), and any comments the Secretary may have with respect 
to such report. The report shall include definitions of direct 
and administrative costs used by the Department of Health 
and Human Services for programs funded under this subtitle. 
"(4) COSTS.—Of the funds reserved under section 674(b)(3), 
not more than $350,000 shall be available to carry out the 
reporting requirements contained in paragraph (2). 
"SEC. 678F. LIMITATIONS ON USE OF FUNDS. 
42USC9918. 
"(a) CONSTRUCTION OF FACiLmEs.— 
"(1) LIMITATIONS.—Except as provided in paragraph (2), 
grants made under this subtitle (otner than amounts reserved 
under section 674(b)(3)) may not be used by the State, or 
by any other person with which the State makes arrangements 
to carry out the purposes of this subtitle, for the purchase 
or improvement of land, or the purchase, construction, or 
permanent improvement 
(other than 
low-cost 
residential 
weatherization or other energy-related home repairs) of any 
building or other facility. 
"(2) WAIVER.—The Secretary may waive the limitation con-
tained 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 of land or the construction 
of facilities (or the making of permanent improvements) and 
that permitting the waiver will contribute to the ability of 
the State to carry out the purposes of this subtitle. 
"(b) POLITICAL ACTIVITIES.— 
"(1) TREATMENT AS A STATE OR LOCAL AGENCY.—For pur-
poses 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 assist-
ance under this subtitle shall be deemed to be a State or 
local agency. For purposes of paragraphs (1) and (2) of section 
112 STAT. 2748 
PUBLIC LAW 105-285—OCT. 27, 1998 
Notification. 
1502(a) of such title, any entity receiving assist£ince under 
this subtitle shall be deemed to be a State or local agency. 
"(2) PROHIBITIONS.—Programs assisted under this subtitle 
shall not be carried on in a manner involving the use of program 
funds, the provision of services, or the employment or assign-
ment of personnel, in a manner supporting or resulting in 
the identification of such programs with— 
"(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; 
XB) any activity to provide voters or prospective voters 
with transportation to the polls or similar assistance in 
connection with any such election; or 
"(C) any voter registration activity. 
"(3) RULES AND REGULATIONS.—^The Secretary, after con-
sultation with the Office of Personnel Management, shall issue 
rules and regulations to provide for the enforcement of this 
subsection, which shall include provisions for summary suspen-
sion of assistance or other action necessary to permit enforce-
ment on an emergency basis. 
"(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 or activity 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 (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 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 or activity. 
"(2) ACTION OF SECRETARY.—^Whenever the Secretary deter-
mines that a State that has received a payment under this 
subtitle has failed to comply with paragraph (1) or ein 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. 12131 et seq.), as may be appHcable; 
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 pairae^aph (2), 
or whenever the Attorney General has reason to believe that 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2749 
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 
"SEC. eVSG. DRUG AND CHILD SUPPORT SERVICES AND REFERRALS. 
42 USC 9919. 
"(a) DRUG TESTING AND REHABILITATION.— 
"(1) IN GENERAL.—Nothing in this subtitle shall be con-
strued to prohibit a State from testing participants in programs, 
activities, 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) ADMINISTRATIVE EXPENSES.—^Any funds provided under 
this subtitle expended for such testing shall be considered 
to be expended for administrative expenses and shall be subject 
to the limitation specified in section 675C(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 grant under 
section 67 5C, such entity shall— 
"(1) inform custodial parents in single-parent families that 
participate in programs, activities, 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. 
"SEC. 679. OPERATIONAL RULE. 
42 USC 9920. 
"(a) 
RELIGIOUS ORGANIZATIONS INCLUDED AS NONGOVERN-
MENTAL 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 non-
governmental organizations, religious organizations to provide the 
assistance under the program, so long as the program is imple-
mented 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 pro-
vides assistance under, or applies to provide assistance under, this 
subtitle, on the basis that the orgsinization 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 676B; or 
112 STAT. 2750 
PUBLIC LAW 105-285—OCT. 27, 1998 
"(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-l) regarding employment practices 
shall not be affected by its participation in, or receipt of funds 
from, programs described in subsection (a). 
"(c) LIMITATIONS ON USE OP 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. 
"(d) FISCAL ACCOUNTABILITY.— 
"(1) IN GENERAL.—Except as provided in paragraph (2), 
any religious organization providing assistsince under any pro-
gram 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. 
"(e) TREATMENT OF ELIGIBLE ENTITIES AND OTHER INTERMEDI-
ATE ORGANIZATIONS.—If an eligible entity or other organization 
(referred to in this subsection as £in '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 nongovern-
mental 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. 
42 use 9921. 
"SEC. 680. DISCRETIONARY AUTHORITY OF THE SECRETARY. 
"(a) GRANTS, CONTRACTS, ARRANGEMENTS, LOANS, AND GUARAN-
TEES.— 
"(1) IN GENERAL.—^The Secretary shall, from funds reserved 
under section 674(b)(3), make grants, loans, or guarantees to 
States and public agencies and private, nonprofit organizations, 
or enter into contracts or jointly financed cooperative arrange-
ments with States and public agencies and private, nonprofit 
organizations (and for-profit organizations, to the extent speci-
fied in paragraph (2)(E)) for each of the objectives described 
in paragraphs (2) through (4). 
"(2) COMMUNITY ECONOMIC DEVELOPMENT.— 
"(A) ECONOMIC DEVELOPMENT ACTIVITIES.—^The Sec-
retary shall make grants described in paragraph (1) on 
a competitive basis to private, nonprofit organizations that 
are community development corporations to provide tech-
nical and financial assistance for economic development 
activities designed to address the economic needs of low-
income individuals and families by creating emplo3nnient 
and business development opportunities. 
"(B) CONSULTATION.—^The Secretary shall exercise the 
authority provided under subparagraph (A) after consulta-
tion with other relevant Federal officials. 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2751 
"(C) GOVERNING BOARDS.—For a community develop-
ment corporation to receive funds to carry out this para-
graph, 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 develop-
ment corporations in developing or implementing activities 
funded to carry out this paragraph and to evaluate activi-
ties funded to carry out tms 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 train-
ing 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 further-
ing the purposes of this subtitle, and which may include provid-
ing 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 Records, 
report containing a summanr of the evaluations required in sub-
section (b) and a Usting 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 Labor 
and Human Resources of the Senate. 
112 STAT. 2752 
PUBLIC LAW 105-285—OCT. 27, 1998 
42 use 9922. 
**SEC. 681. COMMUNITY FOOD AND NUTRITION PROGRAMS. 
"(a) GRANTS.—^The Secretary may, through grants to public 
and private, nonprofit agencies, provide for community-based, local, 
statewide, and national programs— 
"(1) to coordinate private and public food assistance 
resources, wherever the grant recipient involved determines 
such coordination to be inadequate, to better serve low-income 
populations; 
"(2) to assist low-income communities to identify potential 
sponsors of child nutrition programs and to initiate such pro-
grams in underserved or unserved areas; and 
"(3) to develop innovative approaches at the State and 
local level to meet the nutrition needs of low-income individuals. 
"(b) ALLOTMENTS AND DISTRIBUTION OF FUNDS,— 
"(1) NOT TO EXCEED $6,000,000 IN APPROPRIATIONS.—Of the 
amount appropriated for a fiscal year to carry out this section 
(but not to exceed $6,000,000), the Secretary shall distribute 
fimds for grants under subsection (a) as follows: 
"(A) ALLOTMENTS.—^From a portion equal to 60 percent 
of such amount (but not to exceed $3,600,000), the Sec-
retary shall allot for grants to eligible agencies for state-
wide programs in each State the amount that bears the 
same ratio to such portion as the low-income and 
unemployed population of such State bears to the low-
income and unemployed population of all the States. 
"(B) COMPETITIVE GRANTS.—From a portion equal to 
40 percent of such amount (but not to exceed $2,400,000), 
the Secretary shall make grants on a competitive basis 
to eligible agencies for local and statewide programs. 
"(2) GREATER AVAILABLE APPROPRL\TIONS.—Any amounts 
appropriated for a fiscal year to carry out this section in excess 
of $6,000,000 shall be allotted as follows: 
"(A) ALLOTMENTS.—^The Secretary shall use 40 percent 
of such excess to allot for grants under subsection (a) 
to eligible agencies for statewide programs in each State 
an amount that bears the same ratio to 40 percent of 
such excess as the low-income and unemployed population 
of such State bears to the low-income and unemployed 
population of all the States. 
"(B) COMPETITIVE GRANTS FOR LOCAL AND STATEWIDE 
PROGRAMS.—The Secretary shall use 40 percent of such 
excess to make grants under subsection (a) on a competitive 
basis to eligible agencies for local and statewide programs. 
"(C) 
COMPETITIVE 
GRANTS 
FOR 
NATIONWIDE 
PRO-
GRAMS.—^The Secretary shall use the remaining 20 percent 
of such excess to make grants under subsection (a) on 
a competitive basis to eligible agencies for nationwide pro-
grams, including programs benefiting Indians, as defined 
in section 677, and migrant or seasonal farmworkers. 
"(3) 
ELIGIBILITY FOR ALLOTMENTS FOR STATEWIDE PRO-
GRAMS.—^To be eligible to receive an allotment under paragraph 
(1)(A) or (2)(A), an eligible agency shall demonstrate that the 
proposed program is statewide in scope and represents a com-
prehensive and coordinated effort to alleviate hunger within 
the State. 
"(4) MINIMUM ALLOTMENTS FOR STATEWIDE PROGRAMS.— 
-tiSSJUS**'?!.! «'».»r>4"S'. 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2753 
"(A) IN GENEBAL.—From the amounts allotted under 
paragraphs (1)(A) and (2)(A), the minimum total allotment 
tor each State for each fiscal year shall be— 
"(i) $15,000 if the total amount appropriated to 
carry out this section is not less than $7,000,000 but 
less than $10,000,000; 
"(ii) $20,000 if the total gimount appropriated to 
c£irry out this section is not less than $10,000,000 
but less than $ 15,000,000; or 
"(iii) $30,000 if the total amount appropriated to 
carry out this section is not less than $15,000,000. 
"(B) DEPINTTION.—In this paragraph, the term 'State' 
does not include Guam, American Samoa, the United States 
Virgin Islands, and the Commonwealth of the Northern 
Mariana Islands. 
"(5) MAXIMUM GRANTS.—From funds made available under 
paragraphs (1)(B) and (2)(B) for any fiscal year, the Secretary 
may not make grants under subsection (a) to an eligible agency 
in an aggregate amount exceeding $50,000. From funds made 
available under paragraph (2)(C) for any fiscal year, the Sec-
retary may not make grants under subsection (a) to an eligible 
agency in an aggregate amount exceeding $300,000. 
"(c) REPORT.—For each fiscal year, the Secretary shall prepare 
and submit, to the Committee on Education and the Workforce 
of the House of Representatives and the Committee on Labor and 
Human Resources of the Senate, a report concerning the grsints 
made under this section. Such report shall include— 
"(1) a list of grant recipients; 
Records. 
"(2) information on the amount of funding awarded to 
each grant recipient; and 
"(3) a summary of the activities performed by the grant 
recipients with funding awarded under this section and a 
description of the memner in which such activities meet the 
objectives described in subsection (a). 
"(d) AUTHORIZATION OF APPROPRIATIONS.—There are authorized 
to be appropriated to carry out this section such sums as may 
be necessary for each of fiscal years 1999 through 2003. 
"SEC. 682. NATIONAL OR 
REGIONAL PROGRAMS DESIGNED TO 
42 USC 9923. 
PROVIDEINSTRUCTIONAL ACTIVITIES FOR LOW-INCOME 
YOUTH. 
"(a) GENERAL AUTHORITY.—^The Secretary is authorized to make 
a grant to an eligible service provider to administer national or 
regional programs to provide instructional activities for low-income 
youth. In making such a grant, the Secretary shall give priority 
to eligible service providers that have a demonstrated ability to 
operate such a program. 
"(b) PROGRAM REQUIREMENTS.—^Any instructional activity car-
ried out by an eligible service provider receiving a grant under 
this section shall be carried out on the campus of an institution 
of higher education (as defined in section 1201(a) of the Higher 
Education Act of 1965 (20 U.S.C. 1141(a))) and shall include— 
"(1) access to the facilities and resources of such an institu-
tion; 
"(2) an initial medical examination and follow-up referral 
or treatment, without charge, for youth during their participa-
tion in such activity; 
112 STAT. 2754 
PUBLIC LAW 105-285—OCT. 27, 1998 
"(3) at least one nutritious meal daily, without charge, 
for participating youth during each day of participation; 
"(4) high quality instruction in a variety of sports (that 
shall include swimming and that may include dance and any 
other high quality recreational activity) provided by coaches 
and teachers from institutions of higher education and from 
elementary and secondsiry schools (as defined in section 14101 
of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 8801)); and 
"(5) enrichment instruction and information on matters 
relating to the well-being of youth, to include educational 
opportunities and information on study practices, education 
for the prevention of drug and alcohol abuse, and information 
on health and nutrition, career opportunities, and family and 
job responsibilities. 
"(c) ADVISORY COMMITTEE; PARTNERSHIPS.—The ehgible service 
provider shall, in each community in which a program is funded 
under this section— 
"(1) ensure that— 
"(A) a community-based advisory committee is estab-
lished, with representatives from local youth, family, and 
social service organizations, schools, entities providing park 
and 
recreation 
services, and 
other 
community-based 
organizations serving high-risk youth; or 
"(B) an existing community-based advisory board, 
commission, or committee with similar membership is uti-
lized to serve as the committee described in subparagraph 
(A); and 
"(2) enter into formal partnerships with youth-serving 
organizations or other appropriate social service entities in 
order to link program participants with year-round services 
in their home communities that support and continue the objec-
tives of this subtitle. 
"(d) ELIGIBLE PROVIDERS.—^A service provider that is a national 
private, nonprofit organization, a coalition of such organizations, 
or a private, nonprofit organization applying jointly with a business 
concern shall be eligible to apply for a grant under this section 
if— 
"(1) the applicant has demonstrated experience in operating 
a program providing instruction to low-income youth; 
"(2) the applicant agrees to contribute an amount (in cash 
or in kind, fairly evaluated) of not less than 25 percent of 
the amount requested, for the program funded through the 
grant; 
"(3) the applicant agrees to use no funds from a grant 
authorized under this section for administrative expenses; and 
"(4) the applicant agrees to comply with the regulations 
or program guidelines promulgated by the Secretary for use 
of funds made available through the grant. 
"(e) APPLICATION PROCESS.—To be eligible to receive a grant 
under this section, a service provider shall submit to the Secretary, 
for approval, an application at such time, in such manner, and 
containing such information as the Secretary may require. 
"(f) 
PROMULGATION OF REGULATIONS OR PROGRAM GUIDE-
LINES.—^The Secretary shall promulgate regulations or program 
guidelines to ensure funds made available through a grant made 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2755 
under this section are used in accordance with the objectives of 
this subtitle. 
"(g) AUTHORIZATION OF APPROPRIATIONS.—^There are authorized 
to be appropriated $15,000,000 for each of fiscal years 1999 through 
2003 for grants to carry out this section. 
"SEC. 683. REFERENCES. 
42 USC 9924. 
"Any reference in any provision of law to the poverty line 
set forth in section 624 or 625 of the Economic Opportunity Act 
of 1964 shall be construed to be a reference to the poverty line 
defined in section 673. Except as otherwise provided, any reference 
in any provision of law to any community action agency designated 
under title II of the Economic Opportunity Act of 1964 shall be 
construed to be a reference to an entity eligible to receive funds 
under the community services block grant program.". 
SEC. 202. CONFORMING AMENDMENTS. 
(a) OLDER AMERICANS ACT OP 1965.—Section 306(a)(6)(E)(ii) 
of the Older Americans Act of 1965 (42 U.S.C. 3026(a)(6)(E)(ii)) 
is amended by striking "section 675(c)(3) of the Community Services 
Block Grant Act (42 U.S.C. 9904(c)(3))" and inserting "section 676B 
of the Community Services Block Grant Act". 
(b) COMMUNITY ECONOMIC DEVELOPMENT ACT OF 1981.— 
(1) SOURCE OF FUNDS.—Section 614 of the Community Eco-
nomic Development Act of 1981 (42 U.S.C. 9803) is repealed. 
(2) 
ADVISORY COMMUNITY INVESTMENT BOARD.—Section 
615(a)(2) of the Community Economic Development Act of 1981 
(42 U.S.C. 9804(a)(2)) is amended by striking "through the 
Office" £ind all that follows and inserting "through an appro-
priate office.". 
(c) HUMAN SERVICES REAUTHORIZATION ACT OF 1986.—Section 
407 of the Human Services Reauthorization Act of 1986 (42 U.S.C. 
9812a) is amended— 
(1) in subsection (a)— 
(A) by inserting after "funds available" the following: 
"(before the date of enactment of the Coats Human Services 
'
^ 
r Reauthorization Act of 1998)"; and 
(B) by inserting after "9910(a))" the following: "(as 
[' ' 
in effect before such date)"; and 
(2) in subsection (b)(2)— 
(A) by inserting after "funds available" the following: 
; "(before the date of enactment of the Coats Human Services 
Reauthorization Act of 1998)"; £Uid 
(B) by inserting after "9910(a))" the following: "(as 
in effect before such date)". 
(d) ANTI-DRUG ABUSE ACT OF 1988.—Section 3521(c)(2) of the 
Anti-Drug Abuse Act of 1988 (42 U.S.C. 11841(c)(2)) is amended 
by striking ", such as activities authorized by section 681(a)(2)(F) 
of the Community Services Block Grant Act (42 U.S.C. section 
9910(a)(2)(F)),". 
112 STAT. 2756 
PUBLIC LAW 105-285—OCT. 27, 1998 
Low-Income 
Home Energy 
Assistance 
Amendments of 
1998. 
42 use 8621 
note. 
TITLE III—LOW-INCOME HOME ENERGY 
ASSISTANCE 
SEC. 301. SHORT TITLE. 
This title may be cited as the "Low-Income Home Energy Assist-
ance Amendments of 1998". 
SEC. 302. AUTHORIZATION. 
(a) IN GENERAL.—Section 2602(b) of the Low-Income Home 
Energy Assistance Act of 1981 (42 U.S.C. 8621(b)) is amended 
by inserting ", such sums as may be necessary for each of fiscal 
years 2000 and 2001, and $2,000,000,000 for each of fiscal years 
2002 through 2004" after "1995 through 1999". 
(b) PROGRAM YEAR.—Section 2602(c) of the Low-Income Home 
Energy Assistance Act of 1981 (42 U.S.C. 8621(c)) is amended 
to read as follows: 
"(c) Amounts appropriated under this section for any fiscal 
year for programs and activities under this title shall be made 
available for obligation in the succeeding fiscal year.". 
(c) 
INCENTIVE 
PROGRAM 
FOR LEVERAGING 
NON-FEDERAL 
RESOURCES.—Section 2602(d) of the Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8621(d)) is amended— 
(1) by striking "(d)" and inserting "(d)(1)"; 
(2) by striking "are authorized" and inserting "is author-
ized"; 
(3) by striking "$50,000,000" and all that follows and insert-
ing the following: "$30,000,000 for each of fiscal years 1999 
through 2004, except as provided in paragraph (2)."; and 
(4) by adding at the end the following: 
"(2) For any of fiscal years 1999 through 2004 for which the 
amount appropriated under subsection 
(D) is not less than 
$1,400,000,000, there is authorized to be appropriated $50,000,000 
to carry out section 2607A.". 
(d) TECHNICAL AMENDMENTS.—Section 2602(e) of the Low-
Income Home Energy Assistance Act of 1981 (42 U.S.C. 8621(e)) 
is amended— 
(1) by striking "are authorized" and inserting "is author-
ized"; and 
(2) by striking "subsection (g)" and inserting "subsection 
(e) of such section". 
SEC. 303. DEFINITIONS. 
Section 2603(4) of the Low-Income Home Energy Assistance 
Act of 1981 (42 U.S.C. 8622(4)) is amended— 
(1) by striking "the term" and inserting "The term"; and 
(2) by striking the semicolon and inserting a period. 
SEC. 304. NATURAL DISASTERS AND OTHER EMERGENCIES. 
(a) DEFINITIONS.—Section 2603 of the Low-Income Home 
Energy Assistance Act of 1981 (42 U.S.C. 8622) is amended— 
(1) by redesignating paragraphs (6) through (9) as para-
graphs (8) through (11), respectively; 
(2) by inserting before paragraph (8) (as redesignated in 
paragraph (1)) the following: 
"(7) The term 'natural disaster' means a weather event 
(relating to cold or hot weather), flood, earthquake, tornado, 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2757 
hurricane, or ice storm, or an event meeting such other criteria 
as the Secretary, in the discretion of the Secretary, may deter-
mine to be appropriate."; 
(3) by redesignating paragraphs (1) through (5) as para-
graphs (2) through (6), respectively; and 
(4) by inserting before paragraph (2) (as redesignated in 
paragraph (3)) the following: 
"(1) The term'emergency means— 
"(A) a natural disaster; 
"(B) a significsint home energy supply shortage or 
disruption; 
"(C) a significant increase in the cost of home energy, 
as determined by the Secretary; 
"(D) a significant increase in home energy disconnec-
tions reported by a utility, a State regulatory agency, or 
another agency with necessary data; 
"(E) a significant increase in participation in a public 
benefit program such as the food stamp program carried 
out under the Food Stamp Act of 1977 (7 U.S.C. 2011 
et seq.), the national progrsim to provide supplemental 
security income carried out under title XVI of the Social 
Security Act (42 U.S.C. 1381 et seq.), or the State tem-
porary assistance for needy families program carried out 
under part A of title IV of the Social Security Act (42 
U.S.C. 601 et seq.), as determined by the head of the 
appropriate Federal agency; 
"(F) a significant increase in unemplo)nnent, layoffs, 
or the number of households with an individual applying 
for unemployment benefits, as determined by the Secretary 
of Labor; or 
"(G) an event meeting such criteria as the Secretary, 
in the discretion of the Secretary, may determine to be 
appropriate.". 
(b) CONSIDERATIONS.—Section 2604(g) of the Low-Income Home 
Energy Assistance Act of 1981 (42 U.S.C. 8623(g)) is amended 
by striking the last two sentences and inserting the following: 
"In determining whether to make such an allotment to a State, 
the Secretary shall take into account the extent to which the State 
was affected by the natural disaster or other emergency involved, 
the availability to the State of other resources under the program 
carried out under this title or any other program, and such other 
factors as the Secretary may find to be relevant. Not later than 
Notification. 
30 days after making the determination, but prior to releasing 
an allotted amount to a State, the Secretary shall notify Congress 
of the allotments made pursuant to this subsection.". 
SEG. 305. STATE ALLOTMENTS. 
Section 2604 of the Low-Income Home Energy Assistance Act 
of 1981 (42 U.S.C. 8623) is amended— 
(1) in subsection (b)(1), by striking "the Northern Mariana 
Islands, and the Trust Territory of the Pacific Islands." and 
inserting "and the Commonwealth of the Northern Mariana 
Islands."; 
(2) in subsection (c)(3)(B)(ii), by striking "application" and 
inserting "applications"; 
(3) by striking subsection (f); 
112 STAT. 2758 
PUBLIC LAW 105-285—OCT. 27, 1998 
42 use 8626b 
note. 
Deadline. 
42 use 8626b 
note. 
(4) in the first sentence of subsection (g), by striking "(a) 
through (f)" and inserting "(a) through (d)"; and 
(5) by redesignating subsection (g) as subsection (e). 
SEC. 306. ADMINISTRATION. 
Section 2605 of the Low-Income Home Energy Assistance Act 
of 1981 (42 U.S.C. 8624) is amended— 
(1) in subsection (b)— 
(A) in paragraph (9)(A), by striking "and not trans-
ferred pursuant to section 2604(f) for use under another 
block grant"; 
(B) in paragraph (14), by striking "; and" and inserting 
a semicolon; 
(C) in the matter following paragraph (14), by striking 
"The Secretary may not prescribe the manner in which 
the States will comply with the provisions of this sub-
section."; and 
(D) in the matter following paragraph (16), by inserting 
before 'The Secretary shall issue" the following: "The Sec-
retary may not prescribe the manner in which the States 
will comply with the provisions of this subsection."; 
(2) in subsection (c)(1)— 
(A) in subparagraph (B), by striking "States" and 
inserting "State"; and 
(B) in subparagraph (G)(i), by striking "has" and insert-
ing "had"; and 
(3) in paragraphs (1) and (2)(A) of subsection (k) by insert-
ing ", particularly those low-income households with the lowest 
incomes that pay a high proportion of household income for 
home energy" before the period. 
SEC. 307. PAYMENTS TO STATES. 
Section 2607(b)(2)(B) of the Low-Income Home Energy Assist-
ance Act of 1981 (42 U.S.C. 8626(b)(2)(B)) is amended— 
(1) in the first sentence, by striking "and not transferred 
pursuant to section 2604(f)"; and 
(2) in the second sentence, by striking "but not transferred 
by the State". 
SEC. 308. RESIDENTIAL ENERGY ASSISTANCE CHALLENGE OPTION. 
(a) EVALUATION.—-The Comptroller General of the United States 
shall conduct an evaluation of the Residential Energy Assistance 
Challenge program described in section 2607B of the Low-Income 
Home Energy Assistance Act of 1981 (42 U.S.C. 8626b). 
(b) REPORT.—Not later than 2 years after the date of enactment 
of this Act, the Comptroller General of the United States shall 
prepare and submit to Congress a report containing— 
(1) the findings resulting from the evaluation described 
in subsection (a); and 
(2) the State evaluations described in paragraphs (1) and 
(2) of subsection (b) of such section 2607B. 
(c) INCENTIVE GRANTS.—Section 2607B(b)(l) of the Low-Income 
Home Energy Assistance Act of 1981 (42 U.S.C. 8626b(b)(l)) is 
amended by striking "For each of the fiscal years 1996 through 
1999" and inserting * For each fiscal year". 
(d) TECHNICAL AMENDMENTS.—Section 2607B of the Low-
Income Home Energy Assistance Act of 1981 (42 U.S.C. 8626b) 
is amended— 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2759 
(1) in subsection (e)(2)— 
(A) by redesignating subparagraphs (F) through (N) 
as subparagraphs (E) through (M), respectively; and 
(B) in clause (i) of subparagraph (I) (as redesignated 
in subparagraph (A)), by striking "on" and inserting "of; 
and 
(2) by redesignating subsection (g) as subsection (f). 
SEC. 309. TECHNICAL ASSISTANCE, TRAINING, AND COMPUANCE 
REVIEWS. 
(a) IN GENERAL.—Section 2609A(a) of the Low-Income Home 
Energy Assistance Act of 1981 (42 U.S.C. 8628a(a)) is amended— 
(1) in the matter preceding paragraph (1), by striking 
"$250,000" and mserting "$300,000"; 
(2) by striking "Secretary—" and all that follows through 
"(1) to make" and inserting the following: "Secretary— 
"(l)to— 
"(A) make"; 
(3) by striking "organizations; or" and all that follows 
through "(2) to enter" and inserting the following: "organiza-
tions; or 
"(B) enter"; 
(4) by striking the following: 
"to provide" and inserting the following: 
"to provide"; 
(5) by striking "title." and inserting the following: "title; 
or 
"(2) to conduct onsite compliance reviews of programs sup-
ported under this title."; and 
(6) in paragraph (1)(B) (as redesignated in paragraphs (2) 
and (3))— 
(A) by inserting "or interagency agreements" after 
"cooperative arrgingements"; and 
(B) by inserting "(including Federal agencies)" after 
"public agencies". 
(b) CONFORMING AMENDMENT.—The section heading of section 
2609A of the Low-Income Home Energy Assistance Act of 1981 
(42 U.S.C. 8628a) is amended to read as follows: 
"TECHNICAL ASSISTANCE, TRAINING, AND COMPLIANCE REVIEWS". 
TITLE IV—ASSETS FOR INDEPENDENCE A
s
s
e
t
s f
o
r 
Independence 
Art 
SEC. 401. SHORT TITLE. 
J f USC 604 note. 
This title may be cited as the "Assets for Independence Act". 
SEC. 402. FINDINGS. 
Congress makes the following findings: 
(1) Economic well-being does not come solely from income, 
spending, smd consumption, but also requires savings, invest-
ment, and accumulation of assets because assets can improve 
economic independence and stability, connect individuals with 
a viable and hopeful future, stimulate development of human 
and other capital, and enhance the welfare of offspring. 
(2) Fully V2 of all Americans have either no, negligible, 
or negative assets available for investment, just as the price 
of entry to the economic mainstream, the cost of a house. 
112 STAT. 2760 
PUBLIC LAW 105-285—OCT. 27, 1998 
an adequate education, and starting a business, is increasing. 
Further, the household savings rate of the United States lags 
far behind other industrial nations, presenting a barrier to 
economic growth. 
(3) In the current tight fiscal environment, the United 
States should invest existing resources in high-yield initiatives. 
There is reason to believe mat the financial returns, including 
increased income, tax revenue, and decreased welfare cash 
assistance, resulting from individual development accounts will 
far exceed the cost of investment in those accounts. 
(4) Traditional public assistance programs concentrating 
on income and consumption have rarely been successful in 
promoting and supporting the transition to increased economic 
self-sufficiency. Income-based domestic policy should be com-
plemented with asset-based policy because, while income-based 
policies ensure that consumption needs (including food, child 
care, rent, clothing, and health care) are met, asset-based poli-
cies provide the means to achieve greater independence and 
economic well-being. 
SEC. 403. PURPOSES. 
The purposes of this title are to provide for the establishment 
of demonstration projects designed to determine— 
(1) the social, civic, psychological, and economic effects 
of providing to individuals and families with limited means 
an incentive to accumulate assets by saving a portion of their 
earned income; 
(2) the extent to which an asset-based policy that promotes 
saving for postsecondary education, homeownership, and micro-
enterprise development may be used to enable individuals and 
families with limited means to increase their economic self-
sufficiency; and 
(3) the extent to which an asset-based policy stabihzes 
and improves famiUes and the community in which the families 
Uve. 
SEC. 404. DEFINITIONS. 
In this title: 
(1) APPLICABLE PERIOD.—The term "applicable period" 
means, with respect to amounts to be paid from a grant made 
for a project year, the calendar year immediately preceding 
the calenaar year in which the grant is made. 
(2) ELIGIBLE INDIVIDUAL.—^The term "eligible individual" 
means ein individual who is selected to participate in a dem-
onstration project by a qualified entity under section 409. 
(3) EMERGENCY WITHDRAWAL.—The term "emergency with-
drawal" means a withdrawal by an eligible individual that— 
(A) is a withdrawal of only those funds, or a portion 
of those funds, deposited by the individual in the individual 
development account of the individual; 
(B) is permitted by a qualified entity on a case-by-
case basis; and 
(C) is made for— 
(i) expenses for medical care or necessary to obtain 
medical CEire, for the individual or a spouse or depend-
ent of the individual described in paragraph (8)(D); 
(ii) pajnnents necessary to prevent the eviction 
of the individual from the residence of the individual, 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2761 
or foreclosure on the mortgage for the principal resi-
dence of the individual, as defined in paragraph (8)(B); 
or 
(iii) pajnaients necessary to enable the individual 
to meet necessary living expenses following loss of 
employment. 
(4) HOUSEHOLD.—^The term "household" means all individ-
uals who share use of a dwelling unit as primary qusirters 
for living and eating separate from other individuals. 
(5) INDIVIDUAL DEVELOPMENT ACCOUNT.— 
(A) IN GENERAL.—The term "individual development 
account" means a trust created or organized in the United 
States exclusively for the purpose of paying the qualified 
expenses of an eligible individual, or enabling the eligible 
individual to make an emergency withdrawal, but only 
if the written governing instrument creating the trust con-
tains the following requirements: 
(i) No contribution will be accepted unless the 
contribution is in cash or by check. 
(ii) The trustee is a federally insured 
financial 
institution, or a State insured financial institution if 
no federally insured financial institution is available. 
(iii) The assets of the trust will be invested in 
accordance with the direction of the eligible individual 
after consultation with the qualified entity providing 
deposits for the individual under section 410. 
(iv) The assets of the trust will not be commingled 
with other property except in a common trust fiind 
or common investment fund. 
(v) Except as provided in clause (vi), any amount 
in the trust that is attributable to a deposit provided 
under section 410 may be paid or distributed out of 
the trust only for the purpose of paying the qualified 
expenses of the eligible individual, or enabling the 
eligible individual to make an emergency withdrawal. 
(vi) Any balance in the trust on the day after 
the date on which the individual for whose benefit 
the trust is established dies shall be distributed within 
30 days of that date as directed by that individual 
to another individual development account established 
for the benefit of 8m eligible individual. 
(B) CUSTODL\L ACCOUNTS.—For purposes of subpara-
graph (A), a custodial account shall be treated as a trust 
if the assets of the custodial account are held by a bank 
(as defined in section 408(n) of the Internal Revenue Code 
of 1986) or another person who demonstrates, to the satis-
faction of the SecretEiry, that the manner in which such 
person will administer the custodial account will be consist-
ent with the requirements of this title, and if the custodial 
account would, except for the fact that it is not a trust, 
constitute an individual development account described in 
subparagraph (A). For purposes of this title, in the case 
of a custodial account treated as a trust by reason of 
the preceding sentence, the custodian of that custodial 
account shall be treated as the trustee of the account. 
(6) PROJECT YEAR.—^The term "project year" means, with 
respect to a demonstration project, any of the 5 consecutive 
112 STAT. 2762 
PUBLIC LAW 105-285—OCT. 27, 1998 
12-month periods beginning on the date the project is originally 
authorized to be conducted. 
(7) QUALIFIED ENTITY.— 
(A) IN GENERAL.—^The term "qualified entity" means— 
(i) one or more 
not-for-profit 
organizations 
described in section 501(c)(3) of the Internal Revenue 
Code of 1986 and exempt from taxation under section 
501(a) of such Code; or 
(ii) a State or local government agency, or a tribal 
government, submitting an application under section 
405 jointly with an organization described in clause 
(i). 
(B) RULE OF CONSTRUCTION.—Nothing in this para-
graph shall be construed as preventing an organization 
described in subparagraph (A)(i) from collaborating with 
a financial institution or for-profit community development 
corporation to carry out the purposes of this title. 
(8) QUALIFIED EXPENSES.—^The term "quahfied expenses" 
means one or more of the following, as provided by a qualified 
entity: 
(A) 
POSTSECONDARY EDUCATIONAL EXPENSES.—Post-
secondary educational expenses paid from an individual 
development account directly to an eligible educational 
institution. In this subparagraph: 
(i) POSTSECONDARY EDUCATIONAL EXPENSES.—The 
term "postsecondary educational expenses" means the 
following: 
(I) 
TUITION AND FEES.—Tuition and fees 
required for the enrollment or attendance of a 
student at an eligible educational institution. 
(II) FEES, BOOKS, SUPPLIES, AND EQUIPMENT.— 
Fees, books, supplies, and equipment required for 
courses of instruction at an eligible educational 
institution. 
(ii) 
ELIGIBLE 
EDUCATIONAL 
INSTITUTION.—The 
term "eligible educational institution" means the fol-
lowing: 
(I) INSTITUTION OF HIGHER EDUCATION.—^An 
institution described in section 101 or 102 of the 
Higher Education Act of 1965. 
(II) POSTSECONDARY VOCATIONAL EDUCATION 
SCHOOL.—^An area vocational education school (as 
defined in subparagraph (C) or (D) of section 521(4) 
of the Carl D. Perkins Vocational and Applied 
Technology Education Act (20 U.S.C. 2471(4))) 
which is in any State (as defined in section 521(33) 
of such Act), as such sections are in effect on 
the date of enactment of this title. 
(B) FIRST-HOME PURCHASE.--Qualified acquisition costs 
with respect to a principal residence for a qualified first-
time homebuyer, if paid from an individual development 
account directly to the persons to whom the amounts are 
due. In this subparagraph: 
(i) PRINCIPAL RESIDENCE.—-The term "principal 
residence" means a main residence, the qualified 
acquisition costs of which do not exceed 100 percent 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2763 
of the average area purchase price apphcable to such 
residence. 
(ii) 
QUALIFIED 
ACQUISITION COSTS.—The 
term 
"quahfied acquisition costs" means the costs of acquir-
ing, constructing, or reconstructing a residence. The 
term includes any usual or reasonable settlement, 
financing, or other closing costs. 
(iii) QUALIFIED FIRST-TIME HOMEBUYER.— 
(I) IN GENERAL.—^The term "qualified first-time 
homebuyer" means an individual participating in 
the project involved (and, if married, the individ-
ual's spouse) who has no present ownership 
interest in a principal residence during the 3-year 
period ending on the date of acquisition of the 
principal residence to which this subparagraph 
applies. 
(II) DATE OF ACQUISITION.—The term "date 
of acquisition" means the date on which a binding 
contract to acquire, construct, or reconstruct the 
principal residence to which this subparagraph 
applies is entered into. 
(C) BUSINESS CAPITALIZATION.—^Amounts paid from an 
individual development account directly to a business 
capitalization account that is established in a federally 
insured financial institution (or in a State insured financial 
institution if no federally insured financial institution is 
available) and is restricted to use solely for qualified busi-
ness capitalization expenses. In this subparagraph: 
(i) 
QUALIFIED 
BUSINESS 
CAPITALIZATION 
EXPENSES.—^The term "qualified business capitalization 
expenses" means qualified expenditures for the capital-
ization of a qualified business pursuant to a qualified 
plan. 
(ii) QUALIFIED EXPENDITURES.—The term "qualified 
expenditures" means expenditures included in a quali-
fied plan, including capital, plant, equipment, working 
capital, and inventory expenses. 
(iii) QUALIFIED BUSINESS.—The term "qualified 
business" means any business that does not contravene 
any law or public policy (as determined by the Sec-
retary). 
(iv) QUALIFIED PLAN.—The term "qualified plan" 
means a business plan, or a plan to use a business 
asset purchased, which— 
(I) is approved by a financial institution, a 
microenterprise development organization, or a 
nonprofit loan fund having demonstrated fiduciary 
integrity; 
(II) includes a description of services or goods 
to be sold, a marketing plan, and projected finan-
cial statements; and 
(III) may require the eligible individual to 
obtain the assistance of an experienced entre-
preneurial adviser. 
(D) TRANSFERS TO IDAS OP FAMILY MEMBERS.—Amounts 
paid from an individual development account directly into 
112 STAT. 2764 
PUBLIC LAW 105-285—OCT. 27, 1998 
Deadline. 
Public 
information. 
Deadline. 
another such account estabhshed for the benefit of an 
eligible individual who is— 
(i) the individual's spouse; or 
(ii) any dependent of the individual with respect 
to whom the individual is allowed a deduction under 
section 151 of the Internal Revenue Code of 1986. 
(9) 
QUALIFIED 
SAVINGS OF THE INDIVIDUAL FOR THE 
PERIOD.—^The term "qualified savings of the individual for the 
period" means the aggregate of the amounts contributed by 
an individual to the individual development account of the 
individual during the period. 
(10) SECRETARY.—The term "Secretary" means the Sec-
retary of Health and Human Services, acting through the Direc-
tor of Community Services. 
(11) TRIBAL GOVERNMENT.—^The term "tribal government" 
means a tribal organization, as defined in section 4 of the 
Indian Self-Determination and Education Assistance Act (25 
U.S.C. 450b) or a Native Hawaiian organization, as defined 
in section 9212 of the Native Hawaiian Education Act (20 
U.S.C. 7912). 
SEC. 405. APPLICATIONS. 
(a) ANNOUNCEMENT OF DEMONSTRATION PROJECTS.—Not later 
than 3 months after the date of enactment of this title, the Secretary 
shall publicly announce the availability of funding under this title 
for demonstration projects and shall ensure that applications to 
conduct the demonstration projects are widely available to qualified 
entities. 
(b) SUBMISSION.—Not later than 6 months after the date of 
enactment of this title, a qualified entity may submit to the Sec-
retary an application to conduct a demonstration project under 
this title. 
(c) CRITERIA.—In considering whether to approve an application 
to conduct a demonstration project under this title, the Secretary 
shall assess the following: 
(1) SUFFICIENCY OF PROJECT.—The degree to which the 
project described in the application appears likely to aid project 
participants in achieving economic self-sufficiency 
through 
activities requiring one or more qualified expenses. 
(2) ADMINISTRATIVE ABILITY.—The experience and ability 
of the applicant to responsibly administer the project. 
(3) ABILITY TO ASSIST PARTICIPANTS.—The experience and 
ability of the applicant in recruiting, educating, and assisting 
project participants to increase their economic independence 
and general well-being through the development of assets. 
(4) COMMITMENT OF NON-FEDERAL FUNDS,—^The aggregate 
amount of direct funds fi:om non-Federal public sector and 
from private sources that are formally committed to the project 
as matching contributions. 
(5) ADEQUACY OF PLAN FOR PROVIDING INFORMATION FOR 
EVALUATION.—^The adequacy of the plan for providing informa-
tion relevant to an evaluation of the project. 
(6) OTHER FACTORS.—Such other factors relevant to the 
purposes of this title as the Secretary may specify. 
(d) PREFERENCES.—In considering an application to conduct 
a demonstration project under this title, the Secretary shall give 
preference to an application that— 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2765 
(1) demonstrates the willingness and ability to select 
individuals described in section 408 who are predominantly 
from households in which a child (or children) is living with 
the child's biological or adoptive mother or father, or with 
tiie child's legal guardian; 
(2) provides a commitment of non-Federal funds with a 
proportionately greater amount of such funds committed from 
private sector sources; and 
(3) targets such individuals residing within one or more 
relatively well-defined neighborhoods or communities (including 
rural communities) that experience high rates of poverty or 
unemplo3rment. 
(e) APPROVAL.—Not later than 9 months after the date of enact- Deadline, 
ment of this title, the Secretary shall, on a competitive basis, 
approve such applications to conduct demonstration projects under 
this title as the Secretary considers to be appropriate, taking into 
account the assessments reauired by subsections (c) and (d). The 
Secretary shall ensure, to tne maximum extent practicable, that 
the applications that are approved involve a range of communities 
(both rural and urban) and diverse populations. 
(f) CONTRACTS WITH NONPROFIT ENTITIES.—The Secretary may 
contract with an entity described in section 501(c)(3) of the Internal 
Revenue Code of 1986 and exempt from taxation under section 
501(a) of such Code to carry out any responsibility of the Secretary 
under this section or section 412 if— 
(1) such entity demonstrates the ability to carry out such 
responsibility; and 
(2) the Secretary can demonstrate that such responsibility 
would not be carried out by the Secretary at a lower cost. 
(g) GRANDFATHERING OF EXISTING STATEWIDE PROGRAMS.—^Any 
statewide individual asset-building program that is carried out in 
a manner consistent with the purposes of this title, that is estab-
lished under State law as of the date of enactment of this Act, 
and that as of such date is operating with an annual State appro-
griation of not less than $1,000,000 in non-Federal funds, shall 
e deemed to meet the eligibility requirements of this subtitle, 
and the entity carrying out the program shall be deemed to be 
a qualified entity. The Secretary shall consider funding the state-
wide program as a demonstration project described in this subtitle. 
In considering the statewide program for funding, the Secretary 
shall review an application submitted by the entity carrying out 
such statewide program under this section, notwithstanding the 
preference requirements listed in subsection (d). Any program 
requirements under sections 407 through 411 that Eire inconsistent 
with State statutory requirements in effect on the date of enactment 
of this Act, governing such statewide program, shall not apply 
to the program. 
SEC. 406. DEMONSTRATION AUTHORITY; ANNUAL GRANTS. 
(a) DEMONSTRATION AUTHORITY.—If the Secretary approves an Deadline, 
application to conduct a demonstration project under this title, 
the Secretary shall, not later than 10 months after the date of 
enactment of this title, authorize the applicant to conduct the 
project for 5 project years in accordance with the approved applica-
tion and the requirements of this title. 
(b) GRANT AUTHORITY.—For each project year of a demonstra-
tion project conducted under this title, the Secretary may make 
59-194 O - 98 - 34: QL 3 Part 4 
112 STAT. 2766 
PUBLIC LAW 105-285—OCT. 27, 1998 
a grant to the qualified entity authorized to conduct the project. 
In making such a grant, the Secretary shall make the grant on 
the first day of the project year in an amount not to exceed the 
lesser of— 
(1) the agp-egate amoimt of funds committed as matching 
contributions from non-Federal public or private sector sources; 
or 
(2) $1,000,000. 
SEC. 407. RESERVE FUND. 
(a) ESTABLISHMENT.—^A qualified entity under this title, other 
than a State or local government agency or a tribal government, 
shall establish a Reserve Fund that shall be maintained in accord-
ance with this section. 
(b) AMOUNTS m RESERVE FUND.— 
(1) IN GENERAL.—As soon after receipt as is practicable, 
a qualified entity shall deposit in the Reserve Fund established 
under subsection (a)— 
(A) all fiinds provided to the qualified entity from 
any public or private source in connection with the dem-
onstration project; and 
(B) file proceeds from any investment made under 
subsection (c)(2). 
(2) UNIFORM ACCOUNTING REGULATIONS.—The Secretary 
shall prescribe regulations with respect to accounting for 
amounts in the Reserve Fund established under subsection 
(a). 
(c) USE OP AMOUNTS IN THE RESERVE FUND.— 
(1) IN GENERAL.—^A qualified entity shall use the amounts 
in tiie Reserve Fund established under subsection (a) to— 
(A) assist participants in tlie demonstration project 
in obtaining the skills (including economic literacy, budget-
ing, credit, and counseUng skills) and information necessary 
to achieve economic self-sufficiency 
through activiti^ 
requiring qualified expenses; 
(B) provide deposits in accordance with section 410 
for individuals selected by the qualified entity to participate 
in the demonstration project; 
(C) administer ihe demonstration project; and 
(D) provide the research organization evaluating the 
demonstration project under section 414 with such informa-
tion with respect to the demonstration project as may be 
required for the evaluation. 
(2) AUTHORITY TO INVEST FUNDS.— 
(A) GUIDELINES.—^The Secretary shall establish guide-
lines for investing amounts in the Reserve Fund estabUshed 
under subsection (a) in a manner that provides an appro-
priate balance between return, liquidity, and rii^. 
(B) INVESTMENT.—^A qualified entity shall invest the 
amounts in its Reserve Fund that are not immediately 
needed to carry out the provisions of paragraph (1), in 
accordance with the guidelines established under subpara-
graph (A). 
(3) LIMITATION ON USES.—Not more than 9.5 percent of 
the amounts provided to a qualified entity under section 406(b) 
shall be used by ihe qualified entity for tlie purposes described 
in subparagraims (A), (C), and (D) of paragraph (1), of which 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2767 
not less than 2 percent of the amounts shall be used by the 
qualified entity for the purposes described in paragraph (1)(D). 
If two or more qualified entities are jointly administering a 
project, no qualified entity shall use more than its proportional 
share for the purposes described in subparagraphs (A), (C), 
and (D) of paragraph (1). 
(d) UNUSED FEDERAL GRANT FUNDS TRANSFERRED TO THE SEC-
RETARY WHEN PROJECT TERMINATES.—^Notwithstanding subsection 
(c), upon the termination of any demonstration project authorized 
under this section, the qualified entity conducting the project shall 
transfer to the Secretary an amount equal to— 
(1) the amounts in its Reserve Fund at the time of the 
termination; multiplied by 
(2) a percentage equal to— 
(A) the aggregate amount of grants made to the quali-
fied entity under section 406(b); divided by 
(B) the aggregate amount of all funds provided to the 
qualified entity from all sources to conduct the project. 
SEC. 408. ELIGIBILITY FOR PARTICIPATION. 
(a) IN GENERAL.—^Any individual who is a member of a house-
hold that is eligible for assistance under the State temporary assist-
ance for needy families program established under part A of title 
IV of the Social Security Act (42 U.S.C. 601 et seq.), or that 
meets each of the following requirements shall be eligible to partici-
pate in a demonstration project conducted under this title: 
(1) INCOME TEST.—^The adjusted gross income of the house-
hold does not exceed the earned income amount described in 
section 32 of the Internal Revenue Code of 1986 (taking into 
account the size of the household). 
(2) NET WORTH TEST.— 
(A) IN GENERAL.—^The net worth of the household, as 
of the end of the calendar year preceding the determination 
of eligibility, does not exceed $10,000. 
(B) DETERMINATION OF NET WORTH.—^For purposes of 
subparagraph (A), the net worth of a household is the 
amount equal to— 
(i) the aggregate market value of all assets that 
are owned in whole or in part by any member of 
the household; minus 
(ii) the obligations or debts of any member of the 
household. 
(C) EXCLUSIONS.—For purposes of determining the net 
worth of a household, a household's assets shall not be 
considered to include the primary dwelling unit and one 
motor vehicle owned by a member of the household. 
(b) INDIVIDUALS UNABLE TO COMPLETE THE PROJECT.—^The Sec- Regulations, 
retary shall establish such regulations as are necessary to ensure 
compliance with this title if an individual participating in the 
demonstration project moves from the community in which the 
project is conducted or is otherwise unable to continue participating 
in that project, including regulations prohibiting future eligibility 
to participate in any other demonstration project conducted under 
this title. 
112 STAT. 2768 
PUBLIC LAW 105-285—OCT. 27, 1998 
SEC. 409. SELECTION OP INDIVIDUALS TO PARTICIPATE. 
From among the individuals eligible to participate in a dem-
onstration project conducted under tidis title, each qualified entity 
shall select the individuals— 
(1) that the quaUfied entity determines to be best suited 
to participate; and 
(2) to whom the quahfied entity will provide deposits in 
accordance with section 410. 
SEC. 410. DEPOSITS BY QUAUFIED ENTITIES. 
(a) IN GENERAL.—^Not less than once every 3 months during 
each project year, each qualified entity under this title shall deposit 
in the individual development account of each individual participat-
ing in the project, or into a parallel account maintained by the 
qualified entity— 
(1) from the non-Federal funds described in section 
405(c)(4), a matching contribution of not less than $0.50 and 
not more than $4 for every $1 of earned income (as defined 
in section 911(d)(2) of the Internal Revenue Code of 1986) 
deposited in the account by a project participant during that 
period; 
(2) from the grant made under section 406(b), an amount 
equal to the matching contribution made under paragraph (1); 
and 
(3) any interest that has accrued on amounts deposited 
under paragraph (1) or (2) on behalf of that individual into 
the individual development account of the individual or into 
a parallel account maintained by the qualified entity. 
(b) LIMITATION ON DEPOSITS FOR AN INDIVIDUAL.—Not more 
than $2,000 from a grant made under section 406(b) shall be pro-
vided to any one individual over the coiu-se of the demonstration 
project. 
(c) LIMITATION ON DEPOSITS FOR A HOUSEHOLD.—Not more 
than $4,000 from a grant made under section 406(b) shall be pro-
vided to any one household over the course of the demonstration 
project. 
(d) WITHDRAWAL OF FUNDS.—^The Secretary shall establish such 
guidelines as may be necessary to ensure that funds held in an 
individual development account £u*e not withdrawn, except for one 
or more quaUfied expenses, or for an emergency withdrawal. Such 
guidelines shall include a requirement that a responsible official 
of the qualified entity conducting a project approve a withdrawal 
from such an account in writing. The guidelines shall provide that 
no individual may withdraw funds from an individual development 
account earlier than 6 months after the date on which the individual 
first deposits funds in the account. 
(e) REIMBURSEMENT.—^An individual shall reimburse an individ-
ual development account for any funds withdrawn from the account 
for an emergency withdrawal, not later than 12 months after the 
date of the withdrawal. If the individual fails to make the 
reimbursement, the qualified entity administering the account shall 
transfer the funds deposited into the account or a parallel account 
under this section to the Reserve Fund of the qualified entity, 
and use the funds to benefit other individuals participating in 
the demonstration project involved. 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2769 
SEC. 411. LOCAL CONTROL OVER DEMONSTRATION PROJECTS. 
A qualified entity under this title, other than a State or local 
government agency or a tribal government, shall, subject to the 
provisions of section 413, have sole authority over the administra-
tion of the project. The Secretary may prescribe only such regula-
tions or guidelmes with respect to demonstration projects conducted 
under this title as are necessary to ensure comphance with the 
approved applications and the requirements of this title. 
SEC. 
412. 
ANNUAL 
PROGRESS 
REPORTS. 
(a) IN GENERAL.—^Each qualified entity under this title shall 
prepare an annual report on the progress of the demonstration 
project. Each report shall include DotJi program and participant 
information and shall specify for the period covered by the report 
the following information: 
(1) The number and characteristics of individuals making 
a deposit into an individual development account. 
(2) The amounts in the Reserve Fund established with 
respect to the project. 
(3) The amounts deposited in the individual development 
accounts. 
(4) The amounts withdrawn from the individual develop-
ment accounts and the purposes for which such amounts were 
withdrawn. 
(5) The balances remaining in the individual development 
accounts. 
(6) The savings account characteristics (such as threshold 
amounts and match rates) required to stimulate participation 
in the demonstration project, and how such characteristics vary 
among different populations or communities. 
(7) What service configurations of the quaUfied entity (such 
as configurations relating to peer support, structured planning 
exercises, mentoring, and case management) increased the rate 
and consistency of participation in the demonstration project 
and how such configurations varied among different populations 
or communities. 
(8) Such other information as the Secretary may require 
to evaluate tiie demonstration project. 
(b) SUBMISSION OF REPORTS.—The qualified entity shall submit 
each report required to be prepared under subsection (a) to— 
(1) the Secretary; and 
(2) the Treasurer (or equivalent official) of the State in 
which the project is conducted, if the State or a local govern-
ment or a tribal government committed funds to the demonstra-
tion project. 
(c) TIMING.—The first report required by subsection (a) shall 
be submitted not later than 60 days after the end of the calendar 
year in which the Secretary authorized the qualified entity to con-
duct the demonstration project, and subsequent reports shall be 
submitted every 12 months thereafter, until the conclusion of the 
project. 
SEC. 413. SANCTIONS. 
(a) AUTHORITY TO TERMINATE DEMONSTRATION PROJECT.—If 
the Secret£u-y determines that a qualified entity under this title 
is not operating a demonstration project in accordance with the 
entity's approved application under section 405 or the requirements 
112 STAT. 2770 
PUBLIC LAW 105-285—OCT. 27, 1998 
of this title (and has not implemented any corrective recommenda-
tions directed by the Secretary), the Secretary shall terminate such 
entity's authority to conduct the demonstration project. 
(b) ACTIONS REQUIRED UPON TERMINATION.—If the Secretary 
terminates the authority to conduct a demonstration project, the 
Secretary— 
(1) shall suspend the demonstration project; 
(2) shall take control of the Reserve Fund established 
pursuant to section 407; 
(3) shall make every effort to identify another qualified 
entity (or entities) willing and able to conduct the project in 
accordance -with the approved application (or, if modification 
is necessary to incorporate the recommendations, the applica-
tion as modified) tuid the requirements of this title; 
(4) shall, if t^e Secretsury identifies an entity (or entities) 
described in paragraph (3)— 
(A) authorize the entity {or entities) to conduct the 
project in accordance with the approved application (or, 
if modification is necessary to incorporate the recommenda-
tions, the application as modified) and the requirements 
of 
this title; 
(B) transfer to the entity (or entities) control over 
the Reserve Fund estabUshed pursuant to section 407; 
and 
(C) consider, for purposes of this title— 
(i) such otiier entity (or entities) to be the qualified 
entity (or entities) originally authorized to conduct the 
demonstration project; and 
(ii) the date of such autliorization to be the date 
of the original authorization; and 
(5) if, by the end of the 1-year period beginning on the 
date of the termination, the Secretary has not found a qualified 
entity (or entities) described in paragraph (3), shall— 
(A) terminate the project; and 
(B) from the amount remaining in the Reserve Fund 
established as part of the project, remit to each source 
that provided funds under section 405(c)(4) to the entity 
originally authorized to conduct the project, an amount 
that bears the same ratio to the amount so remaining 
as the amount provided firom the source under section 
405(c)(4) bears to the amount provided firom all such 
sources under that section. 
SEC. 414. EVALUATIONS. 
Deadline. 
(a) IN GENERAL.—Not later than 10 months after the date 
Con(a«cts. 
of enactment of this title, the Secretary shall enter into a contract 
with an independent research organization to evaluate the dem-
onstration projects conducted under this title, individually and as 
a group, including evaluating all qualified entities participating 
in and sources providing funds for the demonstration projects con-
ducted under this title. 
(b) FACTORS TO EVALUATE.—In evaluating any demonstration 
project conducted under this title, the research organization shall 
addbress the following factors: 
(1) The effects of incentives and organizational or institu-
tional support on savings behavior in the demonstration project. 
PUBLIC LAW 105-285—OCT. 27, 1998 
112 STAT. 2771 
(2) The savings rates of individuals in the demonstration 
project based on demographic characteristics including gender, 
age, family size, race or ethnic background, and income. 
(3) The economic, civic, psychological, and social effects 
of asset accumulation, and how such effects vary among dif-
ferent populations or communities. 
(4) The effects of individual development accounts on sav-
ings rates, homeownership, level of postsecondary education 
attained, and self-employment, and how such effects vary 
among different populations or communities. 
(5) The potential financial returns to the Federal Govern-
ment £ind to other public sector and private sector investors 
in individual development accounts over a 5-year and 10-year 
period of time. 
(6) The lessons to be learned from the demonstration 
projects conducted under this title and if a permanent program 
of individual development accounts should be established. 
(7) Such other factors as may be prescribed by the Sec-
retary. 
(c) METHODOLOGICAL REQUIREMENTS.—In evaluating any dem-
onstration project conducted under this title, the research organiza-
tion shall— 
(1) for at least one site, use control groups to compare 
participants with nonparticipants; 
(2) before, during, and after the project, obtain such quan-
titative data as are necessary to evaluate the project thoroughly; 
and 
(3) develop a qualitative assessment, derived from sources 
such as in-depth interviews, of how asset accumulation affects 
individuals and families. 
(d) REPORTS BY THE SECRETARY.— 
Deadlines. 
(1) INTERIM REPORTS.—^Not later than 90 days after the 
end of the calendar year in which the Secretary first authorizes 
a qualified entity to conduct a demonstration project under 
this title, and every 12 months thereafter until all demonstra-
tion projects conducted under this title are completed, the Sec-
retary shall submit to Congress an interim report setting forth 
the results of the reports submitted pursuant to section 412(b). 
(2) FINAL REPORTS.—^Not later than 12 months after the 
conclusion of all demonstration projects conducted under this 
title, the Secretary shall submit to Congress a final report 
setting forth the results and findings of all reports and evalua-
tions conducted pursuant to this title. 
(e) EVALUATION EXPENSES.—^The Secretary shall expend 2 per-
cent of the amount appropriated under section 416 for a fiscal 
year, to carry out the objectives of this section. 
SEC. 415. TREATMENT OF FUNDS. 
Of the funds deposited in individual development accounts for 
eligible individuals, only the funds deposited by the individuals 
(including interest accruing on those funds) may be considered 
to be the income, assets, or resources of the individuals, for purposes 
of determining eligibility for, or the amount of assistance furnished 
under, any Federal or federally assisted program based on need. 
112 STAT. 2772 
PUBLIC LAW 105-285—OCT. 27, 1998 
SEC. 416. AUTHORIZATION OP APPROPRIATIONS. 
There is authorized to be appropriated to carry out this title, 
$25,000,000 for each of fiscal years 1999, 2000, 2001, 2002, and 
2003, to remain available until expended. 
Approved October 27, 1998. 
LEGISLATIVE fflSTORY—S. 2206: 
HOUSE REPORTS: No. 105-788 (Comm. of Conference). 
SENATE REPORTS: No. 105-256 (Comm. on Labor and Himian Resources). 
CONGRESSIONAL RECORD, Vol. 144 (1998): 
July 27, considered and passed Senate. 
Sept. 14, considered and passed House, amended. 
Oct. 8, House and Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 34 (1998): 
Oct. 27, Presidential statement.