[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 2206 Engrossed Amendment House (EAH)]


  2d Session

                                S. 2206

_______________________________________________________________________

                               AMENDMENT
                In the House of Representatives, U. S.,

                                                    September 14, 1998.

    Resolved, That the bill from the Senate (S. 2206) entitled ``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'', do 
pass with the following

                               AMENDMENT:

            Strike out all after the enacting clause and insert:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Human Services 
Reauthorization Act of 1998''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

               TITLE I--AMENDMENTS TO THE HEAD START ACT

Sec. 101. Short title.
Sec. 102. Statement of purpose.
Sec. 103. Definitions.
Sec. 104. Financial assistance for Head Start programs.
Sec. 105. Authorization of appropriations.
Sec. 106. Allotment of funds.
Sec. 107. Designation of Head Start agencies.
Sec. 108. Quality standards.
Sec. 109. Powers and functions of Head Start agencies.
Sec. 110. Head Start transition.
Sec. 111. Submission of plans to governors.
Sec. 112. Participation in Head Start programs.
Sec. 113. Early Head Start programs for families with infants and 
                            toddlers.
Sec. 114. Technical assistance and training.
Sec. 115. Professional requirements.
Sec. 116. Family literacy services.
Sec. 117. Research and evaluation.
Sec. 118. Reports.
Sec. 119. Repeal of consultation requirement.
Sec. 120. Repeal of Head Start Transition Project Act.
Sec. 121. Effective date; application of amendments.

     TITLE II--AMENDMENTS TO THE COMMUNITY SERVICES BLOCK GRANT ACT

Sec. 201. Short title.
Sec. 202. Reauthorization.
Sec. 203. Related amendments.
Sec. 204. Assets for independence.
Sec. 205. Effective date; application of amendments.

 TITLE III--AMENDMENTS TO THE LOW-INCOME HOME ENERGY ASSISTANCE ACT OF 
                                  1981

Sec. 301. Short title.
Sec. 302. Authorization.
Sec. 303. Definitions.
Sec. 304. Natural disasters and other emergencies.
Sec. 305. State allotments.
Sec. 306. Administration.
Sec. 307. Payments to States.
Sec. 308. Residential energy assistance challenge option.

               TITLE I--AMENDMENTS TO THE HEAD START ACT

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Head Start Amendments Act of 
1998''.

SEC. 102. STATEMENT OF PURPOSE.

    Section 636 of the Head Start Act (42 U.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 
families, of health, educational, nutritional, social, and other 
services 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 (3) through (14) as 
        paragraphs (4) through (15), respectively;
            (2) in paragraph (2)--
                    (i) by striking ``, and the Commonwealth of the 
                Northern Mariana Islands'';
                    (ii) by inserting ``of the United States, and the 
                Commonwealth of the Northern Mariana Islands, but for 
                fiscal years ending before October 1, 2001, also 
                means'' after ``Virgin Islands''; and
                    (iii) by inserting ``and'' after ``Marshall 
                Islands'';
            (3) by inserting after paragraph (2) the following:
            ``(3) The term `child with a disability' means--
                    ``(A) a child with a disability, as defined in 
                section 602(3) of the Individuals with Disabilities 
                Education Act; and
                    ``(B) an infant or toddler with a disability, as 
                defined in section 632(5) of such Act.'';
            (4) by striking paragraph (5) (as redesignated in paragraph 
        (1)) and inserting the following:
            ``(5) The term `family literacy services' means services 
        that--
                    ``(A) are provided to participants who receive the 
                services on a voluntary basis;
                    ``(B) are of sufficient intensity, and of 
                sufficient duration, to make sustainable changes in a 
                family (such as eliminating or reducing dependence on 
                income-based public assistance); and
                    ``(C) integrate each of--
                            ``(i) interactive literacy activities 
                        between parents and their children;
                            ``(ii) training for parents on being 
                        partners with their children in learning;
                            ``(iii) parent literacy training, including 
                        training that contributes to economic self-
                        sufficiency; and
                            ``(iv) appropriate instruction for children 
                        of parents receiving the parent literacy 
                        training.'';
            (5) in paragraph (7) (as redesignated in paragraph (1)), by 
        adding at the end the following: ``Nothing in this 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 for the provision of services to such a child.'';
            (6) by striking paragraph (13) (as redesignated in 
        paragraph (1)) and inserting the following:
            ``(13) The term `migrant or 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 labor and who have 
                changed their residence from 1 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.''; and
            (7) by adding at the end the following:
            ``(16) The term `reliable and replicable', used with 
        respect to research, means an objective, valid, scientific 
        study that--
                    ``(A) includes a rigorously defined sample of 
                subjects, that is sufficiently large and representative 
                to support the general conclusions of the study;
                    ``(B) relies on measurements that meet established 
                standards of reliability and validity;
                    ``(C) is subjected to peer review before the 
                results of the study are published; and
                    ``(D) discovers effective strategies for enhancing 
                the development and skills of children.''.

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)--
                    (A) by inserting ``$4,660,000,000 for fiscal year 
                1999 and'' after ``subchapter''; and
                    (B) by striking ``1995 through 1998'' and inserting 
                ``2000 through 2003''; and
            (2) in subsection (b), by striking paragraphs (1) and (2) 
        and inserting the following:
            ``(1) for each of the fiscal years 1999 through 2003, not 
        more than $35,000,000 and not less than the aggregate amount 
        made available to carry out section 642(d) of this Act and the 
        Head Start Transition Project Act (42 U.S.C. 9855-9855g) for 
        fiscal year 1998, to carry out activities authorized under 
        section 642A;
            ``(2) not more than $5,000,000 for each of the fiscal years 
        1999 through 2003 to carry out impact studies under section 
        649(g);
            ``(3) not more than $12,000,000 for fiscal year 1999, and 
        such sums as may be necessary for each of the fiscal years 2000 
        through 2003, to carry out other research, demonstration, and 
        evaluation activities, including longitudinal studies, under 
        section 649; and
            ``(4) not less than $5,000,000 for each of the fiscal years 
        1999 through 2003, to carry out activities authorized under 
        section 648B.''.

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 subparagraph (A)--
                            (i) by striking ``and migrant'' the 1st 
                        place it appears and all that follows through 
                        ``handicapped children'', and inserting ``Head 
                        Start programs and services for children with 
                        disabilities and migrant or seasonal Head Start 
                        programs''; and
                            (ii) by striking ``and migrant'' each other 
                        place it appears and inserting ``Head Start 
                        programs and by migrant or seasonal''; and
                            (iii) by striking ``1994'' and inserting 
                        ``1998'';
                    (B) in subparagraph (B) by striking ``(B) 
                payments'' and all that follows through ``Virgin 
                Islands'' 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; and
                    ``(ii) for fiscal years ending before October 1, 
                2001, to the Federated States of Micronesia, the 
                Republic of the Marshall Islands, and Palau;'';
                    (C) in subparagraph (C), by striking ``and'' at the 
                end;
                    (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) relating to correcting 
                deficiencies and conducting proceedings to terminate 
                the designation of Head Start agencies); and'';
                    (E) by inserting after subparagraph (D) the 
                following:
            ``(E) payments for research and evaluation activities under 
        section 649.''; and
                    (F) by adding at the end the following: ``In 
                carrying out this subchapter, the Secretary shall 
                continue the administrative arrangement responsible for 
                meeting the needs of children of migrant and seasonal 
                farmworkers and Indian children, and shall ensure that 
                appropriate funding is provided to meet such needs.'';
            (2) in paragraph (3)--
                    (A) in subparagraph (A)(i) by striking ``equal'' 
                and all that follows through ``activities'' and 
                inserting ``subject to subsection (m)'';
                    (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 disabilities'' before ``, when'';
                            (ii) in clause (iv) by inserting ``and to 
                        encourage the staff to continually improve 
                        their skills and expertise by informing staff 
                        of the availability of State and Federal loan 
                        forgiveness programs for professional 
                        development'' before the period at the end;
                            (iii) in clause (v) by inserting ``and 
                        collaboration efforts for such programs'' 
                        before the period at the end; and
                            (iv) by amending clause (vi) to read as 
                        follows:
            ``(vi) Ensuring that such programs have adequate numbers of 
        qualified staff that can promote language skills and literacy 
        growth of children and that provide children with a variety of 
        skills that have been identified, through research that is 
        reliable and replicable, as predictive of later reading 
        achievement.''; and
                    (C) in subparagraph (C)--
                            (i) in clause (i)(I)--
                                    (I) by striking ``of staff'' and 
                                inserting ``of classroom teachers and 
                                other staff''; and
                                    (II) by striking ``such staff'' and 
                                inserting ``qualified staff, including 
                                recruitment and retention pursuant to 
                                achieving the requirements set forth in 
                                section 648A(a)'';
                            (ii) by redesignating subclause (II) as 
                        subclause (III);
                            (iii) by inserting after subclause (I) the 
                        following:
            ``(II) Preferences in awarding salary increases, in excess 
        of cost of living allowances, 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.'';
                            (iv) by amending clause (ii) to read as 
                        follows:
            ``(ii) Of the amount remaining after carrying out clause 
        (i), the highest priority shall be placed on training classroom 
        teachers and other staff to meet the education performance 
        standards described in section 641A(a)(1)(B), through 
        activities--
                    ``(I) to promote children's language and literacy 
                growth, through techniques identified through reliable, 
                replicable 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)(1); 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 services necessary to address the problems of 
                children participating 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.'';
                            (v) by striking clause (v);
                            (vi) by redesignating clause (vi) as clause 
                        (v); and
                            (vii) by inserting after clause (v), as so 
                        redesignated, the following:
            ``(vi) To carry out any or all of such activities, but none 
        of such funds may be used for construction or renovation 
        (including nonstructural or minor structural changes).'';
                    (D) in subparagraph (D)(i)(II) by striking ``and 
                migrant'' and inserting ``Head Start programs and by 
                migrant or seasonal'';
            (3) in paragraph (4)--
                    (A) in subparagraph (A), by striking ``1981'' and 
                inserting ``1998'';
                    (B) by amending subparagraph (B) to read as 
                follows:
            ``(B) any amount 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 than 5 years of age who live with families whose 
        income is below the poverty line.''; and
                    (C) by adding at the end the following:
``For each fiscal year the Secretary shall use the most recent data 
available on the number of children under the age of 5, from families 
below the poverty level that is consistent with that published for 
counties, by the Department of Commerce, unless the Secretary and the 
Secretary of Commerce determine that use of the updated poverty data 
would be inappropriate or unreliable. If the Secretary and the 
Secretary of Commerce determine that some or all of the data referred 
to in this paragraph are inappropriate or unreliable, they shall issue 
a report setting forth their reasons in detail.'';
            (4) in paragraph (5)--
                    (A) in subparagraph (B), by inserting before the 
                period the following ``and encourage Head Start 
                agencies to actively collaborate with entities involved 
                in State and local planning processes in order to 
                better meet the needs of low-income children and 
                families'';
                    (B) 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 ``and education and community 
                                service activities,'';
                                    (II) by striking ``and activities'' 
                                and inserting ``activities''; and
                                    (III) by striking the period and 
                                inserting ``(including coordination 
                                with those State officials who are 
                                responsible for administering part C 
                                and section 619 of the Individuals with 
                                Disabilities 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;
            ``(vi) encourage local Head Start agencies to appoint a 
        State level representative to speak on behalf of Head Start 
        agencies within the State on collaborative efforts described in 
        subparagraphs (B) and (D), and in clause (v); and
            ``(vii) encourage Head Start agencies to collaborate with 
        entities involved in State and local planning processes 
        (including the State lead agency administering 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) by redesignating subparagraph (D) as 
                subparagraph (F); and
                    (D) by inserting after subparagraph (C) the 
                following:
    ``(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 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 and professional 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 child care and early childhood education 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 such programs that would be a 
        barrier to service providers, parents, or children, related to 
        the provision of unified services in the consolidation of 
        funding for child care services.
    ``(ii) In the case of a collaborative activity funded 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 carried out under 
that subchapter or provision, during a period in which the activity is 
predominantly funded under this subchapter or such provision.'';
            (5) by amending paragraph (6) to read as follows:
    ``(6)(A) From the amounts reserved and allotted pursuant to 
paragraphs (2) and (4), and except as provided in subparagraph (C)(i), 
the Secretary shall use for grants for programs described in section 
645A(a) a portion of the combined total of such amount equal to--
            ``(i) 7.5 percent for fiscal year 1999;
            ``(ii) 8 percent for fiscal year 2000;
            ``(iii) 8.5 percent for fiscal year 2001;
            ``(iv) not less than 8.5 and not more than 10 percent for 
        fiscal year 2002; and
            ``(v) not less than 8.5 and not more than 10 percent for 
        fiscal year 2003;
of the amount appropriated pursuant to section 639(a) for the 
respective fiscal year.
    ``(B) If the Secretary does not submit to--
            ``(i) the Committee on Education and the Workforce and the 
        Committee on Appropriations of the House of Representatives; 
        and
            ``(ii) to the Committee on Labor and Human Resources and 
        the Committee on Appropriations of the Senate;
by January 1, 2001, a report on the results of the Early Head Start 
impact study currently being conducted by the Secretary, then the 
amount required to be used in accordance with subparagraph (A) for 
fiscal years 2002 and 2003 shall be 8.5 percent of the amount 
appropriated pursuant to section 639(a) for the respective fiscal year.
    ``(C)(i) For any fiscal year for which the Secretary determines 
that the amount appropriated under section 639(a) is not sufficient to 
permit the Secretary to use the portion described in subparagraph (A) 
without reducing the number of children served by Head Start programs 
or negatively impacting 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 used as the portion described in subparagraph (A) 
for the fiscal year for which the determination is made, but not below 
the percentage required to be so used for the preceding fiscal year.
    ``(ii) For any fiscal year for which the amount appropriated under 
section 639(a) requires a reduction in the amount 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 preceding 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.''; and
            (6) by redesignating paragraph (7) as paragraph (8); and
            (7) by inserting after paragraph (6) the following:
            ``(7)(A) For purposes of paragraph (2)(A), in determining 
        the need and demand for migrant or seasonal Head Start programs 
        (and services provided through such programs), the Secretary 
        shall consult with appropriate entities, including providers of 
        services for migrant or seasonal Head Start programs. The 
        Secretary shall, after taking into consideration the need and 
        demand for migrant or 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 allocation provided for unserved 
        eligible children of seasonal farmworkers. In serving the 
        children of seasonal farmworkers, the Secretary shall ensure 
        that services provided by migrant or seasonal Head Start 
        programs do not duplicate or overlap with other Head Start 
        services available in the same geographical area.
            ``(B)(i) Funds available under this subsection for payments 
        to the Federated States of Micronesia, the Republic of the 
        Marshall Islands, and Palau shall be used by the Secretary to 
        make grants on a competitive basis, pursuant to recommendations 
        submitted to the Secretary by the Pacific Region Educational 
        Laboratory of the Department of Education, to the Federated 
        States of Micronesia, the Republic of the Marshall Islands, 
        Palau, Guam, American Samoa, and the Commonwealth of the 
        Northern Mariana Islands, for the purpose of carrying out Head 
        Start programs in accordance with this subchapter.
            ``(ii) Not more than 5 percent of such funds may be used by 
        the Secretary to compensate the Pacific Region Educational 
        Laboratory of the Department of Education for administrative 
        costs incurred in connection with making recommendations under 
        clause (i).
            ``(iii) Notwithstanding any other provision of law, the 
        Federated States of Micronesia, the Republic of the Marshall 
        Islands, and Palau shall not receive any funds under this 
        subchapter for any fiscal year that begins after September 30, 
        2001.''.
    (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 
        Individuals with Disabilities Education Act)''; and
            (3) by adding at the end the following:
``Such policies and procedures shall require Head Start programs 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 (1), by inserting at the end the 
        following: ``In awarding funds to serve an increased number of 
        children, the Secretary shall give priority to those applicants 
        that provide full-working-day, full-calendar year Head Start 
        services through collaboration with entities carrying out 
        programs that are in existence on the date of the allocation 
        and with other private, nonprofit agencies. Any such additional 
        funds remaining may be used to make nonstructural and minor 
        structural changes, and to acquire and install equipment, for 
        the purpose of improving facilities necessary to expand the 
        availability of Head Start programs and to serve an increased 
        number of children.'';
            (2) 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 
                programs (other than the program carried out under this 
                subchapter);'';
                    (B) in subparagraph (C), by striking the semicolon 
                and inserting ``, and organizations and public entities 
                serving 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 ``or any other early childhood 
                program;'';
                    (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 
        services, will plan to coordinate with the local educational 
        agency serving 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 the 
        education services provided by such local educational 
        agency.'';
            (3) in paragraph (3) by striking ``In'' and inserting 
        ``Subject to subsection (m), in''; and
            (4) by adding at the end the following:
    ``(4) Notwithstanding subsection (a)(2), after taking into account 
subsection (a)(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 
subsection.''.
    (d) References.--Section 640(l) of the Head Start Act (42 U.S.C. 
9835(l)) is amended by inserting ``or seasonal'' after ``migrant'' each 
place it appears.
    (e) Relative Availability of Funds for Quality and for Expansion.--
Section 640 of the Head Start Act (42 U.S.C. 9835) is amended by adding 
at the end the following:
    ``(m)(1) After complying with the requirement in subsection (g)(1) 
relating to maintaining the level of services provided during the 
previous year, the Secretary shall make the amount (if any) by which 
the funds appropriated under section 639(a) for a fiscal year exceed 
the adjusted prior year appropriation (as defined in subsection 
(a)(3)(ii)), available as follows:
      

                                                                                                                
                                                                                            Percent of Amount   
                                                                                            Exceeding Adjusted  
                                          Percent of Amount        Percent of Amount            Prior Year      
                                          Exceeding Adjusted       Exceeding Adjusted      Appropriation To Be  
                                              Prior Year               Prior Year        Available to Qualifying
          ``For Fiscal Year:             Appropriation To Be      Appropriation To Be    Head Start Programs for
                                        Available for Quality   Available for Expansion   Quality and Expansion 
                                           Activities Under         Activities Under         Activities Under   
                                        Subsection (a)(3)(C):       Subsection (g):       Subsections (a)(3)(C) 
                                                                                                 and (g)        
                                                                                                                
                 1999                             65                       25                       10          
                 2000                             65                       25                       10          
                 2001                             45                       45                       10          
                 2002                             45                       45                       10          
                 2003                             25                       65                       10.         
                                                                                                                

    ``(2) For purposes of paragraph (1), the term `qualifying Head 
Start program' means a Head Start agency or Head Start program that 
is--
            ``(A) in compliance with the quality standards and result-
        based performance measures applicable under subsections (a) and 
        (b) of section 641A;
            ``(B) not required under subsection (d) of such section to 
        take a corrective action; and
            ``(C) making progress toward complying with requirements 
        applicable under section 648A(a)(2).
    ``(3) Funds required to be made available under this subsection to 
qualifying Head Start programs shall be made available on the same 
basis as allotments are determined under subsection (a)(4).''.
    (f) Conforming Amendment.--Section 644(f)(2) of the Head Start Act 
(42 U.S.C. 9839(f)(2)) is amended by striking ``640(a)(3)(C)(v)'' and 
inserting ``640(g)''.

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) 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 ``Secretary'' the last place it appears;
            (2) in subsection (b) by striking ``area designated by the 
        Bureau of Indian Affairs as near-reservation'' and inserting 
        ``off-reservation area designated by an appropriate tribal 
        government'';
            (3) in subsection (c)--
                    (A) in paragraph (1)--
                            (i) by inserting ``, in consultation with 
                        the chief executive officer of the State if 
                        such State expends non-Federal funds to carry 
                        out Head Start programs,'' after ``shall''; and
                            (ii) 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, performance standards described in 
section 641A(a)(1), results-based performance measures described in 
section 641A(b), and 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 programs,'' after ``shall''; and
                    (C) by aligning the left margin of paragraphs (2) 
                and (3) with the left margin of paragraph (1); and
            (4) in subsection (d)--
                    (A) in the matter preceding paragraph (1), by 
                inserting after the 1st 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.)'';
                    (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 ``and (E)'';
                            (iv) by redesignating subparagraphs (D) and 
                        (E) and subparagraphs (E) and (F), 
                        respectively; and
                            (v) by inserting after subparagraph (C) the 
                        following:
                    ``(D) to 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;'';
                    (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 families, including needs 
        related to the acquisition of the English 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 disabilities;''; 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.''; and
            (5) by amending subsection (e) to read as follows:
    ``(e) If no agency in the community receives priority designation 
and if there is no qualified applicant in the community, then the 
Secretary shall designate an agency to carry out the Head Start program 
in the community on an interim basis until a qualified applicant from 
the community is so designated.''.

SEC. 108. QUALITY STANDARDS.

    (a) Quality Standards.--Section 641A(a) of the Head Start Act (42 
U.S.C. 9836a(a)) is amended--
            (1) in paragraph (1)--
                    (A) in the matter preceding subparagraph (A), by 
                inserting ``, including minimum levels of overall 
                accomplishment,'' 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 school readiness performance 
                standards (based on cognitive learning abilities) to 
                ensure that the children participating in the program, 
                at a minimum--
                            ``(I) develop phonemic, print, and numeracy 
                        awareness;
                            ``(II) understand and use oral language to 
                        communicate for different purposes;
                            ``(III) 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 
                        children, progress toward acquisition of the 
                        English language.'';
            (2) by striking paragraph (2);
            (3) 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 
                                year after the date of enactment of 
                                this section,''; and
                                    (II) by striking ``section 651(b)'' 
                                and all that follows through 
                                ``section'' and inserting ``this 
                                subsection''; and
                            (ii) in subclause (ii), by striking 
                        ``November 2, 1978'' and inserting ``the date 
                        of enactment of the Head Start Amendments Act 
                        of 1998''; and
            (4) by redesignating paragraphs (3) and (4) as paragraphs 
        (2) and (3), respectively.
    (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''; and
                    (C) by striking the period at the end and inserting 
                ``, and the impact of the services provided through the 
                programs to children and their families.'';
            (3) in paragraph (2)--
                    (A) in the heading, by striking ``Design'' and 
                inserting ``Characteristics'';
                    (B) in the matter preceding subparagraph (A), by 
                striking ``be designed'' and inserting ``include the 
                education and school-based readiness performance 
                standards described in subsection (a)(1)(B) and 
                shall'';
                    (C) in subparagraph (A), by striking ``to assess'' 
                and inserting ``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 January 
                        1, 1999'' before the semicolon at the end; and
                    (E) in subparagraph (C), by inserting ``be 
                developed'' before ``for other'';
            (4) in paragraph (3)(A) by striking ``and by region'' and 
        inserting ``, regionally, and locally''; and
            (5) by adding at the end the following:
            ``(4) Required results-based performance measures.--Such 
        results-based performance measures shall ensure that such 
        children--
                    ``(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) Other results-based performance measures.--In 
        addition to other applicable results-based performance 
        measures, Head Start agencies may establish their own results-
        based school readiness 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'' after ``standards''; and
            (2) in paragraph (2)
                    (A) in subparagraph (B), by striking ``and'' at the 
                end;
                    (B) in subparagraph (C)--
                            (i) by inserting ``(including children with 
                        disabilities)'' 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 measured in accordance with the 
                results-based performance measures developed pursuant 
                to subsection (b) and with the performance standards 
                established pursuant to subparagraphs (A) and (B) of 
                subsection (a)(1); and
                    ``(E) seek information from the community and the 
                State about the performance of the program and its 
                efforts 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 
                measures described in 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) concerning a 
                        quality improvement plan; and''; and
            (2) in paragraph (2)(A), in the matter preceding clause 
        (i), by striking ``immediately'' and inserting ``immediately or 
        during a 90-day period under clause (i) or (ii) of paragraph 
        (1)(B)''.
    (e) Report.--Section 641A(e) of the Head Start Act (42 U.S.C. 
9836a(e)) is amended by adding at the end the following: ``Such 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 (b)--
                    (A) in paragraph (6)--
                            (i) by striking subparagraph (D); and
                            (ii) by redesignating subparagraphs (E) and 
                        (F) and subparagraphs (D) and (E), 
                        respectively;
                    (B) in paragraph (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;''; and
                    (F) 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 under this subtitle about the availability of child 
        support services for purposes of establishing paternity and 
        acquiring child support;
            ``(B) refer eligible parents to the child support offices 
        of State and local governments; and
            ``(C) establish referral arrangements with such offices.'';
            (2) in subsection (c)--
                    (A) by inserting ``and collaborate'' after 
                ``coordinate'';
                    (B) by inserting ``and 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.)''; and
                    (C) 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 childhood education and 
                development''; and
            (3) 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 maintain'';
                            (ii) by inserting ``and educational'' after 
                        ``developmental''; and
                            (iii) by striking ``to build'' and 
                        inserting ``build'';
                    (B) by striking paragraph (2); and
                    (C) by redesignating paragraphs (3) through (5) as 
                paragraphs (2) through (4), respectively.

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.

    ``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 program 
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 
        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 
        coordination of programs;
            ``(3) conducting meetings involving parents, kindergarten 
        or elementary school teachers, and Head Start program teachers 
        to discuss the educational, developmental, and other needs of 
        individual children;
            ``(4) organizing and participating 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 program with 
        the education services provided by such local education 
        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 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 transmitted to 
        such officer''.

SEC. 112. PARTICIPATION IN HEAD START PROGRAMS.

    Section 645(a) of the Head Start Act (42 U.S.C. 9840(a)) is 
amended--
            (1) in the last sentence of paragraph (1)--
                    (A) by striking ``provide (A) that'' and inserting 
                the following:
``provide--
            ``(A) that''; and
                    (B) by amending subparagraph (B) to read as 
                follows:
            ``(B) pursuant to such regulations as the Secretary shall 
        prescribe, that programs assisted under this subchapter may--
                    ``(i) include 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 income during the 12 months 
                preceding the month in which the application 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;
                    ``(ii) permit not more than 25 percent of the 
                children enrolled in a Head Start program to be 
                children (without counting children with disabilities) 
                whose family income does not exceed 140 percent of the 
                poverty line if the Head Start agency carrying out such 
                program--
                            ``(I) has a community needs assessment that 
                        demonstrates a need to provide Head Start 
                        services to more of such children who are 
                        members of families with incomes that exceed 
                        the poverty line but do not exceed 140 percent 
                        of the poverty line; and
                            ``(II) ensures that, as a result of 
                        enrolling a greater percentage of children 
                        described in this clause, there will not be a 
                        reduction in, or denial of, Head Start services 
                        to children who are eligible under subparagraph 
                        (A);
                    ``(iii) subject to the approval of the Secretary, 
                permit such Head Start agency that demonstrates to the 
                Secretary that it has made reasonable efforts to enroll 
                children eligible under subparagraph (A) in the Head 
                Start program carried out by such agency, to charge 
                participation fees for children described in clause 
                (ii), consistent with the sliding fee schedule 
                established by the State under section 658E(c)(5) of 
                the of the Child Care and Development Block Grant Act 
                of 1990 (42 U.S.C. 9858c(c)(5)).'';
            (2) by redesignating paragraph (2) as paragraph (3); and
            (3) by inserting after paragraph (1) the following:
    ``(2) 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 copayment is required in conjunction with the 
partnership. The copayment shall not exceed the copayment charged to 
families with similar incomes and circumstances who are receiving the 
services through participation in a program carried out by another 
agency or entity.''.

SEC. 113. EARLY HEAD START PROGRAMS FOR FAMILIES WITH INFANTS AND 
              TODDLERS.

    (a) Program.--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 ``; and'' 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 ``community'';
                    (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 described in 
        section 644(b) of the Individuals With Disabilities Education 
        Act Amendments of 1997 and providers of early intervention 
        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)--
                    (A) by striking ``(a)(1)'' and inserting ``(a)''; 
                and
                    (B) in paragraph (2), by striking ``(or under'' and 
                all that follows through ``(e)(3))'';
            (5) in subsection (d)--
                    (A) in paragraph (1), by inserting ``and'' at the 
                end;
                    (B) by striking paragraph (2); and
                    (C) in paragraph (3) by redesignating such 
                paragraph as paragraph (2);
            (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 
        operation 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 tailored 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 any 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 
                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 of 
                        grants under subsection (a) and support and 
                        program planning and implementation assistance 
                        for new recipients of such grants; and
                            ``(iv) providing professional development 
                        and personnel enhancement activities, including 
                        the provision of funds to recipients of grants 
                        under subsection (a) for the recruitment and 
                        retention of qualified staff with an 
                        appropriate level of education and 
                        experience.''.
    (b) Conforming Amendment.--Section 640(a)(5)(F) of the Head Start 
Act (42 U.S.C. 9835(a)(5)(F)), as so redesignated by section 106, is 
amended by striking ``section 645(a)(1)(A)'' and inserting ``section 
645(a)''.

SEC. 114. TECHNICAL ASSISTANCE AND TRAINING.

    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 at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(3) ensure the provision of technical assistance to 
        assist Head Start agencies, entities carrying out other child 
        care and early childhood programs, communities, and States in 
        collaborative efforts to provide quality full-working-day, 
        full-calendar-year services, including technical assistance 
        related to identifying and assisting in resolving barriers to 
        collaboration.''; 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 
                deficiencies identified through reviews pursuant to 
                section 641A(c) (including the provision of assistance 
                to local programs in the development of quality 
                improvement plans under section 641A(d)(2)); and
                    ``(B) assisting Head Start agencies in--
                            ``(i) ensuring the school readiness of 
                        children; and
                            ``(ii) meeting the education and school 
                        readiness performance standards described in 
                        this subchapter;'';
                    (B) in paragraph (2) by inserting ``supplement 
                amounts provided under section 640(a)(3)(C)(ii),'' 
                after ``(2)'';
                    (C) in paragraph (4)--
                            (i) by inserting ``and implementing'' after 
                        ``developing''; and
                            (ii) by striking ``a longer day'' and 
                        inserting the following: ``the day, and assist 
                        the agencies and programs 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'' at the 
                end;
                    (E) by redesignating paragraphs (3) through (8) as 
                paragraphs (5) through (10), respectively; and
                    (F) 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) assist classroom and non-classroom staff, including 
        individuals in management and leadership capacities, to 
        understand the components of effective family literacy 
        services, gain knowledge about proper implementation of such 
        services within a Head Start program, and receive assistance to 
        achieve successful collaboration agreements with other service 
        providers that allow the effective integration of family 
        literacy services with the Head Start program;''.

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 program 
        is assigned 1 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 readiness 
                of children for school by developing their literacy and 
                phonemic, print, and numeracy awareness, their 
                understanding and use of oral 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 
                learning 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.--The Secretary shall ensure that 
        not later than September 30, 2003, at least 50 percent of all 
        Head Start classrooms in a center-based program are assigned 1 
        teacher who has an associate, baccalaureate, or an advanced 
        degree in early childhood education or development and shall 
        require Head Start agencies to demonstrate continuing progress 
        each year to reach that result. In the remaining balance of 
        such classrooms, there shall be assigned one teacher who has--
                    ``(A) a child development associate (CDA) 
                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 development 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.
            ``(3) Assessment.--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 has 
        mastered the functions described in paragraph (1)(A).''; 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. FAMILY LITERACY SERVICES.

    The Head Start Act (42 U.S.C. 9831 et seq.) is amended by inserting 
after section 648A the following:

``SEC. 648B. FAMILY LITERACY SERVICES.

    ``From funds reserved under section 639(b)(4), the Secretary--
            ``(1) shall provide grants through a competitive process, 
        based upon the quality of the family literacy service proposal 
        and taking into consideration geographic and urban/rural 
        representation, for not more than 100 Head Start agencies to 
        initiate provision of family literacy services through 
        collaborative partnerships with entities that provide adult 
        education services, entities carrying out Even Start programs 
        under part B of chapter 1 of title 1 of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 274 et seq.), or 
        entities that provide other services deemed necessary for the 
        provision of family literacy services; and
            ``(2) may--
                    ``(A) provide training and technical assistance to 
                Head Start agencies that already provide family 
                literacy services;
                    ``(B) designate as mentor programs, and provide 
                financial assistance to, Head Start agencies that 
                demonstrate effective implementation of family literacy 
                services, based on improved outcomes of children and 
                their parents, to enable such agencies to provide 
                training and technical assistance to other agencies 
                that seek to implement, or improve implementation of, 
                family literacy services; and
                    ``(C) award grants or make other assistance 
                available to facilitate training and technical 
                assistance to programs for development of collaboration 
                agreements with other service providers.
In awarding such grants or assistance, the Secretary shall give special 
consideration to an organization that has experience in the development 
and operation of successful family literacy services.''.

SEC. 117. 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 ``; and'';
                    (C) by redesignating paragraphs (2) through (7) as 
                paragraphs (3) through (8), respectively;
                    (D) by inserting after paragraph (1) the following:
            ``(2) over a 5-year period, lead to the development and 
        rigorous evaluation of models for the integration of family 
        literacy services with Head Start programs, that demonstrate 
        the ability to make positive gains for children participating 
        in Head Start programs and their parents, and dissemination of 
        information about such models;''; and
                    (E) by adding at the end the following:
            ``(9) study the experiences of small, medium, and large 
        States with Head Start programs in order to permit comparisons 
        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.
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 the 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) Analyses of data bases.--The Secretary shall obtain 
        analyses of the following existing databases to guide the 
        evaluation recommendations of the expert panel appointed under 
        paragraph (2) and to provide Congress with initial reports of 
        potential Head Start outcomes--
                    ``(A) by use of The Survey of Income and Program 
                Participation (SIPP) conduct an analysis of the 
                different income levels of Head Start participants 
                compared to comparable persons who did not attend Head 
                Start;
                    ``(B) by use of The National Longitudinal Survey of 
                Youth (NLSY) which began gathering data on children who 
                attended Head Start from 1988 on, examine the wide 
                range of outcomes measured within the Survey, including 
                cognitive, socio-emotional, behavioral, and academic 
                development;
                    ``(C) by use of The Survey of Program Dynamics, the 
                new longitudinal survey required by the Personal 
                Responsibility and Work Opportunity Reconciliation Act 
                of 1996, to begin annual reporting, through the 
                duration of the Survey, on Head Start attendees' 
                academic readiness performance and improvements; and
                    ``(D) to ensure that The Survey of Program Dynamics 
                be linked with the NLSY 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 NLSY 
                database.
            ``(2) Expert panel.--
                    ``(A) In general.--The Secretary shall appoint an 
                independent panel consisting of experts in program 
                evaluation and research, education, and early childhood 
                programs--
                            ``(i) to review, and make recommendations 
                        on, the design and plan for the research 
                        (whether conducted as a single assessment or as 
                        a series of assessments), described in 
                        paragraph (3), within 1 year after the date of 
                        enactment of the Human Services Reauthorization 
                        Act of 1998;
                            ``(ii) to maintain and advise the Secretary 
                        regarding the progress of the research; and
                            ``(iii) to comment, if the panel so 
                        desires, on the interim and final research 
                        reports submitted under paragraph (8).
                    ``(B) Travel expenses.--The members of the panel 
                shall not receive compensation for the performance of 
                services for the panel, but shall be allowed travel 
                expenses, including per diem in lieu of subsistence, at 
                rates authorized 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.
            ``(3) General authority.--After reviewing the 
        recommendations of the expert panel the Secretary shall enter 
        into a grant, contract, or cooperative agreement with an 
        organization to conduct independent research that provides a 
        national analysis of the impact of Head Start programs. The 
        Secretary shall ensure that the organization shall have 
        expertise in program evaluation, and research, education, and 
        early childhood programs.
            ``(4) 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 
        recognized standardized measures, and random selection and 
        assignment, as appropriate. The Secretary may provide that the 
        research shall be conducted as a single comprehensive 
        assessment or as a group of coordinated assessments designed to 
        provide, when taken together, a national analysis of the impact 
        of Head Start programs.
            ``(5) Programs.--The Secretary shall ensure that the 
        research focuses primarily on Head Start programs that operate 
        in the several States, the Commonwealth of Puerto Rico, or the 
        District of Columbia and that do not specifically target 
        special populations.
            ``(6) 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 increasing 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 
                        children in cognitive, emotional, and physical 
                        health areas;
                            ``(II) strengthen families as the primary 
                        nurturers of their children; and
                            ``(III) 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 educational, health, and 
                        nutritional services, and linking children and 
                        families to needed community services; and
                            ``(II) how receipt of services described in 
                        subclause (I) enriches the lives of children 
                        and families participating in Head Start 
                        programs;
                    ``(B) examines the impact of Head Start programs on 
                participants on the date the participants leave Head 
                Start programs, at the end of kindergarten, and at the 
                end of first grade, by examining 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 (5) in selecting programs for inclusion in 
                the research; and
                    ``(D) includes comparisons of individuals who 
                participate in Head Start programs with control groups 
                (including comparison groups) composed of--
                            ``(i) individuals who participate in other 
                        early childhood programs (such as preschool 
                        programs and day care); and
                            ``(ii) individuals who do not participate 
                        in any other early childhood program.
            ``(7) Consideration of sources of variation.--In designing 
        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 
                educational agency or a community action agency) 
                providing services for the Head Start program;
                    ``(F) the number of hours and days of program 
                operation 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 
                participant characteristics), as appropriate.
            ``(8) Reports.--
                    ``(A) Submission of interim reports.--The 
                organization shall prepare and submit to the Secretary 
                2 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 preliminary findings of the 
                research, as appropriate.
                    ``(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 Senate.
            ``(9) 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 
        Congress not later than September 2000 a report containing the 
        results of the study, including--
                    ``(A) the types of activities funded with the 
                quality improvement funds;
                    ``(B) the extent to which the use of the quality 
                improvement funds has accomplished the goals of section 
                640(a)(3)(B); and
                    ``(C) the effect of use of the quality improvement 
                funds on teacher training, salaries, benefits, 
                recruitment, and retention.''.

SEC. 118. 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'';
            (3) in paragraph (14) by striking ``and seasonal'' and 
        inserting ``or seasonal''; and
            (4) by adding at the end the following:
    ``(b) Facilities.--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 Committee on 
Labor and Human Resources of the Senate, a report concerning the 
condition, location, and ownership of facilities used, or available to 
be used, by Indian Head Start agencies.''.

SEC. 119. REPEAL OF CONSULTATION REQUIREMENT.

    Section 657A of the Head Start Act (42 U.S.C. 9852a) is repealed.

SEC. 120. REPEAL OF HEAD START TRANSITION PROJECT ACT.

    The Head Start Transition Project Act (42 U.S.C. 9855-9855g) is 
repealed.

SEC. 121. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

    (a) Effective Date.--Except as provided in subsection (b), this 
title and the amendments made by this title shall take effect on the 
date of the enactment of this Act.
    (b) Application of Amendments.--The amendments made by this title 
shall not apply with respect to any fiscal year ending before October 
1, 1998.

     TITLE II--AMENDMENTS TO THE COMMUNITY SERVICES BLOCK GRANT ACT

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Community Services Authorization 
Act of 1998''.

SEC. 202. REAUTHORIZATION.

    The heading for subtitle B, and sections 671 through 680, of the 
Community Services Block Grant Act (42 U.S.C. 9901-9909) are amended to 
read as follows:

          ``Subtitle B--Community Services Block Grant Program

``SEC. 671. SHORT TITLE.

    ``This subtitle may be cited as the `Community Services Block Grant 
Act'.

``SEC. 672. PURPOSES AND GOALS.

    ``The purpose of this subtitle is 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 and 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.)). Such 
goals may be accomplished through--
            ``(1) the strengthening of community capabilities for 
        planning, coordinating, and utilizing a broad range of Federal, 
        State, local, and private resources for the elimination of 
        poverty, and for helping individuals and families achieve self-
        sufficiency;
            ``(2) greater use of innovative and effective, community-
        based approaches to attacking the causes and effects of poverty 
        and of community breakdown;
            ``(3) the maximum participation of residents of the low-
        income communities and members of the groups served by programs 
        assisted through the block grant to empower such individuals to 
        respond to the unique problems and needs within their 
        communities; and
            ``(4) the broadening of the resource base of programs 
        directed to the elimination of poverty so as to secure a more 
        active role for private, faith-based, charitable, and 
        neighborhood organizations in the provision of services as well 
        as individual citizens, business, labor, and professional 
        groups who are able to influence the quantity and quality of 
        opportunities and services for the poor.

``SEC. 673. DEFINITIONS.

    ``In this subtitle:
            ``(1) Eligible entity.--The term `eligible entity' means an 
        entity--
                    ``(A) that is an eligible entity described in 
                section 673(1) (as in effect on the day before the date 
                of enactment of the Human Services Reauthorization Act 
                of 1998) as of 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 designated); and
                    ``(B) that has a tripartite board or other 
                mechanism described in subsection (a) or (b), as 
                appropriate, of section 676B.
            ``(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 the poverty line 
        annually (or at any shorter interval the Secretary determines 
        to be feasible and desirable) 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 poverty line 
        by the percentage change in the Consumer Price Index for All 
        Urban Consumers during the annual or other interval immediately 
        preceding the time at which the revision is made. Whenever a 
        State determines that it serves the objectives 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 `private, 
        nonprofit organization' includes a faith-based 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, but for 
        fiscal years ending before October 1, 2001, includes the 
        Federated States of Micronesia, the Republic of he Marshall 
        Islands, and Palau.

``SEC. 674. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) In General.--There are authorized to be appropriated 
$535,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of fiscal years 2000 through 2003 to carry out the provisions of 
this subtitle (other than sections 681 and 682).
    ``(b) Reservations.--Of the amounts appropriated under subsection 
(a) for each fiscal year, the Secretary shall reserve--
            ``(1) \1/2\ of 1 percent for carrying out section 675A 
        (relating to payments for territories);
            ``(2) 1 \1/2\ percent for activities authorized in sections 
        678A through 678F, of which--
                    ``(A) not less than \1/2\ of the amount reserved by 
                the Secretary under this paragraph shall be distributed 
                directly to local eligible entities or to statewide 
                organizations whose membership is composed of eligible 
                entities, as required under section 678A(c) for the 
                purpose of carrying out activities described in section 
                678A; and
                    ``(B) \1/2\ of the remainder of the amount reserved 
                by the Secretary under this paragraph shall be used to 
                carry out monitoring, evaluation, and corrective 
                activities described in sections 678B(c) and 678A; and
            ``(3) not more than 9 percent for carrying out section 680 
        (relating to discretionary activities).

``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.

``SEC. 675A. DISTRIBUTION TO TERRITORIES.

    ``(a) Apportionment.--The Secretary shall apportion the amount 
reserved under section 674(b)(1)--
            (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; and
            (2) for fiscal years ending before October 1, 2001, and 
        subject to subsection (c), on the basis of need among the 
        Federated States of Micronesia, the Republic of the Marshall 
        Islands, and Palau.
    ``(b) Application.--Each jurisdiction to which subsection (a) 
applies may receive a grant under this subtitle 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 
subtitle, and that are consistent with the requirements of section 676.
    ``(c) Limitation.--(1) Funds apportioned under subsection (a) for 
the Federated States of Micronesia, the Republic of the Marshall 
Islands, and Palau shall be used by the Secretary to make grants on a 
competitive basis, pursuant to recommendations submitted to the 
Secretary by the Pacific Region Educational Laboratory of the 
Department of Education, to the Federated States of Micronesia, the 
Republic of the Marshall Islands, Palau, Guam, American Samoa, and the 
Commonwealth of the Northern Mariana Islands, for the purpose of 
carrying out programs in accordance with this subtitle.
    ``(2) Not more than 5 percent of such funds may be used by the 
Secretary to compensate the Pacific Region Educational Laboratory of 
the Department of Education for administrative costs incurred in 
connection with making recommendations under paragraph (1).
    ``(3) Notwithstanding any other provision of law, the Federated 
States of Micronesia, the Republic of the Marshall Islands, and Palau 
shall not receive any funds under this subtitle for any fiscal year 
that begins after September 30, 2001.

``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 remains 
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 year 
1981 under such section, except that no State shall receive less than 
\1/4\ of 1 percent of the amount appropriated under section 674(a) for 
such fiscal year.
    ``(b) Allotments 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 
        reservations required in section 674(b) exceeds $345,000,000, 
        the Secretary shall allot to each State not less than \1/2\ of 
        1 percent of the amount appropriated under section 674(a) for 
        such fiscal year.
            ``(2) Maintenance of 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 subsection (a) to such 
        State for fiscal year 1990.
            ``(3) Maximum allotments.--The amount allotted under 
        paragraph (1) to a State shall be reduced for a fiscal year, if 
        necessary, so that the aggregate amount allotted to such State 
        under such paragraph and subsection (a) does not exceed 140 
        percent of the aggregate amount allotted to such State under 
        the corresponding provisions of this subtitle for the fiscal 
        year preceding the fiscal year for which a determination is 
        made under this subsection.
    ``(c) Allotment of Additional Funds.--Notwithstanding subsections 
(a) and (b), in any fiscal year in which the amount appropriated under 
section 674(a) exceeds the amount appropriated under such section for 
fiscal year 1999, such excess shall be allotted among the States 
proportionately based on--
            ``(1) the number of public assistance recipients in the 
        respective States;
            ``(2) the number of unemployed individuals in the 
        respective States; and
            ``(3) the number of individuals with incomes below the 
        poverty line in the respective States.
    ``(d) Payments.--The Secretary shall make payments to eligible 
States from the allotments made under this section. The Secretary shall 
make payments for the grants in accordance with section 6503(a) of 
title 31, United States Code.
    ``(e) Definition.--For purposes of 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.

    ``(a) Grants to Local Eligible Entities and Other Organizations.--
            ``(1) In general.--Not less than 90 percent of the funds 
        allotted to a State under section 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 
        paragraph (1) for a fiscal year shall be available for 
        obligation during that fiscal year and the succeeding fiscal 
        year, in accordance with paragraph (3).
            ``(3) Recapture and redistribution of 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 if such unobligated funds exceed 20 percent 
                of the amount so distributed to such eligible entity 
                for such fiscal year.
                    ``(B) Redistribution.--In redistributing funds 
                recaptured 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.
    ``(b) Statewide Activities.--
            ``(1) Use of remainder.--If a State uses less than 100 
        percent of the State allotment to make grants under subsection 
        (a), the State shall use the remainder of the allotment 
        (subject to paragraph (2)) for activities which may include--
                    ``(A) providing training and technical assistance 
                to those entities in need of such training and 
                assistance;
                    ``(B) coordinating State-operated programs and 
                services targeted to low-income children and families 
                with services provided by eligible entities and other 
                organizations funded under this subtitle, including 
                detailing 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 
                communication 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 
                conducted by community action agencies or other 
                neighborhood-based organizations to eliminate poverty, 
                promote self-sufficiency, and promote community 
                revitalization;
                    ``(G) supporting other activities, consistent with 
                the purposes of this subtitle; and
                    ``(H) State charity tax credits as described in 
                subsection (c).
            ``(2) Administrative cap.--No State may spend more than the 
        greater of $55,000, or 5 percent, of the State's allotment 
        received under section 675B for administrative expenses, 
        including monitoring activities. Funds to be spent for such 
        expenses shall be taken from the portion of the State allotment 
        that remains after the State makes grants to eligible entities 
        under subsection (a).<plus-minus> The cost of activities 
        conducted under paragraph (1)(A) shall not be considered to be 
        administrative expenses.
    ``(c)(1) Subject to paragraph (2), if there is in effect under 
State law a charity tax credit, then the State may use for any purpose 
the amount of the allotment that is available for expenditure under 
subsection (b).
    ``(2) 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) For purposes of this subsection:
            ``(A) Charity tax credit.--The term `charity tax credit' 
        means a nonrefundable credit against State income tax (or, in 
        the case of a State which does not impose an income tax, a 
        comparable benefit) which is allowable for contributions, in 
        cash or in kind, to qualified charities.
            ``(B) Qualified Charity.--
                    ``(i) In General.--The term `qualified charity' 
                means any organization--
                            ``(I) which 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) a community action agency as 
                                defined in the Economic Opportunity Act 
                                of 1964; or
                                    ``(cc) a public housing agency as 
                                defined in section 3(b)(6) of the 
                                United States Housing Act of 1937 (42 
                                U.S.C. 1437A(b)(6));
                            ``(II) which 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, which 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 qualified 
                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 writing that the 
                        contribution is for the qualified charity.
                            ``(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) which solicits and collects 
                                gifts and grants which, by agreement, 
                                are distributed to qualified charities 
                                described in clause (i);
                                    ``(bb) which distributes to 
                                qualified charities described in clause 
                                (i) at least 90 percent of the gifts 
                                and grants it receives that are 
                                designated for such qualified 
                                charities; and
                                    ``(cc) which meets the requirements 
                                of clause (vi).
                    ``(iii) Charity must primarily assist poor 
                individuals.--
                            ``(I) In general.--An organization 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 
                        official poverty line (as defined by the Office 
                        of Management and Budget) in order to prevent 
                        or alleviate poverty among such individuals and 
                        families.
                            ``(II) No 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 subclause (I) if such individuals 
                        or families are members of groups which are 
                        generally recognized as including substantially 
                        only individuals and families described in 
                        subclause (I).
                            ``(III) Food aid and homeless shelters.--
                        Except as otherwise provided by the appropriate 
                        State authority, for purposes of subclause (I), 
                        services 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 
                        operation of such services are such that the 
                        service provider may reasonably conclude that 
                        the beneficiaries 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 than 75 
                        percent of the annual aggregate expenses of 
                        such organization.
                            ``(II) Poverty program expense.--For 
                        purposes of subclause (I)--
                                    ``(aa) In general.--The term 
                                `poverty program expense' means any 
                                expense in providing program 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 attendance, and any 
                                expense which consists of a payment to 
                                an affiliate of the organization.
                    ``(v) Reporting requirement.--The information 
                required to be furnished under this clause is--
                            ``(i) the percentages determined by 
                        dividing the following categories of the 
                        organization's expenses for the year by its 
                        total expenses for the year: program services, 
                        management expenses, general expenses, 
                        fundraising expenses, and payments to 
                        affiliates; and
                            ``(ii) the category or categories 
                        (including food, shelter, education, substance 
                        abuse, job training, or otherwise) of services 
                        which constitute its predominant activities.
                    ``(vi) Additional requirements for collection 
                organizations.--The requirements of this clause are met 
                if the organization--
                            ``(I) maintains separate accounting for 
                        revenues and expenses; and
                            ``(II) makes available to the public its 
                        administrative and fundraising costs and 
                        information as to the organizations receiving 
                        funds from it and the amount of such funds.
                    ``(vii) Special rule for states requiring tax 
                uniformity.--In the case of a State--
                            ``(I) which has a constitutional 
                        requirement of tax uniformity; and
                            ``(II) which, 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 insofar 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 is limited to a uniform 
                percentage (but not greater than 25 percent) of State 
                personal income tax liability (determined without 
                regard to credits).
    ``(4) 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.

    ``(a) Designation of Lead Agency.--
            ``(1) Designation.--The chief executive officer of a State 
        desiring to receive an allotment under this subtitle 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 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 1 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 allotment for the period covered by the 
                State plan; and
                    ``(C) conduct reviews of eligible entities under 
                section 678B.
            ``(3) Legislative hearing.--The State shall hold at least 1 
        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 an allotment under this subtitle, 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 the Secretary shall require, 
including--
            ``(1) an assurance that funds made available through the 
        allotment will be used to support activities that are designed 
        to assist low-income families and individuals, including 
        families and individuals receiving assistance under title IV of 
        the Social Security Act, homeless families and individuals, 
        migrant or seasonal farmworkers, and elderly low-income 
        individuals and families, and a description of how such 
        activities will enable the families and individuals--
                    ``(A) to remove obstacles and solve problems that 
                block the achievement of self-sufficiency (particularly 
                for families and individuals who are attempting to 
                transition off a State program carried out under title 
                IV of the Social Security Act);
                    ``(B) to secure and retain meaningful employment;
                    ``(C) to attain an adequate education with 
                particular attention toward improving literacy skills 
                of the low-income families in the community, which may 
                include family literacy initiatives;
                    ``(D) to make better use of available income;
                    ``(E) to obtain and maintain adequate housing and a 
                suitable living environment;
                    ``(F) to obtain emergency assistance through loans, 
                grants, or other means to meet immediate and urgent 
                individual and family needs;
                    ``(G) to achieve greater participation in the 
                affairs of the community, including activities that 
                strengthen and improve the relationship with local law 
                enforcement agencies, which may include activities such 
                as neighborhood or community policing efforts;
                    ``(H) to address the needs of youth in low-income 
                communities through youth development programs that 
                support the primary role of the family, give priority 
                to prevention of youth problems and crime, promote 
                increased community coordination and collaboration in 
                meeting the needs of youth, and support development and 
                expansion of innovative community-based youth 
                development programs, which may include after-school 
                child care programs; and
                    ``(I) 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 
        discretionary funds made available from the remainder of the 
        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 initiatives related 
        to the purposes of this subtitle;
            ``(3) based on information provided by eligible entities in 
        the State, a description of--
                    ``(A) the service delivery system, for services 
                provided or coordinated with funds made available 
                through the allotment, targeted to low-income 
                individuals and families 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 followup consultations;
                    ``(C) a description of how funds made available 
                through the allotment will be coordinated with other 
                public and private resources; and
                    ``(D) a description of how the funds will be used 
                to support innovative community and neighborhood-based 
                initiatives related to the purposes of this subtitle 
                which may include fatherhood and other initiatives with 
                the goal of strengthening families and encouraging 
                parental responsibility;
            ``(4) an assurance that local eligible entities in the 
        State will provide, on an emergency basis, for the provision of 
        such supplies 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 local 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 
        (including a description of how the State and the local 
        eligible entities will coordinate with State and local 
        workforce investment systems in the provision of employment and 
        training services in the State and in local communities);
            ``(6) an assurance that the State will ensure coordination 
        between antipoverty programs in each community, 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 
        section 678D;
            ``(8) an assurance that any eligible entity that received 
        funding in the previous fiscal year under this 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 local 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 faith-based 
        organizations, charitable groups, and community organizations;
            ``(10) an assurance that the State will require each 
        eligible entity to establish procedures under which a low-
        income individual, community organization, or faith-based 
        organization, or representative of low-income individuals that 
        considers its organization, or low-income individuals, to be 
        inadequately 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, as a condition to receipt of funding by the 
        entity 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 
        community-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 in the Results Oriented Management and 
        Accountability System, another performance measure system 
        established 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 
                under this subtitle to respond to--
                            ``(i) the results of the most recently 
                        available census 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 to provide services 
                under this subtitle; and
            ``(2) a termination, the term `cause' includes the material 
        failure of an eligible entity to comply with the terms of such 
        an agreement and the State plan to provide services under this 
        subtitle or the consistent failure of the entity to achieve 
        performance measures as determined by the State.
    ``(d) Procedures and Information.--The Secretary may prescribe 
procedures only 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 
        prepared under this section shall be made available for public 
        inspection within the State in such a manner as will facilitate 
        review of, and comment on, the plan.

``SEC. 676A. DESIGNATION AND REDESIGNATION OF ELIGIBLE ENTITIES 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 eligible entity located 
                in an area contiguous to or within reasonable proximity 
                of the unserved area that is already providing related 
                services in the unserved area; or
                    ``(B) a private nonprofit organization that is 
                geographically located 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.
            ``(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 3 required categories 
                described in subparagraphs (A), (B), and (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), by members that reside in the neighborhood 
                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 local eligible entities that are already 
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 appropriate 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).

``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 administer the community services 
        block grant program through a tripartite board described in 
        paragraph (2) that fully participates in the development and 
        implementation of the program to serve low-income communities 
        or groups.
            ``(2) Selection and composition of 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 that--
                    ``(A) \1/3\ 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 elected officials reasonably available and 
                willing to serve on the board is less than \1/3\ of the 
                membership of the board, membership on the board of 
                appointive public officials or their representatives 
                may be counted in meeting such \1/3\ requirement;
                    ``(B) not fewer than \1/3\ of the members are 
                persons chosen in accordance with democratic selection 
                procedures adequate to assure that these members are 
                representative of low-income individuals and families 
                in the neighborhood served;
                    ``(C) the remainder of the members are officials or 
                members of business, industry, labor, religious, law 
                enforcement, education, or other major groups and 
                interests in the community served; and
                    ``(D) each representative of low-income individuals 
                and families selected to represent a specific 
                neighborhood within a community under subparagraph (B) 
                resides in the neighborhood represented by the member.
    ``(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 \1/3\ 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 
                planning and implementation 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 planning, administration, and evaluation of programs funded 
        under this subtitle.

``SEC. 677. PAYMENTS TO INDIAN TRIBES.

    ``(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 organization; 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 675B 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 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 available by 
grant to the Indian tribe or tribal organization serving the 
individuals for whom such a determination has been made.
    ``(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 of Indians 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.

``SEC. 678. OFFICE OF COMMUNITY SERVICES.

    ``(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, Cooperative Agreements.--The Secretary 
shall carry out functions of this subtitle through grants, contracts, 
or cooperative agreements.

``SEC. 678A. TRAINING AND TECHNICAL ASSISTANCE.

    ``(a) Activities.--The Secretary shall use the amounts reserved in 
section 674(b)(2) for training, technical assistance, planning, 
evaluation, performance measurement, corrective action activities (to 
correct programmatic deficiencies of eligible entities), reporting, and 
data collection activities related to programs carried out under this 
subtitle, and in accordance with subsection (c). Training and technical 
assistance activities may be carried out by the Secretary through 
grants, contracts, or cooperative agreements with eligible entities or 
with organizations or associations whose membership is composed of 
eligible entities or agencies that administer programs for eligible 
entities.
    ``(b) 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 
        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 network of eligible entities.
    ``(c) Distribution Requirement.--Of the amounts reserved under 
section 674(b)(2) for activities to be carried out under this section, 
not less than \1/2\ of such amounts shall be distributed directly to 
local eligible entities or to statewide organizations whose membership 
is composed of eligible entities for the purpose of improving program 
quality (including financial management practices), management 
information and reporting systems, measurement of program results, and 
for the purpose of ensuring responsiveness to local neighborhood needs.

``SEC. 678B. MONITORING OF ELIGIBLE ENTITIES.

    ``(a) In General.--In order to determine whether eligible entities 
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 
        immediately after the completion of the first year in which 
        such entity receives funds through the community services block 
        grant program.
            ``(3) Followup 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 terminated for cause.
    ``(b) Requests.--The State may request training and technical 
assistance from the Secretary as needed to comply with the requirements 
of this section.
    ``(c) Evaluations by the Secretary.--The Secretary shall conduct in 
several States in each fiscal year evaluations and investigations of 
the use of funds received by the States under this subtitle in order to 
evaluate compliance with the provisions of this subtitle, and 
especially with respect to compliance with subsection (b) of section 
676. A report of such evaluations, together with recommendations of 
improvements designed to enhance the benefit and impact to people in 
need, shall be sent to each State evaluated. Upon receiving the report 
the State shall submit a plan of action in response to the 
recommendations contained in the report. The results of the evaluations 
shall be submitted annually to the Chairman of the Committee on 
Education and the Workforce of the House of Representatives and the 
Chairman of the Committee on Labor and Human Resources of the Senate as 
part of the report submitted by the Secretary in accordance with 
section 678E(b)(2).

``SEC. 678C. CORRECTIVE ACTION; TERMINATION AND REDUCTION OF FUNDING.

    ``(a) Determination.--If the State determines, on the basis of a 
review pursuant to subsection 678B, that an eligible entity materially 
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 established by the State (including 
performance objectives), the State shall--
            ``(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 
        appropriate, 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 
        technical 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 deficiency within a reasonable period of time, as 
        determined by the State; and
            ``(B) not later than 30 days after receiving from 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 
determination. The review shall be completed not later than 120 days 
after the determination to terminate the designation or reduce the 
funding. If the review is not completed within 120 days, the 
determination of the State shall become final at the end of the 120th 
day.
    ``(c) Direct Assistance.--Whenever a State violates the assurances 
contained in section 676(b)(8) and terminates or reduces the funding of 
an eligible entity prior to the completion of the State's hearing and 
the Secretary's review as required in subsection (b), the Secretary 
shall assume responsibility for providing financial assistance to the 
eligible entity affected until the violation is corrected. In such 
case, the allotment for the State shall be reduced by an amount equal 
to the funds provided under this subsection to such eligible entity.

``SEC. 678D. FISCAL CONTROLS, AUDITS, AND WITHHOLDING.

    ``(a) Fiscal Controls, Procedures, Audits, and Inspections.--
            ``(1) In general.--A State that receives funds under this 
        subtitle shall--
                    ``(A) establish fiscal control and fund accounting 
                procedures necessary to assure the proper disbursal of 
                and accounting for Federal funds paid to the State 
                under this subtitle, including procedures for 
                monitoring the funds provided under this subtitle;
                    ``(B) ensure that cost and accounting standards of 
                the Office of Management and Budget apply to a 
                recipient of funds under this subtitle;
                    ``(C) prepare, at least every year in accordance 
                with paragraph (2) 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 authorized representatives, for examination, 
                copying, or mechanical reproduction on or off the 
                premises of the appropriate entity upon a reasonable 
                request for the items.
            ``(2) Audits.--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. 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 Secretary.
            ``(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 
        adequate notice and an opportunity for a hearing conducted 
        within the affected State, withhold funds from any State that 
        does not utilize the State allotment substantially 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 1 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 compliance 
        with the provisions of this subtitle.

``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 participate, in a performance 
                measurement system, which may be a performance 
                measurement system established by the Secretary 
                pursuant to subsection (b), or an alternative system 
                that meets the requirements of subsection (b).
                    ``(B) Local agencies.--The State may elect to have 
                local agencies who are subcontractors of the eligible 
                entities under this subtitle participate in the 
                performance measurement system. If the State makes that 
                election, references in this section to eligible 
                entities shall be considered to include the local 
                agencies.
            ``(2) Annual report.--Each State shall annually prepare and 
        submit to the Secretary a report on the measured performance of 
        the State and the eligible entities in the State. Each State 
        shall also include in the report an accounting of the 
        expenditure of funds received by the State through the 
        community services block grant program, including an accounting 
        of funds spent on indirect services or 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 covered by the report.
    ``(b) Secretary's Accountability and Reporting Requirements.--
            ``(1) Performance measurement.--The Secretary, in 
        collaboration with the States and with eligible entities 
        throughout the Nation, shall facilitate the development of 1 or 
        more model performance measurement systems, which may be used 
        by the States and by eligible entities to measure their 
        performance 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, and the eligible entities in the State, under 
                the community services block grant program, as 
                contained in each State plan submitted pursuant to 
                section 676;
                    ``(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 indirect 
                services or 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, and 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 additional information and allows a reasonable 
                period of time prior to the start of the fiscal year 
                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 and 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, indirect, 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.

    ``(a) Construction of Facilities.--
            ``(1) Limitations.--Except as provided in paragraph (2), 
        grants made under this subtitle (other 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 
        contained in paragraph (1) upon a State request for such a 
        waiver, if the Secretary finds that the request describes 
        extraordinary circumstances to justify the purchase 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 purposes 
        of chapter 15 of title 5, United States Code, any entity that 
        assumes responsibility for planning, developing, and 
        coordinating activities under this subtitle and receives 
        assistance under this subtitle shall be deemed to be a State or 
        local agency. For purposes of paragraphs (1) and (2) of section 
        1502(a) of such title, any entity receiving assistance under 
        this subtitle shall be deemed to be a State or local agency.
            ``(2) Prohibitions.--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 
        assignment 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;
                    ``(B) 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 
        consultation 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 
        suspension of assistance or other action necessary to permit 
        enforcement on an emergency basis.
    ``(c) Nondiscrimination.--
            ``(1) In general.--No person shall, on the basis of race, 
        color, religion, 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 
        determines that a State that has received a payment under this 
        subtitle has failed to comply with paragraph (1) or an 
        applicable regulation, the Secretary shall notify the chief 
        executive officer of the State and shall request that the 
        officer secure compliance. If within a reasonable period of 
        time, not to exceed 60 days, the chief executive officer fails 
        or refuses to secure compliance, the Secretary is authorized 
        to--
                    ``(A) refer the matter to the Attorney General with 
                a recommendation that an appropriate civil action be 
                instituted;
                    ``(B) exercise the powers and functions provided by 
                title VI of the Civil Rights Act of 1964 (42 U.S.C. 
                2000d et seq.), the Age Discrimination Act of 1975 (42 
                U.S.C. 6101 et seq.), or section 504 of the 
                Rehabilitation Act of 1973 (29 U.S.C. 794), as may be 
                applicable; or
                    ``(C) take such other action as may be provided by 
                law.
            ``(3) Action of attorney general.--When a matter is 
        referred to the Attorney General pursuant to paragraph (2), or 
        whenever the Attorney General has reason to believe that the 
        State is engaged in a pattern or practice of discrimination in 
        violation of the provisions of this subsection, the Attorney 
        General may bring a civil action in any appropriate United 
        States district court for such relief as may be appropriate, 
        including injunctive relief.

``SEC. 679. OPERATIONAL RULE.

    ``(a) Faith-Based Organizations Included as Nongovernmental 
Providers.--For any program carried out by the Federal Government, or 
by a State or local government under this subtitle, the government 
shall consider, on the same basis as other nongovernmental 
organizations, faith-based organizations to provide the assistance 
under the program, so long as the program is implemented in a manner 
consistent with the Establishment Clause of the first amendment to the 
Constitution. Neither the Federal Government nor a State or local 
government receiving funds under this subtitle shall discriminate 
against an organization that provides assistance under, or applies to 
provide assistance under, this subtitle, on the basis that the 
organization has a faith-based character.
    ``(b) Additional Safeguards.--Neither the Federal Government nor a 
State or local government shall require a faith-based organization to 
remove religious art, icons, scripture, or other symbols in order to be 
eligible to provide assistance under a program described in subsection 
(a).
    ``(c) Limitations on Use of Funds for Certain Purposes.--No funds 
provided to a faith-based 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 
        faith-based organization providing assistance under any program 
        described in subsection (a) shall be subject to the same 
        regulations as other nongovernmental organizations to account 
        in accord with generally accepted accounting principles for the 
        use of such funds provided under such program.
            ``(2) Limited audit.--Such organization shall segregate 
        government funds provided under such program into a separate 
        account. Only the government funds shall be subject to audit by 
        the government.

``SEC. 680. DISCRETIONARY AUTHORITY OF THE SECRETARY.

    ``(a) Grants, Contracts, Arrangements, Loans, and Guarantees.--
            ``(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 arrangements with States and public agencies and 
        private, nonprofit organizations (and for-profit organizations, 
        to the extent specified in (2)(E)) for each of the objectives 
        described in paragraphs (2) through (4).
            ``(2) Community economic development.--
                    ``(A) Economic development activities.--The 
                Secretary shall make grants described in paragraph (1) 
                on a competitive basis to private, non-profit 
                organizations that are community development 
                corporations to provide technical and financial 
                assistance for economic development activities designed 
                to address the economic needs of low-income individuals 
                and families by creating employment and business 
                development opportunities.
                    ``(B) Consultation.--The Secretary shall exercise 
                the authority provided under subparagraph (A) after 
                consultation with other relevant Federal officials.
                    ``(C) Governing boards.--For a community 
                development corporation to receive funds to carry out 
                this paragraph, the corporation shall be governed by a 
                board that shall consist of residents of the community 
                and business and civic leaders and shall have as a 
                principal purpose planning, developing, or managing 
                low-income housing or community development projects.
                    ``(D) Geographic distribution.--In making grants to 
                carry out this paragraph, the Secretary shall take into 
                consideration the geographic distribution of funding 
                among States and the relative proportion of funding 
                among rural and urban areas.
                    ``(E) Reservation.--Of the amounts made available 
                to carry out this paragraph, the Secretary may reserve 
                not more than 1 percent for each fiscal year to make 
                grants to private, nonprofit organizations or to enter 
                into contracts with private, nonprofit or for-profit 
                organizations to provide technical assistance to aid 
                community development corporations in developing or 
                implementing activities funded to carry out this 
                paragraph and to evaluate activities funded to carry 
                out this paragraph.
            ``(3) Rural community development activities.--The 
        Secretary shall provide the assistance described in paragraph 
        (1) for rural community development activities, which shall 
        include--
                    ``(A) grants to private, nonprofit corporations 
                that provide assistance concerning home repair to rural 
                low-income families and planning and developing low-
                income rural rental housing units; and
                    ``(B) grants to multistate, regional, private, 
                nonprofit organizations to provide training and 
                technical assistance to small, rural communities in 
                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 grants to 
        neighborhood-based private, nonprofit organizations to test or 
        assist in the development of new approaches or methods that 
        will aid in overcoming special problems identified by 
        communities or neighborhoods or otherwise assist in furthering 
        the purposes of this subtitle, and which may include projects 
        that are designed to serve low-income individuals and families 
        who are not being effectively served by other programs.
    ``(b) Evaluation.--The Secretary shall require all activities 
receiving assistance under this section to be evaluated for their 
effectiveness. Funding for such evaluations shall be provided as a 
stated percentage of the assistance or through a separate grant awarded 
by the Secretary specifically for the purpose of evaluation of a 
particular activity or group of activities.
    ``(c) Annual Report.--The Secretary shall compile an annual report 
containing a summary of the evaluations required in subsection (b) and 
a listing of all activities assisted under this section. The Secretary 
shall annually submit the report to the Chairperson of the Committee on 
Education and the Workforce of the House of Representatives and the 
Chairperson of the Committee on Labor and Human Resources of the 
Senate.''.

SEC. 203. RELATED AMENDMENTS.

    The Community Services Block Grant Act (42 U.S.C. 9901 et seq.) is 
amended--
            (1) by striking section 681;
            (2) in section 681A--
                    (A) by striking ``681A'' and inserting ``681'';
                    (B) in subsection (c) by striking ``Labor'' and 
                inserting ``the Workforce''; and
                    (C) in subsection (d) by striking ``$25,000,000'' 
                and all that follows through ``1998'', and inserting 
                ``$5,000,000 for fiscal year 1999, and such sums as may 
                be necessary for fiscal years 2000 through 2003'';
            (3) in section 682--
                    (A) in subsection (c)--
                            (i) by redesignating paragraphs (3) and (4) 
                        as paragraphs (4) and (5), respectively; and
                            (ii) by inserting after paragraph (2) the 
                        following:
            ``(3) the applicant shall, in each community in which a 
        program is funded under this section--
                    ``(A) ensure that--
                            ``(i) a community-based advisory committee, 
                        composed of representatives of local youth, 
                        family, and social service organizations, 
                        schools, entities that provide park and 
                        recreation services, entities that provide 
                        training services, and community-based 
                        organizations that serve high-risk youth, is 
                        established; or
                            ``(ii) an existing community-based advisory 
                        board, commission, or committee with similar 
                        membership is used; and
                    ``(B) 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 objectives of this 
                subtitle;''; and
                    (B) in subsection (f) by striking ``each fiscal 
                year'' and all that follows through ``1998'', and 
                inserting ``for fiscal year 1999, and such sums as may 
                be necessary for fiscal years 2000 through 2003''; and
            (4) by striking sections 683 and 684, and inserting the 
        following:

``SEC. 683. DRUG TESTING AND PATERNITY DETERMINATIONS.

    ``(a) Drug Testing Permitted.--(1) Nothing in this subtitle shall 
be construed to prohibit a State from testing participants in programs, 
activities, or services carried out under this subtitle for controlled 
substances or from imposing sanctions on such participants who test 
positive for any of such substances.
    ``(2) 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).
    ``(b) Paternity Determinations.--During each fiscal year for which 
an eligible entity receives a grant under section 675C, such entity 
shall--
            ``(1) inform custodial parents in single-parent families 
        that participate in programs, activities, or services carried 
        out under this subtitle about the availability of child support 
        services;
            ``(2) refer eligible parents to the child support offices 
        of State and local governments; and
            ``(3) establish referral arrangements with such offices.

``SEC. 684. REFERENCES.

    ``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 of this subtitle. 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. 204. ASSETS FOR INDEPENDENCE.

    The Community Services Block Grant Act (42 U.S.C. 9901-9912), as 
amended by sections 202 and 203, is amended--
            (1) by striking ``this subtitle' each place it appears 
        (other than in section 671) and inserting ``this part'';
            (2) by inserting the following after section 671:
``CHAPTER 1--COMMUNITY SERVICES GRANTS'';
        and
            (3) by adding at the end the following:
``CHAPTER 2--ASSETS FOR INDEPENDENCE

``SEC. 685. SHORT TITLE.

    ``This chapter may be cited as the `Assets for Independence Act'.

``SEC. 686. FINDINGS.

    ``Congress makes the following findings:
            ``(1) Economic well-being does not come solely from income, 
        spending, and consumption, but also requires savings, 
        investment, 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 \1/2\ 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, 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 that 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 
        complemented 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 policies provide the means to achieve greater 
        independence and economic well-being.

``SEC. 687. PURPOSES.

    ``The purposes of this chapter 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 
        microenterprise 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 stabilizes 
        and improves families and the community in which they live.

``SEC. 688. DEFINITIONS.

    ``In this chapter:
            ``(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 
        calendar year in which the grant is made.
            ``(2) Eligible individual.--The term `eligible individual' 
        means an individual who is selected to participate by a 
        qualified entity under section 693.
            ``(3) Emergency withdrawal.--The term `emergency 
        withdrawal' 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 care, for the 
                        individual or a spouse or dependent of the 
                        individual described in paragraph (8)(D);
                            ``(ii) payments necessary to prevent the 
                        eviction of the individual from the residence 
                        of the individual, or foreclosure on the 
                        mortgage for the principal residence of the 
                        individual, as defined in paragraph (8)(B); or
                            ``(iii) payments necessary to enable the 
                        individual to meet necessary living expenses 
                        following loss of employment.
            ``(4) Household.--The term `household' means all 
        individuals who share use of a dwelling unit as primary 
        quarters 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 meets the following 
                requirements:
                            ``(i) No contribution will be accepted 
                        unless it 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 694.
                            ``(iv) The assets of the trust will not be 
                        commingled with other property except in a 
                        common trust fund or common investment fund.
                            ``(v) Except as provided in clause (vi), 
                        any amount in the trust which is attributable 
                        to a deposit provided under section 694 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 an eligible individual.
                    ``(B) Custodial accounts.--For purposes of 
                subparagraph (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 satisfaction of the Secretary, 
                that the manner in which such person will administer 
                the custodial account will be consistent with the 
                requirements of this chapter, 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 
                chapter, 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 thereof.
            ``(6) Project year.--The term `project year' means, with 
        respect to a demonstration project, any of the 5 consecutive 
        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 689 jointly with an 
                        organization described in clause (i).
                    ``(B) Rule of construction.--Nothing in this 
                paragraph 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 chapter.
            ``(8) Qualified expenses.--The term `qualified expenses' 
        means 1 or more of the following, as provided by the qualified 
        entity:
                    ``(A) Postsecondary educational expenses.--
                Postsecondary 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 following:
                                    ``(I) Institution of higher 
                                education.--An institution described in 
                                section 481(a)(1) or 1201(a) of the 
                                Higher Education Act of 1965 (20 U.S.C. 
                                1088(a)(1) or 1141(a)), as such 
                                sections are in effect on the date of 
                                enactment of this chapter.
                                    ``(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 chapter.
                    ``(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 principal 
                        residence, the qualified acquisition costs of 
                        which do not exceed 100 percent of the average 
                        area purchase price applicable to such 
                        residence.
                            ``(ii) Qualified acquisition costs.--The 
                        term `qualified acquisition costs' means the 
                        costs of acquiring, 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 (and, if married, the 
                                individual'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 which 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 business 
                capitalization expenses. In this subparagraph:
                            ``(i) Qualified business capitalization 
                        expenses.--The term ``qualified business 
                        capitalization expenses' means qualified 
                        expenditures for the capitalization of a 
                        qualified business pursuant to a qualified 
                        plan.
                            ``(ii) Qualified expenditures.--The term 
                        `qualified expenditures' means expenditures 
                        included in a qualified 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 Secretary).
                            ``(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 financial 
                                statements; and
                                    ``(III) may require the eligible 
                                individual to obtain the assistance of 
                                an experienced entrepreneurial adviser.
                    ``(D) Transfers to idas of family members.--Amounts 
                paid from an individual development account directly 
                into another such account established 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 the 
        individual to the individual development account of the 
        individual during the period.
            ``(10) Secretary.--The term `Secretary' means the Secretary 
        of Health and Human 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. 689. APPLICATIONS.

    ``(a) Announcement of Demonstration Projects.--Not later than 3 
months after the date of enactment of this chapter, the Secretary shall 
publicly announce the availability of funding under this chapter 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 chapter, a qualified entity may submit to the 
Secretary an application to conduct a demonstration project under this 
chapter.
    ``(c) Criteria.--In considering whether to approve an application 
to conduct a demonstration project under this chapter, 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 qualified expenses. In making such 
        assessment, the Secretary shall consider the overall quality of 
        project activities in making any particular kind or combination 
        of qualified expenses to be an essential feature of any 
        project.
            ``(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 from 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 information 
        relevant to an evaluation of the project.
            ``(6) Other factors.--Such other factors relevant to the 
        purposes of this chapter as the Secretary may specify.
    ``(d) Preferences.--In considering an application to conduct a 
demonstration project under this chapter, the Secretary shall give 
preference to an application that--
            ``(1) demonstrates the willingness and ability to select 
        individuals described in section 692 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 the 
        child's legal guardian;
            ``(2) provides a commitment of non-Federal funds with a 
        proportionately greater amount of such funds committed by 
        private sector sources; and
            ``(3) targets such individuals residing within 1 or more 
        relatively well-defined neighborhoods or communities (including 
        rural communities) that experience high rates of poverty or 
        unemployment.
    ``(e) Approval.--Not later than 9 months after the date of 
enactment of this chapter, the Secretary shall, on a competitive basis, 
approve such applications to conduct demonstration projects under this 
chapter as the Secretary deems appropriate, taking into account the 
assessments required by subsections (c) and (d). The Secretary is 
encouraged to ensure 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 conduct any responsibility of the Secretary under this 
section or section 696 if--
            ``(1) such entity demonstrates the ability to conduct such 
        responsibility; and
            ``(2) the Secretary can demonstrate that such 
        responsibility would not be conducted by the Secretary at a 
        lower cost.

``SEC. 690. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.

    ``(a) Demonstration Authority.--If the Secretary approves an 
application to conduct a demonstration project under this chapter, the 
Secretary shall, not later than 10 months after the date of enactment 
of this chapter, authorize the applicant to conduct the project for 5 
project years in accordance with the approved application and the 
requirements of this chapter.
    ``(b) Grant Authority.--For each project year of a demonstration 
project conducted under this chapter, the Secretary may make 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 aggregate amount of funds committed as matching 
        contributions by non-Federal public or private sector sources; 
        or
            ``(2) $1,000,000.

``SEC. 691. RESERVE FUND.

    ``(a) Establishment.--A qualified entity under this chapter, other 
than a State or local government agency, or a tribal government, shall 
establish a Reserve Fund which shall be maintained in accordance with 
this section.
    ``(b) Amounts in 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 funds provided to the qualified entity by 
                any public or private source in connection with the 
                demonstration project; and
                    ``(B) the 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 of Amounts in the Reserve Fund.--
            ``(1) In general.--A qualified entity shall use the amounts 
        in the Reserve Fund established under subsection (a) to--
                    ``(A) assist participants in the demonstration 
                project in obtaining the skills (including economic 
                literacy, budgeting, credit, and counseling) and 
                information necessary to achieve economic self-
                sufficiency through activities requiring qualified 
                expenses;
                    ``(B) provide deposits in accordance with section 
                694 for individuals selected by the qualified entity to 
                participate in the demonstration project;
                    ``(C) administer the demonstration project; and
                    ``(D) provide the research organization evaluating 
                the demonstration project under section 698 with such 
                information with respect to the demonstration project 
                as may be required for the evaluation.
            ``(2) Authority to invest funds.--
                    ``(A) Guidelines.--The Secretary shall establish 
                guidelines for investing amounts in the Reserve Fund 
                established under subsection (a) in a manner that 
                provides an appropriate balance between return, 
                liquidity, and risk.
                    ``(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 subparagraph (A).
            ``(3) Limitation on uses.--Not more than 9.5 percent of the 
        amounts provided to a qualified entity under section 698(b) 
        shall be used by the qualified entity for the purposes 
        described in subparagraphs (A), (C), and (D) of paragraph (1), 
        of which not less than 2 percent of the amounts shall be used 
        by the qualified entity for the purposes described in paragraph 
        (1)(D). If 2 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 Secretary 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 time of the 
        termination; multiplied by
            ``(2) a percentage equal to--
                    ``(A) the aggregate amount of grants made to the 
                qualified entity under section 698(b); divided by
                    ``(B) the aggregate amount of all funds provided to 
                the qualified entity by all sources to conduct the 
                project.

``SEC. 692. ELIGIBILITY FOR PARTICIPATION.

    ``(a) In General.--Any individual who is a member of a household 
that is eligible for assistance under the State temporary assistance 
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 participate in a 
demonstration project conducted under this chapter:
            ``(1) Income test.--The adjusted gross income of the 
        household 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 1 motor vehicle owned by the household.
    ``(b) Individuals Unable To Complete the Project.--The Secretary 
shall establish such regulations as are necessary, including 
prohibiting future eligibility to participate in any other 
demonstration project conducted under this chapter, to ensure 
compliance with this chapter 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.

``SEC. 693. SELECTION OF INDIVIDUALS TO PARTICIPATE.

    ``From among the individuals eligible to participate in a 
demonstration project conducted under this chapter, each qualified 
entity shall select the individuals--
            ``(1) that the qualified entity deems to be best suited to 
        participate; and
            ``(2) to whom the qualified entity will provide deposits in 
        accordance with section 694.

``SEC. 694. DEPOSITS BY QUALIFIED ENTITIES.

    ``(a) In General.--Not less than once every 3 months during each 
project year, each qualified entity under this Act shall deposit in the 
individual development account of each individual participating in the 
project, or into a parallel account maintained by the qualified 
entity--
            ``(1) from the non-Federal funds described in section 
        689(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 690(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 690(b) shall be provided to any 
1 individual over the course of the demonstration project.
    ``(c) Limitation on Deposits for a Household.--Not more than $4,000 
from a grant made under section 690(b) shall be provided to any 1 
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 are not withdrawn, except for 1 or more 
qualified expenses, or for an emergency withdrawal. Such guidelines 
shall include a requirement that a responsible official of the 
qualified entity conducting a project approve such withdrawal 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 individual 
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 section 694 to 
the Reserve Fund of the qualified entity, and use the funds to benefit 
other individuals participating in the demonstration project involved.

``SEC. 695. LOCAL CONTROL OVER DEMONSTRATION PROJECTS.

    ``A qualified entity under this chapter, other than a State or 
local government agency or a tribal government, shall, subject to the 
provisions of section 697, have sole authority over the administration 
of the project. The Secretary may prescribe only such regulations or 
guidelines with respect to demonstration projects conducted under this 
chapter as are necessary to ensure compliance with the approved 
applications and the requirements of this chapter.

``SEC. 695A. GRANDFATHERING OF EXISTING STATEWIDE PROGRAMS.

    ``Any statewide asset-building program consistent with the purposes 
of this chapter that is established in State law as of the date of 
enactment of this Act, and that as of such date is operating with an 
annual State appropriation of not less than $1,000,000 in non-Federal 
funds, shall be deemed to have met the requirements of section 688 and 
to be eligible for consideration by the Secretary as a demonstration 
program described in this chapter. Applications submitted by such 
statewide program shall be considered for funding by the Secretary 
notwithstanding the preferences listed in section 689(d). Any program 
requirements under sections 691 through 695 that are inconsistent with 
State statutory requirements in effect on such date governing such 
statewide program are hereby waived.

``SEC. 696. ANNUAL PROGRESS REPORTS.

    ``(a) In General.--Each qualified entity under this chapter shall 
prepare an annual report on the progress of the demonstration project. 
Each report shall include both 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 development 
        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 qualified entity 
        (such as 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 the 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 
        government or a tribal government committed funds to the 
        demonstration 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 conduct the 
demonstration project, and subsequent reports shall be submitted every 
12 months thereafter, until the conclusion of the project.

``SEC. 697. SANCTIONS.

    ``(a) Authority To Terminate Demonstration Project.--If the 
Secretary determines that a qualified entity under this chapter is not 
operating the demonstration project in accordance with the entity's 
application or the requirements of this chapter (and has not 
implemented any corrective recommendations 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 691;
            ``(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, as modified, if 
        necessary to incorporate the recommendations) and the 
        requirements of this chapter;
            ``(4) shall, if the Secretary 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, as modified, if necessary, to incorporate the 
                recommendations) and the requirements of this chapter;
                    ``(B) transfer to the entity (or entities) control 
                over the Reserve Fund established pursuant to section 
                691; and
                    ``(C) consider, for purposes of this chapter--
                            ``(i) such other entity (or entities) to be 
                        the qualified entity (or entities) originally 
                        authorized to conduct the demonstration 
                        project; and
                            ``(ii) the date of such authorization 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 689(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 by the 
                source under section 689(c)(4) bears to the amount 
                provided by all such sources under that section.

``SEC. 698. EVALUATIONS.

    ``(a) In General.--Not later than 10 months after the date of 
enactment of this chapter, the Secretary shall enter into a contract 
with an independent research organization to evaluate, individually and 
as a group, all qualified entities and sources participating in the 
demonstration projects conducted under this chapter.
    ``(b) Factors To Evaluate.--In evaluating any demonstration project 
conducted under this chapter, the research organization shall address 
the following factors:
            ``(1) The effects of incentives and organizational or 
        institutional support on savings behavior in the demonstration 
        project.
            ``(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 
        different populations or communities.
            ``(4) The effects of individual development accounts on 
        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 
        Government and 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 chapter and if a permanent 
        program of individual development accounts should be 
        established.
            ``(7) Such other factors as may be prescribed by the 
        Secretary.
    ``(c) Methodological Requirements.--In evaluating any demonstration 
project conducted under this chapter, the research organization shall--
            ``(1) for at least 1 site, use control groups to compare 
        participants with nonparticipants;
            ``(2) before, during, and after the project, obtain such 
        quantitative 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.--
            ``(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 chapter, and every 12 months thereafter 
        until all demonstration projects conducted under this chapter 
        are completed, the Secretary shall submit to Congress an 
        interim report setting forth the results of the reports 
        submitted pursuant to section 696(b).
            ``(2) Final reports.--Not later than 12 months after the 
        conclusion of all demonstration projects conducted under this 
        chapter, the Secretary shall submit to Congress a final report 
        setting forth the results and findings of all reports and 
        evaluations conducted pursuant to this chapter.
    ``(e) Evaluation Expenses.--The Secretary shall expend such sums as 
may be necessary, but not less than 2 percent of the amount 
appropriated under section 699A for a fiscal year, to carry out the 
purposes of this section.

``SEC. 699. 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 
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.

``SEC. 699A. AUTHORIZATION OF APPROPRIATIONS.

    ``There is authorized to be appropriated to carry out this chapter, 
$25,000,000 for each of fiscal years 1999, 2000, 2001, and 2002, to 
remain available until expended.''.

SEC. 205. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

    (a) Effective Date.--Except as provided in subsection (b), this 
title and the amendments made by this title shall take effect on the 
date of the enactment of this Act.
    (b) Application of Amendments.--The amendments made by this title 
shall not apply with respect to fiscal years ending before October 1, 
1998.

 TITLE III--AMENDMENTS TO THE LOW-INCOME HOME ENERGY ASSISTANCE ACT OF 
                                  1981

SEC. 301. SHORT TITLE.

    This title may be cited as the ``Low-Income Home Energy Assistance 
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 ``, 
$1,100,000,000 for fiscal year 2000, and such sums as may be necessary 
for fiscal year 2001'' after ``1995 through 1999''.
    (b) Program Year.--Section 2602(c) of 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 in 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 by striking ``for each of the fiscal 
years 1996'' and all that follows through the period at the end, and 
inserting ``for each of the fiscal years 1999, 2000, and 2001.''.
    (d) Technical Amendment.--Section 2602(e) of Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8621(e)) is amended 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 
        paragraphs (8) through (11), respectively;
            (2) by inserting before paragraph (8) (as redesignated in 
        paragraph (1)) the following:
            ``(7) Natural disaster.--The term `natural disaster' means 
        a weather event (relating to cold or hot weather), flood, 
        earthquake, tornado, hurricane, or ice storm, or an event 
        meeting such other criteria as the Secretary, in the discretion 
        of the Secretary, may determine to be appropriate.'';
            (3) by redesignating paragraphs (1) through (5) as 
        paragraphs (2) through (6), respectively; and
            (4) by inserting before paragraph (2) (as redesignated in 
        paragraph (3)) the following:
    ``(1) Emergency.--The term `emergency' means--
            ``(A) a natural disaster;
            ``(B) a significant 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 disconnections 
        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 program 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 temporary 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 unemployment, 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 Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8623(g)) is amended by striking the 
last 2 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, whether a Member of Congress has requested that the 
State receive the allotment, and such other factors as the Secretary 
may find to be relevant. Not later than 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.''.

SEC. 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);
            (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 
                transferred 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 subsection.''; and
                    (D) in the matter following paragraph (16), by 
                inserting before ``The Secretary shall issue'' the 
                following: ``The Secretary may not prescribe the manner 
                in which the States will comply with the provisions of 
                this subsection.''; and
            (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 
                inserting ``had''; and
            (3) in paragraphs (1) and (2)(A) of subsection (k) by 
        inserting ``, 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 Assistance 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 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 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)(1) of the Low-Income Home 
Energy Assistance Act of 1981 (42 U.S.C. 8626b(b)(1)) 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 Low-Income Home Energy 
Assistance Act of 1981 (42 U.S.C. 8626b) is amended--
            (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).
            Attest:

                                                                          Clerk.