[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2356 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 2356

 To amend the Richard B. Russell National School Lunch Act to improve 
          management of the child and adult care food program.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 4, 2000

 Mr. Lugar (for himself and Mr. Harkin) introduced the following bill; 
  which was read twice and referred to the Committee on Agriculture, 
                        Nutrition, and Forestry

_______________________________________________________________________

                                 A BILL


 
 To amend the Richard B. Russell National School Lunch Act to improve 
          management of the child and adult care food program.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Child and Adult 
Care Food Program Management Improvement Act of 2000''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definition of institution; exclusion of seriously deficient 
                            institutions.
Sec. 3. Institution approval and applications.
Sec. 4. Reduction in administrative requirements for public sponsoring 
                            organizations.
Sec. 5. Temporary withholding of reimbursement.
Sec. 6. Limitations on ability of family or group day care homes to 
                            transfer sponsoring organizations.
Sec. 7. Limitation on administrative expenses for sponsoring 
                            organizations.
Sec. 8. Reallocation of audit funds.
Sec. 9. Expansion of management support funding.
Sec. 10. Grants to improve program quality.
Sec. 11. Retention of funds collected from institutions.
Sec. 12. Study of administrative costs.
Sec. 13. Effective dates.

SEC. 2. DEFINITION OF INSTITUTION; EXCLUSION OF SERIOUSLY DEFICIENT 
              INSTITUTIONS.

    Section 17(a) of the Richard B. Russell National School Lunch Act 
(42 U.S.C. 1766(a)) is amended--
            (1) by striking ``(a) The Secretary'' and inserting the 
        following:
    ``(a) Grant Authority and Institution Eligibility.--
            ``(1) Grant authority.--The Secretary'';
            (2) by striking the second and third sentences and 
        inserting the following:
            ``(2) Definition of institution.--In this section, the term 
        `institution' means--
                    ``(A) any public or private nonprofit organization 
                providing nonresidential child care or day care outside 
                school hours for school children, including any child 
                care center, settlement house, recreational center, 
                Head Start center, and institution providing child care 
                facilities for children with disabilities;
                    ``(B) any other private organization providing 
                nonresidential child care or day care outside school 
                hours for school children for which the organization 
                receives compensation from amounts granted to the 
                States under title XX of the Social Security Act (42 
                U.S.C. 1397 et seq.) (but only if the organization 
                receives compensation under that title for at least 25 
                percent of its enrolled children or 25 percent of its 
                licensed capacity, whichever is less);
                    ``(C) any public or private nonprofit organization 
                acting as a sponsoring organization for 1 or more of 
                the organizations described in subparagraph (A) or (B) 
                or for an adult day care center (as defined in 
                subsection (o)(2));
                    ``(D) any other private organization acting as a 
                sponsoring organization for, and that is part of the 
                same legal entity as, 1 or more organizations that 
                are--
                            ``(i) described in subparagraph (B); or
                            ``(ii) proprietary title XIX or title XX 
                        centers (as defined in subsection (o)(2));
                    ``(E) any public or private nonprofit organization 
                acting as a sponsoring organization for 1 or more 
                family or group day care homes; and
                    ``(F) any emergency shelter (as defined in 
                subsection (t)).'';
            (3) by striking ``Except as provided in subsection (r),'' 
        and inserting the following:
            ``(3) Age limit.--Except as provided in subsection (r),'';
            (4) by striking ``The Secretary may establish separate 
        guidelines'' and inserting the following:
            ``(4) Additional guidelines.--The Secretary may establish 
        separate guidelines'';
            (5) by striking ``For purposes of determining'' and all 
        that follows through ``an institution'' and inserting the 
        following:
            ``(5) Licensing.--In order to be eligible, an 
        institution'';
            (6) by striking ``standards; and'' and inserting 
        ``standards.'';
            (7) by striking ``(2) no institution'' and inserting the 
        following:
            ``(6) Eligibility criteria.--No institution''; and
            (8) in paragraph (6) (as amended by paragraph (7)), by 
        striking subparagraph (B) and inserting the following:
                    ``(B) has not been seriously deficient, as 
                determined by the State agency responsible for 
                administering the child and adult care food program 
                authorized under this section, in the administration or 
                operation of any Federal, State, or local government 
                program during the previous 5-year period, or such 
                other period as is determined by the Secretary to be 
                appropriate;''.

SEC. 3. INSTITUTION APPROVAL AND APPLICATIONS.

    (a) In General.--Section 17(d) of the Richard B. Russell National 
School Lunch Act (42 U.S.C. 1766(d)) is amended by striking the 
subsection designation and all that follows through the end of 
paragraph (1) and inserting the following:
    ``(d) Institution Approval and Applications.--
            ``(1) Institution approval.--
                    ``(A) Administrative capability.--The State agency 
                may approve an institution that meets the requirements 
                of this section for participation in the child and 
                adult care food program only if the State agency 
                determines that--
                            ``(i) the institution is administratively 
                        capable of operating the program described in 
                        the application of the institution; and
                            ``(ii) the participation of the institution 
                        is necessary to ensure the adequate 
                        availability of child and adult care food 
                        program benefits to eligible participants.
                    ``(B) Criteria for selection.--The State agency 
                shall establish criteria for selecting among 
                institutions for participation in the child and adult 
                care food program if the number of eligible 
                institutions exceeds the number of eligible 
                institutions necessary to ensure the adequate 
                availability of program benefits to eligible 
                participants.
                    ``(C) Notification to applicant.--Not later than 30 
                days after the date on which an applicant institution 
                files a completed application with the State agency, 
                the State agency shall notify the applicant institution 
                whether the institution has been approved or 
                disapproved to participate in the child and adult care 
                food program.
                    ``(D) Approval of private institutions.--
                            ``(i) In general.--Subject to clause (ii), 
                        the State agency may approve an applicant 
                        institution for participation in the child and 
                        adult care food program only if the State 
                        agency conducts a satisfactory inspection of 
                        the institution prior to approval to 
                        participate in the program and the 
                        institution--
                                    ``(I) has tax exempt status under 
                                the Internal Revenue Code of 1986;
                                    ``(II) is operating a Federal 
                                program requiring nonprofit status to 
                                participate in the program; or
                                    ``(III) is described in subsection 
                                (a)(2)(B).
                            ``(ii) Exception for family or group day 
                        care homes.--Clause (i) shall not apply to a 
                        family or group day care home.''.
    (b) Conforming Amendment.--Section 17(d)(2)(B) of the Richard B. 
Russell National School Lunch Act (42 U.S.C. 1766(d)(2)(B)) is amended 
by striking ``subsection (a)(1)'' and inserting ``subsection (a)(5)''.

SEC. 4. REDUCTION IN ADMINISTRATIVE REQUIREMENTS FOR PUBLIC SPONSORING 
              ORGANIZATIONS.

    Section 17(d) of the Richard B. Russell National School Lunch Act 
(42 U.S.C. 1766(d)) is amended by adding at the end the following:
            ``(3) Incentives for public sponsoring organizations.--
                    ``(A) Cost comparisons.--The Secretary shall not 
                require a public organization acting as a sponsoring 
                organization for 1 or more family or group day care 
                homes to compare costs to receive administrative 
                reimbursement under subsection (f)(3)(B).
                    ``(B) Biennial budgets.--The Secretary shall permit 
                a public organization described in subparagraph (A) to 
                submit on a biennial basis the budget of the 
                organization for administrative costs.''.

SEC. 5. TEMPORARY WITHHOLDING OF REIMBURSEMENT.

    Section 17(e) of the Richard B. Russell National School Lunch Act 
(42 U.S.C. 1766(e)) is amended--
            (1) in paragraph (2), by striking ``(2) A State is not'' 
        and inserting the following:
            ``(2) Exceptions.--
                    ``(A) Federal audits.--
                            ``(i) In general.--A State shall not be'';
            (2) in paragraph (3), by striking ``(3) If a State does 
        not'' and inserting the following:
                            ``(ii) Federal hearings provided.--If a 
                        State does not''; and
            (3) by adding at the end the following:
                    ``(B) Temporary withholding of reimbursement.--
                            ``(i) In general.--Subject to clause (ii), 
                        a State agency shall not be required to provide 
                        a hearing to an institution concerning the 
                        decision of the State agency to temporarily 
                        withhold reimbursement based on a finding 
                        that--
                                    ``(I) the institution has failed to 
                                comply with program requirements; or
                                    ``(II) a claim for reimbursement 
                                may not be valid.
                            ``(ii) Limitations.--The State agency shall 
                        provide a hearing to an institution described 
                        in clause (i) if the State agency--
                                    ``(I) withholds reimbursement from 
                                the institution for more than 90 days 
beyond the date on which the reimbursement would be payable but for the 
withholding; or
                                    ``(II) denies the claim for 
                                reimbursement.''.

SEC. 6. LIMITATIONS ON ABILITY OF FAMILY OR GROUP DAY CARE HOMES TO 
              TRANSFER SPONSORING ORGANIZATIONS.

    Section 17(f)(3) of the Richard B. Russell National School Lunch 
Act (42 U.S.C. 1766(f)(3)) is amended by striking subparagraph (D) and 
inserting the following:
                    ``(D) Limitations on ability of family or group day 
                care homes to transfer sponsoring organizations.--
                            ``(i) In general.--Subject to clause (ii), 
                        a State agency shall limit the ability of a 
                        family or group day care home to transfer from 
                        a sponsoring organization to--
                                    ``(I) another sponsoring 
                                organization more frequently than once 
                                a year; or
                                    ``(II) a sponsoring organization 
                                that ceases to participate in the child 
                                and adult care food program.
                            ``(ii) Extenuating circumstances.--The 
                        State agency may permit or require a family or 
                        group day care home to transfer from a 
                        sponsoring organization to another sponsoring 
                        organization more frequently than once a year 
                        in the case of extenuating circumstances (as 
                        determined by the State agency).''.

SEC. 7. LIMITATION ON ADMINISTRATIVE EXPENSES FOR SPONSORING 
              ORGANIZATIONS.

    Section 17(f) of the Richard B. Russell National School Lunch Act 
(42 U.S.C. 1766(f)) is amended by adding at the end the following:
            ``(5) Limitation on administrative expenses for sponsoring 
        organizations.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                sponsoring organization for a child care or adult day 
                care center may retain a portion of the funds provided 
                under paragraph (1) for use only to pay the costs 
                incurred by the sponsoring organization in 
                administering the child and adult care food program.
                    ``(B) Limitation.--
                            ``(i) In general.--Subject to clause (ii), 
                        the State agency shall establish a limitation 
                        on the amount of funds a sponsoring 
                        organization may retain under subparagraph (A) 
                        that does not exceed 15 percent of the total 
                        amount of funds disbursed to the sponsoring 
                        organization under paragraph (1).
                            ``(ii) Consideration of study results.--
                        Based on the results of the study of 
                        administrative costs required under section 12 
                        of the Child and Adult Care Food Program 
                        Management Improvement Act of 2000, the 
                        Secretary shall--
                                    ``(I) evaluate the maximum 
                                limitation established under clause 
                                (i); and
                                    ``(II) make such adjustments to the 
                                limitation as the Secretary determines 
                                to be necessary.''.

SEC. 8. REALLOCATION OF AUDIT FUNDS.

    Section 17(i) of the Richard B. Russell National School Lunch Act 
(42 U.S.C. 1766(i)) is amended--
            (1) by striking ``(i) The Secretary shall'' and inserting 
        the following:
    ``(i) Audit Funds.--
            ``(1) In general.--The Secretary shall''; and
            (2) by adding at the end the following:
            ``(2) Reallocation of funds.--
                    ``(A) Return to the secretary.--For each fiscal 
                year, any amounts allocated to a State under this 
                subsection that are not obligated during the fiscal 
                year shall be returned to the Secretary in accordance 
                with procedures established by the Secretary.
                    ``(B) Reallocation by the secretary.--The Secretary 
                shall allocate any amounts returned under subparagraph 
                (A) among States that demonstrate a need for the 
                amounts, for the purposes described in paragraph (1), 
                in accordance with procedures established by the 
                Secretary.''.

SEC. 9. EXPANSION OF MANAGEMENT SUPPORT FUNDING.

    Section 17(q) of the Richard B. Russell National School Lunch Act 
(42 U.S.C. 1766(q)) is amended by striking paragraph (2) and inserting 
the following:
            ``(2) Funding.--To carry out paragraph (1), the Secretary 
        shall reserve from amounts made available to carry out this 
        section an amount equal to \1/8\ of 1 percent of the amounts 
        made available for fiscal year 2001 and each succeeding fiscal 
        year.''.

SEC. 10. GRANTS TO IMPROVE PROGRAM QUALITY.

    Section 17 of the Richard B. Russell National School Lunch Act (42 
U.S.C. 1766) is amended by adding at the end the following:
    ``(u) Grants To Improve Program Quality.--
            ``(1) In general.--From the amounts made available to carry 
        out this subsection for fiscal year 2001, the Secretary shall 
        reserve $3,000,000 to provide grants to State agencies.
            ``(2) Use of grants.--A State agency receiving a grant 
        under this subsection shall use the grant funds to collaborate 
        with State and local licensing agencies and lead agencies that 
        administer grants under the Child Care and Development Block 
        Grant Act of 1990 (42 U.S.C. 9858 et seq.) for the purpose of 
        establishing State or local licensing requirements for all 
        categories of family or group day care homes and child care 
        centers located within the State.
            ``(3) Limitations.--
                    ``(A) Maximum number of state agencies.--Grants 
                under this subsection may be made to not more than 5 
                State agencies.
                    ``(B) Minimum requirements for state agencies.--A 
                grant under this subsection may be made only to a State 
agency that, at the time of application--
                            ``(i) does not have any State or local 
                        licensing requirements for certain categories 
                        of family or group day care homes or for 
                        certain categories of child care centers;
                            ``(ii) has at least some family or group 
                        day care homes or child care centers that meet 
                        alternate approval standards administered by 
                        the State agency; and
                            ``(iii) can provide an assurance to the 
                        Secretary that the lead agency that administer 
                        a grant in the State under the Child Care and 
                        Development Block Grant Act of 1990 (42 U.S.C. 
                        9858 et seq.) will--
                                    ``(I) participate in the 
                                administration of the grant under this 
                                subsection; and
                                    ``(II) provide funding from the 
                                grant received under that Act in 
                                support of grant activities under this 
                                subsection.''.

SEC. 11. RETENTION OF FUNDS COLLECTED FROM INSTITUTIONS.

    Section 17 of the Richard B. Russell National School Lunch Act (42 
U.S.C. 1766) (as amended by section 10) is amended by adding at the end 
the following:
    ``(v) Retention of Collected Funds.--
            ``(1) In general.--A State agency may retain not more than 
        50 percent of any program funds collected as a result of audits 
        or reviews conducted by the State agency of institutions 
        participating in the child and adult care food program.
            ``(2) Use of funds.--A State agency may use funds retained 
        under this subsection to pay for program costs incurred by the 
        State agency to improve the management and operation of the 
        child and adult care food program within the State.
            ``(3) Fiscal year.--The State agency may obligate funds 
        retained under this subsection during--
                    ``(A) the fiscal year in which a claim arose;
                    ``(B) the fiscal year in which the funds are 
                collected; or
                    ``(C) the fiscal year following the fiscal year in 
                which the funds are collected.''.

SEC. 12. STUDY OF ADMINISTRATIVE COSTS.

    (a) In General.--The Secretary of Agriculture, acting through the 
Administrator of the Food and Nutrition Service, shall conduct a study 
of the administrative rate structure and the administrative costs of 
institutions acting as sponsoring organizations of family or group day 
care homes and sponsoring organizations of organizations described in 
subsections (a)(2)(A), (a)(2)(B), and (o)(2)(A) of section 17 of the 
Richard B. Russell National School Lunch Act (42 U.S.C. 1766).
    (b) Components.--The study shall include an evaluation of--
            (1) the types and amounts of administrative costs incurred 
        by sponsoring organizations;
            (2) the types and amounts of administrative costs being 
        claimed by sponsoring organizations; and
            (3) alternative systems for compensating the sponsoring 
        organizations for administrative costs.
    (c) Report.--Not later than 1 year after the date of enactment of 
this Act or September 30, 2001, whichever is later, the Secretary shall 
submit to the Committee on Agriculture of the House of Representatives 
and the Committee on Agriculture, Nutrition, and Forestry of the Senate 
a report that describes the results of the study conducted under this 
section.
    (d) Funding.--The Secretary shall reserve to carry out this section 
$1,500,000 from amounts made available for fiscal year 2001 to carry 
out section 17 of the Richard B. Russell National School Lunch Act (42 
U.S.C. 1766).

SEC. 13. EFFECTIVE DATES.

    (a) In General.--Except as provided in subsection (b), this Act and 
the amendments made by this Act take effect on October 1, 2000.
    (b) Study of Administrative Costs.--Section 12 takes effect on the 
date of enactment of this Act.
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