[Congressional Record Volume 141, Number 157 (Wednesday, October 11, 1995)]
[Senate]
[Pages S15034-S15041]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BINGAMAN:
  S. 1308. A bill to amend chapter 73 of title 31, United States Code, 
to provide for performance standards for block grant programs, and for 
other purposes; to the Committee on Governmental Affairs.


               THE BLOCK GRANT PERFORMANCE STANDARDS ACT

  Mr. BINGAMAN. Mr. President, I introduce the Block Grant Performance 
Standards Act of 1995. This legislation is intended to provide a 
minimum set of performance standards for all block grants allocating 
Federal funds to States, localities, and other recipients.
  In the 104th Congress, we have seen a movement toward block grants. 
The idea behind this movement is that we have too many programs 
providing funding to other levels of government, and that these 
programs involve too much paperwork. This reasoning leads to the 
conclusion that if we bundle these programs into broader block grants, 
we will release other levels of government to better allocate these 
resources without wasting time and money filling out paperwork bound 
for bureaucrats in Washington.
  Mr. President, I agree that in many cases some of this reasoning is 
correct. To the extent possible, we should try to reduce paperwork and 
increase flexibility for State and local governments receiving Federal 
funds. I believe, however, that in creating block grants we must be 
responsible to taxpayers and resist the temptation to simply turn over 
blank checks to other levels of government. As the elected officials at 
the Federal level, I believe that we must set up minimal performance 
standards for the block grants we provide.
  I am pleased that some of the block grants we are creating do have 
accountability built in. The Chair of the Senate Committee on Labor and 
Human Resources, Senator Kassebaum, for example, has done an admirable 
job of including planning and performance standards for the States' 
administration of the job training block grants anticipated by S. 143, 
now before the Senate. I was successful in attaching an amendment to 
the welfare reform bill approved by the Senate that will provide 
similar accountability.
  The legislation I am introducing today is intended to provide 
accountability standards for all block grant programs. It requires 
entities receiving block grants to submit a plan to the agency 
administrating the grant program that outlines the goals of the entity 
for the use of the Federal funds, a description of how the goals will 
be achieved, and a discussion of performance indicators that will be 
used to measure progress toward those goals. It also ensures public 
participation in the development of this plan through the creation of 
appropriate community advisory committees. Finally, it provides for the 
provision of penalties for entities receiving block grants who 
consistently do not meet the goals they set for themselves in their 
block grant plans over a period of 2 years.
  Mr. President, I believe that this legislation strikes the right 
balance in ensuring that we meet our fiduciary responsibilities to 
Federal taxpayers and our desire to provide maximum flexibility to 
entities receiving block grants. It builds on the work of others, 
including Senator Roth, the sponsor of the Government Performance and 
Results Act of 1993, Public Law 103-62, which set similar performance 
standards for the Federal Government; and David Osborne, who has 
written on the need to develop performance standards for government. It 
also draws on the work of Senator Hatfield and his legislation to 
implement flexibility within current programs: S. 88, the Local 
Empowerment and Flexibility Act of 1995.
  Mr. President, I ask unanimous consent that the text of the bill and 
an article be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1308

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Block Grant Performance 
     Standards Act of 1995''.

     SEC. 2. ADMINISTRATION OF BLOCK GRANTS.

       Chapter 73 of title 31, United States Code, is amended by 
     adding at the end thereof the following new subchapter:

         ``SUBCHAPTER II--CONDITIONS APPLICABLE TO BLOCK GRANTS

     ``Sec. 7321. Purposes

       ``The purposes of this subchapter are to--
       ``(1) enable more efficient use of Federal, State, and 
     local resources;
       ``(2) establish accountability for achieving the purposes 
     of block grant programs; and
       ``(3) establish effective partnerships to address critical 
     issues of public interest.

     ``Sec. 7322. Definitions

       ``For purposes of this subchapter, the term--
       ``(1) `block grant program' means a program in which 
     Federal funds are directly allocated to States, localities, 
     or other recipients for use at the discretion of such States, 
     localities, or recipients in meeting stated Federal 
     purposes.; and
       ``(2) `plan' means a block grant strategic plan described 
     under section 7324.

     ``Sec. 7323. Requirement of approved block grant strategic 
       plans

       ``No payment may be paid under any block grant program to 
     any eligible entity unless such entity has submitted and 
     received approval for a plan.

     ``Sec. 7324. Block grant strategic plans

       ``The head of an agency administering a block grant program 
     shall designate the criteria that shall be included in a 
     block grant strategic plan. At a minimum, each plan shall 
     contain--
       ``(1) a description of goals and objectives, including 
     outcome related goals and objectives for each of the 
     designated program activities for each of the first 6 fiscal 
     years of the plan;
       ``(2) a description of how the goals and objectives are to 
     be achieved, including a description of the operational 
     processes, skills and technology, and the human, capital, 
     information and other objectives required to meet the goals 
     and objectives for the current fiscal year;
       ``(3) a description of performance indicators to be used in 
     measuring or assessing the relevant output service levels and 
     outcomes of each of the mandatory program activities; and
       ``(4) a description of the program evaluation to be used in 
     comparing actual results with established goals and 
     objectives, and the designation of results as highly 
     successful or failing to meet the goals and objectives of the 
     program.

     ``Sec. 7325. Review and approval of block grant strategic 
       plans

       ``After receipt of a plan, the head of an agency shall--
       ``(1) no later than 90 days after the receipt of the 
     application, approve or disapprove all or part of the plan;
       ``(2) no later than 15 days after the date of such approval 
     or disapproval, notify the applicant in writing of the 
     approval or disapproval; and
       ``(3) in the case of any disapproval of a plan, include a 
     written justification of the reasons for disapproval in the 
     written notice of disapproval.

     ``Sec. 7326. Community advisory committees

       ``(a) An entity applying for a block grant shall establish 
     a community advisory committee in accordance with this 
     section.
       ``(b) A community advisory committee shall advise an 
     applicant in the development and implementation of a plan, 
     including advice with respect to--
       ``(1) conducting public hearings; and
       ``(2) receiving comment and reviews from communities 
     affected by the plan.
       ``(c) Membership of the community advisory committee shall 
     include--
       ``(1) persons with leadership experience in private 
     business and voluntary organizations;
       ``(2) elected officials representing jurisdictions included 
     in the plan;
       ``(3) representatives of participating qualified 
     organizations;
       ``(4) the general public; and
       ``(5) individuals and representatives of community 
     organizations who shall help to enhance the leadership role 
     of the local government in developing a plan.
       ``(d) Before submitting an application for approval, or any 
     reports required as a condition of receiving any payment 
     under a block grant program, the applicant shall submit such 
     application or report to the community advisory committee for 
     review and comment. Any comments of the committee shall be 
     submitted with the application or report to the head of an 
     agency.

     ``Sec. 7327. Technical and other assistance

       ``The head of an agency administering a block grant program 
     may provide technical assistance to applicants for block 
     grants in developing information necessary for the design or 
     implementation of a plan.
     
[[Page S 15035]]


     ``Sec. 7328. Conditional termination or alteration of block 
       grant strategic plan

       ``(a) The head of an agency administering a block grant 
     program shall establish procedures by regulation for 
     implementing penalties of not less than 5 percent of the 
     grant a recipient would otherwise receive for failing to meet 
     the goals and objectives included in the plan for a block 
     grant.
       ``(b) The head of an agency shall establish procedures by 
     regulation for--
       ``(1) suspending the grant a recipient would otherwise 
     receive for a period of 3 years for failure for 2 consecutive 
     years to meet the goals and objectives included in the plan 
     for a block grant; and
       ``(2) reallocating the amount of the grant a recipient 
     would otherwise receive to other governmental or nonprofit 
     institutions within the plan.

     ``Sec. 7329. Administration with other conditions of block 
       grant programs

       ``The provisions of this subchapter (including all 
     conditions and requirements) shall supersede any other 
     provision of law relating to the administration of any block 
     grant program only to the extent of any inconsistency with 
     such other provision.''.

     SEC. 3. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Table of Sections.--Chapter 73 of title 31, United 
     States Code, is amended by striking out the chapter heading 
     and the table of sections and inserting in lieu thereof the 
     following:

                ``CHAPTER 73--ADMINISTERING BLOCK GRANTS

                  ``SUBCHAPTER I--BLOCK GRANT AMOUNTS

``Sec.
``7301. Purpose.
``7302. Definitions.
``7303. Reports and public hearings on proposed uses of amounts.
``7304. Availability of records.
``7305. State auditing requirements.

         ``SUBCHAPTER II--CONDITIONS APPLICABLE TO BLOCK GRANTS

``7321. Purposes.
``7322. Definitions.
``7323. Requirement of approved block grant strategic plans.
``7324. Block grant strategic plans.
``7325. Review and approval of block grant strategic plans.
``7326. Community advisory committees.
``7327. Technical and other assistance.
``7328. Conditional termination or alteration of block grant strategic 
              plan.
``7329. Administration with other conditions of block grant programs.

                 ``SUBCHAPTER I--BLOCK GRANT AMOUNTS''.

       (b) Chapter References.--Chapter 73 of title 31, United 
     States Code, is amended--
       (1) in section 7301 in the matter preceding paragraph (1) 
     by striking out ``chapter'' and inserting in lieu thereof 
     ``subchapter''; and
       (2) in section 7302 in the matter preceding paragraph (1) 
     by striking out ``chapter'' and inserting in lieu thereof 
     ``subchapter''.

     SEC. 4. EFFECTIVE DATE.

       This Act shall take effect on October 1, 1997, and shall 
     apply to payments under block grant programs on and after 
     such date.
                                                                    ____


                [From the Washington Post, June 1, 1995]

                A Federal Challenge for Local Ingenuity

                           (By David Osborne)

       In the new Republican Congress, block grants are breaking 
     out all over. And heaven knows, they're superior to narrow 
     categorical grants. But as the time for decisions draws near, 
     it's worth stopping for a moment to ask: Are block grants the 
     best we can do?
       There is one simple idea missing from the block grant 
     debate of 1995. It's called accountability for results. In 
     their heat to downsize the federal government, the 
     Republicans may miss the best opportunity in a generation to 
     create a federalism that works.
       We all know that the current federal system, with its 550-
     plus categorical grant programs, is a mess. We also know from 
     every poll on the issue that the public supports devotion of 
     responsibilities to state and local governments.
       What we don't know is that block grants are the best 
     solution.
       Congress's inability to resist creating new categorical 
     grant programs--they sprout up almost like weeds in a 
     garden--has been a problem since the 1960s. By 1991 Congress 
     funded almost 100 social service grant programs, more than 80 
     health care grant programs and close to 30 grant programs 
     that dealt with housing or development in poor communities.
       Many of these were for absurdly small amounts--$3 million 
     or $4 million nationally. More than half of the Education 
     Department's 90-odd programs were for less than $15 million.
       When one department administers so many tiny grant 
     programs, something is wrong. Thousands of public employees, 
     in Washington and in state and local governments, spend 
     countless hours publicizing programs, writing and reviewing 
     grant applications, reporting on how money was spent and 
     audited. Billions of dollars go to the professionals and 
     bureaucrats who do this, rather than the intended recipients: 
     students, poor people, urban residents and the unemployed.
       For 25 years, the knee-jerk response has been the block 
     grant, which consolidates many categorical grant programs 
     into one grant with--at least theoretically--few strings 
     attached.
       There is just one problem with this. Block grants are blind 
     to performance. They shower as much money on wasteful, 
     ineffective programs as they do on innovative, cost-effective 
     approaches.
       We need a third way: block grants in which state and local 
     governments compete in part based on the results they 
     achieve. This kind of model has become common at the state 
     level. Pennsylvania's highly regarded Ben Franklin 
     Partnership, for instance, invented what it calls ``challenge 
     grants'' to fund local economic development centers.
       The concept is simple, and Congress would be wise to adopt 
     it. Consider the idea of a community development challenge 
     grant, administered by the Department of Housing and Urban 
     Development. Under this approach, the federal government 
     would establish broad guidelines, objectives and performance 
     measures. State and/or local governments would then compete 
     for challenge grants based on three criteria:
       Need: This could be determined by a community's 
     unemployment rate, poverty rate and median income.
       Quality of strategy: Does the proposed strategy leverage 
     private sector involvement? Does it empower communities to 
     solve more of their own problems? Does it encourage 
     competition and choice? Does it measure and reward results?
       Results: The federal government would measure the number of 
     jobs created, changes in the poverty and unemployment rates, 
     job placement rates, private investment leveraged, changes in 
     indicators of family health, incidence of graft or corruption 
     and so on.
       The higher a government ranked on these criteria, the more 
     funding it would receive. Eventually, only two criteria would 
     be necessary: need and results. Until data on results build 
     up, however, HUD could use quality criteria to drive state 
     and local governments toward strategies that have proven more 
     effective than traditional service delivery by public 
     bureaucracies.
       This approach would cause states and localities to attack 
     the problems federal programs are designed to solve, without 
     dictating the approaches they use. It would tap state and 
     local ingenuity without abandoning federal responsibility.
       By setting goals, measuring outcomes and rewarding success, 
     challenged grants would push lower levels of governments to 
     come up with strategies that worked. Local entities could 
     focus on their own areas of greatest need and craft their own 
     initiatives, without micromanagement from above. They could 
     not, however, continue to collect their full grants without 
     producing results.
       The Clinton administration is already testing a version of 
     this model through its ``Oregon Option''--a performance-based 
     contract between the state and several federal departments, 
     first proposed last year by the Alliance for Redesigning 
     Government. HUD Secretary Henry Cisneros has also proposed 
     three performance-based block grants. Yet few Republicans in 
     Congress are listening.
       The Republicans' impulse to hand money to the states 
     regardless of their performance is particularly ironic given 
     the public's intense demand for more efficient and effective 
     government. Remember, this is federal money, raised through 
     federal taxes to attack national problems that state and 
     local governments will never solve on their own.
       It is easy to wax poetic about the virtues of state 
     government. But as the author of a book on the subject, 
     ``Laboratories of Democracy,'' I feel compelled to inject 
     some reality.
       State and local romantics often forget one fact: States, 
     cities and counties must compete to keep their taxes low, 
     lest they drive businesses and wealthy residents away. This 
     is why no state has ever made a sustained investment in 
     combating poverty of crating a viable training system. It is 
     also why no state save Hawaii--separated by thousands of 
     miles of ocean from its neighbors--has ever funded universal 
     health insurance.
       It is equally ironic that Congress wants to give block 
     grants only to the states. The fact that current proposals 
     ignore local governments is perhaps the most obvious sign of 
     how little thinking their authors have done.
       Again, a dose of reality: The typical state bureaucracy 
     performs a little better than the typical federal 
     bureaucracy--but not much. Most of the real improvement in 
     performance over the past two decades has come at the local 
     level. In addition, most public services are provided by 
     local governments, not state governments. And the level of 
     government Americans trust most is--you guessed it--local 
     government.
       If Congress wants to make government work better and cost 
     less, it will control its jerking knee and craft challenge 
     grants aimed at both state and local governments. If it 
     simply wants to make the federal government smaller, it will 
     create block grants for the states. The choice will be 
     revealing.
                                 ______

      By Mr. KERRY
  S. 1310. A bill to amend the Internal Revenue Code of 1986 to expand 
the availability of individual retirement accounts, and for other 
purposes; to the Committee on Finance.


            the savings and investment incentive act of 1995

  Mr. KERRY. Mr. President, in these difficult budgetary times 
we not only 

[[Page S 15036]]
have a fiscal deficit that we must address, but we also have a savings 
deficit in this country that requires creative and innovative 
approaches to helping people save and plan for their retirements.
  That is why I am offering the Savings and Investment Incentive Act of 
1995 which will expand deductible IRA's, create a special nondeductible 
IRA program, allow penalty-free withdrawals for specific reasons; and 
it appeals to our sense of fairness by targeting the middle class.
  What does this mean? It means that any individual who is not an 
active participant in a an employee-sponsored plan would be eligible 
for a deductible IRA, regardless of income.
  It means that income levels for participants in the IRA program would 
be doubled for those who participate in employer-provided pension 
plans.
  It means that all middle-income Americans who earn up to $50,000, and 
couples who earn up to $80,000, indexed for inflation, could fully 
deduct IRA contributions.
  It means that people eligible for traditional IRAs could now set up a 
special IRA that would provide a new saving vehicle that encourages 
middle-income Americans to save by allowing an incentive tax-free 
withdrawal without draining the Treasury.
  I did cosponsor, along with 60 of my colleagues, a more ambitious 
proposal authored by my friend from Delaware, Senator Roth, and my 
friend from Louisiana, Senator Breaux, but, given our budgetary 
constraints, I respectfully suggest that this bill is, perhaps, more 
realistic.

  While contributions to the new special IRA's, under this proposal, 
would not be deductible, if funds remain in the account for at least 5 
years withdrawals would be tax free. Individuals in the upper end of 
the new income brackets would be able to convert balances in their 
traditional deductible IRA accounts to the ``Special IRA'' accounts 
without being subject to penalty.
  The amount transferred from the existing contribution-deductible IRA 
to the special IRA would be subject to ordinary income tax in the year 
of the transfer.
  But, this legislation recognizes people's real needs in the real 
world. Under this plan withdrawals of earnings for the ``Special 
IRA's'' within 5 years would be subject to ordinary income tax and a 
10-percent penalty unless the withdrawals are for education expenses, a 
first-time home purchase, unemployment, or medical care.
  Mr. President, we need to invest more. We need to save more. We need 
to be fair and recognize the difficult economic times that middle-class 
Americans are suffering. We need to help them save for their future and 
find innovative creative ways to do it.
  This bill has the approval of the Treasury Department and does 
everything the Roth-Breaux ``Super-IRA'' proposal does in a way that 
does not inflate the deficit.
  I believe, Mr. President, that the Savings and Investment Incentive 
Act of 1995 is a moderate, fair, common-sense approach that doubles the 
income levels for participation; allows non penalty deductions for a 
variety of real life situations; and it will work for working Americans 
without busting the Treasury.
  Mr. President, I ask unanimous consent that the bill appear in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1310

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

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Savings 
     and Investment Incentive Act of 1995''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
                 TITLE I--RETIREMENT SAVINGS INCENTIVES
                       Subtitle A--IRA Deduction

     SEC. 101. INCREASE IN INCOME LIMITATIONS.

       (a) In General.--Subparagraph (B) of section 219(g)(3) is 
     amended--
       (1) by striking ``$40,000'' in clause (i) and inserting 
     ``$80,000'', and
       (2) by striking ``$25,000'' in clause (ii) and inserting 
     ``$50,000''.
       (b) Phase-Out of Limitations.--Clause (ii) of section 
     219(g)(2)(A) is amended by striking ``$10,000'' and inserting 
     ``an amount equal to 10 times the dollar amount applicable 
     for the taxable year under subsection (b)(1)(A)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 102. INFLATION ADJUSTMENT FOR DEDUCTIBLE AMOUNT AND 
                   INCOME LIMITATIONS.

       (a) In General.--Section 219 is amended by redesignating 
     subsection (h) as subsection (i) and by inserting after 
     subsection (g) the following new subsection:
       ``(h) Cost-of-Living Adjustments.--
       ``(1) In general.--In the case of any taxable year 
     beginning in a calendar year after 1996, each dollar amount 
     to which this subsection applies shall be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1995' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(2) Dollar amounts to which subsection applies.--This 
     subsection shall apply to--
       ``(A) the $2,000 amounts under subsection (b)(1)(A) and 
     (c), and
       ``(B) the applicable dollar amounts under subsection 
     (g)(3)(B).
       ``(3) Rounding rules.--
       ``(A) Deduction amounts.--If any amount referred to in 
     paragraph (2)(A) as adjusted under paragraph (1) is not a 
     multiple of $500, such amount shall be rounded to the next 
     lowest multiple of $500.
       ``(B) Applicable dollar amounts.--If any amount referred to 
     in paragraph (2)(B) as adjusted under paragraph (1) is not a 
     multiple of $5,000, such amount shall be rounded to the next 
     lowest multiple of $5,000.''
       (b) Conforming Amendments.--
       (1) Clause (i) of section 219(c)(2)(A) is amended to read 
     as follows:
       ``(i) the sum of $250 and the dollar amount in effect for 
     the taxable year under subsection (b)(1)(A), or''.
       (2) Section 408(a)(1) is amended by striking ``in excess of 
     $2,000 on behalf of any individual'' and inserting ``on 
     behalf of any individual in excess of the amount in effect 
     for such taxable year under section 219(b)(1)(A)''.
       (3) Section 408(b)(2)(B) is amended by striking ``$2,000'' 
     and inserting ``the dollar amount in effect under section 
     219(b)(1)(A)''.
       (4) Subparagraph (A) of section 408(d)(5) is amended by 
     striking ``$2,250'' and inserting ``the dollar amount in 
     effect for the taxable year under section 219(c)(2)(A)(i)''.
       (5) Section 408(j) is amended by striking ``$2,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 103. COORDINATION OF IRA DEDUCTION LIMIT WITH ELECTIVE 
                   DEFERRAL LIMIT.

       (a) In General.--Section 219(b) (relating to maximum amount 
     of deduction) is amended by adding at the end the following 
     new paragraph:
       ``(4) Coordination with elective deferral limit.--The 
     amount determined under paragraph (1) or subsection (c)(2) 
     with respect to any individual for any taxable year shall not 
     exceed the excess (if any) of--
       ``(A) the limitation applicable for the taxable year under 
     section 402(g)(1), over
       ``(B) the elective deferrals (as defined in section 
     402(g)(3)) of such individual for such taxable year.''
       (b) Conforming Amendment.--Section 219(c) is amended by 
     adding at the end the following new paragraph:
       ``(3) Cross Reference.--

  ``For reduction in paragraph (2) amount, see subsection (b)(4).''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
                Subtitle B--Nondeductible Tax-Free IRA's

     SEC. 111. ESTABLISHMENT OF NONDEDUCTIBLE TAX-FREE INDIVIDUAL 
                   RETIREMENT ACCOUNTS.

       (a) In General.--Subpart A of part I of subchapter D of 
     chapter 1 (relating to pension, profit-sharing, stock bonus 
     plans, etc.) is amended by inserting after section 408 the 
     following new section:

     ``SEC. 408A. SPECIAL INDIVIDUAL RETIREMENT ACCOUNTS.

       ``(a) General Rule.--Except as provided in this chapter, a 
     special individual retirement account shall be treated for 
     purposes of this title in the same manner as an individual 
     retirement plan.
       ``(b) Special Individual Retirement Account.--For purposes 
     of this title, the term `special individual retirement 
     account' means an individual retirement plan which is 
     designated at the time of establishment of the plan as a 
     special individual retirement account.
       ``(c) Treatment of Contributions.--
       ``(1) No deduction allowed.--No deduction shall be allowed 
     under section 219 for a contribution to a special individual 
     retirement account.
       ``(2) Contribution limit.--The aggregate amount of 
     contributions for any taxable year to all special individual 
     retirement accounts maintained for the benefit of an 
     individual shall not exceed the excess (if any) of--
       ``(A) the maximum amount allowable as a deduction under 
     section 219 with respect to such individual for such taxable 
     year, over

[[Page S 15037]]

       ``(B) the amount so allowed.
       ``(3) Special rules for qualified transfers.--
       ``(A) In general.--No rollover contribution may be made to 
     a special individual retirement account unless it is a 
     qualified transfer.
       ``(B) Limit not to apply.--The limitation under paragraph 
     (2) shall not apply to a qualified transfer to a special 
     individual retirement account.
       ``(d) Tax Treatment of Distributions.--
       ``(1) In general.--Except as provided in this subsection, 
     any amount paid or distributed out of a special individual 
     retirement account shall not be included in the gross income 
     of the distributee.
       ``(2) Exception for earnings on contributions held less 
     than 5 years.--
       ``(A) In general.--Any amount distributed out of a special 
     individual retirement account which consists of earnings 
     allocable to contributions made to the account during the 5-
     year period ending on the day before such distribution shall 
     be included in the gross income of the distributee for the 
     taxable year in which the distribution occurs.
       ``(B) Ordering rule.--
       ``(i) First-in, first-out rule.--Distributions from a 
     special individual retirement account shall be treated as 
     having been made--

       ``(I) first from the earliest contribution (and earnings 
     allocable thereto) remaining in the account at the time of 
     the distribution, and
       ``(II) then from other contributions (and earnings 
     allocable thereto) in the order in which made.

       ``(ii) Allocations between contributions and earnings.--Any 
     portion of a distribution allocated to a contribution (and 
     earnings allocable thereto) shall be treated as allocated 
     first to the earnings and then to the contribution.
       ``(iii) Allocation of earnings.--Earnings shall be 
     allocated to a contribution in such manner as the Secretary 
     may by regulations prescribe.
       ``(iv) Contributions in same year.--Except as provided in 
     regulations, all contributions made during the same taxable 
     year may be treated as 1 contribution for purposes of this 
     subparagraph.
       ``(C) Cross reference.--

  ``For additional tax for early withdrawal, see section 72(t).

       ``(3) Qualified transfer.--
       ``(A) In general.--Paragraph (2) shall not apply to any 
     distribution which is transferred in a qualified transfer to 
     another special individual retirement account.
       ``(B) Contribution period.--For purposes of paragraph (2), 
     the special individual retirement account to which any 
     contributions are transferred shall be treated as having held 
     such contributions during any period such contributions were 
     held (or are treated as held under this subparagraph) by the 
     special individual retirement account from which transferred.
       ``(4) Special rules relating to certain transfers.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, in the case of a qualified transfer to a special 
     individual retirement account from an individual retirement 
     plan which is not a special individual retirement account--
       ``(i) there shall be included in gross income any amount 
     which, but for the qualified transfer, would be includible in 
     gross income, but
       ``(ii) section 72(t) shall not apply to such amount.
       ``(B) Time for inclusion.--In the case of any qualified 
     transfer which occurs before January 1, 1997, any amount 
     includible in gross income under subparagraph (A) with 
     respect to such contribution shall be includible ratably over 
     the 4-taxable year period beginning in the taxable year in 
     which the amount was paid or distributed out of the 
     individual retirement plan.
       ``(e) Qualified Transfer.--For purposes of this section
       ``(1) In general.--The term `qualified transfer' means a 
     transfer to a special individual retirement account from 
     another such account or from an individual retirement plan 
     but only if such transfer meets the requirements of section 
     408(d)(3).
       ``(2) Limitation.--A transfer otherwise described in 
     paragraph (1) shall not be treated as a qualified transfer if 
     the taxpayer's adjusted gross income for the taxable year of 
     the transfer exceeds the sum of--
       ``(A) the applicable dollar amount, plus
       ``(B) the dollar amount applicable for the taxable year 
     under section 219(g)(2)(A)(ii).

     This paragraph shall not apply to a transfer from a special 
     individual retirement account to another special individual 
     retirement account.
       ``(3) Definitions.--For purposes of this subsection, the 
     terms `adjusted gross income' and `applicable dollar amount' 
     have the meanings given such terms by section 219(g)(3), 
     except subparagraph (A)(ii) thereof shall be applied without 
     regard to the phrase `or the deduction allowable under this 
     section'.''
       (b) Early Withdrawal Penalty.--Section 72(t) is amended by 
     adding at the end the following new paragraph:
       ``(6) Rules relating to special individual retirement 
     accounts.--In the case of a special individual retirement 
     account under section 408A--
       ``(A) this subsection shall only apply to distributions out 
     of such account which consist of earnings allocable to 
     contributions made to the account during the 5-year period 
     ending on the day before such distribution, and
       ``(B) paragraph (2)(A)(i) shall not apply to any 
     distribution described in subparagraph (A).''
       (c) Excess Contributions.--Section 4973(b) is amended by 
     adding at the end the following new sentence: ``For purposes 
     of paragraphs (1)(B) and (2)(C), the amount allowable as a 
     deduction under section 219 shall be computed without regard 
     to section 408A.''
       (d) Conforming Amendment.--The table of sections for 
     subpart A of part I of subchapter D of chapter 1 is amended 
     by inserting after the item relating to section 408 the 
     following new item:

``Sec. 408A. Special individual retirement accounts.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
                  TITLE II--PENALTY-FREE DISTRIBUTIONS

     SEC. 201. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE USED 
                   WITHOUT PENALTY TO PURCHASE FIRST HOMES, TO PAY 
                   HIGHER EDUCATION OR FINANCIALLY DEVASTATING 
                   MEDICAL EXPENSES, OR BY THE UNEMPLOYED.

       (a) In General.--Paragraph (2) of section 72(t) (relating 
     to exceptions to 10-percent additional tax on early 
     distributions from qualified retirement plans) is amended by 
     adding at the end the following new subparagraph:
       ``(D) Distributions from certain plans for first home 
     purchases or educational expenses.--Distributions to an 
     individual from an individual retirement plan--
       ``(i) which are qualified first-time homebuyer 
     distributions (as defined in paragraph (7)); or
       ``(ii) to the extent such distributions do not exceed the 
     qualified higher education expenses (as defined in paragraph 
     (8)) of the taxpayer for the taxable year.''
       (b) Financially Devastating Medical Expenses.--
       (1) In general.--Section 72(t)(3)(A) is amended by striking 
     ``(B),''.
       (2) Certain lineal descendants and ancestors treated as 
     dependents and long-term care services treated as medical 
     care.--Subparagraph (B) of section 72(t)(2) is amended by 
     striking ``medical care'' and all that follows and inserting 
     ``medical care determined--
       ``(i) without regard to whether the employee itemizes 
     deductions for such taxable year, and
       ``(ii) in the case of an individual retirement plan--

       ``(I) by treating such employee's dependents as including 
     all children, grandchildren and ancestors of the employee or 
     such employee's spouse and
       ``(II) by treating qualified long-term care services (as 
     defined in paragraph (9)) as medical care for purposes of 
     this subparagraph (B).''

       (3) Conforming amendment.--Subparagraph (B) of section 
     72(t)(2) is amended by striking ``or (C)'' and inserting ``, 
     (C) or (D)''.
       (c) Definitions.--Section 72(t), as amended by this Act, is 
     amended by adding at the end the following new paragraphs:
       ``(7) Qualified first-time homebuyer distributions.--For 
     purposes of paragraph (2)(D)(i)--
       ``(A) In general.--The term `qualified first-time homebuyer 
     distribution' means any payment or distribution received by 
     an individual to the extent such payment or distribution is 
     used by the individual before the close of the 60th day after 
     the day on which such payment or distribution is received to 
     pay qualified acquisition costs with respect to a principal 
     residence of a first-time homebuyer who is such individual or 
     the spouse, child (as defined in section 151(c)(3)), or 
     grandchild of such individual.
       ``(B) Qualified acquisition costs.--For purposes of this 
     paragraph, the term `qualified acquisition costs' means the 
     costs of acquiring, constructing, or reconstructing a 
     residence. Such term includes any usual or reasonable 
     settlement, financing, or other closing costs.
       ``(C) First-time homebuyer; other definitions.--For 
     purposes of this paragraph--
       ``(i) First-time homebuyer.--The term `first-time 
     homebuyer' means any individual if--

       ``(I) such individual (and if married, such individual's 
     spouse) had 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 
     paragraph applies, and
       ``(II) subsection (h) or (k) of section 1034 did not 
     suspend the running of any period of time specified in 
     section 1034 with respect to such individual on the day 
     before the date the distribution is applied pursuant to 
     subparagraph (A).

     In the case of an individual described in section 
     143(i)(1)(C) for any year, an ownership interest shall not 
     include any interest under a contract of deed described in 
     such section. An individual who loses an ownership interest 
     in a principal residence incident to a divorce or legal 
     separation is deemed for purposes of this subparagraph to 
     have had no ownership interest in such principal residence 
     within the period referred to in subparagraph (A)(II).
       ``(ii) Principal residence.--The term `principal residence' 
     has the same meaning as when used in section 1034.

[[Page S 15038]]

       ``(iii) Date of acquisition.--The term `date of 
     acquisition' means the date--

       ``(I) on which a binding contract to acquire the principal 
     residence to which subparagraph (A) applies is entered into, 
     or
       ``(II) on which construction or reconstruction of such a 
     principal residence is commenced.

       ``(D) Special rule where delay in acquisition.--If any 
     distribution from any individual retirement plan fails to 
     meet the requirements of subparagraph (A) solely by reason of 
     a delay or cancellation of the purchase or construction of 
     the residence, the amount of the distribution may be 
     contributed to an individual retirement plan as provided in 
     section 408(d)(3)(A)(i) (determined by substituting `120 
     days' for `60 days' in such section), except that--
       ``(i) section 408(d)(3)(B) shall not be applied to such 
     contribution, and
       ``(ii) such amount shall not be taken into account in 
     determining whether section 408(d)(3)(A)(i) applies to any 
     other amount.
       ``(8) Qualified higher education expenses.--For purposes of 
     paragraph (2)(D)(ii)--
       ``(A) In general.--The term `qualified higher education 
     expenses' means tuition and fees required for the enrollment 
     or attendance of--
       ``(i) the taxpayer,
       ``(ii) the taxpayer's spouse,
       ``(iii) a dependent of the taxpayer with respect to whom 
     the taxpayer is allowed a deduction under section 151, or
       ``(iv) the taxpayer's child (as defined in section 
     151(c)(3)) or grandchild,
     as an eligible student at an institution of higher education 
     (as defined in paragraphs (1)(D) and (2) of section 220(c)).
       ``(B) Exceptions.--The term `qualified higher education 
     expenses' does not include expenses described in 
     subparagraphs (B) and (C) of section 220(c)(1).
       ``(C) Coordination with savings bond provisions.--The 
     amount of qualified higher education expenses for any taxable 
     year shall be reduced by any amount excludable from gross 
     income under section 135.
       ``(9) Qualified long-term care services.--For purposes of 
     paragraph (2)(B)--
       ``(A) In general.--The term `qualified long-term care 
     services' means necessary diagnostic, curing, mitigating, 
     treating, preventive, therapeutic, and rehabilitative 
     services, and maintenance and personal care services (whether 
     performed in a residential or nonresidential setting) which--
       ``(i) are required by an individual during any period the 
     individual is an incapacitated individual (as defined in 
     subparagraph (B)),
       ``(ii) have as their primary purpose--

       ``(I) the provision of needed assistance with 1 or more 
     activities of daily living (as defined in subparagraph (C)), 
     or
       ``(II) protection from threats to health and safety due to 
     severe cognitive impairment, and

       ``(iii) are provided pursuant to a continuing plan of care 
     prescribed by a licensed professional (as defined in 
     subparagraph (D)).
       ``(B) Incapacitated individual.--The term `incapacitated 
     individual' means any individual who--
       ``(i) is unable to perform, without substantial assistance 
     from another individual (including assistance involving 
     cueing or substantial supervision), at least 2 activities of 
     daily living as defined in subparagraph (C), or
       ``(ii) has severe cognitive impairment as defined by the 
     Secretary in consultation with the Secretary of Health and 
     Human Services.

     Such term shall not include any individual otherwise meeting 
     the requirements of the preceding sentence unless a licensed 
     professional within the preceding 12-month period has 
     certified that such individual meets such requirements.
       ``(C) Activities of daily living.--Each of the following is 
     an activity of daily living:
       ``(i) Eating.
       ``(ii) Toileting.
       ``(iii) Transferring.
       ``(iv) Bathing.
       ``(v) Dressing.
       ``(D) Licensed professional.--The term `licensed 
     professional' means--
       ``(i) a physician or registered professional nurse, or
       ``(ii) any other individual who meets such requirements as 
     may be prescribed by the Secretary after consultation with 
     the Secretary of Health and Human Services.
       ``(E) Certain services not included.--The term `qualified 
     long-term care services' shall not include any services 
     provided to an individual--
       ``(i) by a relative (directly or through a partnership, 
     corporation, or other entity) unless the relative is a 
     licensed professional with respect to such services, or
       ``(ii) by a corporation or partnership which is related 
     (within the meaning of section 267(b) or 707(b)) to the 
     individual.

     For purposes of this subparagraph, the term `relative' means 
     an individual bearing a relationship to the individual which 
     is described in paragraphs (1) through (8) of section 
     152(a).''
       (d) Penalty-Free Distributions for Certain Unemployed 
     Individuals.--Paragraph (2) of section 72(t) is amended by 
     adding at the end the following new subparagraph:
       ``(E) Distributions to unemployed individuals.--A 
     distribution from an individual retirement plan to an 
     individual after separation from employment, if--
       ``(i) such individual has received unemployment 
     compensation for 12 consecutive weeks under any Federal or 
     State unemployment compensation law by reason of such 
     separation, and
       ``(ii) such distributions are made during any taxable year 
     during which such unemployment compensation is paid or the 
     succeeding taxable year.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to payments and distributions after December 31, 
     1995.

     SEC. 202. CONTRIBUTIONS MUST BE HELD AT LEAST 5 YEARS IN 
                   CERTAIN CASES.

       (a) In General.--Section 72(t), as amended by this Act, is 
     amended by adding at the end the following new paragraph:
       ``(10) Certain contributions must be held 5 years.--
       ``(A) In general.--Paragraph (2)(A)(i) shall not apply to 
     any amount distributed out of an individual retirement plan 
     (other than a special individual retirement account) which is 
     allocable to contributions made to the plan during the 5-year 
     period ending on the date of such distribution (and earnings 
     on such contributions).
       ``(B) Ordering rule.--For purposes of this paragraph, 
     distributions shall be treated as having been made--
       ``(i) first from the earliest contribution (and earnings 
     allocable thereto) remaining in the account at the time of 
     the distribution, and
       ``(ii) then from other contributions (and earnings 
     allocable thereto) in the order in which made.

     Earnings shall be allocated to contributions in such manner 
     as the Secretary may prescribe.
       ``(C) Special rule for rollovers.--
       ``(i) Pension plans.--Subparagraph (A) shall not apply to 
     distributions out of an individual retirement plan which are 
     allocable to rollover contributions to which section 402(c), 
     403(a)(4), or 403(b)(8) applied.
       ``(ii) Contribution period.--For purposes of subparagraph 
     (A), amounts shall be treated as having been held by a plan 
     during any period such contributions were held (or are 
     treated as held under this clause) by any individual 
     retirement plan from which transferred.
       ``(D) Special accounts.--For rules applicable to special 
     individual retirement accounts under section 408A, see 
     paragraph (8).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions (and earnings allocable thereto) 
     which are made after December 31, 1995.
                                 ______

      By Mr. CAMPBELL (for himself and Mr. Bradley):
  S. 1311. A bill to establish a National Fitness and Sports Foundation 
to carry out activities to support and supplement the mission of the 
President's Council on Physical Fitness and Sports, and for other 
purposes; to the Committee on Commerce, Science, and Transportation.


        the national physical fitness and sports foundation act

 Mr. CAMPBELL. Mr. President, I introduce the National Physical 
Fitness and Sports Foundation Act. This legislation serves the growing 
need of the President's Council on Physical Fitness to expand and 
become more self-sufficient.
  Mr. President, the foundation created by this bill simply allows the 
Council to expand its scope and activities without burdening the 
Federal Government with this expense. As it stands today, the 
President's Council operates under a severely limited budget. This 
legislation will empower the Council to become more self-reliant, and 
less dependent on Federal funding, by creating opportunities to 
generate and solicit independent sources of funding for the 
organization.
  At a time where we are operating under fiscal restraints, I want to 
assure my colleagues that this bill does not create a quasi-federal 
agency to add to the already burdensome system. The foundation created 
by this bill will be established in collaboration with the Department 
of Health and Human Services. It would be a nonprofit, private 
corporation that would encourage the participation by, and support of 
private organizations for the activities of the Council.
  For my colleagues that may not be familiar with the Council, I would 
like to provide some background on its mission and intent. The 
President's Council on Physical Fitness and Sports was originally 
established by President Eisenhower in 1956 to promote physical fitness 
for our Nation's youth. Since that time, the Council has undergone 
significant changes, expanding its services to include opportunities 
with physical fitness, sports, and sports medicine for people of all 
ages. Today, the Council serves an important role with other national 
physical fitness and sports organizations and several 

[[Page S 15039]]
Federal agencies, collaborating on important issues and campaigns to 
improve the health of the citizens of this country.
  The President's Council on Physical Fitness is of personal interest 
to me. As many of my colleagues know, sports, specifically judo, played 
a critical role in my life. I was hardly a role model as a young man; I 
hung out with a tough crowd and got into plenty of trouble. The 
discipline and commitment that judo taught me, literally turned my life 
around. After many years of dedicated training, I was honored with a 
gold medal in the 1963 Pan Am Games for judo, and then was selected a 
year later as captain of the 1964 U.S. Olympic Judo Team. I personally 
know what a difference sports can make in a person's life. That is why 
I am encouraging any and all efforts to promote sports and physical 
fitness in our country.
  The Council is the only Federal office that is solely devoted to 
programs involving physical activity, fitness, and sports. Because of 
the invaluable role these activities play in the lives of nearly all 
Americans, it is critical that we support this organization in its 
vital efforts to continue to promote high standards of health and 
fitness for the citizens of this Country.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1311

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``National Physical Fitness 
     and Sports Foundation Establishment Act''.

     SEC. 2. ESTABLISHMENT AND PURPOSE OF FOUNDATION.

       (a) Establishment.--There is established the National 
     Physical Fitness and Sports Foundation (hereinafter in this 
     Act referred to as the ``Foundation''). The Foundation shall 
     be a charitable and nonprofit corporation and shall not be an 
     agency or establishment of the United States.
       (b) Purposes.--It is the purpose of the Foundation to--
       (1) in conjunction with the President's Council on Physical 
     Fitness and Sports, develop a list and description of 
     programs, events and other activities which would further the 
     goals outlined in Executive Order 12345 and with respect to 
     which combined private and governmental efforts would be 
     beneficial; and
       (2) encourage and promote the participation by private 
     organizations in the activities referred to in subsection 
     (b)(1) and to encourage and promote private gifts of money 
     and other property to support those activities.
       (c) Disposition of Money and Property.--At least annually 
     the Foundation shall transfer, after the deduction of the 
     administrative expenses of the Foundation, the balance of any 
     contributions received for the activities referred to in 
     subsection (b), to the Public Health Service Gift Fund 
     pursuant to section 231 of the Public Health Service Act (42 
     U.S.C. 238) for expenditure pursuant to the provisions of 
     that section and consistent with the purposes for which the 
     funds were donated.

     SEC. 3. BOARD OF DIRECTORS OF THE FOUNDATION.

       (a) Establishment and Membership.--
       (1) In general.--The Foundation shall have a governing 
     Board of Directors (hereinafter referred to in this Act as 
     the ``Board''), which shall consist of nine Directors, to be 
     appointed not later than 90 days after the date of enactment 
     of this Act, each of whom shall be a United States citizen 
     and--
       (A) three of whom must be knowledgeable or experienced in 
     one or more fields directly connected with physical fitness, 
     sports or the relationship between health status and physical 
     exercise; and
       (B) six of whom must be leaders in the private sector with 
     a strong interest in physical fitness, sports or the 
     relationship between health status and physical exercise (one 
     of which shall be a representative of the United States 
     Olympic Committee).

     The membership of the Board, to the extent practicable, shall 
     represent diverse professional specialties relating to the 
     achievement of physical fitness through regular participation 
     in programs of exercise, sports and similar activities.
       (2) Ex officio members.--The Assistant Secretary for 
     Health, the Executive Director of the President's Council on 
     Physical Fitness and Sports, the Director for the National 
     Center for Chronic Disease Prevention and Health Promotion, 
     the Director of the National Heart, Lung, and Blood Institute 
     and the Director for the Centers for Disease Control and 
     Prevention shall serve as ex officio, nonvoting members of 
     the Board.
       (3) Not federal employment.--Appointment to the Board or 
     serving as a member of the staff of the Board shall not 
     constitute employment by, or the holding of an office of, the 
     United States for the purposes of any Federal employment or 
     other law.
       (b) Appointment and Terms.--
       (1) Appointment.--Of the members of the Board appointed 
     under subsection (a)(1), three shall be appointed by the 
     Secretary of Health and Human Services (hereinafter referred 
     to in this Act as the ``Secretary''), two shall be appointed 
     by the Majority Leader of the Senate, one shall be appointed 
     by the Minority Leader of the Senate, two shall be appointed 
     by the Speaker of the House of representatives, and one shall 
     be appointed by the Minority Leader of the House of 
     Representatives.
       (2) Terms.--Members appointed to the Board under subsection 
     (a)(1) shall serve for a term of 6 years. A vacancy on the 
     Board shall be filled within 60 days of the date on which 
     such vacancy occurred in the manner in which the original 
     appointment was made. A member appointed to fill a vacancy 
     shall serve for the balance of the term of the individual who 
     was replaced. No individual may serve more than two 
     consecutive terms as a Director.
       (c) Chairperson.--A Chairperson shall be elected by the 
     Board from among its members and serve for a 2-year term. The 
     Chairperson shall not be limited in terms or service.
       (d) Quorum.--A majority of the sitting members of the Board 
     shall constitute a quorum for the transaction of business.
       (e) Meetings.--The Board shall meet at the call of the 
     Chairperson, but in no event less than once each year. If a 
     Director misses three consecutive regularly scheduled 
     meetings, that individual may be removed from the Board and 
     the vacancy filled in accordance with subsection (b)(2).
       (f) Reimbursement of Expenses.--The members of the Board 
     shall serve without pay. The members of the Board 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 Board.
       (g) General Powers.--
       (1) Organization.--The Board may complete the organization 
     of the Foundation by--
       (A) appointing officers and employees;
       (B) adopting a constitution and bylaws consistent with the 
     purposes of the Foundation and the provision of this Act; and
       (C) undertaking such other acts as may be necessary to 
     carry out the provisions of this Act.

     In establishing bylaws under this paragraph, the Board shall 
     provide for policies with regard to financial conflicts of 
     interest and ethical standards for the acceptance, 
     solicitation and disposition of donations and grants to the 
     Foundation.
       (2) Limitations on officers and employees.--The following 
     limitations apply with respect to the appointment of officers 
     and employees of the Foundation:
       (A) Officers and employees may not be appointed until the 
     Foundation has sufficient funds to compensate such 
     individuals for their service. No individual so appointed may 
     receive pay in excess of the annual rate of basic pay in 
     effect for Executive Level V in the Federal service.
       (B) The first officer or employee appointed by the Board 
     shall be the secretary of the Board who--
       (i) shall serve, at the direction of the Board, as its 
     chief operating officer; and
       (ii) shall be knowledgeable and experienced in matters 
     relating to physical fitness and sports.
       (C) No Public Health Service employee nor the spouse or 
     dependent relative of such an employee may serve as an 
     officer or member of the Board of Directors or as an employee 
     of the Foundation.
       (D) Any individual who is an officer, employee, or member 
     of the Board of the Foundation may not (in accordance with 
     the policies developed under paragraph (1)(B)) personally or 
     substantially participate in the consideration or 
     determination by the Foundation of any matter that would 
     directly or predictably affect any financial interest of the 
     individual or a relative (as such term is defined in section 
     109(16) of the Ethics in Government Act of 1978) of the 
     individual, of any business organization or other entity, or 
     of which the individual is an officer or employee, or is 
     negotiating for employment, or in which the individual has 
     any other financial interest.

     SEC. 4. RIGHTS AND OBLIGATIONS OF THE FOUNDATION.

       (a) In General.--The Foundation--
       (1) shall have perpetual succession;
       (2) may conduct business throughout the several States, 
     territories, and possessions of the United States;
       (3) shall locate its principal offices in or near the 
     District of Columbia; and
       (4) shall at all times maintain a designated agent 
     authorized to accept service of process for the Foundation.

     The serving of notice to, or service of process upon, the 
     agent required under paragraph (4), or mailed to the business 
     address of such agent, shall be deemed as service upon or 
     notice to the Foundation.
       (b) Seal.--The Foundation shall have an official seal 
     selected by the Board which shall be judicially noticed.
       (c) Powers.--To carry out the purposes under section 2, the 
     Foundation shall have 

[[Page S 15040]]
     the usual powers of a corporation acting as a trustee in the District 
     of Columbia, including the power--
       (1) except as otherwise provided herein, to accept, 
     receive, solicit, hold, administer and use any gift, devise, 
     or bequest, either absolutely or in trust, of real or 
     personal property or any income therefrom or other interest 
     therein;
       (2) to acquire by purchase or exchange any real or personal 
     property or interest therein;
       (3) unless otherwise required by the instrument of 
     transfer, to sell, donate, lease, invest, reinvest, retain or 
     otherwise dispose of any property or income therefrom;
       (4) to sue and be sued, and complain and defend itself in 
     any court of competent jurisdiction, except for gross 
     negligence;
       (5) to enter into contracts or other arrangements with 
     public agencies and private organizations and persons and to 
     make such payments as may be necessary to carry out its 
     functions; and
       (6) to do any and all acts necessary and proper to carry 
     out the purposes of the Foundation.

     For purposes of this Act, an interest in real property shall 
     be treated as including, among other things, easements or 
     other rights for preservation, conservation, protection, or 
     enhancement by and for the public of natural, scenic, 
     historic, scientific, educational inspirational or 
     recreational resources. A gift, devise, or bequest may be 
     accepted by the Foundation even though it is encumbered, 
     restricted or subject to beneficial interests of private 
     persons if any current or future interest therein is for the 
     benefit of the Foundation.

     SEC. 5. PROTECTION AND USES OF TRADEMARKS AND TRADE NAMES.

       (a) Protection.--Without the consent of the Foundation, in 
     conjunction with the President's Council on Physical Fitness 
     and Sports, any person who uses for the purpose of trade, to 
     induce the sale of any goods or services, or to promote any 
     theatrical exhibition, athletic performance or competition--
       (1) the official seal of the President's Council on 
     Physical Fitness and Sports consisting of the eagle holding 
     an olive branch and arrows with shield breast encircled by 
     name ``President's Council on Physical Fitness and Sports'';
       (2) the official seal of the Foundation
       (3) any trademark, trade name, sign, symbol or insignia 
     falsely representing association with or authorization by the 
     president's Council on Physical Fitness and Sports or the 
     Foundation;

     shall be subject in a civil action by the Foundation for the 
     remedies provided for in the Act of July 9, 1946 (60 stat. 
     427; commonly known as the Trademark Act of 1946).
       (b) Uses.--The Foundation, in conjunction with the 
     President's Council on Physical Fitness and Sports, may 
     authorize contributors and suppliers of goods or services to 
     use the trade name of the President's Council on Physical 
     Fitness and Sports and the Foundation, as well as any 
     trademark, seal, symbol, insignia, or emblem of the 
     President's Council on Physical Fitness and Sports or the 
     Foundation, in advertising that the contributors, goods or 
     services when donated, supplied, or furnished to or for the 
     use of, approved, selected, or used by the President's 
     Council on Physical Fitness and Sports or the Foundation.

     SEC. 6. VOLUNTEER STATUS.

       The Foundation may accept, without regard to the civil 
     service classification laws, rules, or regulations, the 
     services of volunteers in the performance of the functions 
     authorized herein, in the same manner as provided for under 
     section 7(c) of the Fish and Wildlife Act of 1956 (16 U.S.C. 
     742f(c)).

     SEC. 7. AUDIT, REPORT REQUIREMENTS, AND PETITION OF ATTORNEY 
                   GENERAL FOR EQUITABLE RELIEF.

       (a) Audits.--For purposes of Public Law 88-504 (36 U.S.C. 
     1101 et seq.), the Foundation shall be treated as a private 
     corporation under Federal law. The Inspector General of the 
     Department of Health and Human Services and the Comptroller 
     General of the United States shall have access to the 
     financial and other records of the Foundation, upon 
     reasonable notice.
       (b) Report.--The Foundation shall, as soon as practicable 
     after the end of each fiscal year, transmit to the Secretary 
     and to Congress a report of its proceedings and activities 
     during such year, including a full and complete statement of 
     its receipts, expenditures, and investments.
       (c) Relief With Respect to Certain Foundation Acts or 
     Failure to Act.--If the Foundation--
       (1) engages in, or threatens to engage in, any act, 
     practice or policy that is inconsistent with the purposes 
     described in section 2(b); or
       (2) refuses, fails, or neglects to discharge its 
     obligations under this Act, or threaten to do so;

     the Attorney General may petition in the United States 
     District Court for the District of Columbia for such 
     equitable relief as may be necessary or appropriate.
                                 ______

      By Mr. CAMPBELL:
  S. 1313. A bill to amend the Internal Revenue Code of 1986 to permit 
India tribal governments to maintain section 401(k) plans for their 
employees; to the Committee on Finance.


                       401(k) PROGRAM LEGISLATION

 Mr. CAMPBELL. Mr. President, today, I introduce a bill that 
will statutorily permit tribal governments, and enterprises owned by 
tribal governments, to offer salary reduction pension plans to their 
employees under section 401(k) of the Internal Revenue Code.
  Under current law, tribal governments are not allowed to offer tax 
deferred, salary reduction pension plans because tax exempt 
organization are generally prohibited from doing so. Further 
exacerbating the dilemma confronting tribal governments is the fact 
that they are not eligible to participate in other tax deferred, salary 
reduction pension plans.
  For example, since 1982 a dozen or more Indian tribal governments 
have adopted section 403(b) salary reduction pension arrangements only 
to have the Internal Revenue Service determine these arrangements are 
not properly qualified. In addition, Indian tribal governments are not 
eligible to offer section 457 salary reduction pension arrangements 
because they are not ``eligible employers'', as defined in section 457.
  It is apparent that Indian tribal governments seem to be one of only 
a few categories of employers who do not have these kinds of pension 
arrangements available to them. I believe that Indian tribal 
governments, like most all employers, should have opportunity to offer 
competitive salary reduction pension arrangements, such as a 401(k).
  Mr. President, the 401(k) plan was formally authorized in 1978 as a 
salary reduction arrangement for employees of profit making firms. The 
authority was subsequently expanded to tax exempt organization and 
State and local government. In 1986, however, State and local 
governments and nonprofit organizations, including Indian tribes, were 
prohibited from offering 401(k)'s. At this time, only rural electric 
cooperatives are exempted from the prohibition.
  Mr. President, this bill simply adds Indian tribal governments to the 
list of qualified offerors.
  A 401(k) plan permits employees to elect a contribution of part of 
their wages on a tax-deferred basis to a plan that may offer several 
investment options. Employers usually make contributions, which are 
also tax-deferred. In the same way, investment earnings are also tax 
deferred. This means that taxes aren't paid on the amount saved until 
it is withdrawn, thereby earning greater interest. Essentially, this 
expands the amount of money invested, and allows participants to put 
more money to work for them.
  Without question, Indian tribal governments should be allowed to 
offer some kind of tax deferred salary reduction plan. Almost all 
sectors of society, including the Federal Government, Congress, State 
and local governments, and private employees are allowed to enroll in 
salary reduction pension plans. In 1990, according to Department of 
Labor statistics, about 19.5 million Americans were enrolled in 401(k) 
plans.
  Tribal governments should be allowed to offer 401(k) pension plans 
because they will give tribal employees an incentive to save money for 
retirement. It's no secret that Indian tribes have a history of 
economic hardship. Under this plan, workers who otherwise might not 
save money, and workers who otherwise might not be offered a pension 
plan, will be allowed to participate. In addition, the portability of 
benefits will encourage tribal employees to enroll in pension plans. If 
an employee terminates employment with the tribe, that person is 
allowed to put the accumulated savings into an individual retirement 
account [IRA]. A 401(k) plan also must be offered to all employees on a 
nondiscriminatory basis, ensuring that both higher and lower wage 
employees must be able to access pension benefits.
  As tribal governments are successful in their business ventures, it 
is critically important that tribal employees are encouraged to save 
money for retirement. In the past, only a few tribal governments had 
the resources to offer employees salary reduction pension plans. Today, 
however, with the growth of tribal enterprises, there is more money to 
invest in the future and there are more tribal employees. In my home 
State, the largest employer in Montezuma County is now the Ute Mountain 
Ute Tribe. It's time that Congress recognize the economic gains being 
made by tribes and to allow them to offer 

[[Page S 15041]]
these broad based, elective deferral arrangements for their employees.
  There is danger that if Congress fails to act now, tribes will 
mistakenly offer their employees 401(k) pension plans. Current law is 
confusing, leading some tribes to think that they are already qualified 
to offer 401(k) plans. Investment companies are trying to sell 401(k) 
pension plans to tribes, even though it's not legal. Unfortunately, we 
know from the past that this can lead to the loss of tribal funds. This 
proposal explicitly allows tribal governments to offer these plans, 
thereby clearing up any confusion.
  Recognizing the advantages of section 401(k) salary reduction pension 
arrangements, the House Ways and Means Committee included in its budget 
reconciliation mark a provision to again expand the authority to a 
broader range of organizations that include nonprofit organizations and 
State and local governments.
  Mr. President, it is my hope that in the coming days this proposal 
will be favorably considered by my colleagues on the Finance Committee. 
In closing I would ask unanimous consent that a revenue estimate from 
the Joint Tax Committee also be included in the Record to accompany the 
text of the bill.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1313

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

     SECTION 1. ELIGIBILITY OF INDIAN TRIBAL GOVERNMENTS TO 
                   MAINTAIN SECTION 401(k) PLANS.

       (a) In General.--The last sentence of section 401(k)(4)(B) 
     of the Internal Revenue Code of 1986 (relating to 
     ineligibility of certain governments and exempt 
     organizations) is amended to read as follows: ``This 
     subparagraph shall not apply to a rural cooperative plan or a 
     plan maintained by an Indian tribal government (within the 
     meaning of section 7871).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to plans established after December 31, 1994.
                                                                    ____

                                    Congress of the United States,


                                  Joint Committee on Taxation,

                                  Washington, DC, October 9, 1995.
     Hon. Ben Nighthorse Campbell,
     U.S. Senate,
     Washington, DC.
       Dear Senator Campbell: This is in response to your request 
     dated July 17, 1995, for a revenue estimate of a proposal 
     that would modify present law to permit Indian tribal 
     governments to maintain qualified cash or deferred 
     arrangements (sec. 401(k) plans).
       For the purpose of the revenue estimate, we have assumed 
     that employees of tribal governments would include employees 
     of gambling casinos owned and operated by Indian tribal 
     governments.
       The proposal would be effective with respect to plans 
     established after December 31, 1994. We estimated that this 
     proposal would reduce Federal fiscal year budget receipts as 
     follows:

                        [In millions of dollars]

Fiscal years:
  1996...............................................................-1
  1997...............................................................-2
  1998...............................................................-2
  1999...............................................................-2
  2000...............................................................-3
  2001...............................................................-3
  2002...............................................................-3
                                                               ________

    1996-2002.......................................................-16

Note: Details do not add to total due to rounding.

       I hope this information is helpful to you. If we can be of 
     further assistance, please let me know.
           Sincerely,
                                                  Kenneth J. Kies,

     Chief of Staff.

                          ____________________