[Congressional Record Volume 144, Number 125 (Friday, September 18, 1998)]
[Senate]
[Pages S10617-S10633]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               HUMAN SERVICES REAUTHORIZATION ACT OF 1998

  Mr. SESSIONS. Mr. President, I ask the Chair lay before the Senate a 
message from the House of Representatives on the bill (S. 2206) to 
amend the Head Start Act, the Low-Income Home Energy Assistance Act of 
1981, and the Community Services Block Grant Act to reauthorze and make 
improvements to those Acts, to establish demonstration projects that 
provide an opportunity for persons with limited means to accumulate 
assets, and for other purposes.
  The PRESIDING OFFICER laid before the Senate the following message 
from the House of Representatives:

       Resolved, That the bill from the Senate (S. 2206) entitled 
     ``An Act to amend the Head Start Act, the Low-Income Home 
     Energy Assistance Act of 1981, and the Community Services 
     Block Grant Act to reauthorize and make improvements to those 
     Acts, to establish demonstration projects that provide an 
     opportunity for persons with limited means to accumulate 
     assets, and for other purposes'', do pass with the following 
     amendment:
       Strike out all after the enacting clause and insert:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.

               TITLE I--AMENDMENTS TO THE HEAD START ACT

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

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

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

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

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

               TITLE I--AMENDMENTS TO THE HEAD START ACT

     SEC. 101. SHORT TITLE.

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

     SEC. 102. STATEMENT OF PURPOSE.

       Section 636 of the Head Start Act (42 U.S.C. 9831) is 
     amended to read as follows:

     ``SEC. 636. STATEMENT OF PURPOSE.

       ``It is the purpose of this subchapter to promote school 
     readiness by enhancing the social and cognitive development 
     of low-income children through the provision, to low-income 
     children and their families, of health, educational, 
     nutritional, social, and other services that are determined, 
     based on family needs assessments, to be necessary.''.

     SEC. 103. DEFINITIONS.

       Section 637 of the Head Start Act (42 U.S.C. 9832) is 
     amended--
       (1) by redesignating paragraphs (3) through (14) as 
     paragraphs (4) through (15), respectively;
       (2) in paragraph (2)--
       (i) by striking ``, and the Commonwealth of the Northern 
     Mariana Islands'';
       (ii) by inserting ``of the United States, and the 
     Commonwealth of the Northern Mariana Islands, but for fiscal 
     years ending before October 1, 2001, also means'' after 
     ``Virgin Islands''; and
       (iii) by inserting ``and'' after ``Marshall Islands'';
       (3) by inserting after paragraph (2) the following:
       ``(3) The term `child with a disability' means--
       ``(A) a child with a disability, as defined in section 
     602(3) of the Individuals with Disabilities Education Act; 
     and
       ``(B) an infant or toddler with a disability, as defined in 
     section 632(5) of such Act.'';
       (4) by striking paragraph (5) (as redesignated in paragraph 
     (1)) and inserting the following:
       ``(5) The term `family literacy services' means services 
     that--
       ``(A) are provided to participants who receive the services 
     on a voluntary basis;
       ``(B) are of sufficient intensity, and of sufficient 
     duration, to make sustainable changes in a family (such as 
     eliminating or reducing dependence on income-based public 
     assistance); and
       ``(C) integrate each of--
       ``(i) interactive literacy activities between parents and 
     their children;
       ``(ii) training for parents on being partners with their 
     children in learning;
       ``(iii) parent literacy training, including training that 
     contributes to economic self-sufficiency; and
       ``(iv) appropriate instruction for children of parents 
     receiving the parent literacy training.'';
       (5) in paragraph (7) (as redesignated in paragraph (1)), by 
     adding at the end the following: ``Nothing in this paragraph 
     shall be construed to require an agency to provide services 
     to a child who has not reached the age of compulsory school 
     attendance for more than the number of hours per day 
     permitted by State law for the provision of services to such 
     a child.'';
       (6) by striking paragraph (13) (as redesignated in 
     paragraph (1)) and inserting the following:
       ``(13) The term `migrant or seasonal Head Start program' 
     means--
       ``(A) with respect to services for migrant farmworkers, a 
     Head Start program that serves families who are engaged in 
     agricultural labor and who have changed their residence from 
     1 geographic location to another in the preceding 2-year 
     period; and
       ``(B) with respect to services for seasonal farmworkers, a 
     Head Start program that serves families who are engaged 
     primarily in seasonal agricultural labor and who have not 
     changed their residence to another geographic location in the 
     preceding 2-year period.''; and
       (7) by adding at the end the following:
       ``(16) The term `reliable and replicable', used with 
     respect to research, means an objective, valid, scientific 
     study that--
       ``(A) includes a rigorously defined sample of subjects, 
     that is sufficiently large and representative to support the 
     general conclusions of the study;
       ``(B) relies on measurements that meet established 
     standards of reliability and validity;
       ``(C) is subjected to peer review before the results of the 
     study are published; and
       ``(D) discovers effective strategies for enhancing the 
     development and skills of children.''.

     SEC. 104. FINANCIAL ASSISTANCE FOR HEAD START PROGRAMS.

       Section 638(1) of the Head Start Act (42 U.S.C. 9833(1)) is 
     amended--
       (1) by striking ``aid the'' and inserting ``enable the''; 
     and
       (2) by striking the semicolon and inserting ``and attain 
     school readiness;''.

     SEC. 105. AUTHORIZATION OF APPROPRIATIONS.

       Section 639 of the Head Start Act (42 U.S.C. 9834) is 
     amended--
       (1) in subsection (a)--
       (A) by inserting ``$4,660,000,000 for fiscal year 1999 
     and'' after ``subchapter''; and
       (B) by striking ``1995 through 1998'' and inserting ``2000 
     through 2003''; and
       (2) in subsection (b), by striking paragraphs (1) and (2) 
     and inserting the following:
       ``(1) for each of the fiscal years 1999 through 2003, not 
     more than $35,000,000 and not less than the aggregate amount 
     made available to carry out section 642(d) of this Act and 
     the Head Start Transition Project Act (42 U.S.C. 9855-9855g) 
     for fiscal year 1998, to carry out activities authorized 
     under section 642A;
       ``(2) not more than $5,000,000 for each of the fiscal years 
     1999 through 2003 to carry out impact studies under section 
     649(g);
       ``(3) not more than $12,000,000 for fiscal year 1999, and 
     such sums as may be necessary for each of the fiscal years 
     2000 through 2003, to carry out other research, 
     demonstration, and evaluation activities, including 
     longitudinal studies, under section 649; and
       ``(4) not less than $5,000,000 for each of the fiscal years 
     1999 through 2003, to carry out activities authorized under 
     section 648B.''.

     SEC. 106. ALLOTMENT OF FUNDS.

       (a) Allotments.--Section 640(a) of the Head Start Act (42 
     U.S.C. 9835(a)) is amended--
       (1) in paragraph (2)--
       (A) in subparagraph (A)--
       (i) by striking ``and migrant'' the 1st place it appears 
     and all that follows through ``handicapped children'', and 
     inserting ``Head Start programs and services for children 
     with disabilities and migrant or seasonal Head Start 
     programs''; and
       (ii) by striking ``and migrant'' each other place it 
     appears and inserting ``Head Start programs and by migrant or 
     seasonal''; and
       (iii) by striking ``1994'' and inserting ``1998'';
       (B) in subparagraph (B) by striking ``(B) payments'' and 
     all that follows through ``Virgin Islands'' and inserting the 
     following:
       ``(B) payments, subject to paragraph (7)--
       ``(i) to Guam, American Samoa, the Commonwealth of the 
     Northern Mariana Islands, and the Virgin Islands of the 
     United States; and
       ``(ii) for fiscal years ending before October 1, 2001, to 
     the Federated States of Micronesia, the Republic of the 
     Marshall Islands, and Palau;'';
       (C) in subparagraph (C), by striking ``and'' at the end;
       (D) in subparagraph (D), by striking ``related to the 
     development and implementation of quality improvement plans 
     under section

[[Page S10618]]

     641A(d)(2)).'' and inserting ``carried out under paragraph 
     (1), (2), or (3) of section 641A(d) relating to correcting 
     deficiencies and conducting proceedings to terminate the 
     designation of Head Start agencies); and'';
       (E) by inserting after subparagraph (D) the following:
       ``(E) payments for research and evaluation activities under 
     section 649.''; and
       (F) by adding at the end the following: ``In carrying out 
     this subchapter, the Secretary shall continue the 
     administrative arrangement responsible for meeting the needs 
     of children of migrant and seasonal farmworkers and Indian 
     children, and shall ensure that appropriate funding is 
     provided to meet such needs.'';
       (2) in paragraph (3)--
       (A) in subparagraph (A)(i) by striking ``equal'' and all 
     that follows through ``activities'' and inserting ``subject 
     to subsection (m)'';
       (B) in subparagraph (B)--
       (i) in clause (ii)--

       (I) by striking ``adequate qualified staff'' and inserting 
     ``adequate numbers of qualified staff''; and
       (II) by inserting ``and children with disabilities'' before 
     ``, when'';

       (ii) in clause (iv) by inserting ``and to encourage the 
     staff to continually improve their skills and expertise by 
     informing staff of the availability of State and Federal loan 
     forgiveness programs for professional development'' before 
     the period at the end;
       (iii) in clause (v) by inserting ``and collaboration 
     efforts for such programs'' before the period at the end; and
       (iv) by amending clause (vi) to read as follows:
       ``(vi) Ensuring that such programs have adequate numbers of 
     qualified staff that can promote language skills and literacy 
     growth of children and that provide children with a variety 
     of skills that have been identified, through research that is 
     reliable and replicable, as predictive of later reading 
     achievement.''; and
       (C) in subparagraph (C)--
       (i) in clause (i)(I)--

       (I) by striking ``of staff'' and inserting ``of classroom 
     teachers and other staff''; and
       (II) by striking ``such staff'' and inserting ``qualified 
     staff, including recruitment and retention pursuant to 
     achieving the requirements set forth in section 648A(a)'';

       (ii) by redesignating subclause (II) as subclause (III);
       (iii) by inserting after subclause (I) the following:
       ``(II) Preferences in awarding salary increases, in excess 
     of cost of living allowances, shall be granted to classroom 
     teachers and staff who obtain additional training or 
     education related to their responsibilities as employees of a 
     Head Start program.'';
       (iv) by amending clause (ii) to read as follows:
       ``(ii) Of the amount remaining after carrying out clause 
     (i), the highest priority shall be placed on training 
     classroom teachers and other staff to meet the education 
     performance standards described in section 641A(a)(1)(B), 
     through activities--
       ``(I) to promote children's language and literacy growth, 
     through techniques identified through reliable, replicable 
     research;
       ``(II) to promote the acquisition of the English language 
     for non-English background children and families;
       ``(III) to foster children's school readiness skills 
     through activities described in section 648A(a)(1); and
       ``(IV) to provide training necessary to improve the 
     qualifications of the staff of the Head Start agencies and to 
     support staff training, child counseling, and other services 
     necessary to address the problems of children participating 
     in Head Start programs, including children from dysfunctional 
     families, children who experience chronic violence in their 
     communities, and children who experience substance abuse in 
     their families.'';
       (v) by striking clause (v);
       (vi) by redesignating clause (vi) as clause (v); and
       (vii) by inserting after clause (v), as so redesignated, 
     the following:
       ``(vi) To carry out any or all of such activities, but none 
     of such funds may be used for construction or renovation 
     (including nonstructural or minor structural changes).'';
       (D) in subparagraph (D)(i)(II) by striking ``and migrant'' 
     and inserting ``Head Start programs and by migrant or 
     seasonal'';
       (3) in paragraph (4)--
       (A) in subparagraph (A), by striking ``1981'' and inserting 
     ``1998'';
       (B) by amending subparagraph (B) to read as follows:
       ``(B) any amount available after all allotments are made 
     under subparagraph (A) for such fiscal year shall be 
     distributed proportionately on the basis of the number of 
     children less than 5 years of age who live with families 
     whose income is below the poverty line.''; and
       (C) by adding at the end the following:
     ``For each fiscal year the Secretary shall use the most 
     recent data available on the number of children under the age 
     of 5, from families below the poverty level that is 
     consistent with that published for counties, by the 
     Department of Commerce, unless the Secretary and the 
     Secretary of Commerce determine that use of the updated 
     poverty data would be inappropriate or unreliable. If the 
     Secretary and the Secretary of Commerce determine that some 
     or all of the data referred to in this paragraph are 
     inappropriate or unreliable, they shall issue a report 
     setting forth their reasons in detail.'';
       (4) in paragraph (5)--
       (A) in subparagraph (B), by inserting before the period the 
     following ``and encourage Head Start agencies to actively 
     collaborate with entities involved in State and local 
     planning processes in order to better meet the needs of low-
     income children and families'';
       (B) in subparagraph (C)--
       (i) in clause (i)(I), by inserting ``the appropriate 
     regional office of the Administration for Children and 
     Families and'' before ``agencies'';
       (ii) in clause (iii), by striking ``and'' at the end;
       (iii) in clause (iv)--

       (I) by striking ``education, and national service 
     activities,'' and inserting ``and education and community 
     service activities,'';
       (II) by striking ``and activities'' and inserting 
     ``activities''; and
       (III) by striking the period and inserting ``(including 
     coordination with those State officials who are responsible 
     for administering part C and section 619 of the Individuals 
     with Disabilities Education Act (20 U.S.C. 1431-1445, 1419)), 
     and services for homeless children;''; and

       (iv) by adding at the end the following:
       ``(v) include representatives of the State Head Start 
     Association and local Head Start agencies in unified planning 
     regarding early care and education services at both the State 
     and local levels, including collaborative efforts to plan for 
     the provision of full-working-day, full-calendar-year early 
     care and education services for children;
       ``(vi) encourage local Head Start agencies to appoint a 
     State level representative to speak on behalf of Head Start 
     agencies within the State on collaborative efforts described 
     in subparagraphs (B) and (D), and in clause (v); and
       ``(vii) encourage Head Start agencies to collaborate with 
     entities involved in State and local planning processes 
     (including the State lead agency administering the financial 
     assistance received under the Child Care and Development 
     Block Grant Act of 1990 (42 U.S.C. 9858 et seq.) and the 
     entities providing resource and referral services in the 
     State) in order to better meet the needs of low-income 
     children and families.'';
       (C) by redesignating subparagraph (D) as subparagraph (F); 
     and
       (D) by inserting after subparagraph (C) the following:
       ``(D) Following the award of collaboration grants described 
     in subparagraph (B), the Secretary shall provide, from the 
     reserved sums, supplemental funding for collaboration 
     grants--
       ``(i) to States that develop statewide, regional, or local 
     unified plans for early childhood education and child care 
     that include the participation of Head Start agencies; and
       ``(ii) to States that engage in other innovative 
     collaborative initiatives, including plans for collaborative 
     training and professional development initiatives for child 
     care, early childhood education and Head Start service 
     managers, providers, and staff.
       ``(E)(i) The Secretary shall--
       ``(I) review on an ongoing basis evidence of barriers to 
     effective collaboration between Head Start programs and other 
     Federal child care and early childhood education programs and 
     resources;
       ``(II) develop initiatives, including providing additional 
     training and technical assistance and making regulatory 
     changes, in necessary cases, to eliminate barriers to the 
     collaboration; and
       ``(III) develop a mechanism to resolve administrative and 
     programmatic conflicts between such programs that would be a 
     barrier to service providers, parents, or children, related 
     to the provision of unified services in the consolidation of 
     funding for child care services.
       ``(ii) In the case of a collaborative activity funded under 
     this subchapter and another provision of law providing for 
     Federal child care or early childhood education, the use of 
     equipment and nonconsumable supplies purchased with funds 
     made available under this subchapter or such provision shall 
     not be restricted to children enrolled or otherwise 
     participating in the program carried out under that 
     subchapter or provision, during a period in which the 
     activity is predominantly funded under this subchapter or 
     such provision.'';
       (5) by amending paragraph (6) to read as follows:
       ``(6)(A) From the amounts reserved and allotted pursuant to 
     paragraphs (2) and (4), and except as provided in 
     subparagraph (C)(i), the Secretary shall use for grants for 
     programs described in section 645A(a) a portion of the 
     combined total of such amount equal to--
       ``(i) 7.5 percent for fiscal year 1999;
       ``(ii) 8 percent for fiscal year 2000;
       ``(iii) 8.5 percent for fiscal year 2001;
       ``(iv) not less than 8.5 and not more than 10 percent for 
     fiscal year 2002; and
       ``(v) not less than 8.5 and not more than 10 percent for 
     fiscal year 2003;
     of the amount appropriated pursuant to section 639(a) for the 
     respective fiscal year.
       ``(B) If the Secretary does not submit to--
       ``(i) the Committee on Education and the Workforce and the 
     Committee on Appropriations of the House of Representatives; 
     and
       ``(ii) to the Committee on Labor and Human Resources and 
     the Committee on Appropriations of the Senate;

     by January 1, 2001, a report on the results of the Early Head 
     Start impact study currently being conducted by the 
     Secretary, then the amount required to be used in accordance 
     with subparagraph (A) for fiscal years 2002 and 2003 shall be 
     8.5 percent of the amount appropriated pursuant to section 
     639(a) for the respective fiscal year.
       ``(C)(i) For any fiscal year for which the Secretary 
     determines that the amount appropriated under section 639(a) 
     is not sufficient to permit the Secretary to use the portion 
     described in subparagraph (A) without reducing the number of 
     children served by Head Start programs or negatively 
     impacting the quality of Head Start services, relative to the 
     number of children served and the quality of the services 
     during the preceding fiscal year, the Secretary may reduce

[[Page S10619]]

     the percentage of funds required to be used as the portion 
     described in subparagraph (A) for the fiscal year for which 
     the determination is made, but not below the percentage 
     required to be so used for the preceding fiscal year.
       ``(ii) For any fiscal year for which the amount 
     appropriated under section 639(a) requires a reduction in the 
     amount made available under this subchapter to Head Start 
     agencies and entities described in section 645A, relative to 
     the amount made available to the agencies and entities for 
     the preceding fiscal year, adjusted as described in paragraph 
     (3)(A)(ii), the Secretary shall proportionately reduce--
       ``(I) the amounts made available to the entities for 
     programs carried out under section 645A; and
       ``(II) the amounts made available to Head Start agencies 
     for Head Start programs.''; and
       (6) by redesignating paragraph (7) as paragraph (8); and
       (7) by inserting after paragraph (6) the following:
       ``(7)(A) For purposes of paragraph (2)(A), in determining 
     the need and demand for migrant or seasonal Head Start 
     programs (and services provided through such programs), the 
     Secretary shall consult with appropriate entities, including 
     providers of services for migrant or seasonal Head Start 
     programs. The Secretary shall, after taking into 
     consideration the need and demand for migrant or seasonal 
     Head Start programs (and such services), ensure that there is 
     an adequate level of such services for eligible children of 
     migrant farmworkers before approving an increase in the 
     allocation provided for unserved eligible children of 
     seasonal farmworkers. In serving the children of seasonal 
     farmworkers, the Secretary shall ensure that services 
     provided by migrant or seasonal Head Start programs do not 
     duplicate or overlap with other Head Start services available 
     in the same geographical area.
       ``(B)(i) Funds available under this subsection for payments 
     to the Federated States of Micronesia, the Republic of the 
     Marshall Islands, and Palau shall be used by the Secretary to 
     make grants on a competitive basis, pursuant to 
     recommendations submitted to the Secretary by the Pacific 
     Region Educational Laboratory of the Department of Education, 
     to the Federated States of Micronesia, the Republic of the 
     Marshall Islands, Palau, Guam, American Samoa, and the 
     Commonwealth of the Northern Mariana Islands, for the purpose 
     of carrying out Head Start programs in accordance with this 
     subchapter.
       ``(ii) Not more than 5 percent of such funds may be used by 
     the Secretary to compensate the Pacific Region Educational 
     Laboratory of the Department of Education for administrative 
     costs incurred in connection with making recommendations 
     under clause (i).
       ``(iii) Notwithstanding any other provision of law, the 
     Federated States of Micronesia, the Republic of the Marshall 
     Islands, and Palau shall not receive any funds under this 
     subchapter for any fiscal year that begins after September 
     30, 2001.''.
       (b) Children With Disabilities.--Section 640(d) of the Head 
     Start Act (42 U.S.C. 9835(d)) is amended--
       (1) by striking ``1982'' and inserting ``1999'';
       (2) by striking ``(as defined in section 602(a) of the 
     Individuals with Disabilities Education Act)''; and
       (3) by adding at the end the following:
     ``Such policies and procedures shall require Head Start 
     programs to coordinate programmatic efforts with efforts to 
     implement part C and section 619 of the Individuals with 
     Disabilities Education Act (20 U.S.C 1431-1445, 1419).''.
       (c) Increased Appropriations.--Section 640(g) of the Head 
     Start Act (42 U.S.C. 9835(g)) is amended--
       (1) in paragraph (1), by inserting at the end the 
     following: ``In awarding funds to serve an increased number 
     of children, the Secretary shall give priority to those 
     applicants that provide full-working-day, full-calendar year 
     Head Start services through collaboration with entities 
     carrying out programs that are in existence on the date of 
     the allocation and with other private, nonprofit agencies. 
     Any such additional funds remaining may be used to make 
     nonstructural and minor structural changes, and to acquire 
     and install equipment, for the purpose of improving 
     facilities necessary to expand the availability of Head Start 
     programs and to serve an increased number of children.'';
       (2) in paragraph (2)--
       (A) in subparagraph (A), by striking the semicolon and 
     inserting ``, and the performance history of the applicant in 
     providing services under other Federal programs (other than 
     the program carried out under this subchapter);'';
       (B) in subparagraph (C), by striking the semicolon and 
     inserting ``, and organizations and public entities serving 
     children with disabilities;'';
       (C) in subparagraph (D), by striking the semicolon and 
     inserting ``and the extent to which, and manner in which, the 
     applicant demonstrates the ability to collaborate and 
     participate with other local community providers of child 
     care or preschool services to provide full-working-day full-
     calendar-year services;'';
       (D) in subparagraph (E), by striking ``program; and'' and 
     inserting ``or any other early childhood program;'';
       (E) in subparagraph (F), by striking the period and 
     inserting a semicolon; and
       (F) by adding at the end the following:
       ``(G) the extent to which the applicant proposes to foster 
     partnerships with other service providers in a manner that 
     will enhance the resource capacity of the applicant; and
       ``(H) the extent to which the applicant, in providing 
     services, will plan to coordinate with the local educational 
     agency serving the community involved and with schools in 
     which children participating in a Head Start program operated 
     by such agency will enroll following such program, regarding 
     the education services provided by such local educational 
     agency.'';
       (3) in paragraph (3) by striking ``In'' and inserting 
     ``Subject to subsection (m), in''; and
       (4) by adding at the end the following:
       ``(4) Notwithstanding subsection (a)(2), after taking into 
     account subsection (a)(1), the Secretary may allocate a 
     portion of the remaining additional funds under subsection 
     (a)(2)(A) for the purpose of increasing funds available for 
     activities described in such subsection.''.
       (d) References.--Section 640(l) of the Head Start Act (42 
     U.S.C. 9835(l)) is amended by inserting ``or seasonal'' after 
     ``migrant'' each place it appears.
       (e) Relative Availability of Funds for Quality and for 
     Expansion.--Section 640 of the Head Start Act (42 U.S.C. 
     9835) is amended by adding at the end the following:
       ``(m)(1) After complying with the requirement in subsection 
     (g)(1) relating to maintaining the level of services provided 
     during the previous year, the Secretary shall make the amount 
     (if any) by which the funds appropriated under section 639(a) 
     for a fiscal year exceed the adjusted prior year 
     appropriation (as defined in subsection (a)(3)(ii)), 
     available as follows:
       

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

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

     SEC. 107. DESIGNATION OF HEAD START AGENCIES.

       Section 641 of the Head Start Act (42 U.S.C. 9836) is 
     amended--
       (1) in subsection (a) by inserting ``(in consultation with 
     the chief executive officer of the State involved, if such 
     State expends non-Federal funds to carry out Head Start 
     programs)'' after ``Secretary'' the last place it appears;
       (2) in subsection (b) by striking ``area designated by the 
     Bureau of Indian Affairs as near-reservation'' and inserting 
     ``off-reservation area designated by an appropriate tribal 
     government'';
       (3) in subsection (c)--
       (A) in paragraph (1)--
       (i) by inserting ``, in consultation with the chief 
     executive officer of the State if such State expends non-
     Federal funds to carry out Head Start programs,'' after 
     ``shall''; and
       (ii) by striking ``makes a finding'' and all that follows 
     through the period at the end, and inserting the following:

     ``determines that the agency involved fails to meet program 
     and financial management requirements, performance standards 
     described in section 641A(a)(1), results-based performance

[[Page S10620]]

     measures described in section 641A(b), and other requirements 
     established by the Secretary.'';
       (B) in paragraph (2), by inserting ``, in consultation with 
     the chief executive officer of the State if such State 
     expends non-Federal funds to carry out Head Start programs,'' 
     after ``shall''; and
       (C) by aligning the left margin of paragraphs (2) and (3) 
     with the left margin of paragraph (1); and
       (4) in subsection (d)--
       (A) in the matter preceding paragraph (1), by inserting 
     after the 1st sentence the following:

     ``In selecting from among qualified applicants for 
     designation as a Head Start agency, the Secretary shall give 
     priority to any qualified agency that functioned as a Head 
     Start delegate agency in the community and carried out a Head 
     Start program that the Secretary determines met or exceeded 
     such performance standards and such results-based performance 
     measures.'';
       (B) in paragraph (3) by inserting ``and programs under part 
     C and section 619 of the Individuals with Disabilities 
     Education Act (20 U.S.C 1431-1445, 1419)'' after ``(20 U.S.C. 
     2741 et seq.)'';
       (C) in paragraph (4)--
       (i) in subparagraph (A), by inserting ``(at home and in the 
     center involved where practicable)'' after ``activities'';
       (ii) in subparagraph (D)--

       (I) in clause (iii) by adding ``or'' at the end;
       (II) by striking clause (iv); and
       (III) by redesignating clause (v) as clause (iv);

       (iii) in subparagraph (E) by striking ``and (D)'' and 
     inserting ``and (E)'';
       (iv) by redesignating subparagraphs (D) and (E) and 
     subparagraphs (E) and (F), respectively; and
       (v) by inserting after subparagraph (C) the following:
       ``(D) to offer to parents of participating children 
     substance abuse counseling (either directly or through 
     referral to local entities), including information on drug-
     exposed infants and fetal alcohol syndrome;'';
       (D) by amending paragraph (7) to read as follows:
       ``(7) the plan of such applicant to meet the needs of non-
     English background children and their families, including 
     needs related to the acquisition of the English language;'';
       (E) in paragraph (8)--
       (i) by striking the period at the end and inserting ``; 
     and''; and
       (ii) by redesignating such paragraph as paragraph (9);
       (F) by inserting after paragraph (7) the following:
       ``(8) the plan of such applicant to meet the needs of 
     children with disabilities;''; and
       (G) by adding at the end the following:
       ``(10) the plan of such applicant to collaborate with other 
     entities carrying out early childhood education and child 
     care programs in the community.''; and
       (5) by amending subsection (e) to read as follows:
       ``(e) If no agency in the community receives priority 
     designation and if there is no qualified applicant in the 
     community, then the Secretary shall designate an agency to 
     carry out the Head Start program in the community on an 
     interim basis until a qualified applicant from the community 
     is so designated.''.

     SEC. 108. QUALITY STANDARDS.

       (a) Quality Standards.--Section 641A(a) of the Head Start 
     Act (42 U.S.C. 9836a(a)) is amended--
       (1) in paragraph (1)--
       (A) in the matter preceding subparagraph (A), by inserting 
     ``, including minimum levels of overall accomplishment,'' 
     after ``regulation standards'';
       (B) in subparagraph (A), by striking ``education,'';
       (C) by redesignating subparagraphs (B) through (D) as 
     subparagraphs (C) through (E), respectively; and
       (D) by inserting after subparagraph (A) the following:
       ``(B)(i) education performance standards to ensure the 
     school readiness of children participating in a Head Start 
     program, on completion of the Head Start program and prior to 
     entering school; and
       ``(ii) additional school readiness performance standards 
     (based on cognitive learning abilities) to ensure that the 
     children participating in the program, at a minimum--
       ``(I) develop phonemic, print, and numeracy awareness;
       ``(II) understand and use oral language to communicate for 
     different purposes;
       ``(III) understand and use increasingly complex and varied 
     vocabulary;
       ``(IV) develop and demonstrate an appreciation of books; 
     and
       ``(V) in the case of non-English background children, 
     progress toward acquisition of the English language.'';
       (2) by striking paragraph (2);
       (3) in paragraph (3)--
       (A) in subparagraph (B)(iii) by striking ``child'' and 
     inserting ``early childhood education and''; and
       (B) in subparagraph (C)--
       (i) in clause (i)--

       (I) by striking ``not later than 1 year after the date of 
     enactment of this section,''; and
       (II) by striking ``section 651(b)'' and all that follows 
     through ``section'' and inserting ``this subsection''; and

       (ii) in subclause (ii), by striking ``November 2, 1978'' 
     and inserting ``the date of enactment of the Head Start 
     Amendments Act of 1998''; and
       (4) by redesignating paragraphs (3) and (4) as paragraphs 
     (2) and (3), respectively.
       (b) Performance Measures.--Section 641A(b) of the Head 
     Start Act (42 U.S.C. 9836a(b)) is amended--
       (1) in the heading, by inserting ``Results-Based'' before 
     ``Performance'';
       (2) in paragraph (1)--
       (A) by striking ``Not later than 1 year after the date of 
     enactment of this section, the'' and inserting ``The'';
       (B) by striking ``child'' and inserting ``early childhood 
     education and''; and
       (C) by striking the period at the end and inserting ``, and 
     the impact of the services provided through the programs to 
     children and their families.'';
       (3) in paragraph (2)--
       (A) in the heading, by striking ``Design'' and inserting 
     ``Characteristics'';
       (B) in the matter preceding subparagraph (A), by striking 
     ``be designed'' and inserting ``include the education and 
     school-based readiness performance standards described in 
     subsection (a)(1)(B) and shall'';
       (C) in subparagraph (A), by striking ``to assess'' and 
     inserting ``assess the impact of'';
       (D) in subparagraph (B)--
       (i) by striking ``to'';
       (ii) by striking ``and peer review'' and inserting ``, peer 
     review, and program evaluation''; and
       (iii) by inserting ``not later than January 1, 1999'' 
     before the semicolon at the end; and
       (E) in subparagraph (C), by inserting ``be developed'' 
     before ``for other'';
       (4) in paragraph (3)(A) by striking ``and by region'' and 
     inserting ``, regionally, and locally''; and
       (5) by adding at the end the following:
       ``(4) Required results-based performance measures.--Such 
     results-based performance measures shall ensure that such 
     children--
       ``(A) know that letters of the alphabet are a special 
     category of visual graphics that can be individually named;
       ``(B) recognize a word as a unit of print;
       ``(C) identify at least 10 letters of the alphabet; and
       ``(D) associate sounds with written words.
       ``(5) Other results-based performance measures.--In 
     addition to other applicable results-based performance 
     measures, Head Start agencies may establish their own 
     results-based school readiness performance measures.''.
       (c) Monitoring.--Section 641A(c) of the Head Start Act (42 
     U.S.C. 9836a(c)) is amended--
       (1) in paragraph (1) by inserting ``and results-based 
     performance measures'' after ``standards''; and
       (2) in paragraph (2)
       (A) in subparagraph (B), by striking ``and'' at the end;
       (B) in subparagraph (C)--
       (i) by inserting ``(including children with disabilities)'' 
     after ``eligible children''; and
       (ii) by striking the period at the end and inserting a 
     semicolon; and
       (C) by adding at the end the following:
       ``(D) include as part of the reviews of the programs, a 
     review and assessment of program effectiveness, as measured 
     in accordance with the results-based performance measures 
     developed pursuant to subsection (b) and with the performance 
     standards established pursuant to subparagraphs (A) and (B) 
     of subsection (a)(1); and
       ``(E) seek information from the community and the State 
     about the performance of the program and its efforts to 
     collaborate with other entities carrying out early childhood 
     education and child care programs in the community.''.
       (d) Termination.--Section 641A(d) of the Head Start Act (42 
     U.S.C. 9836a(d)) is amended--
       (1) in paragraph (1)--
       (A) by inserting ``or results-based performance measures 
     described in subsection (b)'' after ``subsection (a)''; and
       (B) by amending subparagraph (B) to read as follows:
       ``(B) with respect to each identified deficiency, require 
     the agency--
       ``(i) to correct the deficiency immediately, if the 
     Secretary finds that the deficiency threatens the health or 
     safety of staff or program participants or poses a threat to 
     the integrity of Federal funds;
       ``(ii) to correct the deficiency not later than 90 days 
     after the identification of the deficiency if the Secretary 
     finds, in the discretion of the Secretary, that such a 90-day 
     period is reasonable, in light of the nature and magnitude of 
     the deficiency; or
       ``(iii) in the discretion of the Secretary (taking into 
     consideration the seriousness of the deficiency and the time 
     reasonably required to correct the deficiency) to comply with 
     the requirements of paragraph (2) concerning a quality 
     improvement plan; and''; and
       (2) in paragraph (2)(A), in the matter preceding clause 
     (i), by striking ``immediately'' and inserting ``immediately 
     or during a 90-day period under clause (i) or (ii) of 
     paragraph (1)(B)''.
       (e) Report.--Section 641A(e) of the Head Start Act (42 
     U.S.C. 9836a(e)) is amended by adding at the end the 
     following: ``Such report shall be widely disseminated and 
     available for public review in both written and electronic 
     formats.''.

     SEC. 109. POWERS AND FUNCTIONS OF HEAD START AGENCIES.

       Section 642 of the Head Start Act (42 U.S.C. 9837) is 
     amended--
       (1) in subsection (b)--
       (A) in paragraph (6)--
       (i) by striking subparagraph (D); and
       (ii) by redesignating subparagraphs (E) and (F) and 
     subparagraphs (D) and (E), respectively;
       (B) in paragraph (8) by striking ``and'' at the end;
       (C) in paragraph (9) by striking the period at the end and 
     inserting ``; and'';
       (D) by redesignating paragraphs (6) through (9) as 
     paragraphs (7) through (10), respectively;
       (E) by inserting after paragraph (5) the following:

[[Page S10621]]

       ``(6) offer to parents of participating children substance 
     abuse counseling (either directly or through referral to 
     local entities), including information on drug-exposed 
     infants and fetal alcohol syndrome;''; and
       (F) by adding at the end the following:
       ``(11)(A) inform custodial parents in single-parent 
     families that participate in programs, activities, or 
     services carried out under this subtitle about the 
     availability of child support services for purposes of 
     establishing paternity and acquiring child support;
       ``(B) refer eligible parents to the child support offices 
     of State and local governments; and
       ``(C) establish referral arrangements with such offices.'';
       (2) in subsection (c)--
       (A) by inserting ``and collaborate'' after ``coordinate'';
       (B) by inserting ``and part C and section 619 of the 
     Individuals with Disabilities Education Act (20 U.S.C 1431-
     1445, 1419)'' after ``(20 U.S.C. 2741 et seq.)''; and
       (C) by striking ``section 402(g) of the Social Security 
     Act, and other'' and inserting ``the State program carried 
     out under the Child Care and Development Block Grant Act of 
     1990 (42 U.S.C. 9858 et seq.), and other early childhood 
     education and development''; and
       (3) in subsection (d)--
       (A) in paragraph (1)--
       (i) by striking ``carry out'' and all that follows through 
     ``maintain'' and inserting ``take steps to ensure, to the 
     maximum extent possible, that children maintain'';
       (ii) by inserting ``and educational'' after 
     ``developmental''; and
       (iii) by striking ``to build'' and inserting ``build'';
       (B) by striking paragraph (2); and
       (C) by redesignating paragraphs (3) through (5) as 
     paragraphs (2) through (4), respectively.

     SEC. 110. HEAD START TRANSITION.

       The Head Start Act (42 U.S.C. 9831 et seq.) is amended by 
     inserting after section 642 the following:

     ``SEC. 642A. HEAD START TRANSITION.

       ``Each Head Start agency shall take steps to coordinate 
     with the local educational agency serving the community 
     involved and with schools in which children participating in 
     a Head Start program operated by such agency will enroll 
     following such program, including--
       ``(1) developing and implementing a systematic procedure 
     for transferring, with parental consent, Head Start program 
     records for each participating child to the school in which 
     such child will enroll;
       ``(2) establishing channels of communication between Head 
     Start staff and their counterparts in the schools (including 
     teachers, social workers, and health staff) to facilitate 
     coordination of programs;
       ``(3) conducting meetings involving parents, kindergarten 
     or elementary school teachers, and Head Start program 
     teachers to discuss the educational, developmental, and other 
     needs of individual children;
       ``(4) organizing and participating in joint transition-
     related training of school staff and Head Start staff;
       ``(5) developing and implementing a family outreach and 
     support program in cooperation with entities carrying out 
     parental involvement efforts under title I of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.);
       ``(6) assisting families, administrators, and teachers in 
     enhancing educational and developmental continuity between 
     Head Start services and elementary school classes; and
       ``(7) linking the services provided in such program with 
     the education services provided by such local education 
     agency.''.

     SEC. 111. SUBMISSION OF PLANS TO GOVERNORS.

       The first sentence of section 643 of the Head Start Act (42 
     U.S.C. 9838) is amended--
       (1) by striking ``30 days'' and inserting ``45 days'';
       (2) by striking ``so disapproved'' and inserting 
     ``disapproved (for reasons other than failure to comply with 
     State health, safety, and child care laws, including 
     regulations applicable to comparable child care programs in 
     the State)''; and
       (3) by inserting before the period ``, as evidenced by a 
     written statement of the Secretary's findings transmitted to 
     such officer''.

     SEC. 112. PARTICIPATION IN HEAD START PROGRAMS.

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

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

       (a) Program.--Section 645A of the Head Start Act (42 U.S.C. 
     9840a) is amended--
       (1) in the section heading, by inserting ``early head 
     start'' before ``programs for'';
       (2) in subsection (a)--
       (A) in paragraph (1) by striking ``; and'' and inserting a 
     period;
       (B) by striking paragraph (2); and
       (C) by striking ``for--'' and all that follows through 
     ``(1)'', and inserting ``for'';
       (3) in subsection (b)--
       (A) in paragraph (5), by inserting ``(including programs 
     for infants and toddlers with disabilities)'' after 
     ``community'';
       (B) in paragraph (7) by striking ``and'' at the end;
       (C) by redesignating paragraph (8) as paragraph (9); and
       (D) by inserting after paragraph (7) the following:
       ``(8) ensure formal linkages with the agencies described in 
     section 644(b) of the Individuals With Disabilities Education 
     Act Amendments of 1997 and providers of early intervention 
     services for infants and toddlers with disabilities under the 
     Individuals with Disabilities Education Act (20 U.S.C. 1400 
     et seq.); and'';
       (4) in subsection (c)--
       (A) by striking ``(a)(1)'' and inserting ``(a)''; and
       (B) in paragraph (2), by striking ``(or under'' and all 
     that follows through ``(e)(3))'';
       (5) in subsection (d)--
       (A) in paragraph (1), by inserting ``and'' at the end;
       (B) by striking paragraph (2); and
       (C) in paragraph (3) by redesignating such paragraph as 
     paragraph (2);
       (6) by striking subsection (e);
       (7) by redesignating subsections (f) and (g) as subsections 
     (e) and (f), respectively;
       (8) in subsection (e) (as redesignated in paragraph (7))--
       (A) in the subsection heading, by striking ``Other''; and
       (B) by striking ``From the balance remaining of the portion 
     specified in section 640(a)(6), after making grants to the 
     eligible entities specified in subsection (e),'' and 
     inserting ``From the portion specified in section 
     640(a)(6),'';
       (9) by striking subsection (h); and
       (10) by adding at the end the following:
       ``(g) Monitoring, Training, Technical Assistance, and 
     Evaluation.--
       ``(1) Requirement.--In order to ensure the successful 
     operation of programs assisted under this section, the 
     Secretary shall use funds from the portion specified in 
     section 640(a)(6) to monitor the operation of such programs, 
     evaluate their effectiveness, and provide training and 
     technical assistance tailored to the particular needs of such 
     programs.
       ``(2) Training and technical assistance account.--
       ``(A) In general.--Of the amount made available to carry 
     out this section for any fiscal year, not less than 5 percent 
     and not more than 10 percent shall be reserved to fund a 
     training and technical assistance account.
       ``(B) Activities.--Funds in the account may be used for 
     purposes including--
       ``(i) making grants to, and entering into contracts with, 
     organizations with specialized expertise relating to infants, 
     toddlers, and families and the capacity needed to provide 
     direction and support to a national training and technical 
     assistance system, in order to provide such direction and 
     support;
       ``(ii) providing ongoing training and technical assistance 
     for regional and program staff charged with monitoring and 
     overseeing the administration of the program carried out 
     under this section;
       ``(iii) providing ongoing training and technical assistance 
     for existing recipients of grants under subsection (a) and 
     support and program planning and implementation assistance 
     for new recipients of such grants; and
       ``(iv) providing professional development and personnel 
     enhancement activities, including the

[[Page S10622]]

     provision of funds to recipients of grants under subsection 
     (a) for the recruitment and retention of qualified staff with 
     an appropriate level of education and experience.''.
       (b) Conforming Amendment.--Section 640(a)(5)(F) of the Head 
     Start Act (42 U.S.C. 9835(a)(5)(F)), as so redesignated by 
     section 106, is amended by striking ``section 645(a)(1)(A)'' 
     and inserting ``section 645(a)''.

     SEC. 114. TECHNICAL ASSISTANCE AND TRAINING.

       Section 648 of the Head Start Act (42 U.S.C. 9843) is 
     amended--
       (1) in subsection (b)--
       (A) in paragraph (1), by striking ``and'' at the end;
       (B) in paragraph (2), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(3) ensure the provision of technical assistance to 
     assist Head Start agencies, entities carrying out other child 
     care and early childhood programs, communities, and States in 
     collaborative efforts to provide quality full-working-day, 
     full-calendar-year services, including technical assistance 
     related to identifying and assisting in resolving barriers to 
     collaboration.''; and
       (2) in subsection (c)--
       (A) by amending paragraph (1) to read as follows:
       ``(1) give priority consideration to--
       ``(A) activities to correct program and management 
     deficiencies identified through reviews pursuant to section 
     641A(c) (including the provision of assistance to local 
     programs in the development of quality improvement plans 
     under section 641A(d)(2)); and
       ``(B) assisting Head Start agencies in--
       ``(i) ensuring the school readiness of children; and
       ``(ii) meeting the education and school readiness 
     performance standards described in this subchapter;'';
       (B) in paragraph (2) by inserting ``supplement amounts 
     provided under section 640(a)(3)(C)(ii),'' after ``(2)'';
       (C) in paragraph (4)--
       (i) by inserting ``and implementing'' after ``developing''; 
     and
       (ii) by striking ``a longer day'' and inserting the 
     following: ``the day, and assist the agencies and programs in 
     expediting the sharing of information about innovative models 
     for providing full-working-day, full-calendar-year services 
     for children'';
       (D) in paragraph (7), by striking ``and'' at the end;
       (E) by redesignating paragraphs (3) through (8) as 
     paragraphs (5) through (10), respectively; and
       (F) by inserting after paragraph (2) the following:
       ``(3) assist Head Start agencies in the development of 
     collaborative initiatives with States and other entities 
     within the States, to foster effective early childhood 
     professional development systems;
       ``(4) assist classroom and non-classroom staff, including 
     individuals in management and leadership capacities, to 
     understand the components of effective family literacy 
     services, gain knowledge about proper implementation of such 
     services within a Head Start program, and receive assistance 
     to achieve successful collaboration agreements with other 
     service providers that allow the effective integration of 
     family literacy services with the Head Start program;''.

     SEC. 115. PROFESSIONAL REQUIREMENTS.

       Section 648A of the Head Start Act (42 U.S.C. 9843a) is 
     amended--
       (1) by amending subsection (a) to read as follows:
       ``(a) Classroom Teachers.--
       ``(1) Professional requirements.--The Secretary shall 
     ensure that each Head Start classroom in a center-based 
     program is assigned 1 teacher who has demonstrated competency 
     to perform functions that include--
       ``(A) planning and implementing learning experiences that 
     advance the intellectual and physical development of 
     children, including improving readiness of children for 
     school by developing their literacy and phonemic, print, and 
     numeracy awareness, their understanding and use of oral 
     language, their understanding and use of increasingly complex 
     and varied vocabulary, their appreciation of books and their 
     problem solving abilities;
       ``(B) establishing and maintaining a safe, healthy learning 
     environment;
       ``(C) supporting the social and emotional development of 
     children; and
       ``(D) encouraging the involvement of the families of the 
     children in a Head Start program and supporting the 
     development of relationships between children and their 
     families.
       ``(2) Degree requirements.--The Secretary shall ensure that 
     not later than September 30, 2003, at least 50 percent of all 
     Head Start classrooms in a center-based program are assigned 
     1 teacher who has an associate, baccalaureate, or an advanced 
     degree in early childhood education or development and shall 
     require Head Start agencies to demonstrate continuing 
     progress each year to reach that result. In the remaining 
     balance of such classrooms, there shall be assigned one 
     teacher who has--
       ``(A) a child development associate (CDA) credential that 
     is appropriate to the age of the children being served in 
     center-based programs;
       ``(B) a State-awarded certificate for preschool teachers 
     that meets or exceeds the requirements for a child 
     development associate credential; or
       ``(C) a degree in a field related to early childhood 
     education with experience in teaching preschool children and 
     a State-awarded certificate to teach in a preschool program.
       ``(3) Assessment.--Head Start agencies shall adopt, in 
     consultation with experts in child development and with 
     classroom teachers, an assessment to be used when hiring or 
     evaluating any classroom teacher in a center-based Head Start 
     program. Such assessment shall measure whether such teacher 
     has mastered the functions described in paragraph (1)(A).''; 
     and
       (2) in subsection (b)(2)(B)--
       (A) by striking ``staff,'' and inserting ``staff or''; and
       (B) by striking ``, or that'' and all that follows through 
     ``families''.

     SEC. 116. FAMILY LITERACY SERVICES.

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

     ``SEC. 648B. FAMILY LITERACY SERVICES.

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

     In awarding such grants or assistance, the Secretary shall 
     give special consideration to an organization that has 
     experience in the development and operation of successful 
     family literacy services.''.

     SEC. 117. RESEARCH AND EVALUATION.

       Section 649 of the Head Start Act (42 U.S.C. 9844) is 
     amended--
       (1) in subsection (d)--
       (A) in paragraph (6), by striking ``and'' at the end;
       (B) in paragraph (7) by striking the period at the end and 
     inserting ``; and'';
       (C) by redesignating paragraphs (2) through (7) as 
     paragraphs (3) through (8), respectively;
       (D) by inserting after paragraph (1) the following:
       ``(2) over a 5-year period, lead to the development and 
     rigorous evaluation of models for the integration of family 
     literacy services with Head Start programs, that demonstrate 
     the ability to make positive gains for children participating 
     in Head Start programs and their parents, and dissemination 
     of information about such models;''; and
       (E) by adding at the end the following:
       ``(9) study the experiences of small, medium, and large 
     States with Head Start programs in order to permit 
     comparisons of children participating in the programs with 
     eligible children who did not participate in the programs, 
     which study--
       ``(A) may include the use of a data set that existed prior 
     to the initiation of the study; and
       ``(B) shall compare the educational achievement, social 
     adaptation, and health status of the participating children 
     and the eligible nonparticipating children.

     The Secretary shall ensure that an appropriate entity carries 
     out a study described in paragraph (9), and prepares and 
     submits to the appropriate committees of the Congress a 
     report containing the results of the study, not later than 
     September 30, 2002.''; and
       (2) by adding at the end the following:
       ``(g) National Head Start Impact Research.--
       ``(1) Analyses of data bases.--The Secretary shall obtain 
     analyses of the following existing databases to guide the 
     evaluation recommendations of the expert panel appointed 
     under paragraph (2) and to provide Congress with initial 
     reports of potential Head Start outcomes--
       ``(A) by use of The Survey of Income and Program 
     Participation (SIPP) conduct an analysis of the different 
     income levels of Head Start participants compared to 
     comparable persons who did not attend Head Start;
       ``(B) by use of The National Longitudinal Survey of Youth 
     (NLSY) which began gathering data on children who attended 
     Head Start from 1988 on, examine the wide range of outcomes 
     measured within the Survey, including cognitive, socio-
     emotional, behavioral, and academic development;
       ``(C) by use of The Survey of Program Dynamics, the new 
     longitudinal survey required by the Personal Responsibility 
     and Work Opportunity Reconciliation Act of 1996, to begin 
     annual reporting, through the duration of the Survey, on Head 
     Start attendees' academic readiness performance and 
     improvements; and
       ``(D) to ensure that The Survey of Program Dynamics be 
     linked with the NLSY at least once by the use of a common 
     performance test, to be determined by the expert panel, for 
     the greater national usefulness of the NLSY database.
       ``(2) Expert panel.--
       ``(A) In general.--The Secretary shall appoint an 
     independent panel consisting of experts in program evaluation 
     and research, education, and early childhood programs--
       ``(i) to review, and make recommendations on, the design 
     and plan for the research (whether

[[Page S10623]]

     conducted as a single assessment or as a series of 
     assessments), described in paragraph (3), within 1 year after 
     the date of enactment of the Human Services Reauthorization 
     Act of 1998;
       ``(ii) to maintain and advise the Secretary regarding the 
     progress of the research; and
       ``(iii) to comment, if the panel so desires, on the interim 
     and final research reports submitted under paragraph (8).
       ``(B) Travel expenses.--The members of the panel shall not 
     receive compensation for the performance of services for the 
     panel, but shall be allowed travel expenses, including per 
     diem in lieu of subsistence, at rates authorized for 
     employees of agencies under subchapter I of chapter 57 of 
     title 5, United States Code, while away from their homes or 
     regular places of business in the performance of services for 
     the panel. Notwithstanding section 1342 of title 31, United 
     States Code, the Secretary may accept the voluntary and 
     uncompensated services of members of the panel.
       ``(3) General authority.--After reviewing the 
     recommendations of the expert panel the Secretary shall enter 
     into a grant, contract, or cooperative agreement with an 
     organization to conduct independent research that provides a 
     national analysis of the impact of Head Start programs. The 
     Secretary shall ensure that the organization shall have 
     expertise in program evaluation, and research, education, and 
     early childhood programs.
       ``(4) Designs and techniques.--The Secretary shall ensure 
     that the research uses rigorous methodological designs and 
     techniques (based on the recommendations of the expert 
     panel), including longitudinal designs, control groups, 
     nationally recognized standardized measures, and random 
     selection and assignment, as appropriate. The Secretary may 
     provide that the research shall be conducted as a single 
     comprehensive assessment or as a group of coordinated 
     assessments designed to provide, when taken together, a 
     national analysis of the impact of Head Start programs.
       ``(5) Programs.--The Secretary shall ensure that the 
     research focuses primarily on Head Start programs that 
     operate in the several States, the Commonwealth of Puerto 
     Rico, or the District of Columbia and that do not 
     specifically target special populations.
       ``(6) Analysis.--The Secretary shall ensure that the 
     organization conducting the research--
       ``(A)(i) determines if, overall, the Head Start programs 
     have impacts consistent with their primary goal of increasing 
     the social competence of children, by increasing the everyday 
     effectiveness of the children in dealing with their present 
     environments and future responsibilities, and increasing 
     their school readiness;
       ``(ii) considers whether the Head Start programs--
       ``(I) enhance the growth and development of children in 
     cognitive, emotional, and physical health areas;
       ``(II) strengthen families as the primary nurturers of 
     their children; and
       ``(III) ensure that children attain school readiness; and
       ``(iii) examines--
       ``(I) the impact of the Head Start programs on increasing 
     access of children to such services as educational, health, 
     and nutritional services, and linking children and families 
     to needed community services; and
       ``(II) how receipt of services described in subclause (I) 
     enriches the lives of children and families participating in 
     Head Start programs;
       ``(B) examines the impact of Head Start programs on 
     participants on the date the participants leave Head Start 
     programs, at the end of kindergarten, and at the end of first 
     grade, by examining a variety of factors, including 
     educational achievement, referrals for special education or 
     remedial course work, and absenteeism;
       ``(C) makes use of random selection from the population of 
     all Head Start programs described in paragraph (5) in 
     selecting programs for inclusion in the research; and
       ``(D) includes comparisons of individuals who participate 
     in Head Start programs with control groups (including 
     comparison groups) composed of--
       ``(i) individuals who participate in other early childhood 
     programs (such as preschool programs and day care); and
       ``(ii) individuals who do not participate in any other 
     early childhood program.
       ``(7) Consideration of sources of variation.--In designing 
     the research, the Secretary shall, to the extent practicable, 
     consider addressing possible sources of variation in impact 
     of Head Start programs, including variations in impact 
     related to such factors as--
       ``(A) Head Start program operations;
       ``(B) Head Start program quality;
       ``(C) the length of time a child attends a Head Start 
     program;
       ``(D) the age of the child on entering the Head Start 
     program;
       ``(E) the type of organization (such as a local educational 
     agency or a community action agency) providing services for 
     the Head Start program;
       ``(F) the number of hours and days of program operation of 
     the Head Start program (such as whether the program is a 
     full-working-day full-calendar-year program, a part-day 
     program or a part-year program); and
       ``(G) other characteristics and features of the Head Start 
     program (such as geographic location, location in an urban or 
     a rural service area, or participant characteristics), as 
     appropriate.
       ``(8) Reports.--
       ``(A) Submission of interim reports.--The organization 
     shall prepare and submit to the Secretary 2 interim reports 
     on the research. The first interim report shall describe the 
     design of the research, and the rationale for the design, 
     including a description of how potential sources of variation 
     in impact of Head Start programs have been considered in 
     designing the research. The second interim report shall 
     describe the status of the research and preliminary findings 
     of the research, as appropriate.
       ``(B) Submission of final report.--The organization shall 
     prepare and submit to the Secretary a final report containing 
     the findings of the research.
       ``(C) Transmittal of reports to congress.--
       ``(i) In general.--The Secretary shall transmit, to the 
     committees described in clause (ii), the first interim report 
     by September 30, 1999, the second interim report by September 
     30, 2001, and the final report by September 30, 2003.
       ``(ii) Committees.--The committees referred to in clause 
     (i) are the Committee on Education and the Workforce of the 
     House of Representatives and the Committee on Labor and Human 
     Resources of the Senate.
       ``(9) Definition.--In this subsection, the term `impact', 
     used with respect to a Head Start program, means a difference 
     in an outcome for a participant in the program that would not 
     have occurred without the participation in the program.
       ``(h) Quality Improvement Study.--
       ``(1) Study.--The Secretary shall conduct a study regarding 
     the use and effects of use of the quality improvement funds 
     made available under section 640(a)(3) since fiscal year 
     1991.
       ``(2) Report.--The Secretary shall prepare and submit to 
     Congress not later than September 2000 a report containing 
     the results of the study, including--
       ``(A) the types of activities funded with the quality 
     improvement funds;
       ``(B) the extent to which the use of the quality 
     improvement funds has accomplished the goals of section 
     640(a)(3)(B); and
       ``(C) the effect of use of the quality improvement funds on 
     teacher training, salaries, benefits, recruitment, and 
     retention.''.

     SEC. 118. REPORTS.

       Section 650 of the Head Start Act (42 U.S.C. 9846) is 
     amended--
       (1) by inserting ``(a) Status of Children.--'' before 
     ``At'';
       (2) by striking ``and Labor'' each place it appears and 
     inserting ``and the Workforce'';
       (3) in paragraph (14) by striking ``and seasonal'' and 
     inserting ``or seasonal''; and
       (4) by adding at the end the following:
       ``(b) Facilities.--At least once during every 5-year 
     period, the Secretary shall prepare and submit, to the 
     Committee on Education and the Workforce of the House of 
     Representatives and the Committee on Labor and Human 
     Resources of the Senate, a report concerning the condition, 
     location, and ownership of facilities used, or available to 
     be used, by Indian Head Start agencies.''.

     SEC. 119. REPEAL OF CONSULTATION REQUIREMENT.

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

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

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

     SEC. 121. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

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

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

     SEC. 201. SHORT TITLE.

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

     SEC. 202. REAUTHORIZATION.

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

          ``Subtitle B--Community Services Block Grant Program

     ``SEC. 671. SHORT TITLE.

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

     ``SEC. 672. PURPOSES AND GOALS.

       ``The purpose of this subtitle is to provide assistance to 
     States and local communities, working through a network of 
     community action agencies and other neighborhood-based 
     organizations, for the reduction of poverty, the 
     revitalization of low-income communities, and the empowerment 
     of low-income families and individuals in rural and urban 
     areas to become fully self-sufficient (particularly families 
     who are attempting to transition off a State program carried 
     out under part A of title IV of the Social Security Act (42 
     U.S.C. 601 et seq.)). Such goals may be accomplished 
     through--
       ``(1) the strengthening of community capabilities for 
     planning, coordinating, and utilizing a broad range of 
     Federal, State, local, and private resources for the 
     elimination of poverty, and for helping individuals and 
     families achieve self-sufficiency;
       ``(2) greater use of innovative and effective, community-
     based approaches to attacking the causes and effects of 
     poverty and of community breakdown;
       ``(3) the maximum participation of residents of the low-
     income communities and members of the groups served by 
     programs assisted through the block grant to empower such 
     individuals to respond to the unique problems and needs 
     within their communities; and
       ``(4) the broadening of the resource base of programs 
     directed to the elimination of poverty so as to secure a more 
     active role for private, faith-based, charitable, and 
     neighborhood organizations in the provision of services as 
     well as

[[Page S10624]]

     individual citizens, business, labor, and professional groups 
     who are able to influence the quantity and quality of 
     opportunities and services for the poor.

     ``SEC. 673. DEFINITIONS.

       ``In this subtitle:
       ``(1) Eligible entity.--The term `eligible entity' means an 
     entity--
       ``(A) that is an eligible entity described in section 
     673(1) (as in effect on the day before the date of enactment 
     of the Human Services Reauthorization Act of 1998) as of such 
     date of enactment or is designated by the process described 
     in section 676A (including an organization serving migrant or 
     seasonal farmworkers that is so described or designated); and
       ``(B) that has a tripartite board or other mechanism 
     described in subsection (a) or (b), as appropriate, of 
     section 676B.
       ``(2) Poverty line.--The term `poverty line' means the 
     official poverty line defined by the Office of Management and 
     Budget based on the most recent data available from the 
     Bureau of the Census. The Secretary shall revise the poverty 
     line annually (or at any shorter interval the Secretary 
     determines to be feasible and desirable) which shall be used 
     as a criterion of eligibility in the community services block 
     grant program established under this subtitle. The required 
     revision shall be accomplished by multiplying the official 
     poverty line by the percentage change in the Consumer Price 
     Index for All Urban Consumers during the annual or other 
     interval immediately preceding the time at which the revision 
     is made. Whenever a State determines that it serves the 
     objectives of the block grant program established under this 
     subtitle, the State may revise the poverty line to not to 
     exceed 125 percent of the official poverty line otherwise 
     applicable under this paragraph.
       ``(3) Private, nonprofit organization.--The term `private, 
     nonprofit organization' includes a faith-based organization, 
     to which the provisions of section 679 shall apply.
       ``(4) Secretary.--The term `Secretary' means the Secretary 
     of Health and Human Services.
       ``(5) State.--The term `State' means each of the several 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, Guam, the United States Virgin Islands, American Samoa, 
     and the Commonwealth of the Northern Mariana Islands, but for 
     fiscal years ending before October 1, 2001, includes the 
     Federated States of Micronesia, the Republic of he Marshall 
     Islands, and Palau.

     ``SEC. 674. AUTHORIZATION OF APPROPRIATIONS.

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

     ``SEC. 675. ESTABLISHMENT OF BLOCK GRANT PROGRAM.

       ``The Secretary is authorized to establish a community 
     services block grant program and make grants through the 
     program to States to ameliorate the causes of poverty in 
     communities within the States.

     ``SEC. 675A. DISTRIBUTION TO TERRITORIES.

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

     ``SEC. 675B. ALLOTMENTS AND PAYMENTS TO STATES.

       ``(a) Allotments in General.--The Secretary shall, from the 
     amount appropriated under section 674(a) for each fiscal year 
     that remains after the Secretary makes the reservations 
     required in section 674(b), allot to each State, subject to 
     section 677, an amount that bears the same ratio to such 
     remaining amount as the amount received by the State for 
     fiscal year 1981 under section 221 of the Economic 
     Opportunity Act of 1964 bore to the total amount received by 
     all States for fiscal year 1981 under such section, except 
     that no State shall receive less than \1/4\ of 1 percent of 
     the amount appropriated under section 674(a) for such fiscal 
     year.
       ``(b) Allotments in Years With Greater Available Funds.--
       ``(1) Minimum allotments.--Subject to paragraphs (2) and 
     (3), if the amount appropriated under section 674(a) for a 
     fiscal year that remains after the Secretary makes the 
     reservations required in section 674(b) exceeds $345,000,000, 
     the Secretary shall allot to each State not less than \1/2\ 
     of 1 percent of the amount appropriated under section 674(a) 
     for such fiscal year.
       ``(2) Maintenance of fiscal year 1990 levels.--Paragraph 
     (1) shall not apply with respect to a fiscal year if the 
     amount allotted under subsection (a) to any State for that 
     year is less than the amount allotted under subsection (a) to 
     such State for fiscal year 1990.
       ``(3) Maximum allotments.--The amount allotted under 
     paragraph (1) to a State shall be reduced for a fiscal year, 
     if necessary, so that the aggregate amount allotted to such 
     State under such paragraph and subsection (a) does not exceed 
     140 percent of the aggregate amount allotted to such State 
     under the corresponding provisions of this subtitle for the 
     fiscal year preceding the fiscal year for which a 
     determination is made under this subsection.
       ``(c) Allotment of Additional Funds.--Notwithstanding 
     subsections (a) and (b), in any fiscal year in which the 
     amount appropriated under section 674(a) exceeds the amount 
     appropriated under such section for fiscal year 1999, such 
     excess shall be allotted among the States proportionately 
     based on--
       ``(1) the number of public assistance recipients in the 
     respective States;
       ``(2) the number of unemployed individuals in the 
     respective States; and
       ``(3) the number of individuals with incomes below the 
     poverty line in the respective States.
       ``(d) Payments.--The Secretary shall make payments to 
     eligible States from the allotments made under this section. 
     The Secretary shall make payments for the grants in 
     accordance with section 6503(a) of title 31, United States 
     Code.
       ``(e) Definition.--For purposes of this section, the term 
     `State' does not include Guam, American Samoa, the United 
     States Virgin Islands, and the Commonwealth of the Northern 
     Mariana Islands.

     ``SEC. 675C. USES OF FUNDS.

       ``(a) Grants to Local Eligible Entities and Other 
     Organizations.--
       ``(1) In general.--Not less than 90 percent of the funds 
     allotted to a State under section 675B shall be used by the 
     State to make grants for the purposes described in section 
     672 to eligible entities.
       ``(2) Obligational authority.--Funds distributed to 
     eligible entities through grants made in accordance with 
     paragraph (1) for a fiscal year shall be available for 
     obligation during that fiscal year and the succeeding fiscal 
     year, in accordance with paragraph (3).
       ``(3) Recapture and redistribution of unobligated funds.--
       ``(A) Amount.--Beginning on October 1, 2000, a State may 
     recapture and redistribute funds distributed to an eligible 
     entity through a grant made under paragraph (1) that are 
     unobligated at the end of a fiscal year if such unobligated 
     funds exceed 20 percent of the amount so distributed to such 
     eligible entity for such fiscal year.
       ``(B) Redistribution.--In redistributing funds recaptured 
     in accordance with this paragraph, States shall redistribute 
     such funds to an eligible entity, or require the original 
     recipient of the funds to redistribute the funds to a 
     private, nonprofit organization, located within the community 
     served by the original recipient of the funds, for activities 
     consistent with the purposes of this subtitle.
       ``(b) Statewide Activities.--
       ``(1) Use of remainder.--If a State uses less than 100 
     percent of the State allotment to make grants under 
     subsection (a), the State shall use the remainder of the 
     allotment (subject to paragraph (2)) for activities which may 
     include--
       ``(A) providing training and technical assistance to those 
     entities in need of such training and assistance;
       ``(B) coordinating State-operated programs and services 
     targeted to low-income children and families with services 
     provided by eligible entities and other organizations funded 
     under this subtitle, including detailing appropriate 
     employees of State or local agencies to entities funded under 
     this subtitle, to ensure increased access to services 
     provided by such State or local agencies;
       ``(C) supporting statewide coordination and communication 
     among eligible entities;
       ``(D) analyzing the distribution of funds made available 
     under this subtitle within the State to determine if such 
     funds have been targeted to the areas of greatest need;
       ``(E) supporting asset-building programs for low-income 
     individuals, such as programs supporting individual 
     development accounts;

[[Page S10625]]

       ``(F) supporting innovative programs and activities 
     conducted by community action agencies or other neighborhood-
     based organizations to eliminate poverty, promote self-
     sufficiency, and promote community revitalization;
       ``(G) supporting other activities, consistent with the 
     purposes of this subtitle; and
       ``(H) State charity tax credits as described in subsection 
     (c).
       ``(2) Administrative cap.--No State may spend more than the 
     greater of $55,000, or 5 percent, of the State's allotment 
     received under section 675B for administrative expenses, 
     including monitoring activities. Funds to be spent for such 
     expenses shall be taken from the portion of the State 
     allotment that remains after the State makes grants to 
     eligible entities under subsection (a). The cost 
     of activities conducted under paragraph (1)(A) shall not be 
     considered to be administrative expenses.
       ``(c)(1) Subject to paragraph (2), if there is in effect 
     under State law a charity tax credit, then the State may use 
     for any purpose the amount of the allotment that is available 
     for expenditure under subsection (b).
       ``(2) The aggregate amount a State may use under paragraph 
     (1) during a fiscal year shall not exceed 100 percent of the 
     revenue loss of the State during the fiscal year that is 
     attributable to the charity tax credit, as determined by the 
     Secretary of the Treasury without regard to any such revenue 
     loss occurring before January 1, 1999.
       ``(3) For purposes of this subsection:
       ``(A) Charity tax credit.--The term `charity tax credit' 
     means a nonrefundable credit against State income tax (or, in 
     the case of a State which does not impose an income tax, a 
     comparable benefit) which is allowable for contributions, in 
     cash or in kind, to qualified charities.
       ``(B) Qualified Charity.--
       ``(i) In General.--The term `qualified charity' means any 
     organization--
       ``(I) which is--

       ``(aa) described in section 501(c)(3) of the Internal 
     Revenue Code of 1986 and exempt from tax under section 501(a) 
     of such Code;
       ``(bb) a community action agency as defined in the Economic 
     Opportunity Act of 1964; or
       ``(cc) a public housing agency as defined in section 
     3(b)(6) of the United States Housing Act of 1937 (42 U.S.C. 
     1437A(b)(6));

       ``(II) which is certified by the appropriate State 
     authority as meeting the requirements of clauses (iii) and 
     (iv); and
       ``(III) if such organization is otherwise required to file 
     a return under section 6033 of such Code, which elects to 
     treat the information required to be furnished by clause (v) 
     as being specified in section 6033(b) of such Code.
       ``(ii) Certain contributions to collection organizations 
     treated as contributions to qualified charity.--
       ``(I) In general.--A contribution to a collection 
     organization shall be treated as a contribution to a 
     qualified charity if the donor designates in writing that the 
     contribution is for the qualified charity.
       ``(II) Collection organization.--The term `collection 
     organization' means an organization described in section 
     501(c)(3) of such Code and exempt from tax under section 
     501(a) of such Code--

       ``(aa) which solicits and collects gifts and grants which, 
     by agreement, are distributed to qualified charities 
     described in clause (i);
       ``(bb) which distributes to qualified charities described 
     in clause (i) at least 90 percent of the gifts and grants it 
     receives that are designated for such qualified charities; 
     and
       ``(cc) which meets the requirements of clause (vi).

       ``(iii) Charity must primarily assist poor individuals.--
       ``(I) In general.--An organization meets the requirements 
     of this clause only if the appropriate State authority 
     reasonably expects that the predominant activity of such 
     organization will be the provision of direct services within 
     the United States to individuals and families whose annual 
     incomes generally do not exceed 185 percent of the official 
     poverty line (as defined by the Office of Management and 
     Budget) in order to prevent or alleviate poverty among such 
     individuals and families.
       ``(II) No recordkeeping in certain cases.--An organization 
     shall not be required to establish or maintain records with 
     respect to the incomes of individuals and families for 
     purposes of subclause (I) if such individuals or families are 
     members of groups which are generally recognized as including 
     substantially only individuals and families described in 
     subclause (I).
       ``(III) Food aid and homeless shelters.--Except as 
     otherwise provided by the appropriate State authority, for 
     purposes of subclause (I), services to individuals in the 
     form of--

       ``(aa) donations of food or meals; or
       ``(bb) temporary shelter to homeless individuals;

     shall be treated as provided to individuals described in 
     subclause (I) if the location and operation of such services 
     are such that the service provider may reasonably conclude 
     that the beneficiaries of such services are predominantly 
     individuals described in subclause (I).
       ``(iv) Minimum expense requirement.--
       ``(I) In general.--An organization meets the requirements 
     of this clause only if the appropriate State authority 
     reasonably expects that the annual poverty program expenses 
     of such organization will not be less than 75 percent of the 
     annual aggregate expenses of such organization.
       ``(II) Poverty program expense.--For purposes of subclause 
     (I)--

       ``(aa) In general.--The term `poverty program expense' 
     means any expense in providing program services referred to 
     in clause (iii).
       ``(bb) Exceptions.--Such term shall not include any 
     management or general expense, any expense for the purpose of 
     influencing legislation (as defined in section 4911(d) of the 
     Internal Revenue Code of 1986), any expense for the purpose 
     of fundraising, any expense for a legal service provided on 
     behalf of any individual referred to in clause (iii), any 
     expense for providing tuition assistance relating to 
     compulsory school attendance, and any expense which consists 
     of a payment to an affiliate of the organization.

       ``(v) Reporting requirement.--The information required to 
     be furnished under this clause is--
       ``(i) the percentages determined by dividing the following 
     categories of the organization's expenses for the year by its 
     total expenses for the year: program services, management 
     expenses, general expenses, fundraising expenses, and 
     payments to affiliates; and
       ``(ii) the category or categories (including food, shelter, 
     education, substance abuse, job training, or otherwise) of 
     services which constitute its predominant activities.
       ``(vi) Additional requirements for collection 
     organizations.--The requirements of this clause are met if 
     the organization--
       ``(I) maintains separate accounting for revenues and 
     expenses; and
       ``(II) makes available to the public its administrative and 
     fundraising costs and information as to the organizations 
     receiving funds from it and the amount of such funds.
       ``(vii) Special rule for states requiring tax uniformity.--
     In the case of a State--
       ``(I) which has a constitutional requirement of tax 
     uniformity; and
       ``(II) which, as of December 31, 1997, imposed a tax on 
     personal income with--

       ``(aa) a single flat rate applicable to all earned and 
     unearned income (except insofar as any amount is not taxed 
     pursuant to tax forgiveness provisions); and
       ``(bb) no generally available exemptions or deductions to 
     individuals;

     the requirement of paragraph (2) shall be treated as met if 
     the amount of the credit is limited to a uniform percentage 
     (but not greater than 25 percent) of State personal income 
     tax liability (determined without regard to credits).
       ``(4) No part of the aggregate amount a State uses under 
     paragraph (1) may be used to supplant non-Federal funds that 
     would be available, in the absence of Federal funds, to 
     offset a revenue loss of the State attributable to a charity 
     tax credit.

     ``SEC. 676. APPLICATION AND PLAN.

       ``(a) Designation of Lead Agency.--
       ``(1) Designation.--The chief executive officer of a State 
     desiring to receive an allotment under this subtitle shall 
     designate, in an application submitted to the Secretary under 
     subsection (b), an appropriate State agency that complies 
     with the requirements of paragraph (2) to act as a lead 
     agency for purposes of carrying out State activities under 
     this subtitle.
       ``(2) Duties.--The lead agency shall--
       ``(A) develop the State plan to be submitted to the 
     Secretary under subsection (b);
       ``(B) in conjunction with the development of the State plan 
     as required under subsection (b), hold at least 1 hearing in 
     the State with sufficient time and statewide distribution of 
     notice of such hearing, to provide to the public an 
     opportunity to comment on the proposed use and distribution 
     of funds to be provided through the allotment for the period 
     covered by the State plan; and
       ``(C) conduct reviews of eligible entities under section 
     678B.
       ``(3) Legislative hearing.--The State shall hold at least 1 
     legislative hearing every 3 years in conjunction with the 
     development of the State plan.
       ``(b) State Application and Plan.--Beginning with fiscal 
     year 2000, to be eligible to receive an allotment under this 
     subtitle, a State shall prepare and submit to the Secretary 
     an application and State plan covering a period of not less 
     than 1 fiscal year and not more than 2 fiscal years. The plan 
     shall be submitted not later than 30 days prior to the 
     beginning of the first fiscal year covered by the plan, and 
     shall contain such information as the Secretary shall 
     require, including--
       ``(1) an assurance that funds made available through the 
     allotment will be used to support activities that are 
     designed to assist low-income families and individuals, 
     including families and individuals receiving assistance under 
     title IV of the Social Security Act, homeless families and 
     individuals, migrant or seasonal farmworkers, and elderly 
     low-income individuals and families, and a description of how 
     such activities will enable the families and individuals--
       ``(A) to remove obstacles and solve problems that block the 
     achievement of self-sufficiency (particularly for families 
     and individuals who are attempting to transition off a State 
     program carried out under title IV of the Social Security 
     Act);
       ``(B) to secure and retain meaningful employment;
       ``(C) to attain an adequate education with particular 
     attention toward improving literacy skills of the low-income 
     families in the community, which may include family literacy 
     initiatives;
       ``(D) to make better use of available income;
       ``(E) to obtain and maintain adequate housing and a 
     suitable living environment;
       ``(F) to obtain emergency assistance through loans, grants, 
     or other means to meet immediate and urgent individual and 
     family needs;
       ``(G) to achieve greater participation in the affairs of 
     the community, including activities that strengthen and 
     improve the relationship with local law enforcement agencies, 
     which may include activities such as neighborhood or 
     community policing efforts;
       ``(H) to address the needs of youth in low-income 
     communities through youth development

[[Page S10626]]

     programs that support the primary role of the family, give 
     priority to prevention of youth problems and crime, promote 
     increased community coordination and collaboration in meeting 
     the needs of youth, and support development and expansion of 
     innovative community-based youth development programs, which 
     may include after-school child care programs; and
       ``(I) to make more effective use of, and to coordinate 
     with, other programs related to the purposes of this subtitle 
     (including State welfare reform efforts);
       ``(2) a description of how the State intends to use 
     discretionary funds made available from the remainder of the 
     allotment described in section 675C(b) in accordance with 
     this subtitle, including a description of how the State will 
     support innovative community and neighborhood-based 
     initiatives related to the purposes of this subtitle;
       ``(3) based on information provided by eligible entities in 
     the State, a description of--
       ``(A) the service delivery system, for services provided or 
     coordinated with funds made available through the allotment, 
     targeted to low-income individuals and families in 
     communities within the State;
       ``(B) a description of how linkages will be developed to 
     fill identified gaps in the services, through the provision 
     of information, referrals, case management, and followup 
     consultations;
       ``(C) a description of how funds made available through the 
     allotment will be coordinated with other public and private 
     resources; and
       ``(D) a description of how the funds will be used to 
     support innovative community and neighborhood-based 
     initiatives related to the purposes of this subtitle which 
     may include fatherhood and other initiatives with the goal of 
     strengthening families and encouraging parental 
     responsibility;
       ``(4) an assurance that local eligible entities in the 
     State will provide, on an emergency basis, for the provision 
     of such supplies and services, nutritious foods, and related 
     services, as may be necessary to counteract conditions of 
     starvation and malnutrition among low-income individuals;
       ``(5) an assurance that the State and the local eligible 
     entities in the State will coordinate, and establish linkages 
     between, governmental and other social services programs to 
     assure the effective delivery of such services to low-income 
     individuals and to avoid duplication of such services 
     (including a description of how the State and the local 
     eligible entities will coordinate with State and local 
     workforce investment systems in the provision of employment 
     and training services in the State and in local communities);
       ``(6) an assurance that the State will ensure coordination 
     between antipoverty programs in each community, and ensure, 
     where appropriate, that emergency energy crisis intervention 
     programs under title XXVI (relating to low-income home energy 
     assistance) are conducted in such community;
       ``(7) an assurance that the State will permit and cooperate 
     with Federal investigations undertaken in accordance with 
     section 678D;
       ``(8) an assurance that any eligible entity that received 
     funding in the previous fiscal year under this subtitle will 
     not have its funding terminated under this subtitle, or 
     reduced below the proportional share of funding the entity 
     received in the previous fiscal year unless, after providing 
     notice and an opportunity for a hearing on the record, the 
     State determines that cause exists for such termination or 
     such reduction, subject to review by the Secretary as 
     provided in section 678C(b);
       ``(9) an assurance that local eligible entities in the 
     State will, to the maximum extent possible, coordinate 
     programs with and form partnerships with other organizations 
     serving low-income residents of the communities and members 
     of the groups served by the State, including faith-based 
     organizations, charitable groups, and community 
     organizations;
       ``(10) an assurance that the State will require each 
     eligible entity to establish procedures under which a low-
     income individual, community organization, or faith-based 
     organization, or representative of low-income individuals 
     that considers its organization, or low-income individuals, 
     to be inadequately represented on the board (or other 
     mechanism) of the eligible entity to petition for adequate 
     representation;
       ``(11) an assurance that the State will secure from each 
     eligible entity, as a condition to receipt of funding by the 
     entity under this subtitle for a program, a community action 
     plan (which shall be submitted to the Secretary, at the 
     request of the Secretary, with the State plan) that includes 
     a community-needs assessment for the community served, which 
     may be coordinated with community-needs assessments conducted 
     for other programs;
       ``(12) an assurance that the State and all eligible 
     entities in the State will, not later than fiscal year 2001, 
     participate in the Results Oriented Management and 
     Accountability System, another performance measure system 
     established pursuant to section 678E(b), or an alternative 
     system for measuring performance and results that meets the 
     requirements of that section, and a description of outcome 
     measures to be used to measure eligible entity performance in 
     promoting self-sufficiency, family stability, and community 
     revitalization; and
       ``(13) information describing how the State will carry out 
     the assurances described in this subsection.
       ``(c) Funding Termination or Reductions.--For purposes of 
     making a determination in accordance with subsection (b)(8) 
     with respect to--
       ``(1) a funding reduction, the term `cause' includes--
       ``(A) a statewide redistribution of funds provided under 
     this subtitle to respond to--
       ``(i) the results of the most recently available census or 
     other appropriate data;
       ``(ii) the designation of a new eligible entity; or
       ``(iii) severe economic dislocation; or
       ``(B) the failure of an eligible entity to comply with the 
     terms of an agreement to provide services under this 
     subtitle; and
       ``(2) a termination, the term `cause' includes the material 
     failure of an eligible entity to comply with the terms of 
     such an agreement and the State plan to provide services 
     under this subtitle or the consistent failure of the entity 
     to achieve performance measures as determined by the State.
       ``(d) Procedures and Information.--The Secretary may 
     prescribe procedures only for the purpose of assessing the 
     effectiveness of eligible entities in carrying out the 
     purposes of this subtitle.
       ``(e) Revisions and Inspection.--
       ``(1) Revisions.--The chief executive officer of each State 
     may revise any plan prepared under this section and shall 
     submit the revised plan to the Secretary.
       ``(2) Public inspection.--Each plan or revised plan 
     prepared under this section shall be made available for 
     public inspection within the State in such a manner as will 
     facilitate review of, and comment on, the plan.

     ``SEC. 676A. DESIGNATION AND REDESIGNATION OF ELIGIBLE 
                   ENTITIES IN UNSERVED AREAS.

       ``(a) Qualified Organization In or Near Area.--
       ``(1) In general.--If any geographic area of a State is 
     not, or ceases to be, served by an eligible entity under this 
     subtitle, and if the chief executive officer of the State 
     decides to serve such area, the chief executive officer may 
     solicit applications from, and designate as an eligible 
     entity--
       ``(A) a private nonprofit eligible entity located in an 
     area contiguous to or within reasonable proximity of the 
     unserved area that is already providing related services in 
     the unserved area; or
       ``(B) a private nonprofit organization that is 
     geographically located in the unserved area that is capable 
     of providing a broad range of services designed to eliminate 
     poverty and foster self-sufficiency and that meets the 
     requirements of this subtitle.
       ``(2) Requirement.--In order to serve as the eligible 
     entity for the area, an entity described in paragraph (1)(B) 
     shall agree to add additional members to the board of the 
     entity to ensure adequate representation--
       ``(A) in each of the 3 required categories described in 
     subparagraphs (A), (B), and (C) of section 676B(a)(2), by 
     members that reside in the community comprised by the 
     unserved area; and
       ``(B) in the category described in section 676B(a)(2), by 
     members that reside in the neighborhood served.
       ``(b) Special Consideration.--In designating an eligible 
     entity under subsection (a), the chief executive officer 
     shall grant the designation to an organization of 
     demonstrated effectiveness in meeting the goals and purposes 
     of this subtitle and may give priority, in granting the 
     designation, to local eligible entities that are already 
     providing related services in the unserved area, consistent 
     with the needs identified by a community-needs assessment.
       ``(c) No Qualified Organization in or Near Area.--If no 
     private, nonprofit organization is identified or determined 
     to be qualified under subsection (a) to serve the unserved 
     area as an eligible entity the chief executive officer may 
     designate an appropriate political subdivision of the State 
     to serve as an eligible entity for the area. In order to 
     serve as the eligible entity for that area, the political 
     subdivision shall have a board or other mechanism as required 
     in section 676B(b).

     ``SEC. 676B. TRIPARTITE BOARDS.

       ``(a) Private Nonprofit Entities.--
       ``(1) Board.--In order for a private, nonprofit entity to 
     be considered to be an eligible entity for purposes of 
     section 673(1), the entity shall administer the community 
     services block grant program through a tripartite board 
     described in paragraph (2) that fully participates in the 
     development and implementation of the program to serve low-
     income communities or groups.
       ``(2) Selection and composition of board.--The members of 
     the board referred to in paragraph (1) shall be selected by 
     the entity and the board shall be composed so as to assure 
     that--
       ``(A) \1/3\ of the members of the board are elected public 
     officials, holding office on the date of selection, or their 
     representatives, except that if the number of elected 
     officials reasonably available and willing to serve on the 
     board is less than \1/3\ of the membership of the board, 
     membership on the board of appointive public officials or 
     their representatives may be counted in meeting such \1/3\ 
     requirement;
       ``(B) not fewer than \1/3\ of the members are persons 
     chosen in accordance with democratic selection procedures 
     adequate to assure that these members are representative of 
     low-income individuals and families in the neighborhood 
     served;
       ``(C) the remainder of the members are officials or members 
     of business, industry, labor, religious, law enforcement, 
     education, or other major groups and interests in the 
     community served; and
       ``(D) each representative of low-income individuals and 
     families selected to represent a specific neighborhood within 
     a community under subparagraph (B) resides in the 
     neighborhood represented by the member.
       ``(b) Public Organizations.--In order for a public 
     organization to be considered to be an eligible entity for 
     purposes of section 673(1), the entity shall administer the 
     community services block grant program through--
       ``(1) a tripartite board, which shall have members selected 
     by the organization and shall be composed so as to assure 
     that not fewer than \1/3\ of the members are persons chosen 
     in accordance with democratic selection procedures adequate 
     to assure that these members--

[[Page S10627]]

       ``(A) are representative of low-income individuals and 
     families in the neighborhood served;
       ``(B) reside in the neighborhood served; and
       ``(C) are able to participate actively in the planning and 
     implementation of programs funded under this subtitle; or
       ``(2) another mechanism specified by the State to assure 
     decisionmaking and participation by low-income individuals in 
     the planning, administration, and evaluation of programs 
     funded under this subtitle.

     ``SEC. 677. PAYMENTS TO INDIAN TRIBES.

       ``(a) Reservation.--If, with respect to any State, the 
     Secretary--
       ``(1) receives a request from the governing body of an 
     Indian tribe or tribal organization within the State that 
     assistance under this subtitle be made directly to such tribe 
     or organization; and
       ``(2) determines that the members of such tribe or tribal 
     organization would be better served by means of grants made 
     directly to provide benefits under this subtitle,

     the Secretary shall reserve from amounts that would otherwise 
     be allotted to such State under section 675B for the fiscal 
     year the amount determined under subsection (b).
       ``(b) Determination of Reserved Amount.--The Secretary 
     shall reserve for the purpose of subsection (a) from amounts 
     that would otherwise be allotted to such State, not less than 
     100 percent of an amount that bears the same ratio to the 
     State allotment for the fiscal year involved as the 
     population of all eligible Indians for whom a determination 
     has been made under subsection (a) bears to the population of 
     all individuals eligible for assistance under this subtitle 
     in such State.
       ``(c) Awards.--The sums reserved by the Secretary on the 
     basis of a determination made under subsection (a) shall be 
     made available by grant to the Indian tribe or tribal 
     organization serving the individuals for whom such a 
     determination has been made.
       ``(d) Plan.--In order for an Indian tribe or tribal 
     organization to be eligible for a grant award for a fiscal 
     year under this section, the tribe or organization shall 
     submit to the Secretary a plan for such fiscal year that 
     meets such criteria as the Secretary may prescribe by 
     regulation.
       ``(e) Definitions.--In this section:
       ``(1) Indian tribe; tribal organization.--The terms `Indian 
     tribe' and `tribal organization' mean a tribe, band, or other 
     organized group of Indians recognized in the State in which 
     the tribe, band, or group resides, or considered by the 
     Secretary of the Interior, to be an Indian tribe or an Indian 
     organization for any purpose.
       ``(2) Indian.--The term `Indian' means a member of an 
     Indian tribe or of a tribal organization.

     ``SEC. 678. OFFICE OF COMMUNITY SERVICES.

       ``(a) Office.--The Secretary shall carry out the functions 
     of this subtitle through an Office of Community Services, 
     which shall be established in the Department of Health and 
     Human Services. The Office shall be headed by a Director.
       ``(b) Grants, Contracts, Cooperative Agreements.--The 
     Secretary shall carry out functions of this subtitle through 
     grants, contracts, or cooperative agreements.

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

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

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

       ``(a) In General.--In order to determine whether eligible 
     entities meet the performance goals, administrative 
     standards, financial management requirements, and other 
     requirements of a State, the State shall conduct the 
     following reviews of eligible entities:
       ``(1) A full onsite review of each such entity at least 
     once during each 3-year period.
       ``(2) An onsite review of each newly designated entity 
     immediately after the completion of the first year in which 
     such entity receives funds through the community services 
     block grant program.
       ``(3) Followup reviews including prompt return visits to 
     eligible entities, and their programs, that fail to meet the 
     goals, standards, and requirements established by the State.
       ``(4) Other reviews as appropriate, including reviews of 
     entities with programs that have had other Federal, State, or 
     local grants terminated for cause.
       ``(b) Requests.--The State may request training and 
     technical assistance from the Secretary as needed to comply 
     with the requirements of this section.
       ``(c) Evaluations by the Secretary.--The Secretary shall 
     conduct in several States in each fiscal year evaluations and 
     investigations of the use of funds received by the States 
     under this subtitle in order to evaluate compliance with the 
     provisions of this subtitle, and especially with respect to 
     compliance with subsection (b) of section 676. A report of 
     such evaluations, together with recommendations of 
     improvements designed to enhance the benefit and impact to 
     people in need, shall be sent to each State evaluated. Upon 
     receiving the report the State shall submit a plan of action 
     in response to the recommendations contained in the report. 
     The results of the evaluations shall be submitted annually to 
     the Chairman of the Committee on Education and the Workforce 
     of the House of Representatives and the Chairman of the 
     Committee on Labor and Human Resources of the Senate as part 
     of the report submitted by the Secretary in accordance with 
     section 678E(b)(2).

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

       ``(a) Determination.--If the State determines, on the basis 
     of a review pursuant to subsection 678B, that an eligible 
     entity materially fails to comply with the terms of an 
     agreement, or the State plan, to provide services under this 
     subtitle or to meet appropriate standards, goals, and other 
     requirements established by the State (including performance 
     objectives), the State shall--
       ``(1) inform the entity of the deficiency to be corrected;
       ``(2) require the entity to correct the deficiency;
       ``(3)(A) offer training and technical assistance, if 
     appropriate, to help correct the deficiency, and prepare and 
     submit to the Secretary a report describing the training and 
     technical assistance offered; or
       ``(B) if the State determines that such training and 
     technical assistance are not appropriate, prepare and submit 
     to the Secretary a report stating the reasons for the 
     determination;
       ``(4)(A) at the discretion of the State (taking into 
     account the seriousness of the deficiency and the time 
     reasonably required to correct the deficiency), allow the 
     entity to develop and implement, within 60 days after being 
     informed of the deficiency, a quality improvement plan to 
     correct such deficiency within a reasonable period of time, 
     as determined by the State; and
       ``(B) not later than 30 days after receiving from an 
     eligible entity a proposed quality improvement plan pursuant 
     to subparagraph (A), either approve such proposed plan or 
     specify the reasons why the proposed plan cannot be approved; 
     and
       ``(5) after providing adequate notice and an opportunity 
     for a hearing, initiate proceedings to terminate the 
     designation of or reduce the funding under this subtitle of 
     the eligible entity unless the entity corrects the 
     deficiency.
       ``(b) Review.--A determination to terminate the designation 
     or reduce the funding of an eligible entity is reviewable by 
     the Secretary. The Secretary shall, upon request, review such 
     a determination. The review shall be completed not later than 
     120 days after the determination to terminate the designation 
     or reduce the funding. If the review is not completed within 
     120 days, the determination of the State shall become final 
     at the end of the 120th day.
       ``(c) Direct Assistance.--Whenever a State violates the 
     assurances contained in section 676(b)(8) and terminates or 
     reduces the funding of an eligible entity prior to the 
     completion of the State's hearing and the Secretary's review 
     as required in subsection (b), the Secretary shall assume 
     responsibility for providing financial assistance to the 
     eligible entity affected until the violation is corrected. In 
     such case, the allotment for the State shall be reduced by an 
     amount equal to the funds provided under this subsection to 
     such eligible entity.

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

       ``(a) Fiscal Controls, Procedures, Audits, and 
     Inspections.--
       ``(1) In general.--A State that receives funds under this 
     subtitle shall--
       ``(A) establish fiscal control and fund accounting 
     procedures necessary to assure the proper disbursal of and 
     accounting for Federal funds paid to the State under this 
     subtitle, including procedures for monitoring the funds 
     provided under this subtitle;
       ``(B) ensure that cost and accounting standards of the 
     Office of Management and Budget apply to a recipient of funds 
     under this subtitle;
       ``(C) prepare, at least every year in accordance with 
     paragraph (2) an audit of the expenditures of the State of 
     amounts received under this subtitle and amounts transferred 
     to carry out the purposes of this subtitle; and
       ``(D) make appropriate books, documents, papers, and 
     records available to the Secretary and the Comptroller 
     General of the United States, or any of their duly authorized 
     representatives, for examination, copying, or mechanical 
     reproduction on or off the premises of the appropriate entity 
     upon a reasonable request for the items.
       ``(2) Audits.--Each audit required by subsection (a)(1)(C) 
     shall be conducted by an entity independent of any agency 
     administering activities or services carried out under this 
     subtitle and shall be conducted in accordance with generally 
     accepted accounting principles. Within 30 days after the 
     completion of each such audit in a State, the chief executive 
     officer of the State shall submit a copy of such audit to any 
     eligible

[[Page S10628]]

     entity that was the subject of the audit at no charge, to the 
     legislature of the State, and to the Secretary.
       ``(3) Repayments.--The State shall repay to the United 
     States amounts found not to have been expended in accordance 
     with this subtitle or the Secretary may offset such amounts 
     against any other amount to which the State is or may become 
     entitled under this subtitle.
       ``(b) Withholding.--
       ``(1) In general.--The Secretary shall, after providing 
     adequate notice and an opportunity for a hearing conducted 
     within the affected State, withhold funds from any State that 
     does not utilize the State allotment substantially in 
     accordance with the provisions of this subtitle, including 
     the assurances such State provided under section 676.
       ``(2) Response to complaints.--The Secretary shall respond 
     in an expeditious and speedy manner to complaints of a 
     substantial or serious nature that a State has failed to use 
     funds in accordance with the provisions of this subtitle, 
     including the assurances provided by the State under section 
     676. For purposes of this paragraph, a complaint of a failure 
     to meet any 1 of the assurances provided under section 676 
     that constitutes disregarding that assurance shall be 
     considered to be a complaint of a serious nature.
       ``(3) Investigations.--Whenever the Secretary determines 
     that there is a pattern of complaints of failures described 
     in paragraph (2) from any State in any fiscal year, the 
     Secretary shall conduct an investigation of the use of funds 
     received under this subtitle by such State in order to ensure 
     compliance with the provisions of this subtitle.

     ``SEC. 678E. ACCOUNTABILITY AND REPORTING REQUIREMENTS.

       ``(a) State Accountability and Reporting Requirements.--
       ``(1) Performance measurement.--
       ``(A) In general.--By October 1, 2001, each State that 
     receives funds under this subtitle shall participate, and 
     shall ensure that all eligible entities in the State 
     participate, in a performance measurement system, which may 
     be a performance measurement system established by the 
     Secretary pursuant to subsection (b), or an alternative 
     system that meets the requirements of subsection (b).
       ``(B) Local agencies.--The State may elect to have local 
     agencies who are subcontractors of the eligible entities 
     under this subtitle participate in the performance 
     measurement system. If the State makes that election, 
     references in this section to eligible entities shall be 
     considered to include the local agencies.
       ``(2) Annual report.--Each State shall annually prepare and 
     submit to the Secretary a report on the measured performance 
     of the State and the eligible entities in the State. Each 
     State shall also include in the report an accounting of the 
     expenditure of funds received by the State through the 
     community services block grant program, including an 
     accounting of funds spent on indirect services or 
     administrative costs by the State and the eligible entities, 
     and funds spent by eligible entities on the direct delivery 
     of local services, and shall include information on the 
     number of and characteristics of clients served under this 
     subtitle in the State, based on data collected from the 
     eligible entities. The State shall also include in the report 
     a summary describing the training and technical assistance 
     offered by the State under section 678C(a)(3) during the year 
     covered by the report.
       ``(b) Secretary's Accountability and Reporting 
     Requirements.--
       ``(1) Performance measurement.--The Secretary, in 
     collaboration with the States and with eligible entities 
     throughout the Nation, shall facilitate the development of 1 
     or more model performance measurement systems, which may be 
     used by the States and by eligible entities to measure their 
     performance in carrying out the requirements of this subtitle 
     and in achieving the goals of their community action plans. 
     The Secretary shall provide technical assistance, including 
     support for the enhancement of electronic data systems, to 
     States and to eligible entities to enhance their capability 
     to collect and report data for such a system and to aid in 
     their participation in such a system.
       ``(2) Reporting requirements.--At the end of each fiscal 
     year beginning after September 30, 1999, the Secretary shall, 
     directly or by grant or contract, prepare a report 
     containing--
       ``(A) a summary of the planned use of funds by each State, 
     and the eligible entities in the State, under the community 
     services block grant program, as contained in each State plan 
     submitted pursuant to section 676;
       ``(B) a description of how funds were actually spent by the 
     State and eligible entities in the State, including a 
     breakdown of funds spent on indirect services or 
     administrative costs and on the direct delivery of local 
     services by eligible entities;
       ``(C) information on the number of entities eligible for 
     funds under this subtitle, the number of low-income persons 
     served under this subtitle, and such demographic data on the 
     low-income populations served by eligible entities as is 
     determined by the Secretary to be feasible;
       ``(D) a comparison of the planned uses of funds for each 
     State and the actual uses of the funds;
       ``(E) a summary of each State's performance results, and 
     the results for the eligible entities, as collected and 
     submitted by the States in accordance with subsection (a)(2); 
     and
       ``(F) any additional information that the Secretary 
     considers to be appropriate to carry out this subtitle, if 
     the Secretary informs the States of the need for such 
     additional information and allows a reasonable period of time 
     prior to the start of the fiscal year for the States to 
     collect and provide the information.
       ``(3) Submission.--The Secretary shall submit to the 
     Committee on Education and the Workforce of the House of 
     Representatives and the Committee on Labor and Human 
     Resources of the Senate the report described in paragraph 
     (2), and any comments the Secretary may have with respect to 
     such report. The report shall include definitions of direct, 
     indirect, and administrative costs used by the Department of 
     Health and Human Services for programs funded under this 
     subtitle.
       ``(4) Costs.--Of the funds reserved under section 
     674(b)(3), not more than $350,000 shall be available to carry 
     out the reporting requirements contained in paragraph (2).

     ``SEC. 678F. LIMITATIONS ON USE OF FUNDS.

       ``(a) Construction of Facilities.--
       ``(1) Limitations.--Except as provided in paragraph (2), 
     grants made under this subtitle (other than amounts reserved 
     under section 674(b)(3)) may not be used by the State, or by 
     any other person with which the State makes arrangements to 
     carry out the purposes of this subtitle, for the purchase or 
     improvement of land, or the purchase, construction, or 
     permanent improvement (other than low-cost residential 
     weatherization or other energy-related home repairs) of any 
     building or other facility.
       ``(2) Waiver.--The Secretary may waive the limitation 
     contained in paragraph (1) upon a State request for such a 
     waiver, if the Secretary finds that the request describes 
     extraordinary circumstances to justify the purchase of land 
     or the construction of facilities (or the making of permanent 
     improvements) and that permitting the waiver will contribute 
     to the ability of the State to carry out the purposes of this 
     subtitle.
       ``(b) Political Activities.--
       ``(1) Treatment as a state or local agency.--For purposes 
     of chapter 15 of title 5, United States Code, any entity that 
     assumes responsibility for planning, developing, and 
     coordinating activities under this subtitle and receives 
     assistance under this subtitle shall be deemed to be a State 
     or local agency. For purposes of paragraphs (1) and (2) of 
     section 1502(a) of such title, any entity receiving 
     assistance under this subtitle shall be deemed to be a State 
     or local agency.
       ``(2) Prohibitions.--Programs assisted under this subtitle 
     shall not be carried on in a manner involving the use of 
     program funds, the provision of services, or the employment 
     or assignment of personnel, in a manner supporting or 
     resulting in the identification of such programs with--
       ``(A) any partisan or nonpartisan political activity or any 
     political activity associated with a candidate, or contending 
     faction or group, in an election for public or party office;
       ``(B) any activity to provide voters or prospective voters 
     with transportation to the polls or similar assistance in 
     connection with any such election; or
       ``(C) any voter registration activity.
       ``(3) Rules and regulations.--The Secretary, after 
     consultation with the Office of Personnel Management, shall 
     issue rules and regulations to provide for the enforcement of 
     this subsection, which shall include provisions for summary 
     suspension of assistance or other action necessary to permit 
     enforcement on an emergency basis.
       ``(c) Nondiscrimination.--
       ``(1) In general.--No person shall, on the basis of race, 
     color, religion, national origin, or sex be excluded from 
     participation in, be denied the benefits of, or be subjected 
     to discrimination under, any program or activity funded in 
     whole or in part with funds made available under this 
     subtitle. Any prohibition against discrimination on the basis 
     of age under the Age Discrimination Act of 1975 (42 U.S.C. 
     6101 et seq.) or with respect to an otherwise qualified 
     individual with a disability as provided in section 504 of 
     the Rehabilitation Act of 1973 (29 U.S.C. 794) or title II of 
     the Americans with Disabilities Act of 1990 (42 U.S.C. 12131 
     et seq.) shall also apply to any such program or activity.
       ``(2) Action of secretary.--Whenever the Secretary 
     determines that a State that has received a payment under 
     this subtitle has failed to comply with paragraph (1) or an 
     applicable regulation, the Secretary shall notify the chief 
     executive officer of the State and shall request that the 
     officer secure compliance. If within a reasonable period of 
     time, not to exceed 60 days, the chief executive officer 
     fails or refuses to secure compliance, the Secretary is 
     authorized to--
       ``(A) refer the matter to the Attorney General with a 
     recommendation that an appropriate civil action be 
     instituted;
       ``(B) exercise the powers and functions provided by title 
     VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), 
     the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), 
     or section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 
     794), as may be applicable; or
       ``(C) take such other action as may be provided by law.
       ``(3) Action of attorney general.--When a matter is 
     referred to the Attorney General pursuant to paragraph (2), 
     or whenever the Attorney General has reason to believe that 
     the State is engaged in a pattern or practice of 
     discrimination in violation of the provisions of this 
     subsection, the Attorney General may bring a civil action in 
     any appropriate United States district court for such relief 
     as may be appropriate, including injunctive relief.

     ``SEC. 679. OPERATIONAL RULE.

       ``(a) Faith-Based Organizations Included as Nongovernmental 
     Providers.--For any program carried out by the Federal 
     Government, or by a State or local government under this 
     subtitle, the government shall consider, on the same basis as 
     other nongovernmental organizations, faith-based 
     organizations to provide the assistance under the program, so 
     long as the program is implemented in a manner consistent 
     with the Establishment Clause of the first

[[Page S10629]]

     amendment to the Constitution. Neither the Federal Government 
     nor a State or local government receiving funds under this 
     subtitle shall discriminate against an organization that 
     provides assistance under, or applies to provide assistance 
     under, this subtitle, on the basis that the organization has 
     a faith-based character.
       ``(b) Additional Safeguards.--Neither the Federal 
     Government nor a State or local government shall require a 
     faith-based organization to remove religious art, icons, 
     scripture, or other symbols in order to be eligible to 
     provide assistance under a program described in subsection 
     (a).
       ``(c) Limitations on Use of Funds for Certain Purposes.--No 
     funds provided to a faith-based organization to provide 
     assistance under any program described in subsection (a) 
     shall be expended for sectarian worship, instruction, or 
     proselytization.
       ``(d) Fiscal Accountability.--
       ``(1) In general.--Except as provided in paragraph (2), any 
     faith-based organization providing assistance under any 
     program described in subsection (a) shall be subject to the 
     same regulations as other nongovernmental organizations to 
     account in accord with generally accepted accounting 
     principles for the use of such funds provided under such 
     program.
       ``(2) Limited audit.--Such organization shall segregate 
     government funds provided under such program into a separate 
     account. Only the government funds shall be subject to audit 
     by the government.

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

       ``(a) Grants, Contracts, Arrangements, Loans, and 
     Guarantees.--
       ``(1) In general.--The Secretary shall, from funds reserved 
     under section 674(b)(3), make grants, loans, or guarantees to 
     States and public agencies and private, nonprofit 
     organizations, or enter into contracts or jointly financed 
     cooperative arrangements with States and public agencies and 
     private, nonprofit organizations (and for-profit 
     organizations, to the extent specified in (2)(E)) for each of 
     the objectives described in paragraphs (2) through (4).
       ``(2) Community economic development.--
       ``(A) Economic development activities.--The Secretary shall 
     make grants described in paragraph (1) on a competitive basis 
     to private, non-profit organizations that are community 
     development corporations to provide technical and financial 
     assistance for economic development activities designed to 
     address the economic needs of low-income individuals and 
     families by creating employment and business development 
     opportunities.
       ``(B) Consultation.--The Secretary shall exercise the 
     authority provided under subparagraph (A) after consultation 
     with other relevant Federal officials.
       ``(C) Governing boards.--For a community development 
     corporation to receive funds to carry out this paragraph, the 
     corporation shall be governed by a board that shall consist 
     of residents of the community and business and civic leaders 
     and shall have as a principal purpose planning, developing, 
     or managing low-income housing or community development 
     projects.
       ``(D) Geographic distribution.--In making grants to carry 
     out this paragraph, the Secretary shall take into 
     consideration the geographic distribution of funding among 
     States and the relative proportion of funding among rural and 
     urban areas.
       ``(E) Reservation.--Of the amounts made available to carry 
     out this paragraph, the Secretary may reserve not more than 1 
     percent for each fiscal year to make grants to private, 
     nonprofit organizations or to enter into contracts with 
     private, nonprofit or for-profit organizations to provide 
     technical assistance to aid community development 
     corporations in developing or implementing activities funded 
     to carry out this paragraph and to evaluate activities funded 
     to carry out this paragraph.
       ``(3) Rural community development activities.--The 
     Secretary shall provide the assistance described in paragraph 
     (1) for rural community development activities, which shall 
     include--
       ``(A) grants to private, nonprofit corporations that 
     provide assistance concerning home repair to rural low-income 
     families and planning and developing low-income rural rental 
     housing units; and
       ``(B) grants to multistate, regional, private, nonprofit 
     organizations to provide training and technical assistance to 
     small, rural communities in meeting their community facility 
     needs.
       ``(4) Neighborhood innovation projects.--The Secretary 
     shall provide the assistance described in paragraph (1) for 
     neighborhood innovation projects, which shall include grants 
     to neighborhood-based private, nonprofit organizations to 
     test or assist in the development of new approaches or 
     methods that will aid in overcoming special problems 
     identified by communities or neighborhoods or otherwise 
     assist in furthering the purposes of this subtitle, and which 
     may include projects that are designed to serve low-income 
     individuals and families who are not being effectively served 
     by other programs.
       ``(b) Evaluation.--The Secretary shall require all 
     activities receiving assistance under this section to be 
     evaluated for their effectiveness. Funding for such 
     evaluations shall be provided as a stated percentage of the 
     assistance or through a separate grant awarded by the 
     Secretary specifically for the purpose of evaluation of a 
     particular activity or group of activities.
       ``(c) Annual Report.--The Secretary shall compile an annual 
     report containing a summary of the evaluations required in 
     subsection (b) and a listing of all activities assisted under 
     this section. The Secretary shall annually submit the report 
     to the Chairperson of the Committee on Education and the 
     Workforce of the House of Representatives and the Chairperson 
     of the Committee on Labor and Human Resources of the 
     Senate.''.

     SEC. 203. RELATED AMENDMENTS.

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

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

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

     ``SEC. 684. REFERENCES.

       ``Any reference in any provision of law to the poverty line 
     set forth in section 624 or 625 of the Economic Opportunity 
     Act of 1964 shall be construed to be a reference to the 
     poverty line defined in section 673 of this subtitle. Any 
     reference in any provision of law to any community action 
     agency designated under title II of the Economic Opportunity 
     Act of 1964 shall be construed to be a reference to an entity 
     eligible to receive funds under the community services block 
     grant program.''.

     SEC. 204. ASSETS FOR INDEPENDENCE.

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

     ``CHAPTER 1--COMMUNITY SERVICES GRANTS'';

     and
       (3) by adding at the end the following:

     ``CHAPTER 2--ASSETS FOR INDEPENDENCE

     ``SEC. 685. SHORT TITLE.

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

     ``SEC. 686. FINDINGS.

       ``Congress makes the following findings:
       ``(1) Economic well-being does not come solely from income, 
     spending, and consumption, but also requires savings, 
     investment, and accumulation of assets because assets can 
     improve economic independence and stability, connect 
     individuals with a viable and hopeful future, stimulate 
     development of human and other capital, and enhance the 
     welfare of offspring.
       ``(2) Fully \1/2\ of all Americans have either no, 
     negligible, or negative assets available for investment, just 
     as the price of entry to the economic mainstream, the cost of 
     a house, an adequate education, and starting a business, is 
     increasing. Further, the household savings rate of the United 
     States lags far behind other industrial nations presenting a 
     barrier to economic growth.
       ``(3) In the current tight fiscal environment, the United 
     States should invest existing resources in high-yield 
     initiatives. There is reason to believe that the financial 
     returns, including increased income, tax revenue, and 
     decreased welfare cash assistance, resulting from individual 
     development accounts will far exceed the cost of investment 
     in those accounts.

[[Page S10630]]

       ``(4) Traditional public assistance programs concentrating 
     on income and consumption have rarely been successful in 
     promoting and supporting the transition to increased economic 
     self-sufficiency. Income-based domestic policy should be 
     complemented with asset-based policy because, while income-
     based policies ensure that consumption needs (including food, 
     child care, rent, clothing, and health care) are met, asset-
     based policies provide the means to achieve greater 
     independence and economic well-being.

     ``SEC. 687. PURPOSES.

       ``The purposes of this chapter are to provide for the 
     establishment of demonstration projects designed to 
     determine--
       ``(1) the social, civic, psychological, and economic 
     effects of providing to individuals and families with limited 
     means an incentive to accumulate assets by saving a portion 
     of their earned income;
       ``(2) the extent to which an asset-based policy that 
     promotes saving for postsecondary education, homeownership, 
     and microenterprise development may be used to enable 
     individuals and families with limited means to increase their 
     economic self-sufficiency; and
       ``(3) the extent to which an asset-based policy stabilizes 
     and improves families and the community in which they live.

     ``SEC. 688. DEFINITIONS.

       ``In this chapter:
       ``(1) Applicable period.--The term `applicable period' 
     means, with respect to amounts to be paid from a grant made 
     for a project year, the calendar year immediately preceding 
     the calendar year in which the grant is made.
       ``(2) Eligible individual.--The term `eligible individual' 
     means an individual who is selected to participate by a 
     qualified entity under section 693.
       ``(3) Emergency withdrawal.--The term `emergency 
     withdrawal' means a withdrawal by an eligible individual 
     that--
       ``(A) is a withdrawal of only those funds, or a portion of 
     those funds, deposited by the individual in the individual 
     development account of the individual;
       ``(B) is permitted by a qualified entity on a case-by-case 
     basis; and
       ``(C) is made for--
       ``(i) expenses for medical care or necessary to obtain 
     medical care, for the individual or a spouse or dependent of 
     the individual described in paragraph (8)(D);
       ``(ii) payments necessary to prevent the eviction of the 
     individual from the residence of the individual, or 
     foreclosure on the mortgage for the principal residence of 
     the individual, as defined in paragraph (8)(B); or
       ``(iii) payments necessary to enable the individual to meet 
     necessary living expenses following loss of employment.
       ``(4) Household.--The term `household' means all 
     individuals who share use of a dwelling unit as primary 
     quarters for living and eating separate from other 
     individuals.
       ``(5) Individual development account.--
       ``(A) In general.--The term `individual development 
     account' means a trust created or organized in the United 
     States exclusively for the purpose of paying the qualified 
     expenses of an eligible individual, or enabling the eligible 
     individual to make an emergency withdrawal, but only if the 
     written governing instrument creating the trust meets the 
     following requirements:
       ``(i) No contribution will be accepted unless it is in cash 
     or by check.
       ``(ii) The trustee is a federally insured financial 
     institution, or a State insured financial institution if no 
     federally insured financial institution is available.
       ``(iii) The assets of the trust will be invested in 
     accordance with the direction of the eligible individual 
     after consultation with the qualified entity providing 
     deposits for the individual under section 694.
       ``(iv) The assets of the trust will not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       ``(v) Except as provided in clause (vi), any amount in the 
     trust which is attributable to a deposit provided under 
     section 694 may be paid or distributed out of the trust only 
     for the purpose of paying the qualified expenses of the 
     eligible individual, or enabling the eligible individual to 
     make an emergency withdrawal.
       ``(vi) Any balance in the trust on the day after the date 
     on which the individual for whose benefit the trust is 
     established dies shall be distributed within 30 days of that 
     date as directed by that individual to another individual 
     development account established for the benefit of an 
     eligible individual.
       ``(B) Custodial accounts.--For purposes of subparagraph 
     (A), a custodial account shall be treated as a trust if the 
     assets of the custodial account are held by a bank (as 
     defined in section 408(n) of the Internal Revenue Code of 
     1986) or another person who demonstrates, to the satisfaction 
     of the Secretary, that the manner in which such person will 
     administer the custodial account will be consistent with the 
     requirements of this chapter, and if the custodial account 
     would, except for the fact that it is not a trust, constitute 
     an individual development account described in subparagraph 
     (A). For purposes of this chapter, in the case of a custodial 
     account treated as a trust by reason of the preceding 
     sentence, the custodian of that custodial account shall be 
     treated as the trustee thereof.
       ``(6) Project year.--The term `project year' means, with 
     respect to a demonstration project, any of the 5 consecutive 
     12-month periods beginning on the date the project is 
     originally authorized to be conducted.
       ``(7) Qualified entity.--
       ``(A) In general.--The term `qualified entity' means--
       ``(i) one or more not-for-profit organizations described in 
     section 501(c)(3) of the Internal Revenue Code of 1986 and 
     exempt from taxation under section 501(a) of such Code; or
       ``(ii) a State or local government agency, or a tribal 
     government, submitting an application under section 689 
     jointly with an organization described in clause (i).
       ``(B) Rule of construction.--Nothing in this paragraph 
     shall be construed as preventing an organization described in 
     subparagraph (A)(i) from collaborating with a financial 
     institution or for-profit community development corporation 
     to carry out the purposes of this chapter.
       ``(8) Qualified expenses.--The term `qualified expenses' 
     means 1 or more of the following, as provided by the 
     qualified entity:
       ``(A) Postsecondary educational expenses.--Postsecondary 
     educational expenses paid from an individual development 
     account directly to an eligible educational institution. In 
     this subparagraph:
       ``(i) Postsecondary educational expenses.--The term 
     `postsecondary educational expenses' means the following:

       ``(I) Tuition and fees.--Tuition and fees required for the 
     enrollment or attendance of a student at an eligible 
     educational institution.
       ``(II) Fees, books, supplies, and equipment.--Fees, books, 
     supplies, and equipment required for courses of instruction 
     at an eligible educational institution.

       ``(ii) Eligible educational institution.--The term 
     ``eligible educational institution' means the following:

       ``(I) Institution of higher education.--An institution 
     described in section 481(a)(1) or 1201(a) of the Higher 
     Education Act of 1965 (20 U.S.C. 1088(a)(1) or 1141(a)), as 
     such sections are in effect on the date of enactment of this 
     chapter.
       ``(II) Postsecondary vocational education school.--An area 
     vocational education school (as defined in subparagraph (C) 
     or (D) of section 521(4) of the Carl D. Perkins Vocational 
     and Applied Technology Education Act (20 U.S.C. 2471(4))) 
     which is in any State (as defined in section 521(33) of such 
     Act), as such sections are in effect on the date of enactment 
     of this chapter.

       ``(B) First-home purchase.--Qualified acquisition costs 
     with respect to a principal residence for a qualified first-
     time homebuyer, if paid from an individual development 
     account directly to the persons to whom the amounts are due. 
     In this subparagraph:
       ``(i) Principal residence.--The term `principal residence' 
     means a principal residence, the qualified acquisition costs 
     of which do not exceed 100 percent of the average area 
     purchase price applicable to such residence.
       ``(ii) Qualified acquisition costs.--The term `qualified 
     acquisition costs' means the costs of acquiring, 
     constructing, or reconstructing a residence. The term 
     includes any usual or reasonable settlement, financing, or 
     other closing costs.
       ``(iii) Qualified first-time homebuyer.--

       ``(I) In general.--The term `qualified first-time 
     homebuyer' means an individual participating in the project 
     (and, if married, the individual's spouse) who has no present 
     ownership interest in a principal residence during the 3-year 
     period ending on the date of acquisition of the principal 
     residence to which this subparagraph applies.
       ``(II) Date of acquisition.--The term `date of acquisition' 
     means the date on which a binding contract to acquire, 
     construct, or reconstruct the principal residence to which 
     this subparagraph applies is entered into.

       ``(C) Business capitalization.--Amounts paid from an 
     individual development account directly to a business 
     capitalization account which is established in a federally 
     insured financial institution (or in a State insured 
     financial institution if no federally insured financial 
     institution is available) and is restricted to use solely for 
     qualified business capitalization expenses. In this 
     subparagraph:
       ``(i) Qualified business capitalization expenses.--The term 
     ``qualified business capitalization expenses' means qualified 
     expenditures for the capitalization of a qualified business 
     pursuant to a qualified plan.
       ``(ii) Qualified expenditures.--The term `qualified 
     expenditures' means expenditures included in a qualified 
     plan, including capital, plant, equipment, working capital, 
     and inventory expenses.
       ``(iii) Qualified business.--The term `qualified business' 
     means any business that does not contravene any law or public 
     policy (as determined by the Secretary).
       ``(iv) Qualified plan.--The term `qualified plan' means a 
     business plan, or a plan to use a business asset purchased, 
     which--

       ``(I) is approved by a financial institution, a 
     microenterprise development organization, or a nonprofit loan 
     fund having demonstrated fiduciary integrity;
       ``(II) includes a description of services or goods to be 
     sold, a marketing plan, and projected financial statements; 
     and
       ``(III) may require the eligible individual to obtain the 
     assistance of an experienced entrepreneurial adviser.

       ``(D) Transfers to idas of family members.--Amounts paid 
     from an individual development account directly into another 
     such account established for the benefit of an eligible 
     individual who is--
       ``(i) the individual's spouse; or
       ``(ii) any dependent of the individual with respect to whom 
     the individual is allowed a deduction under section 151 of 
     the Internal Revenue Code of 1986.
       ``(9) Qualified savings of the individual for the period.--
     The term `qualified savings of the individual for the period' 
     means the aggregate of the amounts contributed by the 
     individual to the individual development account of the 
     individual during the period.
       ``(10) Secretary.--The term `Secretary' means the Secretary 
     of Health and Human Services.

[[Page S10631]]

       ``(11) Tribal government.--The term `tribal government' 
     means a tribal organization, as defined in section 4 of the 
     Indian Self-Determination and Education Assistance Act (25 
     U.S.C. 450b) or a Native Hawaiian organization, as defined in 
     section 9212 of the Native Hawaiian Education Act (20 U.S.C. 
     7912).

     ``SEC. 689. APPLICATIONS.

       ``(a) Announcement of Demonstration Projects.--Not later 
     than 3 months after the date of enactment of this chapter, 
     the Secretary shall publicly announce the availability of 
     funding under this chapter for demonstration projects and 
     shall ensure that applications to conduct the demonstration 
     projects are widely available to qualified entities.
       ``(b) Submission.--Not later than 6 months after the date 
     of enactment of this chapter, a qualified entity may submit 
     to the Secretary an application to conduct a demonstration 
     project under this chapter.
       ``(c) Criteria.--In considering whether to approve an 
     application to conduct a demonstration project under this 
     chapter, the Secretary shall assess the following:
       ``(1) Sufficiency of project.--The degree to which the 
     project described in the application appears likely to aid 
     project participants in achieving economic self-sufficiency 
     through activities requiring qualified expenses. In making 
     such assessment, the Secretary shall consider the overall 
     quality of project activities in making any particular kind 
     or combination of qualified expenses to be an essential 
     feature of any project.
       ``(2) Administrative ability.--The experience and ability 
     of the applicant to responsibly administer the project.
       ``(3) Ability to assist participants.--The experience and 
     ability of the applicant in recruiting, educating, and 
     assisting project participants to increase their economic 
     independence and general well-being through the development 
     of assets.
       ``(4) Commitment of non-federal funds.--The aggregate 
     amount of direct funds from non-Federal public sector and 
     from private sources that are formally committed to the 
     project as matching contributions.
       ``(5) Adequacy of plan for providing information for 
     evaluation.--The adequacy of the plan for providing 
     information relevant to an evaluation of the project.
       ``(6) Other factors.--Such other factors relevant to the 
     purposes of this chapter as the Secretary may specify.
       ``(d) Preferences.--In considering an application to 
     conduct a demonstration project under this chapter, the 
     Secretary shall give preference to an application that--
       ``(1) demonstrates the willingness and ability to select 
     individuals described in section 692 who are predominantly 
     from households in which a child (or children) is living with 
     the child's biological or adoptive mother or father, or with 
     the child's legal guardian;
       ``(2) provides a commitment of non-Federal funds with a 
     proportionately greater amount of such funds committed by 
     private sector sources; and
       ``(3) targets such individuals residing within 1 or more 
     relatively well-defined neighborhoods or communities 
     (including rural communities) that experience high rates of 
     poverty or unemployment.
       ``(e) Approval.--Not later than 9 months after the date of 
     enactment of this chapter, the Secretary shall, on a 
     competitive basis, approve such applications to conduct 
     demonstration projects under this chapter as the Secretary 
     deems appropriate, taking into account the assessments 
     required by subsections (c) and (d). The Secretary is 
     encouraged to ensure that the applications that are approved 
     involve a range of communities (both rural and urban) and 
     diverse populations.
       ``(f) Contracts With Nonprofit Entities.--The Secretary may 
     contract with an entity described in section 501(c)(3) of the 
     Internal Revenue Code of 1986 and exempt from taxation under 
     section 501(a) of such Code to conduct any responsibility of 
     the Secretary under this section or section 696 if--
       ``(1) such entity demonstrates the ability to conduct such 
     responsibility; and
       ``(2) the Secretary can demonstrate that such 
     responsibility would not be conducted by the Secretary at a 
     lower cost.

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

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

     ``SEC. 691. RESERVE FUND.

       ``(a) Establishment.--A qualified entity under this 
     chapter, other than a State or local government agency, or a 
     tribal government, shall establish a Reserve Fund which shall 
     be maintained in accordance with this section.
       ``(b) Amounts in Reserve Fund.--
       ``(1) In general.--As soon after receipt as is practicable, 
     a qualified entity shall deposit in the Reserve Fund 
     established under subsection (a)--
       ``(A) all funds provided to the qualified entity by any 
     public or private source in connection with the demonstration 
     project; and
       ``(B) the proceeds from any investment made under 
     subsection (c)(2).
       ``(2) Uniform accounting regulations.--The Secretary shall 
     prescribe regulations with respect to accounting for amounts 
     in the Reserve Fund established under subsection (a).
       ``(c) Use of Amounts in the Reserve Fund.--
       ``(1) In general.--A qualified entity shall use the amounts 
     in the Reserve Fund established under subsection (a) to--
       ``(A) assist participants in the demonstration project in 
     obtaining the skills (including economic literacy, budgeting, 
     credit, and counseling) and information necessary to achieve 
     economic self-sufficiency through activities requiring 
     qualified expenses;
       ``(B) provide deposits in accordance with section 694 for 
     individuals selected by the qualified entity to participate 
     in the demonstration project;
       ``(C) administer the demonstration project; and
       ``(D) provide the research organization evaluating the 
     demonstration project under section 698 with such information 
     with respect to the demonstration project as may be required 
     for the evaluation.
       ``(2) Authority to invest funds.--
       ``(A) Guidelines.--The Secretary shall establish guidelines 
     for investing amounts in the Reserve Fund established under 
     subsection (a) in a manner that provides an appropriate 
     balance between return, liquidity, and risk.
       ``(B) Investment.--A qualified entity shall invest the 
     amounts in its Reserve Fund that are not immediately needed 
     to carry out the provisions of paragraph (1), in accordance 
     with the guidelines established under subparagraph (A).
       ``(3) Limitation on uses.--Not more than 9.5 percent of the 
     amounts provided to a qualified entity under section 698(b) 
     shall be used by the qualified entity for the purposes 
     described in subparagraphs (A), (C), and (D) of paragraph 
     (1), of which not less than 2 percent of the amounts shall be 
     used by the qualified entity for the purposes described in 
     paragraph (1)(D). If 2 or more qualified entities are jointly 
     administering a project, no qualified entity shall use more 
     than its proportional share for the purposes described in 
     subparagraphs (A), (C), and (D) of paragraph (1).
       ``(d) Unused Federal Grant Funds Transferred to the 
     Secretary When Project Terminates.--Notwithstanding 
     subsection (c), upon the termination of any demonstration 
     project authorized under this section, the qualified entity 
     conducting the project shall transfer to the Secretary an 
     amount equal to--
       ``(1) the amounts in its Reserve Fund at time of the 
     termination; multiplied by
       ``(2) a percentage equal to--
       ``(A) the aggregate amount of grants made to the qualified 
     entity under section 698(b); divided by
       ``(B) the aggregate amount of all funds provided to the 
     qualified entity by all sources to conduct the project.

     ``SEC. 692. ELIGIBILITY FOR PARTICIPATION.

       ``(a) In General.--Any individual who is a member of a 
     household that is eligible for assistance under the State 
     temporary assistance for needy families program established 
     under part A of title IV of the Social Security Act (42 
     U.S.C. 601 et seq.), or that meets each of the following 
     requirements shall be eligible to participate in a 
     demonstration project conducted under this chapter:
       ``(1) Income test.--The adjusted gross income of the 
     household does not exceed the earned income amount described 
     in section 32 of the Internal Revenue Code of 1986 (taking 
     into account the size of the household).
       ``(2) Net worth test.--
       ``(A) In general.--The net worth of the household, as of 
     the end of the calendar year preceding the determination of 
     eligibility, does not exceed $10,000.
       ``(B) Determination of net worth.--For purposes of 
     subparagraph (A), the net worth of a household is the amount 
     equal to--
       ``(i) the aggregate market value of all assets that are 
     owned in whole or in part by any member of the household; 
     minus
       ``(ii) the obligations or debts of any member of the 
     household.
       ``(C) Exclusions.--For purposes of determining the net 
     worth of a household, a household's assets shall not be 
     considered to include the primary dwelling unit and 1 motor 
     vehicle owned by the household.
       ``(b) Individuals Unable To Complete the Project.--The 
     Secretary shall establish such regulations as are necessary, 
     including prohibiting future eligibility to participate in 
     any other demonstration project conducted under this chapter, 
     to ensure compliance with this chapter if an individual 
     participating in the demonstration project moves from the 
     community in which the project is conducted or is otherwise 
     unable to continue participating in that project.

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

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

     ``SEC. 694. DEPOSITS BY QUALIFIED ENTITIES.

       ``(a) In General.--Not less than once every 3 months during 
     each project year, each qualified entity under this Act shall 
     deposit in the individual development account of each 
     individual participating in the project, or into a parallel 
     account maintained by the qualified entity--

[[Page S10632]]

       ``(1) from the non-Federal funds described in section 
     689(c)(4), a matching contribution of not less than $0.50 and 
     not more than $4 for every $1 of earned income (as defined in 
     section 911(d)(2) of the Internal Revenue Code of 1986) 
     deposited in the account by a project participant during that 
     period;
       ``(2) from the grant made under section 690(b), an amount 
     equal to the matching contribution made under paragraph (1); 
     and
       ``(3) any interest that has accrued on amounts deposited 
     under paragraph (1) or (2) on behalf of that individual into 
     the individual development account of the individual or into 
     a parallel account maintained by the qualified entity.
       ``(b) Limitation on Deposits for an Individual.--Not more 
     than $2,000 from a grant made under section 690(b) shall be 
     provided to any 1 individual over the course of the 
     demonstration project.
       ``(c) Limitation on Deposits for a Household.--Not more 
     than $4,000 from a grant made under section 690(b) shall be 
     provided to any 1 household over the course of the 
     demonstration project.
       ``(d) Withdrawal of Funds.--The Secretary shall establish 
     such guidelines as may be necessary to ensure that funds held 
     in an individual development account are not withdrawn, 
     except for 1 or more qualified expenses, or for an emergency 
     withdrawal. Such guidelines shall include a requirement that 
     a responsible official of the qualified entity conducting a 
     project approve such withdrawal in writing. The guidelines 
     shall provide that no individual may withdraw funds from an 
     individual development account earlier than 6 months after 
     the date on which the individual first deposits funds in the 
     account.
       ``(e) Reimbursement.--An individual shall reimburse an 
     individual development account for any funds withdrawn from 
     the account for an emergency withdrawal, not later than 12 
     months after the date of the withdrawal. If the individual 
     fails to make the reimbursement, the qualified entity 
     administering the account shall transfer the funds deposited 
     into the account or a parallel account under section 694 to 
     the Reserve Fund of the qualified entity, and use the funds 
     to benefit other individuals participating in the 
     demonstration project involved.

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

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

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

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

     ``SEC. 696. ANNUAL PROGRESS REPORTS.

       ``(a) In General.--Each qualified entity under this chapter 
     shall prepare an annual report on the progress of the 
     demonstration project. Each report shall include both program 
     and participant information and shall specify for the period 
     covered by the report the following information:
       ``(1) The number and characteristics of individuals making 
     a deposit into an individual development account.
       ``(2) The amounts in the Reserve Fund established with 
     respect to the project.
       ``(3) The amounts deposited in the individual development 
     accounts.
       ``(4) The amounts withdrawn from the individual development 
     accounts and the purposes for which such amounts were 
     withdrawn.
       ``(5) The balances remaining in the individual development 
     accounts.
       ``(6) The savings account characteristics (such as 
     threshold amounts and match rates) required to stimulate 
     participation in the demonstration project, and how such 
     characteristics vary among different populations or 
     communities.
       ``(7) What service configurations of the qualified entity 
     (such as peer support, structured planning exercises, 
     mentoring, and case management) increased the rate and 
     consistency of participation in the demonstration project and 
     how such configurations varied among different populations or 
     communities.
       ``(8) Such other information as the Secretary may require 
     to evaluate the demonstration project.
       ``(b) Submission of Reports.--The qualified entity shall 
     submit each report required to be prepared under subsection 
     (a) to--
       ``(1) the Secretary; and
       ``(2) the Treasurer (or equivalent official) of the State 
     in which the project is conducted, if the State or a local 
     government or a tribal government committed funds to the 
     demonstration project.
       ``(c) Timing.--The first report required by subsection (a) 
     shall be submitted not later than 60 days after the end of 
     the calendar year in which the Secretary authorized the 
     qualified entity to conduct the demonstration project, and 
     subsequent reports shall be submitted every 12 months 
     thereafter, until the conclusion of the project.

     ``SEC. 697. SANCTIONS.

       ``(a) Authority To Terminate Demonstration Project.--If the 
     Secretary determines that a qualified entity under this 
     chapter is not operating the demonstration project in 
     accordance with the entity's application or the requirements 
     of this chapter (and has not implemented any corrective 
     recommendations directed by the Secretary), the Secretary 
     shall terminate such entity's authority to conduct the 
     demonstration project.
       ``(b) Actions Required Upon Termination.--If the Secretary 
     terminates the authority to conduct a demonstration project, 
     the Secretary--
       ``(1) shall suspend the demonstration project;
       ``(2) shall take control of the Reserve Fund established 
     pursuant to section 691;
       ``(3) shall make every effort to identify another qualified 
     entity (or entities) willing and able to conduct the project 
     in accordance with the approved application (or, as modified, 
     if necessary to incorporate the recommendations) and the 
     requirements of this chapter;
       ``(4) shall, if the Secretary identifies an entity (or 
     entities) described in paragraph (3)--
       ``(A) authorize the entity (or entities) to conduct the 
     project in accordance with the approved application (or, as 
     modified, if necessary, to incorporate the recommendations) 
     and the requirements of this chapter;
       ``(B) transfer to the entity (or entities) control over the 
     Reserve Fund established pursuant to section 691; and
       ``(C) consider, for purposes of this chapter--
       ``(i) such other entity (or entities) to be the qualified 
     entity (or entities) originally authorized to conduct the 
     demonstration project; and
       ``(ii) the date of such authorization to be the date of the 
     original authorization; and
       ``(5) if, by the end of the 1-year period beginning on the 
     date of the termination, the Secretary has not found a 
     qualified entity (or entities) described in paragraph (3), 
     shall--
       ``(A) terminate the project; and
       ``(B) from the amount remaining in the Reserve Fund 
     established as part of the project, remit to each source that 
     provided funds under section 689(c)(4) to the entity 
     originally authorized to conduct the project, an amount that 
     bears the same ratio to the amount so remaining as the amount 
     provided by the source under section 689(c)(4) bears to the 
     amount provided by all such sources under that section.

     ``SEC. 698. EVALUATIONS.

       ``(a) In General.--Not later than 10 months after the date 
     of enactment of this chapter, the Secretary shall enter into 
     a contract with an independent research organization to 
     evaluate, individually and as a group, all qualified entities 
     and sources participating in the demonstration projects 
     conducted under this chapter.
       ``(b) Factors To Evaluate.--In evaluating any demonstration 
     project conducted under this chapter, the research 
     organization shall address the following factors:
       ``(1) The effects of incentives and organizational or 
     institutional support on savings behavior in the 
     demonstration project.
       ``(2) The savings rates of individuals in the demonstration 
     project based on demographic characteristics including 
     gender, age, family size, race or ethnic background, and 
     income.
       ``(3) The economic, civic, psychological, and social 
     effects of asset accumulation, and how such effects vary 
     among different populations or communities.
       ``(4) The effects of individual development accounts on 
     homeownership, level of postsecondary education attained, and 
     self-employment, and how such effects vary among different 
     populations or communities.
       ``(5) The potential financial returns to the Federal 
     Government and to other public sector and private sector 
     investors in individual development accounts over a 5-year 
     and 10-year period of time.
       ``(6) The lessons to be learned from the demonstration 
     projects conducted under this chapter and if a permanent 
     program of individual development accounts should be 
     established.
       ``(7) Such other factors as may be prescribed by the 
     Secretary.
       ``(c) Methodological Requirements.--In evaluating any 
     demonstration project conducted under this chapter, the 
     research organization shall--
       ``(1) for at least 1 site, use control groups to compare 
     participants with nonparticipants;
       ``(2) before, during, and after the project, obtain such 
     quantitative data as are necessary to evaluate the project 
     thoroughly; and
       ``(3) develop a qualitative assessment, derived from 
     sources such as in-depth interviews, of how asset 
     accumulation affects individuals and families.
       ``(d) Reports by the Secretary.--
       ``(1) Interim reports.--Not later than 90 days after the 
     end of the calendar year in which the Secretary first 
     authorizes a qualified entity to conduct a demonstration 
     project under this chapter, and every 12 months thereafter 
     until all demonstration projects conducted under this chapter 
     are completed, the Secretary shall submit to Congress an 
     interim report setting forth the results of the reports 
     submitted pursuant to section 696(b).
       ``(2) Final reports.--Not later than 12 months after the 
     conclusion of all demonstration projects conducted under this 
     chapter, the Secretary shall submit to Congress a final 
     report setting forth the results and findings of all reports 
     and evaluations conducted pursuant to this chapter.
       ``(e) Evaluation Expenses.--The Secretary shall expend such 
     sums as may be necessary, but not less than 2 percent of the 
     amount appropriated under section 699A for a fiscal year, to 
     carry out the purposes of this section.

[[Page S10633]]

     ``SEC. 699. TREATMENT OF FUNDS.

       ``Of the funds deposited in individual development accounts 
     for eligible individuals, only the funds deposited by the 
     individuals (including interest accruing on those funds) may 
     be considered to be income, assets, or resources of the 
     individuals for purposes of determining eligibility for, or 
     the amount of assistance furnished under, any Federal or 
     federally assisted program based on need.

     ``SEC. 699A. AUTHORIZATION OF APPROPRIATIONS.

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

     SEC. 205. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

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

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

     SEC. 301. SHORT TITLE.

       This title may be cited as the ``Low-Income Home Energy 
     Assistance Amendments of 1998''.

     SEC. 302. AUTHORIZATION.

       (a) In General.--Section 2602(b) of the Low-Income Home 
     Energy Assistance Act of 1981 (42 U.S.C. 8621(b)) is amended 
     by inserting ``, $1,100,000,000 for fiscal year 2000, and 
     such sums as may be necessary for fiscal year 2001'' after 
     ``1995 through 1999''.
       (b) Program Year.--Section 2602(c) of Low-Income Home 
     Energy Assistance Act of 1981 (42 U.S.C. 8621(c)) is amended 
     to read as follows:
       ``(c) Amounts appropriated under this section in any fiscal 
     year for programs and activities under this title shall be 
     made available for obligation in the succeeding fiscal 
     year.''.
       (c) Incentive Program for Leveraging Non-Federal 
     Resources.--Section 2602(d) of the Low-Income Home Energy 
     Assistance Act of 1981 (42 U.S.C. 8621(d)) is amended by 
     striking ``for each of the fiscal years 1996'' and all that 
     follows through the period at the end, and inserting ``for 
     each of the fiscal years 1999, 2000, and 2001.''.
       (d) Technical Amendment.--Section 2602(e) of Low-Income 
     Home Energy Assistance Act of 1981 (42 U.S.C. 8621(e)) is 
     amended by striking ``subsection (g)'' and inserting 
     ``subsection (e) of such section''.

     SEC. 303. DEFINITIONS.

       Section 2603(4) of the Low-Income Home Energy Assistance 
     Act of 1981 (42 U.S.C. 8622(4)) is amended--
       (1) by striking ``the term'' and inserting ``The term''; 
     and
       (2) by striking the semicolon and inserting a period.

     SEC. 304. NATURAL DISASTERS AND OTHER EMERGENCIES.

       (a) Definitions.--Section 2603 of the Low-Income Home 
     Energy Assistance Act of 1981 (42 U.S.C. 8622) is amended--
       (1) by redesignating paragraphs (6) through (9) as 
     paragraphs (8) through (11), respectively;
       (2) by inserting before paragraph (8) (as redesignated in 
     paragraph (1)) the following:
       ``(7) Natural disaster.--The term `natural disaster' means 
     a weather event (relating to cold or hot weather), flood, 
     earthquake, tornado, hurricane, or ice storm, or an event 
     meeting such other criteria as the Secretary, in the 
     discretion of the Secretary, may determine to be 
     appropriate.'';
       (3) by redesignating paragraphs (1) through (5) as 
     paragraphs (2) through (6), respectively; and
       (4) by inserting before paragraph (2) (as redesignated in 
     paragraph (3)) the following:
       ``(1) Emergency.--The term `emergency' means--
       ``(A) a natural disaster;
       ``(B) a significant home energy supply shortage or 
     disruption;
       ``(C) a significant increase in the cost of home energy, as 
     determined by the Secretary;
       ``(D) a significant increase in home energy disconnections 
     reported by a utility, a State regulatory agency, or another 
     agency with necessary data;
       ``(E) a significant increase in participation in a public 
     benefit program such as the food stamp program carried out 
     under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), the 
     national program to provide supplemental security income 
     carried out under title XVI of the Social Security Act (42 
     U.S.C. 1381 et seq.), or the State temporary assistance for 
     needy families program carried out under part A of title IV 
     of the Social Security Act (42 U.S.C. 601 et seq.), as 
     determined by the head of the appropriate Federal agency;
       ``(F) a significant increase in unemployment, layoffs, or 
     the number of households with an individual applying for 
     unemployment benefits, as determined by the Secretary of 
     Labor; or
       ``(G) an event meeting such criteria as the Secretary, in 
     the discretion of the Secretary, may determine to be 
     appropriate.''.
       (b) Considerations.--Section 2604(g) of Low-Income Home 
     Energy Assistance Act of 1981 (42 U.S.C. 8623(g)) is amended 
     by striking the last 2 sentences and inserting the following: 
     ``In determining whether to make such an allotment to a 
     State, the Secretary shall take into account the extent to 
     which the State was affected by the natural disaster or other 
     emergency involved, the availability to the State of other 
     resources under the program carried out under this title or 
     any other program, whether a Member of Congress has requested 
     that the State receive the allotment, and such other factors 
     as the Secretary may find to be relevant. Not later than 30 
     days after making the determination, but prior to releasing 
     an allotted amount to a State, the Secretary shall notify 
     Congress of the allotments made pursuant to this 
     subsection.''.

     SEC. 305. STATE ALLOTMENTS.

       Section 2604 of the Low-Income Home Energy Assistance Act 
     of 1981 (42 U.S.C. 8623) is amended--
       (1) in subsection (b)(1), by striking ``the Northern 
     Mariana Islands, and the Trust Territory of the Pacific 
     Islands.'' and inserting ``and the Commonwealth of the 
     Northern Mariana Islands.'';
       (2) in subsection (c)(3)(B)(ii), by striking 
     ``application'' and inserting ``applications'';
       (3) by striking subsection (f);
       (4) in the first sentence of subsection (g), by striking 
     ``(a) through (f)'' and inserting ``(a) through (d)''; and
       (5) by redesignating subsection (g) as subsection (e).

     SEC. 306. ADMINISTRATION.

       Section 2605 of the Low-Income Home Energy Assistance Act 
     of 1981 (42 U.S.C. 8624) is amended--
       (1) in subsection (b)--
       (A) in paragraph (9)(A), by striking ``and not transferred 
     pursuant to section 2604(f) for use under another block 
     grant'';
       (B) in paragraph (14), by striking ``; and'' and inserting 
     a semicolon;
       (C) in the matter following paragraph (14), by striking 
     ``The Secretary may not prescribe the manner in which the 
     States will comply with the provisions of this subsection.''; 
     and
       (D) in the matter following paragraph (16), by inserting 
     before ``The Secretary shall issue'' the following: ``The 
     Secretary may not prescribe the manner in which the States 
     will comply with the provisions of this subsection.''; and
       (2) in subsection (c)(1)--
       (A) in subparagraph (B), by striking ``States'' and 
     inserting ``State''; and
       (B) in subparagraph (G)(i), by striking ``has'' and 
     inserting ``had''; and
       (3) in paragraphs (1) and (2)(A) of subsection (k) by 
     inserting ``, particularly those low-income households with 
     the lowest incomes that pay a high proportion of household 
     income for home energy'' before the period.

     SEC. 307. PAYMENTS TO STATES.

       Section 2607(b)(2)(B) of the Low-Income Home Energy 
     Assistance Act of 1981 (42 U.S.C. 8626(b)(2)(B)) is amended--
       (1) in the first sentence, by striking ``and not 
     transferred pursuant to section 2604(f)''; and
       (2) in the second sentence, by striking ``but not 
     transferred by the State''.

     SEC. 308. RESIDENTIAL ENERGY ASSISTANCE CHALLENGE OPTION.

       (a) Evaluation.--The Comptroller General shall conduct an 
     evaluation of the Residential Energy Assistance Challenge 
     program described in section 2607B of the Low-Income Home 
     Energy Assistance Act of 1981 (42 U.S.C. 8626b).
       (b) Report.--Not later than 2 years after the date of 
     enactment of this Act, the Comptroller General shall prepare 
     and submit to Congress a report containing--
       (1) the findings resulting from the evaluation described in 
     subsection (a); and
       (2) the State evaluations described in paragraphs (1) and 
     (2) of subsection (b) of such section 2607B.
       (c) Incentive Grants.--Section 2607B(b)(1) of the Low-
     Income Home Energy Assistance Act of 1981 (42 U.S.C. 
     8626b(b)(1)) is amended by striking ``For each of the fiscal 
     years 1996 through 1999'' and inserting ``For each fiscal 
     year''.
       (d) Technical Amendments.--Section 2607B of Low-Income Home 
     Energy Assistance Act of 1981 (42 U.S.C. 8626b) is amended--
       (1) in subsection (e)(2)--
       (A) by redesignating subparagraphs (F) through (N) as 
     subparagraphs (E) through (M), respectively; and
       (B) in clause (i) of subparagraph (I) (as redesignated in 
     subparagraph (A)), by striking ``on'' and inserting ``of''; 
     and
       (2) by redesignating subsection (g) as subsection (f).

  Mr. SESSIONS. Mr. President, I ask unanimous consent that the Senate 
disagree to the amendment of the House, request a conference with the 
House, and the Chair be authorized to appoint conferees on behalf of 
the Senate.
  There being no objection, the Presiding Officer (Mr. Enzi) appointed 
Mr. Jeffords, Mr. Coats, Mr. Gregg, Mr. Kennedy, and Mr. Dodd conferees 
on the part of the Senate.

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