[Congressional Record (Bound Edition), Volume 151 (2005), Part 20]
[House]
[Pages 26705-26812]
[From the U.S. Government Publishing Office, www.gpo.gov]




          DEFICIT REDUCTION OMNIBUS RECONCILIATION ACT OF 2005

  Mr. NUSSLE. Mr. Speaker, pursuant to section 3 of House Resolution 
560, I call up the Senate bill (S. 1932) to provide for reconciliation 
pursuant to section 202(a) of the concurrent resolution on the budget 
for fiscal year 2006 (H. Con. Res. 95), and ask for its immediate 
consideration in the House.
  The Clerk read the title of the Senate bill.
  The text of the Senate bill is as follows:

                                S. 1932

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Deficit Reduction Omnibus 
     Reconciliation Act of 2005''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of Contents.

       TITLE I--COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

Sec. 1001. Short title.

                     Subtitle A--Commodity Programs

Sec. 1101. Reduction of commodity program payments.
Sec. 1102. Forfeiture penalty for nonrecourse sugar loans.
Sec. 1103. Cotton competitiveness provisions.
Sec. 1104. National dairy market loss payments.
Sec. 1105. Advance direct payments.

                        Subtitle B--Conservation

Sec. 1201. Conservation reserve program.
Sec. 1202. Conservation security program.
Sec. 1203. Environmental quality incentives program.

                       Subtitle C--Miscellaneous

Sec. 1301. Initiative for future agriculture and food systems.

       TITLE II--COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

           Subtitle A--Merger of the Deposit Insurance Funds

Sec. 2001. Short title.
Sec. 2002. Definitions.
Sec. 2003. Merger of BIF and SAIF.
Sec. 2004. Establishment of the Deposit Insurance Fund.
Sec. 2005. Technical and conforming amendments to the Federal Deposit 
              Insurance Act.
Sec. 2006. Other technical and conforming amendments.
Sec. 2007. Effective date.

      Subtitle B--Deposit Insurance Modernization and Improvement

Sec. 2011. Short title.
Sec. 2012. Changes to Federal deposit insurance coverage.
Sec. 2013. Designated reserve ratio.
Sec. 2014. Assessment credits and dividends.
Sec. 2015. Assessments-related records retention and statute of 
              limitations.
Sec. 2016. Increase in fees for late assessment payments.
Sec. 2017. Regulations required.
Sec. 2018. Studies of potential changes to the Federal deposit 
              insurance system.
Sec. 2019. Effective date.

                   Subtitle C--FHA Asset Disposition

Sec. 2021. Short title.
Sec. 2022. Definitions.
Sec. 2023. Appropriated funds requirement for below market sales.
Sec. 2024. Up-front grants.
Sec. 2025. Authorization of appropriations.

                Subtitle D--Adaptive Housing Assistance

Sec. 2031. Short title.
Sec. 2032. Adoptive housing assistance for disabled veterans residing 
              temporarily in housing owned by a family member.
Sec. 2033. GAO reports.

     TITLE III--COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

Sec. 3001. Short title.
Sec. 3002. Analog spectrum recovery; hard deadline.
Sec. 3003. Auction of recovered spectrum.
Sec. 3004. Supplemental license fees.
Sec. 3005. Digital Transition and Public Safety Fund.
Sec. 3005A. Communication system grants.
Sec. 3006. Essential air service program.

                 TITLE IV--ENERGY AND NATURAL RESOURCES

Sec. 4001. Oil and gas leasing program.

           TITLE V--COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

Sec. 5001. Technical corrections to SAFETEA-LU.

                     TITLE VI--COMMITTEE ON FINANCE

Sec. 6000. Amendments to Social Security Act.

                          Subtitle A--Medicaid

        Chapter 1--Payment For Prescription Drugs Under Medicaid

Sec. 6001. Pharmacy reimbursement.
Sec. 6002. Increase in rebates for covered outpatient drugs.
Sec. 6003. Improved regulation of authorized generic drugs.

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Sec. 6004. Collection of rebates for certain physician administered 
              drugs.

                Chapter 2--Long-Term Care Under Medicaid

Sec. 6011. Reform of Medicaid asset transfer rules.
Sec. 6012. State long-term care partnerships.

       Chapter 3--Eliminating Fraud, Waste, and Abuse in Medicaid

Sec. 6021. Enhancing third party recovery.
Sec. 6022. Limitation on use of contingency fee arrangements.
Sec. 6023. Encouraging the enactment of State False Claims Acts.
Sec. 6024. Employee education about False Claims Recovery.
Sec. 6025. Prohibition on restocking and double billing of prescription 
              drugs.
Sec. 6026. Medicaid Integrity Program.

               Chapter 4--State Financing Under Medicaid

Sec. 6031. Reforms of targeted case management.
Sec. 6032. Temporary Federal matching payments for Federal assistance.
Sec. 6033. Managed care organization provider tax reform.
Sec. 6034. Inclusion of podiatrists as physicians.
Sec. 6035. DSH allotment for the District of Columbia.
Sec. 6036. Demonstration project regarding Medicaid reimbursement for 
              stabilization of emergency medical conditions by non-
              publicly owned or operated institutions for mental 
              diseases.
Sec. 6037. Limitation on severe reduction in the Medicaid FMAP for 
              fiscal year 2006.
Sec. 6038. Extension of prescription drug rebates to enrollees in 
              Medicaid managed care organizations.
Sec. 6039. Extension of the Medicare Part A and B payment holiday.
Sec. 6039A. Sense of the Senate.
Sec. 6039B. Authority to continue providing certain adult day health 
              care services or medical adult day care services.
Sec. 6039C. Demonstration project regarding Medicaid coverage of low-
              income HIV-infected individuals.
Sec. 6039D. Additional increase in rebate for single source and 
              innovator multiple source drugs.

Chapter 5--Improving the Medicaid and State Children's Health Insurance 
                                Programs


                  SUBCHAPTER A--FAMILY OPPORTUNITY ACT

Sec. 6041. Short title of subchapter.
Sec. 6042. Opportunity for families of disabled children to purchase 
              Medicaid coverage for such children.
Sec. 6043. Demonstration projects regarding home and community-based 
              alternatives to psychiatric residential treatment 
              facilities for children.
Sec. 6044. Development and support of family-to-family health 
              information centers.
Sec. 6045. Restoration of Medicaid eligibility for certain SSI 
              beneficiaries.


        SUBCHAPTER B--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

Sec. 6051. Rules for availability, redistribution, and extended 
              availability of allotments for fiscal years 2003, 2004, 
              and 2005.
Sec. 6052. Authority to use up to 10 percent of fiscal year 2006 and 
              2007 allotments for outreach.
Sec. 6053. Prohibition against covering nonpregnant childless adults 
              with SCHIP funds.
Sec. 6054. Continued authority for qualifying States to use certain 
              funds for Medicaid expenditures.
Sec. 6055. Grants to promote innovative outreach and enrollment under 
              Medicaid and SCHIP.


    SUBCHAPTER C--MONEY FOLLOWS THE PERSON REBALANCING DEMONSTRATION

Sec. 6061. Money Follows the Person Rebalancing Demonstration.

   Chapter 6--Option for Hurricane Katrina Disaster States To Delay 
                              Application

Sec. 6071. Option for Hurricane Katrina disaster States to delay 
              application.

                          Subtitle B--Medicare

Sec. 6101. Improvements to the Medicare-dependent hospital (MDH) 
              program.
Sec. 6102. Reduction in payments to skilled nursing facilities for bad 
              debt.
Sec. 6103. Two-year extension of the 50 percent compliance threshold 
              used to determine whether a hospital or unit of a 
              hospital is an inpatient rehabilitation facility under 
              the Medicare program.
Sec. 6104. Prohibition on physician self referrals to physician owned, 
              limited service hospitals.
Sec. 6105. Minimum update for physicians' services for 2006.
Sec. 6106. One-year extension of hold harmless provisions for small 
              rural hospitals and sole community hospitals under the 
              prospective payment system for hospital outpatient 
              department services.
Sec. 6107. Update to the composite rate component of the basic case-mix 
              adjusted prospective payment system for dialysis 
              services.
Sec. 6108. One-year extension of moratorium on therapy caps.
Sec. 6109. Transfer of title of certain DME to patient after 13-month 
              rental.
Sec. 6110. Establishment of Medicare value-based purchasing programs.
Sec. 6111. Phase-out of risk adjustment budget neutrality in 
              determining the amount of payments to Medicare Advantage 
              organizations.
Sec. 6112. Elimination of Medicare Advantage regional plan 
              stabilization fund.
Sec. 6113. Rural PACE provider grant program.
Sec. 6114. Waiver of part B late enrollment penalty for certain 
              international volunteers.
Sec. 6115. Delivery of services at federally qualified health centers.
Sec. 6116. Technical correction regarding purchase agreements for 
              power-driven wheelchairs.
Sec. 6117. Medicare coverage of ultrasound screening for abdominal 
              aortic aneurysms; national educational and information 
              campaign.
Sec. 6118. Improving patient access to, and utilization of, colorectal 
              cancer screening under medicare.
Sec. 6119. Coverage of marriage and family therapist services and 
              mental health counselor services under part b of the 
              medicare program.
Sec. 6120. Quality measurement systems amendments.

     TITLE VII--COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                    Subtitle A--Education Provisions

                          Chapter 1--Education

Sec. 7101. Provisional grant assistance program.
Sec. 7102. National smart grants.
Sec. 7103. Loan limits.
Sec. 7104. Plus loan interest rates and zero special allowance payment.
Sec. 7105. Reduction of lender insurance reimbursement rates.
Sec. 7106. Guaranty agency origination fee.
Sec. 7107. Deferment of student loans for military service.
Sec. 7108. Recovery through consolidation.
Sec. 7109. Single holder rule.
Sec. 7110. Default reduction program.
Sec. 7111. Requirements for disbursements of student loans.
Sec. 7112. Special insurance and reinsurance rules.
Sec. 7113. School as lender moratorium.
Sec. 7114. Permanent reduction of special allowance payments for loans 
              from the proceeds of tax exempt issues.
Sec. 7115. Special allowances.
Sec. 7116. Origination fee.
Sec. 7117. Income contingent repayment for public sector employees.
Sec. 7118. Family contribution for dependent students.
Sec. 7119. Family contribution for independent students without 
              dependents other than a spouse.
Sec. 7120. Family contribution for independent students with dependents 
              other than a spouse.
Sec. 7121. Regulations; updated tables.
Sec. 7122. Simplified need test and automatic zero improvements.
Sec. 7123. Loan forgiveness for teachers.
Sec. 7124. Effective date.

         Chapter 2--Hurricane Katrina Higher Education Recovery

Sec. 7151. Short title.
Sec. 7152. Definitions.
Sec. 7153. Waiver authority and modifications to certain provisions of 
              the Higher Education Act of 1965.
Sec. 7154. General waiver authority and required consultation.
Sec. 7155. Notice of waivers, modifications, or extensions.
Sec. 7156. Regulatory requirements inapplicable.
Sec. 7157. Department of Education Inspector General audit and report.
Sec. 7158. Sunset provision.

       Subtitle B--Pension Benefit Guaranty Corporation Premiums

Sec. 7201. Amendments to the Employee Retirement Income Security Act of 
              1974.

              Subtitle C--Higher Education Reauthorization

       Chapter 1--Short Title; References; General Effective Date

Sec. 7301. Short title.
Sec. 7302. References.
Sec. 7303. General effective date.

                     Chapter 2--General Provisions

Sec. 7311. Additional definitions.
Sec. 7312. General definition of institution of higher education.
Sec. 7313. Definition of institution of higher education for purposes 
              of title IV programs.

[[Page 26707]]

Sec. 7314. Protection of student speech and association rights.
Sec. 7315. National advisory committee on institutional quality and 
              integrity.
Sec. 7316. Drug and alcohol abuse prevention.
Sec. 7317. Prior rights and obligations.
Sec. 7318. Cost of higher education.
Sec. 7319. Performance-based organization for the delivery of Federal 
              student financial assistance.
Sec. 7320. Procurement flexibility.

                 Chapter 3--Teacher Quality Enhancement

Sec. 7331. Teacher quality enhancement grants for States and 
              partnerships.

                      Chapter 4--Institutional Aid

Sec. 7341. Program purpose.
Sec. 7342. Definitions; eligibility.
Sec. 7343. American Indian tribally controlled colleges and 
              universities.
Sec. 7344. Alaska Native and Native Hawaiian-serving institutions.
Sec. 7345. Native American-serving, nontribal institutions.
Sec. 7346. Part B definitions.
Sec. 7347. Grants to institutions.
Sec. 7348. Allotments to institutions.
Sec. 7349. Professional or graduate institutions.
Sec. 7350. Authorization of appropriations.
Sec. 7351. Technical corrections.

                     Chapter 5--Student Assistance


   SUBCHAPTER A--GRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF 
                            HIGHER EDUCATION

Sec. 7361. Federal Pell Grants.
Sec. 7362. Federal TRIO Programs.
Sec. 7363. Gaining Early Awareness and Readiness for Undergraduate 
              Programs.
Sec. 7364. Academic Achievement Incentive Scholarships.
Sec. 7365. Federal Supplemental Educational Opportunity Grants.
Sec. 7366. Leveraging Educational Assistance Partnership Program.
Sec. 7367. Special programs for students whose families are engaged in 
              migrant and seasonal farmwork.
Sec. 7368. Robert C. Byrd Honors Scholarship Program.
Sec. 7369. Child care access means parents in school.
Sec. 7370. Learning anytime anywhere partnerships.


          SUBCHAPTER B--FEDERAL FAMILY EDUCATION LOAN PROGRAM

Sec. 7381. Extension of authorities.
Sec. 7382. Federal payments to reduce student interest costs.
Sec. 7383. Federal consolidation loans.
Sec. 7384. Default reduction program.
Sec. 7385. Requirements for disbursement of student loans.
Sec. 7386. Reports to credit bureaus and institutions of higher 
              education.
Sec. 7387. Common forms and formats.
Sec. 7388. Student loan information by eligible borrowers.
Sec. 7389. Consumer education information.
Sec. 7390. Definition of eligible lender.
Sec. 7390A. Repayment by the Secretary of loans of bankrupt, deceased, 
              or disabled borrowers; treatment of borrowers attending 
              schools that fail to provide a refund, attending closed 
              schools, or falsely certified as eligible to borrow.


               SUBCHAPTER C--FEDERAL WORK-STUDY PROGRAMS

Sec. 7391. Authorization of appropriations.
Sec. 7392. Allowance for books and supplies.
Sec. 7393. Grants for Federal work-study programs.
Sec. 7394. Job location and development programs.
Sec. 7395. Work colleges.


       SUBCHAPTER D--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM

Sec. 7401. Funds for administrative expenses.


                  SUBCHAPTER E--FEDERAL PERKINS LOANS

Sec. 7411. Program authority.
Sec. 7412. Terms of loans.
Sec. 7413. Cancellation of loans for certain public service.
Sec. 7414. Federal capital contribution recovery.


                      SUBCHAPTER F--NEED ANALYSIS

Sec. 7421. Cost of attendance.
Sec. 7422. Discretion of student financial aid administrators.
Sec. 7423. Definitions.


    SUBCHAPTER G--GENERAL PROVISIONS RELATING TO STUDENT ASSISTANCE

Sec. 7431. Definitions.
Sec. 7432. Compliance calendar.
Sec. 7433. Forms and regulations.
Sec. 7434. Student eligibility.
Sec. 7435. Statute of limitations and State court judgments.
Sec. 7436. Institutional refunds.
Sec. 7437. Institutional and financial assistance for students.
Sec. 7438. National student loan data system.
Sec. 7439. Early awareness of financial aid eligibility.
Sec. 7440. College access initiative.
Sec. 7441. Program participation agreements.
Sec. 7442. Regulatory relief and improvement.
Sec. 7443. Transfer of allotments.
Sec. 7444. Wage garnishment requirement.
Sec. 7445. Purpose of administrative payments.
Sec. 7446. Advisory committee on student financial assistance.
Sec. 7447. Regional meetings.
Sec. 7448. Year 2000 requirements at the department.


                    SUBCHAPTER H--PROGRAM INTEGRITY

Sec. 7451. Recognition of accrediting agency or association.
Sec. 7452. Administrative capacity standard.
Sec. 7453. Program review and data.

                   Chapter 6--Developing Institutions

Sec. 7501. Definitions.
Sec. 7502. Authorized activities.
Sec. 7503. Duration of grant.
Sec. 7504. Postbaccalaureate opportunities for Hispanic Americans.
Sec. 7505. Applications.
Sec. 7506. Cooperative arrangements.
Sec. 7507. Authorization of appropriations.

              Chapter 7--International Education Programs

Sec. 7601. Findings.
Sec. 7602. Graduate and undergraduate language and area centers and 
              programs.
Sec. 7603. Undergraduate international studies and foreign language 
              programs.
Sec. 7604. Research; studies.
Sec. 7605. Technological innovation and cooperation for foreign 
              information access.
Sec. 7606. Selection of certain grant recipients.
Sec. 7607. American overseas research centers.
Sec. 7608. Authorization of appropriations for international and 
              foreign language studies.
Sec. 7609. Centers for international business education.
Sec. 7610. Education and training programs.
Sec. 7611. Authorization of appropriations for business and 
              international education programs.
Sec. 7612. Minority foreign service professional development program.
Sec. 7613. Institutional development.
Sec. 7614. Study abroad program.
Sec. 7615. Advanced degree in international relations.
Sec. 7616. Internships.
Sec. 7617. Financial assistance.
Sec. 7618. Report.
Sec. 7619. Gifts and donations.
Sec. 7620. Authorization of appropriations for the institute for 
              international public policy.
Sec. 7621. Definitions.
Sec. 7622. Assessment and enforcement.

       Chapter 8--Graduate And Postsecondary Improvement Programs

Sec. 7701. Purpose.
Sec. 7702. Allocation of Jacob K. Javits fellowships.
Sec. 7703. Stipends.
Sec. 7704. Authorization of appropriations for the Jacob K. Javits 
              Fellowship Program.
Sec. 7705. Institutional eligibility under the graduate assistance in 
              areas of national need program.
Sec. 7706. Awards to graduate students.
Sec. 7707. Additional assistance for cost of education.
Sec. 7708. Authorization of appropriations for the graduate assistance 
              in areas of national need program.
Sec. 7709. Authorization of appropriations for the Thurgood Marshall 
              Legal Educational Opportunity Program.
Sec. 7710. Fund for the improvement of postsecondary education.
Sec. 7711. Special projects.
Sec. 7712. Authorization of appropriations for the fund for the 
              improvement of postsecondary education.
Sec. 7713. Repeal of the urban community service program.
Sec. 7714. Grants authorized for demonstration projects to ensure 
              students with disabilities receive a quality higher 
              education.
Sec. 7715. Applications for demonstration projects to ensure students 
              with disabilities receive a quality higher education.
Sec. 7716. Authorization of appropriations for the demonstration 
              projects to ensure students with disabilities receive a 
              quality higher education.

                        Chapter 9--Miscellaneous

Sec. 7801. Miscellaneous.

                  Chapter 10--Amendments to Other Laws


            SUBCHAPTER A--EDUCATION OF THE DEAF ACT OF 1986

Sec. 7901. Laurent Clerc National Deaf Education Center.
Sec. 7902. Agreement with Gallaudet University.
Sec. 7903. Agreement for the National Technical Institute for the Deaf.
Sec. 7904. Cultural experiences grants.
Sec. 7905. Audit.

[[Page 26708]]

Sec. 7906. Reports.
Sec. 7907. Monitoring, evaluation, and reporting.
Sec. 7908. Liaison for educational programs.
Sec. 7909. Federal endowment programs for Gallaudet University and the 
              National Technical Institute for the Deaf.
Sec. 7910. Oversight and effect of agreements.
Sec. 7911. International students.
Sec. 7912. Research priorities.
Sec. 7913. Authorization of appropriations.


           SUBCHAPTER B--UNITED STATES INSTITUTE OF PEACE ACT

Sec. 7921. United States Institute of Peace Act.


         SUBCHAPTER C--THE HIGHER EDUCATION AMENDMENTS OF 1998

Sec. 7931. Repeals.
Sec. 7932. Grants to States for workplace and community transition 
              training for incarcerated youth offenders.


                     SUBCHAPTER D--INDIAN EDUCATION

                Part I--Tribal Colleges and Universities

Sec. 7941. Reauthorization of the Tribally Controlled College or 
              University Assistance Act of 1978.

                    Part II--Navajo Higher Education

Sec. 7945. Short title.
Sec. 7946. Reauthorization of Navajo Community College Act.

                      Subtitle D--Hurricane Relief

Sec. 7947. Findings.
Sec. 7948. Immediate aid to restart school operations.
Sec. 7949. Hold harmless for local educational agencies serving major 
              disaster areas.
Sec. 7950. Teacher and paraprofessional reciprocity; delay.
Sec. 7951. Assistance for homeless youth.
Sec. 7952. Temporary emergency impact aid for displaced students.
Sec. 7953. Origination fees for student loans.
Sec. 7954. Authorization and appropriation of funds.
Sec. 7955. Sunset provision.

                 TITLE VIII--COMMITTEE ON THE JUDICIARY

Sec. 8001. Recapture of unused visa numbers.
Sec. 8002. Fees with respect to immigration services for intracompany 
              transferees.
Sec. 8003. Justice programs.
Sec. 8004. Copyright program.

                   DIVISION A--AMTRAK REAUTHORIZATION

Sec. 1. Short title.
Sec. 2. Amendment of Title 49, United States Code.

                        TITLE I--AUTHORIZATIONS

Sec. 101. Authorization for Amtrak capital and operating expenses and 
              State capital grants.
Sec. 102. Authorization for the Federal Railroad Administration.
Sec. 103. Repayment of long-term debt and capital leases.
Sec. 104. Excess railroad retirement.
Sec. 105. Other authorizations.

          TITLE II--AMTRAK REFORM AND OPERATIONAL IMPROVEMENTS

Sec. 201. National railroad passenger transportation system defined.
Sec. 202. Amtrak board of directors.
Sec. 203. Establishment of improved financial accounting system.
Sec. 204. Development of 5-year financial plan.
Sec. 205. Establishment of grant process.
Sec. 206. State-supported routes.
Sec. 207. Independent auditor to establish methodologies for Amtrak 
              route and service planning decisions.
Sec. 208. Metrics and standards.
Sec. 209. Passenger train performance.
Sec. 210. Long distance routes.
Sec. 211. Alternate passenger rail service program.
Sec. 212. Employee transition assistance.
Sec. 213. Northeast corridor state-of-good-repair plan.
Sec. 214. Northeast corridor infrastructure and operations 
              improvements.
Sec. 215. Restructuring long-term debt and capital leases.
Sec. 216. Study of compliance requirements at existing intercity rail 
              stations.
Sec. 217. Incentive pay.
Sec. 218. Access to Amtrak equipment and services.
Sec. 219. General Amtrak provisions.
Sec. 220. Private sector funding of passenger trains.
Sec. 221. On-board service improvements.
Sec. 222. Amtrak management accountability.

               TITLE III--INTERCITY PASSENGER RAIL POLICY

Sec. 301. Capital assistance for intercity passenger rail service.
Sec. 302. State rail plans.
Sec. 303. Next generation corridor train equipment pool.
Sec. 304. Federal rail policy.
Sec. 305. Rail cooperation research program.

              TITLE IV--PASSENGER RAIL SECURITY AND SAFETY

Sec. 401. Systemwide Amtrak security upgrades.
Sec. 402. Fire and life-safety improvements.
Sec. 403. Amtrak plan to assist families of passengers involved in rail 
              passenger accidents.
Sec. 404. Northern border rail passenger report.
Sec. 405. Passenger, baggage, and cargo screening.

       TITLE I--COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

     SEC. 1001. SHORT TITLE.

       This title may be cited as the ``Agricultural 
     Reconciliation Act of 2005''.

                     Subtitle A--Commodity Programs

     SEC. 1101. REDUCTION OF COMMODITY PROGRAM PAYMENTS.

       (a) In General.--Subtitle F of title I of the Farm Security 
     and Rural Investment Act of 2002 (7 U.S.C. 7991 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 1619. REDUCTION OF COMMODITY PROGRAM PAYMENTS.

       ``(a) Definition of Commodity Program Payments.--In this 
     section, the term `commodity program payments' means--
       ``(1) direct payments;
       ``(2) counter-cyclical payments; and
       ``(3) payments and benefits associated with the loan 
     program, including gains from the forfeiture of any commodity 
     pledged as collateral for loans and gains from in-kind 
     payments described in section 166 of the Federal Agriculture 
     Improvement and Reform Act of 1996 (7 U.S.C. 7286), as 
     determined by the Secretary.
       ``(b) Reduction.--
       ``(1) In general.--Notwithstanding any other provision of 
     this title, for each of the 2006 through 2010 crop years for 
     wheat, corn, grain sorghum, barley, oats, upland cotton, 
     extra long staple cotton, rice, soybeans, other oilseeds, 
     wool, mohair, honey, dry peas, lentils, small chickpeas, 
     unshorn pelts, silage, hay, and peanuts, the Secretary shall 
     reduce the total amount of commodity program payments 
     received by the producers on a farm for those commodities for 
     that crop year by an amount equal to 2.5 percent of that 
     amount.
       ``(2) Milk.--During the period beginning on October 1, 
     2005, and ending on September 30, 2007, the Secretary shall 
     reduce the total amount of payments received by producers 
     pursuant to section 1502 by an amount equal to 2.5 percent of 
     that amount.''.
       (b) Commodities.--
       (1) In general.--Title I of the Farm Security and Rural 
     Investment Act of 2002 (7 U.S.C. 7901 et seq.), including 
     each amendment made by that title, is amended by striking 
     ``2007'' each place it appears (other than in sections 
     1104(f), 1304(g), and 1307(a)(6) and amendments made by this 
     title) and inserting ``2011''.
       (2) Cotton.--Sections 1204(e)(1) and 1208(a) of the Farm 
     Security and Rural Investment Act of 2002 (7 U.S.C. 
     7934(e)(1), 7938(a)) are amended by striking ``2008'' each 
     place it appears and inserting ``2012''.

     SEC. 1102. FORFEITURE PENALTY FOR NONRECOURSE SUGAR LOANS.

       Section 156 of the Federal Agriculture Improvement and 
     Reform Act of 1996 (7 U.S.C. 7272) is amended--
       (1) by redesignating subsections (h), (i), and (j) as 
     subsections (i), (j), and (k), respectively; and
       (2) by inserting after subsection (g) the following:
       ``(h) Forfeiture Penalty.--
       ``(1) In general.--In the case of each of the 2006 through 
     2010 crops of sugar beets and sugarcane, a penalty shall be 
     assessed on the forfeiture of any sugar pledged as collateral 
     for a nonrecourse loan under this section.
       ``(2) Amount.--The penalty for sugarcane and sugar beets 
     under this subsection shall be 1.2 percent of the loan rate 
     established for sugarcane and sugar beets under subsections 
     (a) and (b), respectively.
       ``(3) Effect of forfeiture.--Any payments owed producers by 
     a processor that forfeits any sugar pledged as collateral for 
     a nonrecourse loan shall be reduced in proportion to the loan 
     forfeiture penalty incurred by the processor.
       ``(4) Crops.--This subsection shall apply only to the 2006 
     through 2010 crops of sugar beets and sugarcane.''.

     SEC. 1103. COTTON COMPETITIVENESS PROVISIONS.

       (a) In General.--Section 1207 of the Farm Security and 
     Rural Investment Act of 2002 (7 U.S.C. 7937) is amended--
       (1) by striking the section heading and inserting the 
     following: ``UPLAND COTTON IMPORT QUOTAS.'';
       (2) by striking subsection (a);
       (3) by redesignating subsections (b) and (c) as subsections 
     (a) and (b), respectively;
       (4) in subsection (a) (as so redesignated)--
       (A) in paragraph (1)--
       (i) in subparagraph (B), by striking ``, adjusted for the 
     value of any certificate issued under subsection (a),''; and
       (ii) in subparagraph (C), by striking ``, for the value of 
     any certificates issued under subsection (a)''; and
       (B) in paragraph (4), by striking ``subsection (c)'' and 
     inserting ``subsection (b)''; and
       (5) in subsection (b)(2) (as so redesignated), by striking 
     ``subsection (b)'' and inserting ``subsection (a)''.

[[Page 26709]]

       (b) FAIR.--Section 136 of the Federal Agriculture 
     Improvement and Reform Act of 1996 (7 U.S.C. 7236) is 
     repealed.
       (c) Effective Date.--The amendments made by this section 
     take effect on August 1, 2006.

     SEC. 1104. NATIONAL DAIRY MARKET LOSS PAYMENTS.

       (a) Amount.--Section 1502(c) of the Farm Security and Rural 
     Investment Act of 2002 (7 U.S.C. 7982(c)) is amended by 
     striking paragraph (3) and inserting the following:
       ``(3)(A) during the period beginning on the first day of 
     the month the producers on a dairy farm enter into a contract 
     under this section and ending on September 30, 2005, 45 
     percent; and
       ``(B) during the period beginning on October 1, 2005, and 
     ending on September 30, 2007, 34 percent.''.
       (b) Duration.--Section 1502 of the Farm Security and Rural 
     Investment Act of 2002 (7 U.S.C. 7982) is amended by striking 
     ``2005'' each place it appears in subsections (f) and (g)(1) 
     and inserting ``2007''.
       (c) Conforming Amendments.--Section 1502 of the Farm 
     Security and Rural Investment Act of 2002 (7 U.S.C. 7982) is 
     amended--
       (1) in subsection (g)(1), by striking ``and subsection 
     (h)''; and
       (2) by striking subsection (h).

     SEC. 1105. ADVANCE DIRECT PAYMENTS.

       (a) In General.--Section 1103(d)(2) of the Farm Security 
     and Rural Investment Act of 2002 (7 U.S.C. 7913(d)(2)) is 
     amended in the first sentence by striking ``2007 crops 
     years'' and inserting ``2005 crop years, up to 40 percent of 
     the direct payment for a covered commodity for the 2006 crop 
     year, and up to 29 percent of the direct payment for a 
     covered commodity for any of the 2007 through 2011 crop 
     years,''.
       (b) Peanuts.--Section 1303(e)(2) of the Farm Security and 
     Rural Investment Act of 2002 (7 U.S.C. 7953(e)(2)) is amended 
     in the first sentence by striking ``2007 crops years'' and 
     inserting ``2005 crop years, up to 40 percent of the direct 
     payment for the 2006 crop year, and up to 29 percent of the 
     direct payment for any of the 2007 through 2011 crop 
     years,''.

                        Subtitle B--Conservation

     SEC. 1201. CONSERVATION RESERVE PROGRAM.

       (a) In General.--Section 1231 of the Food Security Act of 
     1985 (16 U.S.C. 3831) is amended--
       (1) in subsection (a), by striking ``2007'' and inserting 
     ``2011'';
       (2) in subsection (d), by striking ``up'' and all that 
     follows through ``years'' and inserting ``in the conservation 
     reserve at any 1 time 36,400,000 acres during the 2002 
     through 2010 calendar years and 38,300,000 acres in the 2011 
     calendar year''; and
       (3) in subsection (h)(1)(A), by striking ``2007'' and 
     inserting ``2011''.
       (b) Funding.--Section 1241(a) of the Food Security Act of 
     1985 (16 U.S.C. 3841(a)) is amended--
       (1) in the matter before paragraph (1), by striking ``For'' 
     and inserting ``Except as otherwise provided in this 
     subsection, for''; and
       (2) in paragraph (1), by striking ``The conservation'' and 
     inserting ``For fiscal years 2002 through 2011, the 
     conservation''.
       (c) Implementation.--In implementing the amendments made by 
     this section, the Secretary of Agriculture shall achieve the 
     new maximum acreage enrollment limit not later than 2 years 
     after the date of enactment of this Act without affecting 
     conservation reserve existing contracts.

     SEC. 1202. CONSERVATION SECURITY PROGRAM.

       (a) In General.--Section 1238A(a) of the Food Security Act 
     of 1985 (16 U.S.C. 3838a(a)) is amended by striking ``2007'' 
     and inserting ``2011''.
       (b) Funding.--Section 1241(a)(3) of the Food Security Act 
     of 1985 (16 U.S.C. 3841(a)(3)) is amended by striking ``not 
     more than $6,037,000,000'' and all that follows through 
     ``2014.'' and inserting the following: ``not more than--
       ``(A) $1,954,000,000 for the period of fiscal years 2006 
     through 2010; and
       ``(B) $5,200,000,000 for the period of fiscal years 2006 
     through 2015.''.

     SEC. 1203. ENVIRONMENTAL QUALITY INCENTIVES PROGRAM.

       (a) In General.--Section 1240B(a)(1) of the Food Security 
     Act of 1985 (16 U.S.C. 3839aa-2(a)(1)) is amended by striking 
     ``2007'' and inserting ``2011''.
       (b) Limitation on Payments.--Section 1240G of the Food 
     Security Act of 1985 (16 U.S.C. 3839aa-7) is amended by 
     striking ``2007'' and inserting ``2011''.
       (c) Funding.--Section 1241(a)(6) of the Food Security Act 
     of 1985 (16 U.S.C. 3841(a)(6)) is amended by striking 
     subparagraphs (D) and (E) and inserting the following:
       ``(D) $1,017,000,000 in fiscal year 2005;
       ``(E) $1,185,000,000 in fiscal year 2006;
       ``(F) $1,270,000,000 in each of fiscal years 2007 through 
     2010; and
       ``(G) $1,300,000,000 in fiscal year 2011.''.

                       Subtitle C--Miscellaneous

     SEC. 1301. INITIATIVE FOR FUTURE AGRICULTURE AND FOOD 
                   SYSTEMS.

       (a) In General.--Section 401(b)(3) of the Agricultural 
     Research, Extension, and Education Reform Act of 1998 (7 
     U.S.C. 7621(b)(3)) is amended--
       (1) in subparagraph (C), by striking ``$160,000,000; and'' 
     and inserting ``$104,000,000;'';
       (2) by redesignating subparagraph (D) as subparagraph (E);
       (3) by inserting after subparagraph (C) the following:
       ``(D) on October 1, 2006, and each October 1 thereafter 
     through October 1, 2009, $130,000,000; and''; and
       (4) in subparagraph (E) (as so redesignated), by striking 
     ``2006'' and inserting ``2010''.
       (b) Effective Date.--The amendments made by subsection (a) 
     take effect on October 1, 2005.

       TITLE II--COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

           Subtitle A--Merger of the Deposit Insurance Funds

     SEC. 2001. SHORT TITLE.

       This subtitle may be cited as the ``Safe and Fair Deposit 
     Insurance Act of 2005''.

     SEC. 2002. DEFINITIONS.

       In this subtitle--
       (1) the term ``Administration'' means the National Credit 
     Union Administration;
       (2) the term ``Board'' means the Board of Directors of the 
     Federal Deposit Insurance Corporation (other than in 
     connection with the National Credit Union Administration 
     Board);
       (3) the term ``Corporation'' means the Federal Deposit 
     Insurance Corporation;
       (4) the term ``designated reserve ratio'' means the reserve 
     ratio designated by the Board under section 7(b)(3) of the 
     Federal Deposit Insurance Act, as amended by this subtitle;
       (5) the terms ``Fund'' and ``Deposit Insurance Fund'' mean 
     the Deposit Insurance Fund established under section 11(a)(4) 
     of the Federal Deposit Insurance Act, as amended by this 
     subtitle;
       (6) the terms ``depository institution'' and ``insured 
     depository institution'' have the same meanings as in section 
     3 of the Federal Deposit Insurance Act; and
       (7) the term ``reserve ratio'' means the ratio of the fund 
     balance of the Deposit Insurance Fund to aggregate estimated 
     insured deposits held in all insured depository institutions.

     SEC. 2003. MERGER OF BIF AND SAIF.

       (a) In General.--
       (1) Merger.--The Bank Insurance Fund and the Savings 
     Association Insurance Fund shall be merged into the Deposit 
     Insurance Fund.
       (2) Disposition of assets and liabilities.--All assets and 
     liabilities of the Bank Insurance Fund and the Savings 
     Association Insurance Fund shall be transferred to the 
     Deposit Insurance Fund.
       (3) No separate existence.--The separate existence of the 
     Bank Insurance Fund and the Savings Association Insurance 
     Fund shall cease on the effective date of the merger thereof 
     under this section.
       (b) Repeal of Outdated Merger Provision.--Section 2704 of 
     the Deposit Insurance Funds Act of 1996 (12 U.S.C. 1821 note) 
     is repealed.

     SEC. 2004. ESTABLISHMENT OF THE DEPOSIT INSURANCE FUND.

       (a) In General.--Section 11(a)(4) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(a)(4)) is amended--
       (1) by redesignating subparagraph (B) as subparagraph (C);
       (2) by striking subparagraph (A) and inserting the 
     following:
       ``(A) Establishment.--There is established the Deposit 
     Insurance Fund, which the Corporation shall--
       ``(i) maintain and administer;
       ``(ii) use to carry out its insurance purposes, in the 
     manner provided by this subsection; and
       ``(iii) invest in accordance with section 13(a).
       ``(B) Uses.--The Deposit Insurance Fund shall be available 
     to the Corporation for use with respect to Deposit Insurance 
     Fund members.'';
       (3) by striking ``(4) General provisions relating to 
     funds.--'' and inserting the following:
       ``(4) Establishment of the deposit insurance fund.--'';
       (4) in subparagraph (C), as redesignated by paragraph (1) 
     of this subsection, by striking ``Bank Insurance Fund and the 
     Savings Association Insurance Fund'' and inserting ``Deposit 
     Insurance Fund''; and
       (5) by adding at the end the following:
       ``(D) Deposits.--All amounts assessed against insured 
     depository institutions by the Corporation shall be deposited 
     in the Deposit Insurance Fund.''.
       (b) Merger-Related Amendments to the Federal Deposit 
     Insurance Act.--
       (1) Definitions.--Section 3(y) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1813(y)) is amended to read as 
     follows:
       ``(y) Definitions Relating to the Deposit Insurance Fund.--
       ``(1) Deposit insurance fund.--The terms `Deposit Insurance 
     Fund' and `Fund' mean the fund established under section 
     11(a)(4).''.
       (2) Assessments.--Section 7 of the Federal Deposit 
     Insurance Act (12 U.S.C. 1817) is amended--
       (A) by striking subsection (l);
       (B) by redesignating subsections (m) and (n) as subsections 
     (l) and (m), respectively; and
       (C) in subsection (b), by striking paragraph (2) and 
     inserting the following:
       ``(2) Assessments.--

[[Page 26710]]

       ``(A) In general.--Each insured depository institution 
     shall pay assessments to the Corporation in such amounts and 
     at such time or times as the Board of Directors may require.
       ``(B) Factors to be considered.--In setting assessments for 
     insured depository institutions, the Board of Directors shall 
     consider--
       ``(i) the estimated operating expenses of the Deposit 
     Insurance Fund;
       ``(ii) the estimated case resolution expenditures and 
     income of the Deposit Insurance Fund;
       ``(iii) the projected effects of assessments on the 
     earnings and capital of insured depository institutions;
       ``(iv) the need to maintain a risk-based assessment system 
     under paragraph (1); and
       ``(v) any other factors that the Board of Directors may 
     determine to be appropriate.
       ``(C) Notice of assessments.--The Corporation shall notify 
     each insured depository institution of assessments charged to 
     that institution.
       ``(D) Newly insured institutions.--To facilitate the 
     administration of this section, the Board of Directors may 
     waive the requirements of subsection (c)(1) and subparagraph 
     (A) of this paragraph for any assessment period in which a 
     depository institution becomes insured.''.
       (3) Repeal of separate funds provisions.--Section 11(a) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1821(a)) is 
     amended--
       (A) by striking paragraphs (5), (6), and (7); and
       (B) by redesignating paragraph (8) as paragraph (5).

     SEC. 2005. TECHNICAL AND CONFORMING AMENDMENTS TO THE FEDERAL 
                   DEPOSIT INSURANCE ACT.

       (a) In General.--The Federal Deposit Insurance Act (12 
     U.S.C. 1811 et seq.) is amended--
       (1) in section 3(a)(1) (12 U.S.C. 1813(a)(1)), by striking 
     subparagraph (B) and inserting the following:
       ``(B) includes any former savings association.'';
       (2) in section 5(b)(5) (12 U.S.C. 1815(b)(5)), by striking 
     ``the Bank Insurance Fund or the Savings Association 
     Insurance Fund;'' and inserting ``the Deposit Insurance 
     Fund,'';
       (3) in section 5(c)(4), by striking ``deposit insurance 
     fund'' and inserting ``Deposit Insurance Fund'';
       (4) in section 5(d) (12 U.S.C. 1815(d)), by striking 
     paragraphs (2) and (3);
       (5) in section 5(d)(1) (12 U.S.C. 1815(d)(1))--
       (A) in subparagraph (A), by striking ``reserve ratios in 
     the Bank Insurance Fund and the Savings Association Insurance 
     Fund as required by section 7'' and inserting ``the reserve 
     ratio of the Deposit Insurance Fund'';
       (B) by striking subparagraph (B) and inserting the 
     following:
       ``(2) Fee credited to the deposit insurance fund.--The fee 
     paid by the depository institution under paragraph (1) shall 
     be credited to the Deposit Insurance Fund.'';
       (C) by striking ``Uninsured institutions.--'' and all that 
     follows through ``general.--'' and inserting ``Uninsured 
     institutions.--''; and
       (D) by redesignating subparagraph (C) as paragraph (3) and 
     moving the margin 2 ems to the left;
       (6) in section 5(e) (12 U.S.C. 1815(e))--
       (A) in paragraph (5)(A), by striking ``Bank Insurance Fund 
     or the Savings Association Insurance Fund'' and inserting 
     ``Deposit Insurance Fund'';
       (B) by striking paragraph (6); and
       (C) by redesignating paragraphs (7), (8), and (9) as 
     paragraphs (6), (7), and (8), respectively;
       (7) in section 6(5) (12 U.S.C. 1816(5)), by striking ``Bank 
     Insurance Fund or the Savings Association Insurance Fund'' 
     and inserting ``Deposit Insurance Fund'';
       (8) in section 7(a)(3) (12 U.S.C. 1817(a)(3))--
       (A) by striking ``in July''; and
       (B) by striking ``in January'';
       (9) in section 7(b) (12 U.S.C. 1817(b))--
       (A) in paragraph (1)--
       (i) in subparagraph (B)(ii), by striking ``institution's 
     semiannual assessment'' and inserting ``assessments for that 
     institution under subsection (b)''; and
       (ii) in subparagraph (C)--

       (I) by striking ``a depository institution's semiannual 
     assessment'' and inserting ``assessments for a depository 
     institution under subsection (b)''; and
       (II) by striking ``deposit insurance fund'' each place that 
     term appears and inserting ``Deposit Insurance Fund'';

       (B) in paragraph (1)(D), by striking ``each deposit 
     insurance fund'' and inserting ``the Deposit Insurance 
     Fund'';
       (C) by striking paragraph (4) and redesignating paragraphs 
     (5) through (7) as paragraphs (4) through (6), respectively;
       (D) in paragraph (5), as so redesignated--
       (i) by striking ``any such assessment'' and inserting ``any 
     such assessment is necessary'';
       (ii) by striking subparagraph (B);
       (iii) in subparagraph (A)--

       (I) by striking ``(A) is necessary--'';
       (II) by striking ``Bank Insurance Fund members'' and 
     inserting ``insured depository institutions''; and
       (III) by redesignating clauses (i), (ii), and (iii) as 
     subparagraphs (A), (B), and (C), respectively, and moving the 
     margins 2 ems to the left; and

       (iv) in subparagraph (C) (as redesignated)--

       (I) by inserting ``that'' before ``the Corporation''; and
       (II) by striking ``; and'' and inserting a period; and

       (E) in paragraph (6), as so redesignated, by striking 
     ``semiannual assessment'' and inserting ``assessment under 
     subsection (b)'';
       (10) in section 7(c) (12 U.S.C. 1817(c))--
       (A) in paragraph (1), by striking ``institution's 
     semiannual assessment'' and inserting ``assessments for that 
     institution under subsection (b)'';
       (B) by striking paragraphs (2) and (3); and
       (C) by redesignating paragraph (4) as paragraph (2);
       (11) in section 7(j)(7)(F) (12 U.S.C. 1817(j)(7)(F)), by 
     striking ``Bank Insurance Fund or the Savings Association 
     Insurance Fund'' and inserting ``Deposit Insurance Fund'';
       (12) in section 8 (12 U.S.C. 1818)--
       (A) in subsection (p), by striking ``semiannual'';
       (B) in subsection (q), by striking ``semiannual'' and 
     inserting ``assessment''; and
       (C) in subsection (t)(2)(C), by striking ``deposit 
     insurance fund'' and inserting ``Deposit Insurance Fund'';
       (13) in section 11 (12 U.S.C. 1821), by striking ``deposit 
     insurance fund'' each place that term appears and inserting 
     ``Deposit Insurance Fund'';
       (14) in section 11(f)(1) (12 U.S.C. 1821(f)(1)), by 
     striking ``, except that--'' and all that follows through the 
     end of the paragraph and inserting a period;
       (15) in section 11(i)(3) (12 U.S.C. 1821(i)(3))--
       (A) by striking subparagraph (B);
       (B) by redesignating subparagraph (C) as subparagraph (B); 
     and
       (C) in subparagraph (B) (as redesignated), by striking 
     ``subparagraphs (A) and (B)'' and inserting ``subparagraph 
     (A)'';
       (16) in section 11(p)(2)(B) (12 U.S.C. 1821(p)(2)(B)), by 
     striking ``institution, any'' and inserting ``institution, 
     the'';
       (17) in section 12(f)(4)(E)(iv) (12 U.S.C. 
     1822(f)(4)(E)(iv)), by striking ``Federal deposit insurance 
     funds'' and inserting ``the Deposit Insurance Fund, or any 
     predecessor deposit insurance fund'';
       (18) in section 13 (12 U.S.C. 1823)--
       (A) by striking ``deposit insurance fund'' each place that 
     term appears and inserting ``Deposit Insurance Fund'';
       (B) in subsection (a)(1), by striking ``Bank Insurance 
     Fund, the Savings Association Insurance Fund,'' and inserting 
     ``Deposit Insurance Fund'';
       (C) in subsection (c)(4)(E)--
       (i) in the subparagraph heading, by striking ``funds'' and 
     inserting ``fund''; and
       (ii) in clause (i), by striking ``any insurance fund'' and 
     inserting ``the Deposit Insurance Fund'';
       (D) in subsection (c)(4)(G)(ii)--
       (i) by striking ``appropriate insurance fund'' and 
     inserting ``Deposit Insurance Fund'';
       (ii) by striking ``the members of the insurance fund (of 
     which such institution is a member)'' and inserting ``insured 
     depository institutions'';
       (iii) by striking ``each member's'' and inserting ``each 
     insured depository institution's'';
       (iv) by striking ``the member's'' each place that term 
     appears and inserting ``the institution's''; and
       (v) in subclause (II), by striking ``semiannual'' and 
     inserting ``applicable assessment'';
       (E) in subsection (c), by striking paragraph (11);
       (F) in subsection (h), by striking ``Bank Insurance Fund'' 
     and inserting ``Deposit Insurance Fund'';
       (G) in subsection (k)(4)(B)(i), by striking ``Savings 
     Association Insurance Fund member'' and inserting ``savings 
     association''; and
       (H) in subsection (k)(5)--
       (i) in subparagraph (A), by striking ``Savings Association 
     Insurance Fund members'' and inserting ``savings 
     associations'';
       (ii) by striking ``member's'' each place that term appears 
     and inserting ``savings association's''; and
       (iii) by striking ``member'' each place that term appears 
     and inserting ``savings association'';
       (19) in section 14(a) (12 U.S.C. 1824(a)), in the 5th 
     sentence--
       (A) by striking ``Bank Insurance Fund or the Savings 
     Association Insurance Fund'' and inserting ``Deposit 
     Insurance Fund''; and
       (B) by striking ``each such fund'' and inserting ``the 
     Deposit Insurance Fund'';
       (20) in section 14(b) (12 U.S.C. 1824(b)), by striking 
     ``Bank Insurance Fund or Savings Association Insurance Fund'' 
     and inserting ``Deposit Insurance Fund'';
       (21) in section 14(c) (12 U.S.C. 1824(c))--
       (A) in paragraph (2)(A), by striking ``(7)'' and inserting 
     ``(6)''; and
       (B) by striking paragraph (3);
       (22) in section 14(d) (12 U.S.C. 1824(d))--
       (A) by striking ``Bank Insurance Fund member'' each place 
     that term appears and inserting ``insured depository 
     institution'';
       (B) by striking ``Bank Insurance Fund members'' each place 
     that term appears and inserting ``insured depository 
     institutions'';

[[Page 26711]]

       (C) by striking ``Bank Insurance Fund'' each place that 
     term appears (other than in connection with a reference to a 
     Bank Insurance Fund member or members) and inserting 
     ``Deposit Insurance Fund'';
       (D) by striking the subsection heading and inserting the 
     following:
       ``(d) Borrowing for the Deposit Insurance Fund From Insured 
     Depository Institutions.--'';
       (E) in paragraph (3), in the paragraph heading, by striking 
     ``bif'' and inserting ``the deposit insurance fund''; and
       (F) in paragraph (5), in the paragraph heading, by striking 
     ``bif members'' and inserting ``insured depository 
     institutions'';
       (23) in section 14 (12 U.S.C. 1824), by adding at the end 
     the following:
       ``(e) Borrowing for the Deposit Insurance Fund From Federal 
     Home Loan Banks.--
       ``(1) In general.--The Corporation may borrow from the 
     Federal home loan banks, with the concurrence of the Federal 
     Housing Finance Board, such funds as the Corporation 
     considers necessary for the use of the Deposit Insurance 
     Fund.
       ``(2) Terms and conditions.--Any loan from any Federal home 
     loan bank under paragraph (1) to the Deposit Insurance Fund 
     shall--
       ``(A) bear a rate of interest of not less than the current 
     marginal cost of funds to that bank, taking into account the 
     maturities involved;
       ``(B) be adequately secured, as determined by the Federal 
     Housing Finance Board; and
       ``(C) be a direct liability of the Deposit Insurance 
     Fund.'';
       (24) in section 15(c)(5) (12 U.S.C. 1825(c)(5))--
       (A) by striking ``the Bank Insurance Fund or Savings 
     Association Insurance Fund, respectively'' each place that 
     term appears and inserting ``the Deposit Insurance Fund''; 
     and
       (B) in subparagraph (B), by striking ``the Bank Insurance 
     Fund or the Savings Association Insurance Fund, 
     respectively'' and inserting ``the Deposit Insurance Fund'';
       (25) in section 17(a) (12 U.S.C. 1827(a))--
       (A) in the subsection heading, by striking ``BIF, SAIF,'' 
     and inserting ``the Deposit Insurance Fund''; and
       (B) in paragraph (1)--
       (i) by striking ``the Bank Insurance Fund, the Savings 
     Association Insurance Fund,'' each place that term appears 
     and inserting ``the Deposit Insurance Fund''; and
       (ii) in subparagraph (D), by striking ``each insurance 
     fund'' and inserting ``the Fund'';
       (26) in section 17(d) (12 U.S.C. 1827(d)), by striking ``, 
     the Bank Insurance Fund, the Savings Association Insurance 
     Fund,'' each place that term appears and inserting ``the 
     Deposit Insurance Fund'';
       (27) in section 18(m) (12 U.S.C. 1828(m))--
       (A) in paragraph (2), in the matter preceding subparagraph 
     (A), by striking the colon and inserting a dash;
       (B) in paragraph (3)(A)--
       (i) by striking ``poses a serious threat to the Savings 
     Association Insurance Fund'' and inserting ``of an insured 
     savings association poses a serious threat to the Deposit 
     Insurance Fund''; and
       (ii) by striking ``Savings Association Insurance Fund 
     member'' and inserting ``insured savings association''; and
       (C) in paragraph (3)(C), by striking ``Savings Association 
     Insurance Fund or the Bank Insurance Fund'' and inserting 
     ``Deposit Insurance Fund'';
       (28) in section 18(o) (12 U.S.C. 1828(o)), by striking 
     ``deposit insurance funds'' and ``deposit insurance fund'' 
     each place those terms appear and inserting ``Deposit 
     Insurance Fund'';
       (29) in section 18(p) (12 U.S.C. 1828(p)), by striking 
     ``deposit insurance funds'' and inserting ``Deposit Insurance 
     Fund'';
       (30) in section 24 (12 U.S.C. 1831a)--
       (A) in subsections (a)(1) and (d)(1)(A), by striking 
     ``appropriate deposit insurance fund'' each place that term 
     appears and inserting ``Deposit Insurance Fund'';
       (B) in subsection (e)(2)(A), by striking ``risk to'' and 
     all that follows through the period and inserting ``risk to 
     the Deposit Insurance Fund.''; and
       (C) in subsections (e)(2)(B)(ii) and (f)(6)(B), by striking 
     ``the insurance fund of which such bank is a member'' each 
     place that term appears and inserting ``the Deposit Insurance 
     Fund'';
       (31) in section 28 (12 U.S.C. 1831e), by striking 
     ``affected deposit insurance fund'' each place that term 
     appears and inserting ``Deposit Insurance Fund'';
       (32) by striking section 31 (12 U.S.C. 1831h);
       (33) in section 36(i)(3) (12 U.S.C. 1831m(i)(3)), by 
     striking ``affected deposit insurance fund'' and inserting 
     ``Deposit Insurance Fund'';
       (34) in section 37(a)(1)(C) (12 U.S.C. 1831n(a)(1)(C)), by 
     striking ``insurance funds'' and inserting ``Deposit 
     Insurance Fund'';
       (35) in section 38 (12 U.S.C. 1831o), by striking ``the 
     deposit insurance fund'' each place that term appears and 
     inserting ``the Deposit Insurance Fund'';
       (36) in section 38(a) (12 U.S.C. 1831o(a)), in the 
     subsection heading, by striking ``Funds'' and inserting 
     ``Fund'';
       (37) in section 38(k) (12 U.S.C. 1831o(k))--
       (A) in paragraph (1), by striking ``a deposit insurance 
     fund'' and inserting ``the Deposit Insurance Fund'';
       (B) in paragraph (2), by striking ``A deposit insurance 
     fund'' and inserting ``The Deposit Insurance Fund''; and
       (C) in paragraphs (2)(A) and (3)(B), by striking ``the 
     deposit insurance fund's outlays'' each place that term 
     appears and inserting ``the outlays of the Deposit Insurance 
     Fund''; and
       (38) in section 38(o) (12 U.S.C. 1831o(o))--
       (A) by striking ``Associations.--'' and all that follows 
     through ``Subsections (e)(2)'' in paragraph (2) and inserting 
     ``Associations.--Subsections (e)(2)'';
       (B) by redesignating subparagraphs (A), (B), and (C) as 
     paragraphs (1), (2), and (3), respectively, and moving the 
     margins 2 ems to the left; and
       (C) in paragraph (1) (as so redesignated), by redesignating 
     clauses (i) and (ii) as subparagraphs (A) and (B), 
     respectively, and moving the margins 2 ems to the left.
       (b) Conforming Transfer of Funds.--Any funds resulting from 
     the application of section 7(d)(2) of the Federal Deposit 
     Insurance Act prior to its repeal under subsection (a)(4) of 
     this section shall be deposited into the general fund of the 
     Deposit Insurance Fund established pursuant to this subtitle.

     SEC. 2006. OTHER TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Section 5136 of the Revised Statutes.--The paragraph 
     designated the ``Eleventh'' of section 5136 of the Revised 
     Statutes of the United States (12 U.S.C. 24) is amended in 
     the 5th sentence, by striking ``affected deposit insurance 
     fund'' and inserting ``Deposit Insurance Fund''.
       (b) Investments Promoting Public Welfare; Limitations on 
     Aggregate Investments.--The 23d undesignated paragraph of 
     section 9 of the Federal Reserve Act (12 U.S.C. 338a) is 
     amended in the 4th sentence, by striking ``affected deposit 
     insurance fund'' and inserting ``Deposit Insurance Fund''.
       (c) Advances to Critically Undercapitalized Depository 
     Institutions.--Section 10B(b)(3)(A)(ii) of the Federal 
     Reserve Act (12 U.S.C. 347b(b)(3)(A)(ii)) is amended by 
     striking ``any deposit insurance fund in'' and inserting 
     ``the Deposit Insurance Fund of''.
       (d) Amendments to the Federal Home Loan Bank Act.--The 
     Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is 
     amended--
       (1) in section 11(k) (12 U.S.C. 1431(k))--
       (A) in the subsection heading, by striking ``SAIF'' and 
     inserting ``the Deposit Insurance Fund''; and
       (B) by striking ``Savings Association Insurance Fund'' each 
     place that term appears and inserting ``Deposit Insurance 
     Fund'';
       (2) in section 21 (12 U.S.C. 1441)--
       (A) in subsection (f)(2), by striking ``, except that'' and 
     all that follows through the end of the paragraph and 
     inserting a period; and
       (B) in subsection (k), by striking paragraph (4);
       (3) in section 21A(b)(4)(B) (12 U.S.C. 1441a(b)(4)(B)), by 
     striking ``affected deposit insurance fund'' and inserting 
     ``Deposit Insurance Fund''; and
       (4) in section 21B(k) (12 U.S.C. 1441b(k)) by inserting 
     before the colon ``, the following definitions shall apply''.
       (e) Amendments to the Home Owners' Loan Act.--The Home 
     Owners' Loan Act (12 U.S.C. 1461 et seq.) is amended--
       (1) in section 5 (12 U.S.C. 1464)--
       (A) in subsection (c)(6), by striking ``As used in this 
     subsection--'' and inserting ``For purposes of this 
     subsection, the following definitions shall apply:'';
       (B) in subsection (o)(1), by striking ``that is a Bank 
     Insurance Fund member'';
       (C) in subsection (o)(2)(A), by striking ``a Bank Insurance 
     Fund member until such time as it changes its status to a 
     Savings Association Insurance Fund member'' and inserting 
     ``insured by the Deposit Insurance Fund'';
       (D) in subsection (t)(5)(D)(iii)(II), by striking 
     ``affected deposit insurance fund'' and inserting ``Deposit 
     Insurance Fund'';
       (E) in subsection (t)(7)(C)(i)(I), by striking ``affected 
     deposit insurance fund'' and inserting ``Deposit Insurance 
     Fund''; and
       (F) in subsection (v)(2)(A)(i), by striking ``the Savings 
     Association Insurance Fund'' and inserting ``or the Deposit 
     Insurance Fund''; and
       (2) in section 10 (12 U.S.C. 1467a)--
       (A) in subsection (c)(6)(D), by striking ``this title'' and 
     inserting ``this Act'';
       (B) in subsection (e)(1)(B), by striking ``Savings 
     Association Insurance Fund or Bank Insurance Fund'' and 
     inserting ``Deposit Insurance Fund'';
       (C) in subsection (e)(2), by striking ``Savings Association 
     Insurance Fund or the Bank Insurance Fund'' and inserting 
     ``Deposit Insurance Fund'';
       (D) in subsection (e)(4)(B), by striking ``subsection (1)'' 
     and inserting ``subsection (l)'';
       (E) in subsection (g)(3)(A), by striking ``(5) of this 
     section'' and inserting ``(5) of this subsection'';
       (F) in subsection (i), by redesignating paragraph (5) as 
     paragraph (4);
       (G) in subsection (m)(3), by striking subparagraph (E), and 
     by redesignating subparagraphs (F), (G), and (H) as 
     subparagraphs (E), (F), and (G), respectively;

[[Page 26712]]

       (H) in subsection (m)(7)(A), by striking ``during period'' 
     and inserting ``during the period''; and
       (I) in subsection (o)(3)(D), by striking ``sections 5(s) 
     and (t) of this Act'' and inserting ``subsections (s) and (t) 
     of section 5''.
       (f) Amendments to the National Housing Act.--The National 
     Housing Act (12 U.S.C. 1701 et seq.) is amended--
       (1) in section 317(b)(1)(B) (12 U.S.C. 1723i(b)(1)(B)), by 
     striking ``Bank Insurance Fund for banks or through the 
     Savings Association Insurance Fund for savings associations'' 
     and inserting ``Deposit Insurance Fund''; and
       (2) in section 536(b)(1)(B)(ii) (12 U.S.C. 1735f-
     14(b)(1)(B)(ii)), by striking ``Bank Insurance Fund for banks 
     and through the Savings Association Insurance Fund for 
     savings associations'' and inserting ``Deposit Insurance 
     Fund''.
       (g) Amendments to the Financial Institutions Reform, 
     Recovery, and Enforcement Act of 1989.--The Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 1811 note) is amended--
       (1) in section 951(b)(3)(B) (12 U.S.C. 1833a(b)(3)(B)), by 
     striking ``Bank Insurance Fund, the Savings Association 
     Insurance Fund,'' and inserting ``Deposit Insurance Fund (or 
     any predecessor deposit insurance fund)''; and
       (2) in section 1112(c)(1)(B) (12 U.S.C. 3341(c)(1)(B)), by 
     striking ``Bank Insurance Fund, the Savings Association 
     Insurance Fund,'' and inserting ``Deposit Insurance Fund''.
       (h) Amendment to the Bank Holding Company Act of 1956.--The 
     Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is 
     amended--
       (1) in section 2(j)(2) (12 U.S.C. 1841(j)(2)), by striking 
     ``Savings Association Insurance Fund'' and inserting 
     ``Deposit Insurance Fund''; and
       (2) in section 3(d)(1)(D)(iii) (12 U.S.C. 
     1842(d)(1)(D)(iii)), by striking ``appropriate deposit 
     insurance fund'' and inserting ``Deposit Insurance Fund''.
       (i) Amendments to the Gramm-Leach-Bliley Act.--Section 114 
     of the Gramm-Leach-Bliley Act (12 U.S.C. 1828a) is amended in 
     each of subsection (a)(1)(B), paragraphs (2)(B) and (4)(B) of 
     subsection (b), and subsection (c)(1)(B), by striking ``any 
     Federal deposit insurance fund'' and inserting ``the Deposit 
     Insurance Fund''.

     SEC. 2007. EFFECTIVE DATE.

       (a) In General.--Except as otherwise provided in this 
     subtitle, this subtitle and the amendments made by this 
     subtitle shall become effective not later than the first day 
     of the first calendar quarter that begins more than 90 days 
     after the date of enactment of this Act.
       (b) Earlier Implementation.--
       (1) Corporation determination.--If the Corporation 
     determines that merger of the deposit insurance funds should 
     occur before the first day of the first calendar quarter as 
     described in subsection (a), the Corporation shall--
       (A) announce such determination publicly; and
       (B) establish the effective date of the merger.
       (2) Earlier effective date.--On the date established under 
     paragraph (1)(B), this subtitle and the amendments made by 
     this subtitle shall become effective.

      Subtitle B--Deposit Insurance Modernization and Improvement

     SEC. 2011. SHORT TITLE.

       This subtitle may be cited as the ``Deposit Insurance 
     Reform Act of 2005''.

     SEC. 2012. CHANGES TO FEDERAL DEPOSIT INSURANCE COVERAGE.

       (a) Insured Depository Institutions.--
       (1) In general.--Section 11(a)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(a)(1)) is amended--
       (A) by striking subparagraph (B) and inserting the 
     following:
       ``(B) Net amount of insured deposits.--The net amount of 
     deposit insurance payable to any depositor at an insured 
     depository institution shall not exceed the standard maximum 
     deposit insurance amount, as determined in accordance with 
     subparagraphs (C) through (M).''; and
       (B) by striking subparagraph (D) and inserting the 
     following:
       ``(D) Coverage for certain employee benefit plan 
     deposits.--
       ``(i) Pass-through insurance.--The Corporation shall 
     provide pass-through deposit insurance for the deposits of 
     any employee benefit plan.
       ``(ii) Prohibition on acceptance of benefit plan 
     deposits.--An insured depository institution that is not well 
     capitalized or adequately capitalized may not accept employee 
     benefit plan deposits.
       ``(iii) Definitions.--For purposes of this subparagraph, 
     the following definitions shall apply:

       ``(I) Capital standards.--The terms `well capitalized' and 
     `adequately capitalized' have the same meanings as in section 
     38.
       ``(II) Employee benefit plan.--The term `employee benefit 
     plan' has the same meaning as in paragraph (5)(B)(ii), and 
     includes any eligible deferred compensation plan described in 
     section 457 of the Internal Revenue Code of 1986.
       ``(III) Pass-through deposit insurance.--The term `pass-
     through deposit insurance' means, with respect to an employee 
     benefit plan, deposit insurance coverage based on the 
     interest of each participant, in accordance with regulations 
     issued by the Corporation.

       ``(E) Standard maximum deposit insurance amount defined.--
     For purposes of this paragraph, the term `standard maximum 
     deposit insurance amount' means, until April 1, 2010, 
     $100,000.
       ``(F) Determination regarding inflation adjustments.--
       ``(i) Adjustments to standard maximum deposit insurance 
     amount.--Not later than April 1, 2010, and the first day of 
     each 5-year period thereafter, the Board of Directors shall 
     determine whether to increase the standard maximum deposit 
     insurance amount based on the factors set forth under 
     subparagraph (G).
       ``(ii) Adjustments for certain retirement accounts.--Not 
     later than April 1, 2010, and the first day of each 5-year 
     period thereafter, the Board of Directors shall determine 
     whether to increase the amount of insurance available for 
     retirement accounts under paragraph (3), based on the factors 
     set forth under subparagraph (G).
       ``(G) Inflation adjustment considerations.--In making any 
     determination under subparagraph (F), the Board of Directors 
     shall consider--
       ``(i) the economic conditions affecting insured depository 
     institutions;
       ``(ii) the overall risk or risks to the Deposit Insurance 
     Fund;
       ``(iii) a demonstrated need by depositors for the inflation 
     adjustment increase;
       ``(iv) the ability of insured depository institutions to 
     identify and obtain alternative funding sources;
       ``(v) the ability of insured depository institutions to 
     meet the credit needs of their communities;
       ``(vi) potential problems affecting insured depository 
     institutions generally or a specific group or type of insured 
     depository institutions; and
       ``(vii) any other factors that the Board of Directors deems 
     appropriate.
       ``(H) Inflation adjustment calculations for 2010.--
       ``(i) Calculation for standard maximum deposit insurance 
     amount.--The amount provided for any increase in the standard 
     maximum deposit insurance amount shall be, as of April 1, 
     2010, the product of--

       ``(I) $100,000; and
       ``(II) the ratio of the value of the Personal Consumption 
     Expenditures Chain-Type Index (or any successor index 
     thereto), published by the Department of Commerce, for 
     December 31 of the year preceding the year in which the 
     adjustment is calculated under this subparagraph, to the 
     value of such index for December 31 of the year preceding the 
     effective date of the Safe and Fair Deposit Insurance Act of 
     2005.

       ``(ii) Calculation for certain retirement accounts for 
     2010.--The amount provided for any increase in the insurance 
     for retirement accounts under paragraph (3) shall be, as of 
     April 1, 2010, the product of--

       ``(I) $250,000; and
       ``(II) the ratio of the value of the Personal Consumption 
     Expenditures Chain-Type Index (or any successor index 
     thereto), published by the Department of Commerce, for 
     December 31 of the year preceding the year in which the 
     adjustment is calculated under this subparagraph, to the 
     value of such index for December 31 of the year preceding the 
     effective date of the Safe and Fair Deposit Insurance Act of 
     2005.

       ``(I) Inflation adjustment calculations after 2010.--
       ``(i) Calculation for the standard maximum deposit 
     insurance amount.--The amount provided for any increase in 
     the standard maximum deposit insurance amount shall be, as of 
     the 1st day of each 5-year period beginning on April 1, 2015, 
     the product of--

       ``(I) the standard maximum deposit insurance amount; and
       ``(II) the ratio of the value of the Personal Consumption 
     Expenditures Chain-Type Index (or any successor index 
     thereto), published by the Department of Commerce, for 
     December 31 of the year preceding the year in which the 
     adjustment is calculated under this subparagraph, to the 
     value of such index for December 31 of the 6 years prior to 
     the year in which the adjustment is calculated under this 
     subparagraph.

       ``(ii) Calculation for certain retirement accounts.--The 
     amount provided for any increase in the insurance for 
     retirement accounts under paragraph (3) shall be, as of the 
     1st day of each 5-year period beginning on April 1, 2015, the 
     product of--

       ``(I) the amount available for retirement accounts under 
     paragraph (3), as adjusted pursuant to subparagraph (H) or 
     this subparagraph, as appropriate; and
       ``(II) the ratio of the value of the Personal Consumption 
     Expenditures Chain-Type Index (or any successor index 
     thereto), published by the Department of Commerce, for 
     December 31 of the year preceding the year in which the 
     adjustment is calculated under this subparagraph, to the 
     value of such index for December 31 of the 6 years prior to 
     the year in which the adjustment is calculated under this 
     subparagraph.

[[Page 26713]]

       ``(J) Determination of no inflation increases.--If the 
     Board cannot support an increase under subparagraph (F) after 
     consideration of the factors in subparagraph (G), no 
     inflation adjustment shall be made until reconsideration at 
     the beginning of the next 5-year period.
       ``(K) Rounding.--If the amount of increase determined for 
     any period is not a multiple of $10,000, the amount so 
     determined shall be rounded to the nearest $10,000.
       ``(L) Publication.--Not later than April 1, 2010, and not 
     later than the first day of each 5-year period thereafter, 
     the Board of Directors shall publish in the Federal Register 
     the standard maximum deposit insurance amount and the amount 
     of deposit insurance coverage that may be due to any 
     depositor at any insured depository institution during the 
     applicable 5-year period.
       ``(M) No inflation adjustments for public funds.--
     Subparagraphs (E) through (L) shall not apply to any deposits 
     of depositors described in paragraph (2), and the net amount 
     due to any such depositor at an insured depository 
     institution shall not exceed $100,000.''.
       (2) Deposit insurance for retirement accounts.--Section 
     11(a)(3)(A) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(a)(3)(A)) is amended--
       (A) by striking ``$100,000'' and inserting ``$250,000''; 
     and
       (B) by inserting before the period at the end the 
     following: ``which amount shall be subject to inflation 
     adjustments as provided in paragraph (1).''.
       (3) Technical and conforming amendment relating to 
     insurance of trust funds.--Section 7(i) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1817(i)) is amended in each 
     of paragraphs (1) and (3), by striking ``$100,000'' each 
     place it appears and inserting ``the standard maximum deposit 
     insurance amount (as determined under section 11(a)(1))''.
       (4) Other technical and conforming amendments.--The Federal 
     Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended--
       (A) in section 11(m)(6) (12 U.S.C. 1821(m)(6)), by striking 
     ``$100,000'' and inserting ``the standard maximum deposit 
     insurance amount (as determined under subsection (a)(1))'';
       (B) in section 18 (12 U.S.C. 1828), by striking subsection 
     (a) and inserting the following:
       ``(a) Insurance Logo.--
       ``(1) Insured depository institutions.--
       ``(A) In general.--Each insured depository institution 
     shall display at each place of business maintained by that 
     institution a sign or signs relating to the insurance of the 
     deposits of the institution, in accordance with regulations 
     to be prescribed by the Corporation.
       ``(B) Statement to be included.--Each sign required under 
     subparagraph (A) shall include a statement that insured 
     deposits are backed by the full faith and credit of the 
     United States Government.
       ``(2) Regulations.--The Corporation shall prescribe 
     regulations to carry out this subsection, including 
     regulations governing the substance of signs required by 
     paragraph (1) and the manner of display or use of such signs.
       ``(3) Penalties.--For each day that an insured depository 
     institution continues to violate this subsection or any 
     regulation issued under this subsection, it shall be subject 
     to a penalty of not more than $100, which the Corporation may 
     recover for its use.''; and
       (C) in section 43(d) (12 U.S.C. 1831t(d)), by striking 
     ``$100,000'' and inserting ``the standard maximum deposit 
     insurance amount (as determined under section 11(a)(1))''.
       (b) Insured Credit Unions.--
       (1) In general.--Section 207(k) of the Federal Credit Union 
     Act (12 U.S.C. 1787(k)) is amended--
       (A) by striking ``(k)(1)'' and all that follows through the 
     end of paragraph (1) and inserting the following:
       ``(k) Insured Amounts Payable.--
       ``(1) Net insured amount.--
       ``(A) In general.--Subject to the provisions of paragraph 
     (2), the net amount of share insurance payable to any member 
     at an insured credit union shall not exceed the total amount 
     of the shares or deposits in the name of the member (after 
     deducting offsets), less any part thereof which is in excess 
     of the standard maximum share insurance amount, as determined 
     in accordance with this paragraph and paragraphs (5) and (6), 
     and consistent with actions taken by the Federal Deposit 
     Insurance Corporation under section 11(a) of the Federal 
     Deposit Insurance Act.
       ``(B) Aggregation.--Determination of the net amount of 
     share insurance under subparagraph (A), shall be in 
     accordance with such regulations as the Board may prescribe, 
     and, in determining the amount payable to any member, there 
     shall be added together all accounts in the credit union 
     maintained by that member for that member's own benefit, 
     either in the member's own name or in the names of others.
       ``(C) Authority to define the extent of coverage.--The 
     Board may define, with such classifications and exceptions as 
     it may prescribe, the extent of the share insurance coverage 
     provided for member accounts, including member accounts in 
     the name of a minor, in trust, or in joint tenancy.'';
       (B) by adding at the end the following:
       ``(4) Coverage for certain employee benefit plan 
     deposits.--
       ``(A) Pass-through insurance.--The Administration shall 
     provide pass-through share insurance for the deposits or 
     shares of any employee benefit plan, subject to subparagraph 
     (B).
       ``(B) Prohibition on acceptance of deposits.--An insured 
     credit union that is not well capitalized or adequately 
     capitalized may not accept employee benefit plan deposits.
       ``(C) Definitions.--For purposes of this paragraph, the 
     following definitions shall apply:
       ``(i) Capital standards.--The terms `well capitalized' and 
     `adequately capitalized' have the same meanings as in section 
     216(c), as added by section 301 of the Credit Union 
     Membership Access Act (Public Law 105-219, 112 Stat. 931).
       ``(ii) Employee benefit plan.--The term `employee benefit 
     plan'--

       ``(I) has the same meaning as in section 3(3) of the 
     Employee Retirement Income Security Act of 1974;
       ``(II) includes any plan described in section 401(d) of the 
     Internal Revenue Code of 1986; and
       ``(III) includes any eligible deferred compensation plan 
     described in section 457 of the Internal Revenue Code of 
     1986.

       ``(iii) Pass-through share insurance.--The term `pass-
     through share insurance' means, with respect to an employee 
     benefit plan, insurance coverage based on the interest of 
     each participant, in accordance with regulations issued by 
     the Corporation.
       ``(5) Standard maximum share insurance amount defined.--For 
     purposes of this subsection, the term `standard maximum share 
     insurance amount' means, until April 1, 2010, $100,000.
       ``(6) Determinations regarding inflation adjustments.--
       ``(A) Adjustments to standard maximum share insurance 
     amount.--Not later than April 1, 2010, and the first day of 
     each 5-year period thereafter, the Board shall determine 
     whether to increase the standard maximum share insurance 
     amount based on the factors set forth under paragraph (7).
       ``(B) Adjustment for certain retirement accounts.--Not 
     later than April 1, 2010, and the first day of each 5-year 
     period thereafter, the Board shall determine whether to 
     increase the amount of insurance available for retirement 
     accounts under paragraph (3), based on the factors set forth 
     under paragraph (7).
       ``(7) Inflation adjustment considerations.--In making any 
     determination under paragraph (6), the Board shall consider--
       ``(A) the economic conditions affecting insured credit 
     unions;
       ``(B) the overall risk or risks to the National Credit 
     Union Share Insurance Fund;
       ``(C) a demonstrated need by members for the inflation 
     adjustment increase;
       ``(D) the ability of insured credit unions to identify and 
     obtain alternative funding sources;
       ``(E) the ability of insured credit unions to meet the 
     credit needs of their communities;
       ``(F) potential problems affecting insured credit unions 
     generally or a specific group or type of insured credit 
     unions; and
       ``(G) any other factors that the Board deems appropriate.
       ``(8) Inflation adjustment calculations for 2010.--
       ``(A) Calculation for standard maximum share insurance 
     amount.--The amount provided for any increase in the standard 
     maximum share insurance amount shall be, as of April 1, 2010, 
     the product of--
       ``(i) $100,000; and
       ``(ii) the ratio of the value of the Personal Consumption 
     Expenditures Chain-Type Index (or any successor index 
     thereto), published by the Department of Commerce, for 
     December 31 of the year preceding the year in which the 
     adjustment is calculated under this paragraph, to the value 
     of such index for December 31 of the year preceding the 
     effective date of the Safe and Fair Deposit Insurance Act of 
     2005.
       ``(B) Calculation for certain retirement accounts for 
     2010.--The amount provided for any increase in the insurance 
     for retirement accounts under paragraph (3) shall be, as of 
     April 1, 2010, the product of--
       ``(i) $250,000; and
       ``(ii) the ratio of the value of the Personal Consumption 
     Expenditures Chain-Type Index (or any successor index 
     thereto), published by the Department of Commerce, for 
     December 31 of the year preceding the year in which the 
     adjustment is calculated under this paragraph, to the value 
     of such index for December 31 of the year preceding the 
     effective date of the Safe and Fair Deposit Insurance Act of 
     2005.
       ``(9) Inflation adjustment calculations after 2010.--
       ``(A) Calculation for the standard maximum share insurance 
     amount.--The amount provided for any increase in the standard 
     maximum share insurance amount shall be, as of the 1st day of 
     each 5-year period beginning on April 1, 2015, the product 
     of--
       ``(i) the standard maximum share insurance amount; and

[[Page 26714]]

       ``(ii) the ratio of the value of the Personal Consumption 
     Expenditures Chain-Type Index (or any successor index 
     thereto), published by the Department of Commerce, for 
     December 31 of the year preceding the year in which the 
     adjustment is calculated under this paragraph, to the value 
     of such index for December 31 of the 6 years prior to the 
     year in which the adjustment is calculated under this 
     paragraph.
       ``(B) Calculation for certain retirement accounts.--The 
     amount provided for any increase in the insurance for 
     retirement accounts under paragraph (3) shall be, as of the 
     1st day of each 5-year period beginning on April 1, 2015, the 
     product of--
       ``(i) the amount available for retirement accounts under 
     paragraph (3), as adjusted pursuant to paragraph (8) or this 
     paragraph, as appropriate; and
       ``(ii) the ratio of the value of the Personal Consumption 
     Expenditures Chain-Type Index (or any successor index 
     thereto), published by the Department of Commerce, for 
     December 31 of the year preceding the year in which the 
     adjustment is calculated under this paragraph, to the value 
     of such index for December 31 of the 6 years prior to the 
     year in which the adjustment is calculated under this 
     paragraph.
       ``(10) Determination of no inflation increase.--If the 
     Board cannot support an increase under paragraph (6) after 
     consideration of the factors in paragraph (7), no inflation 
     adjustment shall be made until reconsideration at the 
     beginning of the next 5-year period.
       ``(11) Rounding.--If the amount of increase determined for 
     any period is not a multiple of $10,000, the amount so 
     determined shall be rounded to the nearest $10,000.
       ``(12) Publication.--Not later than April 1, 2010, and not 
     later than the first day of each 5-year period thereafter, 
     the Board shall publish in the Federal Register the standard 
     maximum share insurance amount and the amount of share 
     insurance coverage that may be due to any depositor at any 
     insured credit union during the applicable 5-year period.
       ``(13) No inflation adjustments for public funds.--
     Paragraphs (5) through (12) shall not apply to any deposits 
     of depositors described in paragraph (2), and the net amount 
     due to any such depositor at an insured credit union shall 
     not exceed $100,000.''; and
       (C) in paragraph (3), by striking ``$100,000 per account'' 
     and inserting the following: ``$250,000 per account, which 
     amount shall be subject to inflation adjustments as provided 
     in paragraphs (6) through (12).''.
       (2) Technical amendment.--Section 202(h) of the Federal 
     Credit Union Act (12 U.S.C. 1782(h)) is amended by striking 
     ``207(c)(1)'' and inserting ``207(k)''.
       (c) Effective Date.--Except as otherwise specifically 
     provided in this section or the amendments made by this 
     section, this section and such amendments shall become 
     effective on the effective date of the regulations required 
     under section 2017(a)(2), relating to the implementation of 
     deposit insurance changes under this section.

     SEC. 2013. DESIGNATED RESERVE RATIO.

       (a) Repeal of Recapitalization Schedule.--
       (1) In general.--Section 7(b)(3) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1817(b)(3)) is amended to read as 
     follows:
       ``(3) Designated reserve ratio.--
       ``(A) Action by the board.--
       ``(i) In general.--Before the beginning of each calendar 
     year, the Board of Directors shall, subject to clause (ii)--

       ``(I) designate the reserve ratio applicable to the Deposit 
     Insurance Fund for that year; and
       ``(II) publish the reserve ratio so designated.

       ``(ii) Rulemaking.--Any change to the designated reserve 
     ratio for any calendar year shall be made pursuant to section 
     553 of title 5, United States Code.
       ``(B) Range.--The reserve ratio designated by the Board of 
     Directors for any year--
       ``(i) may not exceed 1.50 percent; and
       ``(ii) may not be less than 1.15 percent.
       ``(C) Factors.--In designating a reserve ratio for any 
     year, the Board of Directors shall--
       ``(i) take into account the risk of losses to the Deposit 
     Insurance Fund in that year and in future years;
       ``(ii) take into account economic conditions generally 
     affecting insured depository institutions, to provide for an 
     increase in the designated reserve ratio during more 
     favorable economic conditions and to provide for a decrease 
     in the designated reserve ratio during less favorable 
     economic conditions, notwithstanding the increased risks of 
     loss that may exist during such less favorable conditions, as 
     determined to be appropriate by the Board;
       ``(iii) seek to prevent sharp swings in the assessment 
     rates for insured depository institutions; and
       ``(iv) take into account such other factors as the Board of 
     Directors may determine to be appropriate, consistent with 
     the requirements of this subparagraph.''.
       (2) Technical and conforming amendments.--Section 3(y) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813), as 
     amended by this title, is amended by adding at the end the 
     following:
       ``(2) Reserve ratio.--The term `reserve ratio' means the 
     ratio of the fund balance of the Deposit Insurance Fund to 
     aggregate estimated insured deposits held in all insured 
     depository institutions.
       ``(3) Designated reserve ratio.--The term `designated 
     reserve ratio' means the reserve ratio designated by the 
     Board of Directors under section 7(b)(3).''.
       (3) Effective date.--Subject to paragraph (4), and except 
     as otherwise provided, this subsection and the amendments 
     made by this subsection shall become effective on the 
     effective date of the regulations required under section 
     2017(a)(1), relating to designation of the reserve ratio by 
     the Board.
       (4) Designation of initial reserve ratio for deposit 
     insurance fund.--During the period beginning on the effective 
     date of the merger of the deposit insurance funds under 
     section 2003, and ending on the effective date of final 
     regulations designating the reserve ratio, as required by 
     section 2017(a)(1), the designated reserve ratio of the 
     Deposit Insurance Fund shall continue to be determined 
     pursuant to section 7(b)(2)(A)(iv), as in effect on the day 
     before the effective date of the merger under section 2003.
       (b) Requirements Applicable to Any Modification of the 
     Risk-Based Assessment System.--Section 7(b)(1) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1817(b)(1)) is amended by 
     adding at the end the following:
       ``(E) Requirements applicable to any modification of the 
     risk-based assessment system.--
       ``(i) In general.--In revising or modifying the risk-based 
     assessment system at any time after the date of enactment of 
     the Deposit Insurance Reform Act of 2005, the Board of 
     Directors--

       ``(I) may not make any change to the information collected 
     from or required to be retained by insured depository 
     institutions solely for purposes of the assessment risk 
     classification, as defined by regulations of the Board, if 
     the change would result in the imposition of an overall 
     greater regulatory or reporting burden on insured depository 
     institutions than was the case before that date of enactment; 
     and
       ``(II) may implement any such revision or modification in 
     final form only after notice and opportunity for comment.

       ``(ii) Rule of construction.--An increase in an assessment 
     rate or a revision of the assessment base shall not be 
     considered to be a revision or modification resulting in 
     greater regulatory or reporting burden for purposes of this 
     subparagraph.''.

     SEC. 2014. ASSESSMENT CREDITS AND DIVIDENDS.

       (a) In General.--Section 7(e)(2) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1817(e)(2)) is amended to read as 
     follows:
       ``(2) One-time credit based on total assessment base at 
     year-end 1996.--
       ``(A) In general.--The Board of Directors shall, by 
     regulation, provide for a credit to each insured depository 
     institution that was in existence on December 31, 1996, and 
     that had paid a deposit insurance assessment prior to that 
     date (or a successor insured depository institution), based 
     on the assessment base of the institution on that date, as 
     compared to the combined aggregate assessment base of all 
     such institutions, taking into account such factors as the 
     Board may determine to be appropriate.
       ``(B) Credit limit.--The aggregate amount of credits 
     available under subparagraph (A) to all insured depository 
     institutions that are eligible for the credit shall not 
     exceed the amount that the Corporation could collect if it 
     imposed an assessment of 9 basis points on the combined 
     assessment base of the Bank Insurance Fund and the Savings 
     Association Insurance Fund as of December 31, 2001.
       ``(C) Definition of successor.--The Corporation shall 
     define the term `successor' for purposes of this paragraph, 
     by regulation, and may consider, among other factors and as 
     the Board may deem appropriate, whether and to what extent, 
     if any, an insured depository institution that acquires 
     deposits from another insured depository institution may 
     deemed to be a successor.
       ``(D) Application of credits.--The amount of a credit to 
     any insured depository institution under this paragraph may 
     be applied by the Corporation to those portions of the 
     assessments under subsection (b) applicable to that 
     institution which become due for assessment periods beginning 
     after the effective date of regulations required by 
     subparagraph (A).''.
       (b) Amendments to Section 7.--Section 7(e) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1817(e)) is amended by 
     adding at the end the following new paragraphs:
       ``(3) Dividends.--
       ``(A) Reserve ratio in excess of 1.50 percent of estimated 
     insured deposits.--The Corporation shall provide cash 
     dividends to insured depository institutions in accordance 
     with this paragraph if the reserve ratio of the Deposit 
     Insurance Fund exceeds the maximum amount established under 
     subsection (b)(3)(B)(i), to the extent of that excess amount.
       ``(B) Amount equal to or in excess of 1.40 percent of 
     estimated insured deposits and not more than 1.50 percent.--
     The Corporation shall provide cash dividends to insured 
     depository institutions in accordance with this paragraph if 
     the reserve ratio of the Deposit Insurance Fund equals or 
     exceeds 1.40

[[Page 26715]]

     and is not more than 1.50 percent, and that amount shall 
     equal 50 percent of the amount in excess of the amount 
     required to maintain the reserve ratio at 1.40 percent of the 
     estimated insured deposits.
       ``(C) Factors for consideration for allocation of 
     dividends.--In implementing the provisions of this paragraph, 
     and in accordance with its regulations, the Corporation shall 
     consider--
       ``(i) the ratio of the assessment base of an insured 
     depository institution (including any predecessor 
     institution) on December 31, 1996, to the assessment base of 
     all eligible insured depository institutions on such date;
       ``(ii) the total amount of assessments paid on or after 
     January 1, 1997, by an insured depository institution 
     (including any predecessor institution) to the Deposit 
     Insurance Fund (and any predecessor deposit insurance fund);
       ``(iii) that portion of assessments paid by an insured 
     depository institution (including any predecessor 
     institution) that reflects higher levels of risk assumed by 
     such institution; and
       ``(iv) such other factors as the Corporation determines 
     appropriate.
       ``(D) Limitation.--The Board of Directors may suspend or 
     limit dividends paid under subparagraph (B) if the Board 
     determines in writing that--
       ``(i) a significant risk of losses to the Deposit Insurance 
     Fund exists over the next one-year period; and
       ``(ii) it is likely that such losses will be sufficiently 
     high as to justify a finding by the Board that the reserve 
     ratio should temporarily be allowed--

       ``(I) to grow without requiring dividends under 
     subparagraph (B); or
       ``(II) to exceed the maximum amount established under 
     subsection (b)(3)(B)(i).

       ``(E) Considerations.--In making a determination under 
     subparagraph (D), the Board shall consider--
       ``(i) national and regional conditions and their impact on 
     insured depository institutions;
       ``(ii) potential problems affecting insured depository 
     institutions or a specific group or type of depository 
     institution;
       ``(iii) the degree to which the contingent liability of the 
     Corporation for anticipated failures of insured institutions 
     adequately addresses concerns over funding levels in the 
     Deposit Insurance Fund; and
       ``(iv) any other factors that the Board determines are 
     appropriate.
       ``(F) Report to congress.--
       ``(i) Submission.--Any determination under subparagraph (D) 
     shall be submitted to the Committee on Banking, Housing, and 
     Urban Affairs of the Senate and the Committee on Financial 
     Services of the House of Representatives, not later than 270 
     days after making such determination.
       ``(ii) Content.--The report submitted under clause (i) 
     shall include--

       ``(I) a detailed explanation for the determination; and
       ``(II) a discussion of the factors required to be 
     considered under subparagraph (E).

       ``(G) Review of determination.--
       ``(i) Annual review.--A determination to suspend or limit 
     dividends under subparagraph (D) shall be reviewed by the 
     Board of Directors annually.
       ``(ii) Action by board.--Based on each annual review under 
     clause (i), the Board of Directors shall either renew or 
     remove a determination to suspend or limit dividends under 
     subparagraph (D), or shall make a new determination in 
     accordance with this paragraph. Unless justified under the 
     terms of the renewal or new determination, the Corporation 
     shall be required to provide cash dividends under 
     subparagraph (A) or (B), as appropriate.
       ``(4) Challenges to credit or dividend amounts.--The 
     regulations required under this subsection shall include 
     provisions allowing an insured depository institution a 
     reasonable opportunity to challenge administratively the 
     amount of its credit or dividend under this subsection. The 
     determination of the Corporation of the amount of the credit 
     or dividend following such challenge shall be final, and not 
     subject to judicial review.''.
       (c) Effective Date.--The amendments made by this section 
     shall become effective on the effective date of the 
     regulations required to be issued under section 2017(a)(3), 
     relating to implementation of the one-time assessment credit.

     SEC. 2015. ASSESSMENTS-RELATED RECORDS RETENTION AND STATUTE 
                   OF LIMITATIONS.

       (a) Records Retention.--Paragraph (5) of section 7(b) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1817(b)) is 
     amended to read as follows:
       ``(5) Records to be maintained by insured depository 
     institution.--Each insured depository institution shall 
     maintain all records that the Corporation may require for 
     verifying the correctness of the institution's assessments 
     until the later of--
       ``(A) 3 years from the due date of each assessment payment; 
     or
       ``(B) the date of the final determination of any dispute 
     between the insured depository institution and the 
     Corporation over the amount of any assessment.''.
       (b) Statute of Limitations for Assessment Actions.--
     Subsection (g) of section 7 of the Federal Deposit Insurance 
     Act (12 U.S.C. 1817(g)) is amended to read as follows:
       ``(g) Statute of Limitations for Assessment Actions.--The 
     Corporation, in any court of competent jurisdiction, shall be 
     entitled to recover from any insured depository institution 
     the amount of any unpaid assessment lawfully payable by such 
     insured depository institution. Notwithstanding any other 
     provision in Federal law, or the law of any State--
       ``(1) any action by an insured depository institution to 
     recover from the Corporation the overpaid amount of any 
     assessment shall be brought within 3 years after the date the 
     assessment payment was due, subject to the exception in 
     paragraph (5);
       ``(2) any action by the Corporation to recover from an 
     insured depository institution the underpaid amount of any 
     assessment shall be brought within 3 years after the date the 
     assessment payment was due, subject to the exceptions in 
     paragraphs (3) and (5);
       ``(3) if an insured depository institution has made a false 
     or fraudulent statement with intent to evade any or all of 
     its assessment, the Corporation shall have until 3 years 
     after the date of discovery of the false or fraudulent 
     statement in which to bring an action to recover the 
     underpaid amount;
       ``(4) assessment deposit information contained in records 
     no longer required to be maintained pursuant to subsection 
     (b)(5) shall be considered conclusive and not subject to 
     change; and
       ``(5) any action for the underpaid or overpaid amount of 
     any assessment that became due prior to the effective date of 
     this subsection shall be subject to the statute of 
     limitations for assessments in effect at the time the 
     assessment became due.''.

     SEC. 2016. INCREASE IN FEES FOR LATE ASSESSMENT PAYMENTS.

       Subsection (h) of section 18 of the Federal Deposit 
     Insurance Act (12 U.S.C. 1828(h)) is amended--
       (1) by striking ``Any insured depository institution'' and 
     inserting ``(1) In general.--Any insured depository 
     institution'';
       (2) in paragraph (1), as redesignated, by striking 
     ``penalty of not more than $100'' and inserting ``penalty in 
     an amount of not more than 1 percent of the amount of the 
     assessment due''; and
       (3) by inserting new paragraphs (2) and (3) as follows:
       ``(2) Exception for small assessment amounts.--
     Notwithstanding paragraph (1), if the amount of the 
     assessment for an insured depository institution is less than 
     $10,000 at the time such institution fails or refuses to pay 
     the assessment, such institution shall be subject to a 
     penalty of not more than $100 for each day that such 
     violation continues.
       ``(3) Authority to modify or remit penalty.--The 
     Corporation, in the sole discretion of the Corporation, may 
     compromise, modify, or remit any penalty which the 
     Corporation may assess or has already assessed under 
     paragraph (1) or (2) upon a finding that good cause prevented 
     the timely payment of an assessment.''.

     SEC. 2017. REGULATIONS REQUIRED.

       (a) In General.--Not later than 270 days after the date of 
     enactment of this Act, the Board shall issue final 
     regulations, in accordance with section 553 of chapter 5 of 
     title 5, United States Code--
       (1) designating the reserve ratio for the Deposit Insurance 
     Fund, in accordance with section 7(b)(3) of the Federal 
     Deposit Insurance Act, as amended by section 2013 of this 
     subtitle, which regulations shall become effective not later 
     than 90 days after the date of their publication in final 
     form;
       (2) implementing changes in deposit insurance coverage in 
     accordance with the amendments made by section 2012, which 
     regulations shall become effective not later than 90 days 
     after the date of their publication in final form;
       (3) implementing the one-time assessment credit to certain 
     insured depository institutions in accordance with section 
     7(e)(2) of the Federal Deposit Insurance Act, as amended by 
     section 2014 of this subtitle;
       (4) establishing the qualifications and procedures under 
     which the Corporation may provide dividends under section 
     7(e)(3) of the Federal Deposit Insurance Act, as amended by 
     section 2014 of this subtitle; and
       (5) providing for assessments under section 7 of the 
     Federal Deposit Insurance Act, as amended by this subtitle, 
     which regulations shall become effective on the effective 
     date of the regulations required by paragraph (3).
       (b) Savings Clause.--
       (1) In general.--
       (A) Continuation of existing assessment regulations.--
     Nothing in this title or the amendments made by this title 
     shall be construed to affect the authority of the Corporation 
     with regard to the setting or collection of deposit insurance 
     assessments pursuant to any regulations in effect prior to 
     the effective date of any regulations required under 
     subsection (a).
       (B) Treatment of dif members under existing regulations.--
     Assessment regulations in effect prior to the date of 
     enactment of this title shall be read as applying to members 
     of the Deposit Insurance Fund rather than members of the Bank 
     Insurance Fund or Savings Association Insurance Fund, 
     effective on or after the date on which

[[Page 26716]]

     merger of the deposit insurance funds becomes effective under 
     title I.
       (2) Setting assessments.--Clause (i) of section 7(b)(2)(A) 
     of the Federal Deposit Insurance Act (12 U.S.C. 
     1817(b)(2)(A)) is amended by striking ``necessary--'' and all 
     that follows through the period at the end and inserting 
     ``necessary.''.

     SEC. 2018. STUDIES OF POTENTIAL CHANGES TO THE FEDERAL 
                   DEPOSIT INSURANCE SYSTEM.

       (a) Study and Report by FDIC and NCUA.--
       (1) Study.--The Board of Directors of the Federal Deposit 
     Insurance Corporation and the National Credit Union 
     Administration Board shall each conduct a study of--
       (A) the feasibility of increasing the limit on deposit 
     insurance for deposits of municipalities and other units of 
     general local government, and the potential benefits and the 
     potential adverse consequences that may result from any such 
     increase; and
       (B) the feasibility of establishing a voluntary deposit 
     insurance system for deposits in excess of the maximum amount 
     of deposit insurance for any depositor, and the potential 
     benefits and the potential adverse consequences that may 
     result from the establishment of any such system.
       (2) Report.--Not later than 1 year after the date of 
     enactment of this title, the Board of Directors of the 
     Federal Deposit Insurance Corporation and the National Credit 
     Union Administration Board shall each submit a report to the 
     Congress on the study required under paragraph (1), 
     containing the findings and conclusions of the reporting 
     agency, together with such recommendations for legislative or 
     administrative changes as the agency may determine to be 
     appropriate.
       (b) Study and Report Regarding Appropriate Reserve Ratio.--
       (1) Study.--The Corporation shall conduct a study on the 
     feasibility of using alternatives to estimated insured 
     deposits in calculating the reserve ratio of the Deposit 
     Insurance Fund.
       (2) Report.--Not later than 1 year after the date of 
     enactment of this title, the Board shall submit a report to 
     Congress on the results of the study required under paragraph 
     (1), together with such recommendations for legislative or 
     administrative actions as may be determined to be 
     appropriate.

     SEC. 2019. EFFECTIVE DATE.

       Except as otherwise specifically provided in this subtitle, 
     this subtitle and the amendments made by this subtitle shall 
     become effective on the date of enactment of this Act.

                   Subtitle C--FHA Asset Disposition

     SEC. 2021. SHORT TITLE.

       This subtitle may be cited as the ``FHA Asset Disposition 
     Act of 2005''.

     SEC. 2022. DEFINITIONS.

       For purposes of this subtitle--
       (1) the term ``affordability requirement'' means any 
     requirement or restriction imposed by the Secretary, at the 
     time of sale, on any multifamily real property or multifamily 
     loan, including a use restriction, rent restriction, or 
     rehabilitation requirement;
       (2) the term ``discount sale'' means the sale of 
     multifamily real property in a transaction, including a 
     negotiated sale, in which the sale price is--
       (A) lower than the property market value; and
       (B) set outside of a competitive bidding process that has 
     no affordability requirements;
       (3) the term ``discount loan sale'' means the sale of a 
     multifamily loan in a transaction, including a negotiated 
     sale, in which the sale price is lower than the loan market 
     value and is set outside of a competitive bidding process 
     that has no affordability requirements;
       (4) the term ``loan market value'' means the value of a 
     multifamily loan, without taking into account any 
     affordability requirements;
       (5) the term ``multifamily real property'' means any rental 
     or cooperative housing project of 5 or more units owned by 
     the Secretary that prior to acquisition by the Secretary was 
     security for a loan or loans insured under title II of the 
     National Housing Act;
       (6) the term ``multifamily loan'' means a loan held by the 
     Secretary and secured by a multifamily rental or cooperative 
     housing project of 5 or more units that was formerly insured 
     under title II of the National Housing Act;
       (7) the term ``property market value'' means the value of 
     any multifamily real property for its current use, without 
     taking into account any affordability requirements; and
       (8) the term ``Secretary'' means the Secretary of Housing 
     and Urban Development.

     SEC. 2023. APPROPRIATED FUNDS REQUIREMENT FOR BELOW MARKET 
                   SALES.

       (a) Dispositions by Secretary.--Notwithstanding any other 
     provision of law, other than any statutory affordability 
     requirement for the elderly and disabled, disposition by the 
     Secretary of any multifamily real property through a discount 
     sale under section 207(l) or 246 of the National Housing Act, 
     section 203 of the Housing and Community Development 
     Amendments of 1978, or section 204 of the Departments of 
     Veterans Affairs and Housing and Urban Development, and 
     Independent Agencies Appropriations Act, 1997, shall be 
     subject to the availability of appropriations to the extent 
     that the property value exceeds the sale proceeds. If the 
     multifamily real property is sold for an amount equal to or 
     greater than the property market value, the transaction is 
     not subject to the availability of appropriations.
       (b) Discount Loan Sales.--Notwithstanding any other 
     provision of law, and in accordance with the Credit Reform 
     Act of 1990, a discount loan sale under 207(k) of the 
     National Housing Act, section 203(k) of the Housing and 
     Community Development Amendments of 1978, or section 204(a) 
     of the Departments of Veterans Affairs and Housing and Urban 
     Development, and Independent Agencies Appropriations Act, 
     1997, shall be subject to the availability of appropriations, 
     to the extent that the loan value exceeds the sale proceeds. 
     If the multifamily loan is sold for an amount equal to or 
     greater than the loan market value, then the transaction is 
     not subject to the availability of appropriations.
       (c) Limitation.--This section shall not apply to any 
     transaction that formally commences during the 1-year period 
     preceding the date of enactment of this Act.

     SEC. 2024. UP-FRONT GRANTS.

       (a) VA-HUD.--Section 204(a) of the Departments of Veterans 
     Affairs and Housing and Urban Development, and Independent 
     Agencies Appropriations Act, 1997 (12 U.S.C. 1715z-11a(a)) is 
     amended by adding at the end the following: ``A grant 
     provided under this subsection shall be available only to the 
     extent that appropriations are made in advance for such 
     purpose, and shall not be derived from the General Insurance 
     Fund.''.
       (b) Other Grant Authority.--Section 203(f) of the Housing 
     and Community Development Amendments of 1978 (12 U.S.C. 
     1701z-11(f)) is amended--
       (1) by striking paragraph (4); and
       (2) by redesignating paragraphs (5) through (9) as 
     paragraphs (4) through (8), respectively.
       (c) Limitation.--The amendments made by this section shall 
     not apply to any grant in connection with any transaction 
     that formally commences during the 1-year period preceding 
     the date of enactment of this Act.

     SEC. 2025. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated for fiscal year 
     2006, $100,000,000 to carry out this subtitle.

                Subtitle D--Adaptive Housing Assistance

     SEC. 2031. SHORT TITLE.

       This subtitle may be cited as the ``Specially Adapted 
     Housing Grants Improvements Act of 2005''.

     SEC. 2032. ADAPTIVE HOUSING ASSISTANCE FOR DISABLED VETERANS 
                   RESIDING TEMPORARILY IN HOUSING OWNED BY A 
                   FAMILY MEMBER.

       (a) Assistance Authorized.--Chapter 21 of title 38, United 
     States Code, is amended by inserting after section 2102 the 
     following new section:

     ``Sec. 2102A. Assistance for veterans residing temporarily in 
       housing owned by a family member

       ``(a) Assistance Authorized.--If a disabled veteran 
     described in subsection (a)(2) or (b)(2) of section 2101 of 
     this title resides, but does not intend to permanently 
     reside, in a residence owned by a member of such veteran's 
     family, the Secretary may assist the veteran in acquiring 
     such adaptations to such residence as are determined by the 
     Secretary to be reasonably necessary because of the veteran's 
     disability.
       ``(b) Limitation on Amount of Assistance.--Subject to 
     section 2102(d) of this title, the assistance authorized 
     under subsection (a) may not exceed--
       ``(1) $10,000, in the case of a veteran described in 
     section 2101(a)(2) of this title; or
       ``(2) $2,000, in the case of a veteran described in section 
     2101(b)(2) of this title.
       ``(c) Limitation on Number of Residences Subject to 
     Assistance.--A veteran eligible for assistance authorized 
     under subsection (a) may only be provided such assistance 
     with respect to 1 residence.
       ``(d) Regulations.--Assistance under this section shall be 
     provided in accordance with such regulations as the Secretary 
     may prescribe.
       ``(e) Termination of Authority.--The authority to provide 
     assistance under subsection (a) shall expire at the end of 
     the 5-year period beginning on the date of enactment of the 
     Specially Adapted Housing Grants Improvements Act of 2005.''.
       (b) Limitations on Adaptive Housing Assistance.--Section 
     2102 of such title is amended--
       (1) in subsection (a), by striking ``The assistance 
     authorized by section 2101(a)'' and all that follows through 
     ``any one case--'' and inserting ``Subject to subsection (d), 
     the assistance authorized under section 2101(a) of this title 
     shall be afforded under 1 of the following plans, at the 
     election of the veteran--'';
       (2) by amending subsection (b) to read as follows:
       ``(b) Subject to subsection (d), and except as provided in 
     section 2104(b) of this title, the assistance authorized by 
     section 2101(b) of this title may not exceed the actual cost, 
     or in the case of a veteran acquiring a residence already 
     adapted with special features,

[[Page 26717]]

     the fair market value, of the adaptations determined by the 
     Secretary under such section 2101(b) to be reasonably 
     necessary.''; and
       (3) by adding at the end the following new subsection:
       ``(d)(1) The aggregate amount of assistance available to a 
     veteran under sections 2101(a) and 2102A of this title shall 
     be limited to $50,000.
       ``(2) The aggregate amount of assistance available to a 
     veteran under sections 2101(b) and 2102A of this title shall 
     be limited to the lesser of--
       ``(A) the sum of the cost or fair market value described in 
     section 2102(b) of this title and the actual cost of 
     acquiring the adaptations described in subsection (a); and
       ``(B) $10,000.
       ``(3) No veteran may receive more than 3 grants of 
     assistance under this chapter.''.
       (c) Clerical Amendment.--The table of sections at the 
     beginning of such chapter of such title is amended by 
     inserting after the item relating to section 2102 the 
     following:

``2102A. Assistance for veterans residing temporarily in housing owned 
              by family member.''.

     SEC. 2033. GAO REPORTS.

       (a) Interim Report.--Not later than 3 years after the date 
     of enactment of this Act, the Comptroller General of the 
     United States shall submit to Congress an interim report on 
     the implementation of section 2102A of title 38, United 
     States Code (as added by section 2(a)), by the Department of 
     Veterans Affairs.
       (b) Final Report.--Not later than 5 years after the date of 
     enactment of this Act, the Comptroller General of the United 
     States shall submit to Congress a final report on the 
     implementation of such section 2102A by the Department of 
     Veterans Affairs.

     TITLE III--COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

     SEC. 3001. SHORT TITLE.

       This title may be cited as the ``Digital Transition and 
     Public Safety Act of 2005.''.

     SEC. 3002. ANALOG SPECTRUM RECOVERY; HARD DEADLINE.

       Section 309(j)(14) of the Communications Act of 1934 (47 
     U.S.C. 309(j)(14)) is amended--
       (1) by striking ``December 31, 2006.'' in subparagraph (A) 
     and inserting ``April 7, 2009.'';
       (2) by striking subparagraph (B);
       (3) by striking ``or (B)'' in subparagraph (C)(i)(I);
       (4) by striking ``(C)(i),'' in subparagraph (D) and 
     inserting ``(B)(i),''; and
       (5) by redesignating subparagraphs (C) and (D) as 
     subparagraphs (B) and (C), respectively.

     SEC. 3003. AUCTION OF RECOVERED SPECTRUM.

       (a) Auction: Date, Applicable Requirements.--Section 
     309(j)(15)(C) of the Communications Act of 1934 (47 U.S.C. 
     309(j)(15)(C)) is amended by adding at the end the following:
       ``(v) Additional deadlines for recovered analog spectrum.--
     Notwithstanding subparagraph (B), the Commission shall--

       ``(I) conduct the auction of the licenses for recovered 
     analog spectrum commencing January 28, 2008;
       ``(II) not later than 60 days after the end of the pleading 
     cycle for long-form applications for such auction established 
     pursuant to part 1 of title 47, Code of Federal Regulations, 
     grant or deny such long-form applications and issue the 
     licenses for such recovered analog spectrum to each 
     successful bidder whose long-form application is granted; and
       ``(III) collect and deposit the proceeds of such auction in 
     the Digital Transition and Public Safety Fund established by 
     section 3005 of the Digital Transition and Public Safety Act 
     of 2005.

       ``(vi) Recovered analog spectrum.--For purposes of this 
     subparagraph, the term `recovered analog spectrum' means 
     spectrum reclaimed from the analog television service under 
     paragraph (14), except--

       ``(I) spectrum required by section 337 to be made available 
     for public safety services; and
       ``(II) spectrum auctioned prior to the date of enactment of 
     the Digital Transition and Public Safety Act of 2005.''.

       (b) Extension of Auction Authority.--Paragraph (11) of 
     section 309(j) of the Communications Act of 1934 (47 U.S.C. 
     309(j)(11)) is amended by striking ``September 30, 2007.'' 
     and inserting ``September 30, 2009.''.

     SEC. 3004. SUPPLEMENTAL LICENSE FEES.

       In addition to any fees assessed under the Communications 
     Act of 1934 (47 U.S.C. 151 et seq.), the Commission shall 
     assess extraordinary fees for licenses in the aggregate 
     amount of $10,000,000, which shall be deposited in the 
     Treasury during fiscal year 2006 as offsetting receipts.

     SEC. 3005. DIGITAL TRANSITION AND PUBLIC SAFETY FUND.

       (a) Establishment.--There is established in the Treasury of 
     the United States a fund called the Digital Transition and 
     Public Safety Fund.
       (b) Deposit of Auction Proceeds.--The Commission shall 
     deposit the proceeds of the auction authorized by section 
     309(j)(15)(C)(v) of the Communications Act of 1934 (47 U.S.C. 
     309(j)(15)(C)(v)) in the Fund as required by item (III) of 
     that section.
       (c) Payments Authorized.--The Secretary of Commerce or the 
     Secretary's designee shall make payments from the Fund in the 
     following amounts, for the following programs, and in the 
     following order:
       (1) Not to exceed $3,000,000,000 for a program to assist 
     consumers in the purchase of converter boxes that convert a 
     digital television signal to an analog television signal, and 
     any amounts unexpended or unobligated at the conclusion of 
     the program shall be used for the program described in 
     paragraph (3).
       (2) Not to exceed $200,000,000 for a program to convert 
     low-power television stations and television translator 
     stations from analog to digital, and any amounts unexpended 
     or unobligated at the conclusion of the program shall be used 
     for the program described in paragraph (3).
       (3) Not to exceed $1,250,000,000 for a program to 
     facilitate emergency communications, of which $1,000,000,000 
     shall be used for an interoperability fund and $250,000,000 
     shall be used to implement a national alert system, of which 
     $50,000,000 shall be used for tsunami warning and coastal 
     vulnerability programs.
       (4) Not to exceed $250,000,000 for a program to implement 
     the ENHANCE 911 Act of 2004 (47 U.S.C. 942 note).
       (5) Not to exceed $200,000,000 for a program to provide 
     assistance to coastal States and Indian tribes affected by 
     hurricanes and other coastal disasters.
       (d) Transfer of Amount to Treasury.--On October 2, 2009, 
     Secretary shall transfer $5,000,000,000 from the Fund to the 
     general fund of the Treasury.
       (e) Obligation Time Period.--Any amounts that are to be 
     paid from the Fund under subsection (c) shall be obligated no 
     later than September 14, 2010. The Secretary may not obligate 
     any amounts from the Fund until the proceeds of the auction 
     authorized by section 309(j)(15)(C)(v) are actually deposited 
     by the Commission pursuant to subsection (b). Any amount in 
     the Fund that is not obligated under subsection (c) by that 
     date shall be transferred to the general fund of the 
     Treasury.
       (f) Use of Excess Proceeds.--Any proceeds of the auction 
     authorized by section 309(j)(15)(C)(v) of the Communications 
     Act of 1934, as added by section 3003 of this Act, that 
     exceed the sum of the payments made from the Fund under 
     subsection (c), the transfer from the Fund under subsection 
     (d), and any amount made available under section 3006 
     (referred to in this subsection as ``excess proceeds''), 
     shall be distributed as follows:
       (1) The first $1,000,000,000 of excess proceeds shall be 
     transferred to and deposited in the general fund of the 
     Treasury as miscellaneous receipts.
       (2) After the transfer under paragraph (1), the next 
     $500,000,000 of excess proceeds shall be transferred to the 
     interoperability fund described in subsection (c)(3).
       (3) After the transfers under paragraphs (1) and (2), the 
     next $1,200,000,000 of excess proceeds shall be transferred 
     to the assistance program described in subsection (c)(5).
       (4) After the transfers under paragraphs (1) through (3), 
     any remaining excess proceeds shall be transferred to and 
     deposited in the general fund of the Treasury as 
     miscellaneous receipts.

     SEC. 3005A. COMMUNICATION SYSTEM GRANTS.

       (a) Definitions.--In this section--
       (1) the term ``demonstration project'' means the 
     demonstration project established under subsection (b)(1);
       (2) the term ``Department'' means the Department of 
     Homeland Security;
       (3) the term ``emergency response provider'' has the 
     meaning given that term in section 2(6) the Homeland Security 
     Act of 2002 (6 U.S.C. 101(6)); and
       (4) the term ``Secretary'' means the Secretary of Homeland 
     Security.
       (b) In General.--
       (1) Establishment.--There is established in the Department 
     an ``International Border Community Interoperable 
     Communications Demonstration Project''.
       (2) Minimum number of communities.--The Secretary shall 
     select not fewer than 2 communities to participate in a 
     demonstration project.
       (3) Location of communities.--Not fewer than 1 of the 
     communities selected under paragraph (2) shall be located on 
     the northern border of the United States and not fewer than 1 
     of the communities selected under paragraph (2) shall be 
     located on the southern border of the United States.
       (c) Project Requirements.--The demonstration projects 
     shall--
       (1) address the interoperable communications needs of 
     police officers, firefighters, emergency medical technicians, 
     National Guard, and other emergency response providers;
       (2) foster interoperable communications--
       (A) among Federal, State, local, and tribal government 
     agencies in the United States involved in preventing or 
     responding to terrorist attacks or other catastrophic events; 
     and
       (B) with similar agencies in Canada and Mexico;
       (3) identify common international cross-border frequencies 
     for communications equipment, including radio or computer 
     messaging equipment;
       (4) foster the standardization of interoperable 
     communications equipment;

[[Page 26718]]

       (5) identify solutions that will facilitate communications 
     interoperability across national borders expeditiously;
       (6) ensure that emergency response providers can 
     communicate with each another and the public at disaster 
     sites or in the event of a terrorist attack or other 
     catastrophic event;
       (7) provide training and equipment to enable emergency 
     response providers to deal with threats and contingencies in 
     a variety of environments; and
       (8) identify and secure appropriate joint-use equipment to 
     ensure communications access.
       (d) Distribution of Funds.--
       (1) In general.--The Secretary shall distribute funds under 
     this section to each community participating in a 
     demonstration project through the State, or States, in which 
     each community is located.
       (2) Other participants.--Not later than 60 days after 
     receiving funds under paragraph (1), a State receiving funds 
     under this section shall make the funds available to the 
     local governments and emergency response providers 
     participating in a demonstration project selected by the 
     Secretary.
       (e) Funding.--Amounts made available from the 
     interoperability fund under section 3005(c)(3) shall be 
     available to carry out this section without appropriation.
       (f) Reporting.--Not later than December 31, 2005, and each 
     year thereafter in which funds are appropriated for a 
     demonstration project, the Secretary shall provide to the 
     Committee on Homeland Security and Governmental Affairs of 
     the Senate and the Committee on Homeland Security of the 
     House of Representatives a report on the demonstration 
     projects under this section.

     SEC. 3006. ESSENTIAL AIR SERVICE PROGRAM.

       (a) In General.--If the amount appropriated to carry out 
     the essential air service program under subchapter II of 
     chapter 417 of title 49, United States Code, equals or 
     exceeds $110,000,000 for fiscal year 2006, 2007, 2008, 2009, 
     or 2010, then the Secretary of Commerce shall make 
     $15,000,000 available from the Digital Transition and Public 
     Safety Fund available to the Secretary of Transportation for 
     use in carrying out the essential air service program for 
     that fiscal year.
       (b) Application with Other Funds.--Amounts made available 
     under subsection (a) for any fiscal year shall be in addition 
     to any amounts--
       (1) appropriated for that fiscal year; or
       (2) derived from fees collected pursuant to section 
     45301(a)(1) of title 49, United States Code, that are made 
     available for obligation and expenditure to carry out the 
     essential air service program for that fiscal year.

                 TITLE IV--ENERGY AND NATURAL RESOURCES

     SEC. 4001. OIL AND GAS LEASING PROGRAM.

       (a) Definitions.--In this section:
       (1) Coastal plain.--The term ``Coastal Plain'' means the 
     area identified as the Coastal Plain on the map prepared by 
     the United States Geological Survey, entitled ``Arctic 
     National Wildlife Refuge 1002 Coastal Plain Area'', dated 
     September 2005, and on file with the United States Geological 
     Survey.
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior, acting through the Bureau of Land 
     Management.
       (b) Program.--
       (1) In general.--Congress--
       (A) authorizes the leasing, development, production, and 
     transportation of oil and gas in and from the Coastal Plain; 
     and
       (B) directs the Secretary to take such actions as are 
     necessary to--
       (i) establish and implement an environmentally sound 
     competitive oil and gas leasing program to carry out the 
     activities authorized under subparagraph (A); and
       (ii) conduct 2 lease sales before October 1, 2010.
       (2) Administration.--The Secretary shall administer this 
     section through regulations, lease terms, conditions, 
     restrictions, prohibitions, stipulations, and other 
     provisions that ensure the oil and gas exploration, 
     development, production, and transportation activities on the 
     Coastal Plain are carried out in a manner that will ensure 
     the receipt of fair market value by the public for the 
     mineral resources to be leased.
       (c) Lease Sales Before Fiscal Year 2011.--
       (1) In general.--In order to enable the Secretary to hold 2 
     lease sales before October 1, 2010, this subsection shall 
     apply with respect to the oil and gas leasing program 
     established by the Secretary pursuant to this section.
       (2) Purposes.--For purposes of the National Wildlife Refuge 
     System Administration Act of 1966 (16 U.S.C. 668dd et seq.) 
     and amendments made by that Act, the oil and gas leasing 
     program and activities authorized by this section in the 
     Coastal Plain are deemed to be compatible with the purposes 
     for which the Arctic National Wildlife Refuge was 
     established, and no further findings or decisions are 
     required to implement this determination of compatibility.
       (3) Prelease activities.--The Final Legislative 
     Environmental Impact Statement on the Coastal Plain dated 
     April 1987 and prepared pursuant to section 1002 of the 
     Alaska National Interest Lands Conservation Act (16 U.S.C. 
     3142) and section 102(2)(C) of the National Environmental 
     Policy Act of 1969 (42 U.S.C. 4332(2)(C)) is deemed to 
     satisfy the requirements under the National Environmental 
     Policy Act of 1969 (42 U.S.C. 4321 et seq.) that apply with 
     respect to prelease activities, including actions authorized 
     to be taken by the Secretary to develop and promulgate 
     regulations for the establishment of the leasing program 
     authorized by this section before the conduct of the first 
     lease sale.
       (4) Preferred action.--
       (A) Nonleasing alternatives.--With respect to any 
     environmental impact statement prepared by the Secretary 
     under the National Environmental Policy Act of 1969 (42 
     U.S.C. 4321 et seq.) with respect to any lease sale conducted 
     under the leasing program authorized by this section, the 
     Secretary is not required to identify nonleasing alternative 
     courses of action or to analyze the environmental effects of 
     those courses of action.
       (B) Leasing alternatives.--The Secretary shall only 
     identify a preferred action for leasing and a single leasing 
     alternative, and analyze the environmental effects and 
     potential mitigation measures for the preferred action and 
     leasing alternative.
       (C) Deadline.--The identification and related analyses 
     required by subparagraph (B) shall be completed within 18 
     months after the date of enactment of this Act.
       (D) Public comments.--The Secretary shall only consider 
     public comments that are filed within 30 days after 
     publication of an environmental analysis.
       (E) Compliance.--Compliance with this paragraph satisfies 
     all requirements of section 102(2)(C) of the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)) for 
     the analysis and consideration of the environmental effects 
     of proposed leasing under this section.
       (5) Expedited judicial review.--
       (A) Venue; deadline.--Any complaint seeking judicial review 
     of this section or any action of the Secretary under this 
     section shall be filed in the United States Court of Appeals 
     for the District of Columbia--
       (i) within the 90-day period beginning on the date of the 
     action being challenged; or
       (ii) in the case of a complaint based solely on grounds 
     arising after that period, within 90 days after the 
     complainant knew or reasonably should have known of the 
     grounds for the complaint.
       (B) Scope.--Judicial review of a decision of the Secretary 
     to conduct a lease sale under this section (including the 
     environmental analysis of the decision) shall be--
       (i) limited to whether the Secretary has complied with this 
     section; and
       (ii) based on the administrative record of that decision.
       (d) Receipts.--Notwithstanding any other provision of law, 
     of the amount of adjusted bonus, rental, and royalty receipts 
     derived from oil and gas leasing and operations authorized 
     under this section--
       (1) 50 percent shall be paid to the State of Alaska; and
       (2) the balance shall be deposited into the Treasury as 
     miscellaneous receipts.
       (e) Rights-of-Way.--For purposes of section 1102(4)(A) of 
     the Alaska National Interest Lands Conservation Act (16 
     U.S.C. 3162(4)(A)), any rights-of-way or easements across the 
     Coastal Plain for the exploration, development, production, 
     or transportation of oil and gas shall be considered to be 
     established incident to the management of the Coastal Plain 
     under this section.
       (f) Maximum Surface Acreage.--In administering this 
     section, the Secretary shall ensure that the maximum quantity 
     of surface acreage covered by production and support 
     facilities (including airstrips and any area covered by 
     gravel berms or piers for support of pipelines) does not 
     exceed 2,000 acres on the Coastal Plain.
       (g) Prohibition on Exports.--An oil or gas lease issued 
     under this title shall prohibit the exportation of oil or gas 
     produced under the lease.

           TITLE V--COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

     SEC. 5001. TECHNICAL CORRECTIONS TO SAFETEA-LU.

       (a)(1) Notwithstanding any other provision of law, the 
     amount of $639,000,000 described in section 1102(b)(10) of 
     the Safe, Accountable, Flexible, Efficient Transportation 
     Equity Act: A Legacy for Users (119 Stat. 1144), shall be 
     considered to be--
       (A) for fiscal year 2006 only, $631,000,000; and
       (B) for fiscal year 2007 only, $647,000,000.
       (2) Notwithstanding any other provision of law, the amount 
     of $2,639,000,000 described in section 1102(c)(6) of the 
     Safe, Accountable, Flexible, Efficient Transportation Equity 
     Act: A Legacy for Users (119 Stat. 1144), shall be considered 
     to be--
       (A) for fiscal year 2006 only, $2,631,000,000; and
       (B) for fiscal year 2007 only, $2,647,000,000.
       (b) Section 4409 of the Safe, Accountable, Flexible, 
     Efficient Transportation Equity Act: A Legacy for Users (119 
     Stat. 1144) is amended--
       (1) by striking ``Section'' and inserting the following:
       ``(a) In General.--Section''; and
       (2) by adding at the end the following:
       ``(b) Effective Date.--The amendments made by this section 
     shall take effect on December 31, 2008.''.

[[Page 26719]]



                     TITLE VI--COMMITTEE ON FINANCE

     SEC. 6000. AMENDMENTS TO SOCIAL SECURITY ACT.

       (a) Amendments to Social Security Act.--Except as otherwise 
     specifically provided, whenever in this title an amendment is 
     expressed in terms of an amendment to or repeal of a section 
     or other provision, the reference shall be considered to be 
     made to that section or other provision of the Social 
     Security Act.
       (b) References to the Secretary.--In this title, the term 
     ``Secretary'' means the Secretary of Health and Human 
     Services.

                          Subtitle A--Medicaid

        CHAPTER 1--PAYMENT FOR PRESCRIPTION DRUGS UNDER MEDICAID

     SEC. 6001. PHARMACY REIMBURSEMENT.

       (a) Definition of Average Manufacturer Price.--
       (1) In general.--Section 1927(k)(1) (42 U.S.C. 1396r-
     8(k)(1)) is amended--
       (A) in the paragraph heading, by striking ``price'' and 
     inserting ``price; weighted average manufacturer price'';
       (B) by striking ``The term'' and inserting the following:
       ``(A) In general.--The term''; and
       (C) by adding at the end the following:
       ``(B) Calculation requirements.--For purposes of 
     subparagraph (A), the average manufacturer price shall be 
     calculated according to the following:
       ``(i) Sales exempted from computation.--Without regard to--

       ``(I) sales exempt from inclusion in the determination of 
     best price under subsection (c)(1)(C)(i);
       ``(II) such other sales as the Secretary identifies as 
     sales to an entity that are merely nominal in amount under 
     subsection (c)(1)(C)(ii)(III); and
       ``(III) bona fide service fees (as defined in subparagraph 
     (E)) that are paid by a manufacturer to an entity, that 
     represent fair market value for a bona fide service, and that 
     are not passed on in whole or in part to a client or customer 
     of an entity.

       ``(ii) Sale price net of discounts.--By including the 
     following:

       ``(I) Cash discounts and volume discounts.
       ``(II) Free goods that are contingent upon any purchase 
     requirement or agreement.
       ``(III) Sales at a nominal price that are contingent upon 
     any purchase requirement or agreement.
       ``(IV) Chargebacks, rebates provided to a pharmacy 
     (including a mail order pharmacy but excluding a pharmacy 
     benefit manager), or any other direct or indirect discounts.
       ``(V) Any other price concessions, which may be based on 
     recommendations of the Inspector General of the Department of 
     Health and Human Services, that would result in a reduction 
     of the cost to the purchaser, but only if the Secretary 
     provides notice of the Secretary's intent to include such 
     price concessions in accordance with section 553 of title 5, 
     United States Code.

       ``(C) Weighted average manufacturer price.--The term 
     `weighted average manufacturer price' means, with respect to 
     a rebate period and multiple source drug, the volume-weighted 
     average of the average manufacturer prices reported under 
     subsection (b)(3)(A)(i)(I) for all drug products described in 
     paragraph (7)(A)(i) that are therapeutically equivalent and 
     bioequivalent forms of the drug, determined by--
       ``(i) computing the sum of the products (for each National 
     Drug Code assigned to such drug products) of--

       ``(I) the average manufacturer price; and
       ``(II) the total number of units reported sold under 
     subsection (b)(3)(A)(i)(I); and

       ``(ii) dividing the sum determined under clause (i) by the 
     sum of the total number of units under clause (i)(II) for all 
     National Drug Codes assigned to such drug products.
       ``(D) Limitation on sales at a nominal price.--
       ``(i) In general.--For purposes of clauses (i)(II) and 
     (ii)(III) of subparagraph (B), only sales by a manufacturer 
     of covered outpatient drugs that are single source drugs, 
     innovator multiple source drugs, or authorized generic drugs 
     at nominal prices to the following shall be considered to be 
     sales at a nominal price or merely nominal in amount:

       ``(I) A covered entity described in section 340B(a)(4) of 
     the Public Health Service Act.
       ``(II) An intermediate care facility for the mentally 
     retarded.
       ``(III) A State-owned or operated nursing facility.
       ``(IV) Any other facility or entity that the Secretary 
     determines is a safety net provider to which sales of such 
     drugs at a nominal price would be appropriate based on the 
     following factors:

       ``(aa) The type of facility.
       ``(bb) The services provided by the facility.
       ``(cc) The patient population served by the facility.
       ``(dd) The number of other facilities eligible to purchase 
     at nominal prices in the same service area.
       ``(ii) Nonapplication.--Clause (i) shall not apply with 
     respect to sales by a manufacturer at a nominal price of 
     covered outpatient drugs that are single source drugs, 
     innovator multiple source drugs, or authorized generic drugs 
     pursuant to a master agreement under section 8126 of title 
     38, United States Code.
       ``(E) Bona fide service fees.--For purposes of subparagraph 
     (B)(i)(III), the term `bona fide service fees' means expenses 
     that are for an itemized service actually performed by an 
     entity on behalf of a manufacturer that would have generally 
     been paid for by the manufacturer at the same rate had these 
     services been performed by another entity.''.
       (2) Conforming amendments.--Section 1927(b)(3)(A)(i) (42 
     U.S.C. 1396r-8(b)(3)(A)(i)), as amended by section 6003(a), 
     is amended--
       (A) in subclause (I)--
       (i) by inserting ``and the total number of units sold'' 
     after ``(as defined in subsection (k)(1))''; and
       (ii) by striking ``and'' at the end;
       (B) in subclause (II), by adding ``and'' at the end; and
       (C) by adding at the end the following:

       ``(III) information and data on any sales that were made 
     during such period at a nominal price, including, with 
     respect to each such sale, the purchaser, the name of the 
     product, the amount or number of units of the product sold at 
     a nominal price, and the nominal price paid;''.

       (3) Effective date.--
       (A) In general.--Except as provided in subparagraph (B), 
     the amendments made by this subsection shall take effect on 
     January 1, 2006.
       (B) Exception.--Subparagraph (D) of section 1927(k)(1) of 
     the Social Security Act (42 U.S.C. 1396r-8(k)(1)) (as added 
     by paragraph (1)) shall not apply with respect to a contract 
     in effect on the date of enactment of this Act pursuant to 
     which pharmaceutical products are or may be available at 
     nominal prices until the expiration date of such contract, or 
     October 1, 2006, whichever is earlier, and shall apply to 
     sales made, and rebate periods beginning, on or after that 
     date.
       (4) Exclusion of discounts provided to mail order and 
     nursing facility pharmacies from the determination of average 
     manufacturer price.--
       (A) In general.--Section 1927(k)(1)(B)(ii)(IV) (42 U.S.C. 
     1396r-8(k)(1)(B)(ii)(IV)), as added by paragraph (1)(C), is 
     amended to read as follows:

       ``(IV) Chargebacks, rebates provided to a pharmacy 
     (excluding a mail order pharmacy, a pharmacy at a nursing 
     facility or home, and a pharmacy benefit manager), or any 
     other direct or indirect discounts.''.

       (B) Effective date.--Paragraph (3) shall apply to the 
     amendment made by subparagraph (A).
       (5) Extension of prescription drug discounts to enrollees 
     of medicaid managed care organizations.--
       (A) In general.--Section 1903(m)(2)(A) (42 U.S.C. 
     1396b(m)(2)(A)) is amended--
       (i) in clause (xi), by striking ``and'' at the end;
       (ii) in clause (xii), by striking the period at the end and 
     inserting ``; and''; and
       (iii) by adding at the end the following:
       ``(xiii) such contract provides that payment for covered 
     outpatient drugs dispensed to individuals eligible for 
     medical assistance who are enrolled with the entity shall be 
     subject to the same rebate agreement entered into under 
     section 1927 as the State is subject to and that the State 
     shall have the option of collecting rebates for the 
     dispensing of such drugs by the entity directly from 
     manufacturers or allowing the entity to collect such rebates 
     from manufacturers in exchange for a reduction in the prepaid 
     payments made to the entity for the enrollment of such 
     individuals.''.
       (B) Conforming amendment.--Section 1927(j)(1) (42 U.S.C. 
     1396r-8(j)91)) is amended by inserting ``other than for 
     purposes of collection of rebates for the dispensing of such 
     drugs in accordance with the provisions of a contract under 
     section 1903(m) that meets the requirements of paragraph 
     (2)(A)(xiii) of that section'' before the period.
       (C) Effective date.--The amendments made by this paragraph 
     take effect on the date of enactment of this Act and apply to 
     rebate agreements entered into or renewed under section 1927 
     of the Social Security Act (42 U.S.C. 1396r-8) on or after 
     such date.
       (b) Upper Payment Limit for Ingredient Cost of Covered 
     Outpatient Drugs.--
       (1) In general.--Section 1927(e) (42 U.S.C. 1396r-8(e)) is 
     amended to read as follows:
       ``(e) Pharmacy Reimbursement Limits.--
       ``(1) Upper payment limit for ingredient cost of covered 
     outpatient drugs.--No Federal financial participation shall 
     be available for payment for the ingredient cost of a covered 
     outpatient drug that exceeds the upper payment limit for that 
     drug established under paragraph (2).
       ``(2) Upper payment limit.--
       ``(A) In general.--Except as provided in subparagraphs (B) 
     and (C), the upper payment limit established under this 
     paragraph for the ingredient cost of a--
       ``(i) single source drug, is 105 percent of the average 
     manufacturer price for that drug; and
       ``(ii) multiple source drug, is 115 percent of the weighted 
     average manufacturer price for that drug.
       ``(B) Exception for initial sales periods.--
       ``(i) In general.--In the case of a covered outpatient drug 
     during an initial sales period (not to exceed 2 calendar 
     quarters) in which data on sales for the drug is not 
     sufficiently available from the manufacturer to compute

[[Page 26720]]

     the average manufacturer price or the weighted average 
     manufacturer price, the Secretary shall establish the upper 
     payment limit for the ingredient cost of such drug to apply 
     only during such period based on the following:

       ``(I) In the case of a single source drug, such upper 
     payment limit shall be the wholesale acquisition cost for the 
     drug.
       ``(II) In the case of a first noninnovator multiple source 
     drug, such upper payment limit shall be the average 
     manufacturer price for the single source drug that is rated 
     as therapeutically equivalent and bioequivalent to such drug, 
     minus 10 percent.
       ``(III) In the case of a subsequent noninnovator multiple 
     source drug--

       ``(aa) if the Secretary has sufficient data to determine 
     the weighted average manufacturer price for the drug, such 
     upper payment limit shall be the weighted average 
     manufacturer price determined for the therapeutically 
     equivalent and bioequivalent form of the drug; and
       ``(bb) if the Secretary does not have sufficient data to 
     determine the weighted average manufacturer price for the 
     drug, such upper payment limit shall be the average 
     manufacturer price for the single source drug that is rated 
     as therapeutically equivalent and bioequivalent to the drug, 
     minus 10 percent.
       ``(ii) Definition of wholesale acquisition cost.--For 
     purposes of clause (i), the term `wholesale acquisition cost' 
     means, with respect to a drug or biological, the 
     manufacturer's list price for the drug or biological to 
     wholesalers or direct purchasers in the United States, not 
     including prompt pay or other discounts, rebates, or 
     reductions in price, for the most recent month for which the 
     information is available, as reported in wholesale price 
     guides or other publications of drug or biological pricing 
     data.
       ``(C) Exception for certain innovator multiple source 
     drugs.--In the case of an innovator multiple source drug that 
     a prescribing health care provider determines is necessary 
     for treatment of a condition and that a noninnovator multiple 
     source drug would not be as effective for the individual or 
     would have adverse effects for the individual or both, and 
     for which the provider obtains prior authorization in 
     accordance with a program described in subsection (d)(5), the 
     upper payment limit for the innovator multiple source drug 
     shall be 105 percent of the average manufacturer price for 
     such drug.
       ``(D) Updates; availability of data.--
       ``(i) Frequency of determination.--The Secretary shall 
     update the upper payment limits applicable under this 
     paragraph on a quarterly basis, taking into account the most 
     recent data collected for purposes of determining such limits 
     and the Food and Drug Administration's most recent 
     publication of `Approved Drug Products with Therapeutic 
     Equivalence Evaluations'.
       ``(ii) Collection of data.--

       ``(I) In general.--Beginning on January 1, 2006, the 
     Secretary shall collect data with respect to the average 
     manufacturer prices and volume of sales of covered outpatient 
     drugs (or, in the case of covered outpatient drugs that are 
     first marketed after such date, beginning with the first 
     quarter during which the drugs are first marketed).
       ``(II) Data reported for purposes of determining weighted 
     average manufacturer price.--Insofar as there is a lag in the 
     reporting of the information on rebates and chargebacks so 
     that adequate data are not available on a timely basis to 
     update the weighted average manufacturer price for a multiple 
     source drug, the manufacturer of such drug shall apply a 
     methodology based on a 12-month rolling average for the 
     manufacturer to estimate costs attributable to rebates and 
     charge backs for such drug. For years after 2006, the 
     Secretary shall establish a uniform methodology to estimate 
     and apply such costs.

       ``(iii) Availability of data to states.--Notwithstanding 
     subsection (b)(3)(D), beginning with the first quarter of 
     fiscal year 2006 for which data is available, and for each 
     fiscal year quarter thereafter, the Secretary shall make 
     available to States the most recently reported average 
     manufacturer prices for single source drugs and weighted 
     average manufacturer prices for multiple source drugs.
       ``(E) Authority to enter contracts.--The Secretary may 
     enter into contracts with appropriate entities to determine 
     average manufacturer prices, volume, and other data necessary 
     to calculate the upper payment limit for a covered outpatient 
     drug established under this subsection and to calculate that 
     payment limit.
       ``(3) State use of price data.--
       ``(A) Distribution of data.--The Secretary shall devise and 
     implement a means for electronic distribution of the most 
     recently calculated weighted average manufacturer price and 
     the average manufacturer price for all covered outpatient 
     drugs to each State agency designated under section 
     1902(a)(5) with responsibility for the administration or 
     supervision of the administration of the State plan under 
     this title.
       ``(B) Authority to establish payment rates based on data.--
     A State may use the price data received in accordance with 
     subparagraph (A) in establishing payment rates for the 
     ingredient costs and dispensing fees for covered outpatient 
     drugs dispensed to individuals eligible for medical 
     assistance under this title.
       ``(4) Reasonable dispensing fees required.--
       ``(A) In general.--A State which provides medical 
     assistance for covered outpatient drugs shall pay a 
     dispensing fee for each covered outpatient drug for which 
     Federal financial participation is available in accordance 
     with this section in accordance with the following:
       ``(i) The dispensing fee for a noninnovator multiple source 
     drug shall be greater than the dispensing fee for an 
     innovator multiple source drug that is rated as 
     therapeutically equivalent and bioequivalent to such drug.
       ``(ii) In establishing such dispensing fees, the State 
     takes into consideration such requirements as the Secretary 
     shall, by regulation, establish, and which shall include 
     consideration of the following:

       ``(I) Any reasonable costs associated with a pharmacist's 
     time in checking for information about an individual's 
     coverage or performing quality assurance activities.
       ``(II) Costs associated with--

       ``(aa) the measurement or mixing of a covered outpatient 
     drug;
       ``(bb) filling the container for the drug;
       ``(cc) physically providing the completed prescription to 
     an individual enrolled in the program under this title;
       ``(dd) delivery;
       ``(ee) special packaging;
       ``(ff) overhead related to maintaining the facility and 
     equipment necessary to operate the pharmacy, including the 
     salaries of pharmacists and other pharmacy workers;
       ``(gg) geographic factors that impact operational costs;
       ``(hh) patient counseling; and
       ``(ii) the dispensing of drugs requiring specialty pharmacy 
     care management services (as determined by the Secretary in 
     accordance with subparagraph (B)).
       ``(B) Determination of drugs requiring specialty pharmacy 
     care management services.--
       ``(i) In general.--Not later than 15 months after the date 
     of enactment of the Deficit Reduction Omnibus Reconciliation 
     Act of 2005, the Secretary shall establish a list of covered 
     outpatient drugs which require specialty pharmacy care 
     management services that includes only those drugs for which 
     the Secretary determines that access by individuals eligible 
     for medical assistance under this title would be seriously 
     impaired without the provision of specialty pharmacy care 
     management services.
       ``(ii) Specialty pharmacy care management services 
     defined.--For purposes of this paragraph, the term `specialty 
     pharmacy care management services' means services provided in 
     connection with the dispensing or administration of a covered 
     outpatient drug which the Secretary determines requires--

       ``(I) significant caregiver and provider contact and 
     education regarding the relevant disease state, prevention, 
     treatment, drug indications, benefits, risks, complications, 
     use, pharmacy counseling, and explanation of existing 
     provider guidelines;
       ``(II) patient compliance services, including coordination 
     of provider visits with drug delivery, compliance with a drug 
     dosing regimen, mailing or telephone call reminders, 
     compiling compliance data, and assisting providers in 
     developing compliance programs; or
       ``(III) tracking services, including developing referral 
     processes with providers, screening referrals, and tracking 
     patient weight for dosing requirements.

       ``(iii) Quarterly updates.--The Secretary shall update the 
     list of covered outpatient drugs requiring specialty pharmacy 
     management services on a quarterly basis.
       ``(5) Rules applicable to critical access retail 
     pharmacies.--
       ``(A) Reimbursement limits.--Notwithstanding paragraph 
     (2)(A), in the case of a critical access retail pharmacy (as 
     defined in subparagraph (C)), the upper payment limit--
       ``(i) for the ingredient cost of a single source drug, is 
     the lesser of--

       ``(I) 108 percent of the average manufacturer price for the 
     drug; or
       ``(II) the wholesale acquisition cost for the drug; and

       ``(ii) for the ingredient cost of a multiple source drug, 
     is the lesser of--

       ``(II) 140 percent of the weighted average manufacturer 
     price for the drug; or
       ``(II) the wholesale acquisition cost for the drug.

       ``(B) Application of other provisions.--The preceding 
     provisions of this subsection shall apply with respect to 
     reimbursement to a critical access retail pharmacy in the 
     same manner as such provisions apply to reimbursement to 
     other retail pharmacies except that, in establishing the 
     dispensing fee for a critical access pharmacy the Secretary, 
     in addition to the factors required under paragraph (4), 
     shall include consideration of the costs associated with 
     operating a critical access retail pharmacy.
       ``(C) Critical access retail pharmacy defined.--For 
     purposes of subparagraph (A), the term `critical access 
     retail pharmacy' means an retail pharmacy that is not within

[[Page 26721]]

     a 20-mile radius of another retail pharmacy.''.
       (2) Increase in basic rebate for single source drugs and 
     innovator multiple source drugs.--Section 
     1927(c)(1)(B)(i)(VI) (42 U.S.C. 1396r-8(c)(1)(B)(i)(VI), as 
     added by section 6002(a)(3), is amended by striking ``17'' 
     and inserting ``18.1''.
       (3) Conforming amendments.--
       (A) Section 1927(b)(3)(D)(i) (42 U.S.C. 1396r-
     8(b)(3)(D)(i)) is amended by inserting ``(including with 
     respect to the determination of weighted average manufacturer 
     prices under subsection (e)(2) and the distribution of 
     weighted average manufacturer prices and average manufacturer 
     prices for covered outpatient drugs to States under 
     subsection (e)(3))'' after ``this section''.
       (B) Section 1903(i)(10) (42 U.S.C. 1396b(i)(10)) is 
     amended--
       (i) in subparagraph (A), by striking ``and'' at the end;
       (ii) in subparagraph (B), by striking ``or'' at the end and 
     inserting ``and''; and
       (iii) by adding at the end the following:
       ``(C) with respect to any amount expended for the 
     ingredient cost of a covered outpatient drug that exceeds the 
     upper payment limit for that drug established under section 
     1927(e); or''.
       (4) Effective date.--The amendments made by this subsection 
     take effect with respect to a State on the later of--
       (A) January 1, 2007; or
       (B) the date that is 6 months after the close of the first 
     regular session of the State legislature that begins after 
     the date of enactment of this Act.
       (c) Interim Upper Payment Limit.--
       (1) In general.--With respect to a State program under 
     title XIX of the Social Security Act, during the period that 
     begins on January 1, 2006, and ends on the effective date 
     applicable to such State under subsection (b)(3), the 
     Secretary shall--
       (A) apply the Federal upper payment limit established under 
     section 447.332(b) of title 42, Code of Federal Regulations 
     to the State by substituting ``125 percent'' for ``150 
     percent''; and
       (B) in the case of covered outpatient drugs under title XIX 
     of such Act that are marketed as of July 1, 2005, and are 
     subject to Federal upper payment limits that apply under 
     section 447.332 of title 42, Code of Federal Regulations, use 
     average wholesale prices, direct prices, and wholesale 
     acquisition costs for such drugs that do not exceed such 
     prices and costs as of such date to determine the Federal 
     upper payment limits that apply under section 447.332 of 
     title 42, Code of Federal Regulations to such drugs during 
     such period.
       (2) Application to new drugs.--Paragraph (1)(A) shall apply 
     to a covered outpatient drug under title XIX of the Social 
     Security Act that is first marketed after July 1, 2005, but 
     before January 1, 2007, and is subject to the Federal upper 
     payment limit established under section 447.332(b) of title 
     42, Code of Federal Regulations.

     SEC. 6002. INCREASE IN REBATES FOR COVERED OUTPATIENT DRUGS.

       (a) Increase in Basic Rebate for Single Source Drugs and 
     Innovator Multiple Source Drugs.--Section 1927(c)(1)(B)(i) 
     (42 U.S.C. 1396r-8(c)(1)(B)(i)) is amended--
       (1) in subclause (IV), by striking ``and'' after the 
     semicolon;
       (2) in subclause (V)--
       (A) by inserting ``and before January 1, 2006,'' after 
     ``1995,''; and
       (B) by striking the period and inserting ``; and''; and
       (3) by adding at the end the following:

       ``(VI) after December 31, 2005, is 17 percent.''.

       (b) Increase in Rebate for Other Drugs.--Section 
     1927(c)(3)(B) (42 U.S.C. 1396r-8(c)(3)(B)) is amended--
       (1) in clause (i), by striking ``and'' at the end;
       (2) in clause (ii)--
       (A) by inserting ``and before January 1, 2006,'' after 
     ``December 31, 1993,''; and
       (B) by striking the period at the end and inserting ``; 
     and''; and
       (3) by adding at the end the following:
       ``(iii) after December 31, 2005, is 17 percent.''.

     SEC. 6003. IMPROVED REGULATION OF AUTHORIZED GENERIC DRUGS.

       (a) Inclusion With Other Reported Average Manufacturer and 
     Best Prices.--Section 1927(b)(3)(A) (42 U.S.C. 1396r-
     8(b)(3)(A)) is amended--
       (1) by striking clause (i) and inserting the following:
       ``(i) not later than 30 days after the last day of each 
     rebate period under the agreement--

       ``(I) on the average manufacturer price (as defined in 
     subsection (k)(1)) for each covered outpatient drug for the 
     rebate period under the agreement (including for each such 
     drug that is an authorized generic drug or is any other drug 
     sold under a new drug application approved under section 
     505(c) of the Federal Food, Drug, and Cosmetic Act); and
       ``(II) for each single source drug, innovator multiple 
     source drug, authorized generic drug, and any other drug sold 
     under a new drug application approved under section 505(c) of 
     the Federal Food, Drug, and Cosmetic Act, on the 
     manufacturer's best price (as defined in subsection 
     (c)(1)(C)) for such drug for the rebate period under the 
     agreement;''; and

       (2) in clause (ii), by inserting ``(including for such 
     drugs that are authorized generic drugs or are any other 
     drugs sold under a new drug application approved under 
     section 505(c) of the Federal Food, Drug, and Cosmetic Act)'' 
     after ``drugs''.
       (b) Conforming Amendments.--Section 1927 of such Act (42 
     U.S.C. 1396r-8) is amended--
       (1) in subsection (c)(1)(C)--
       (A) in clause (i), in the matter preceding subclause (I), 
     by striking ``or innovator multiple source drug of a 
     manufacturer'' and inserting ``, innovator multiple source 
     drug, or authorized generic drug of a manufacturer, or any 
     other drug of a manufacturer that is sold under a new drug 
     application approved under section 505(c) of the Federal 
     Food, Drug, and Cosmetic Act''; and
       (B) in clause (ii)--
       (i) in subclause (II), by striking ``and'' at the end;
       (ii) in subclause (III), by striking the period at the end 
     and inserting ``; and''; and
       (iii) by adding at the end the following:

       ``(IV) in the case of a manufacturer that approves, allows, 
     or otherwise permits an authorized generic drug or any other 
     drug of the manufacturer to be sold under a new drug 
     application approved under section 505(c) of the Federal 
     Food, Drug, and Cosmetic Act, shall be inclusive of the 
     lowest price for such authorized generic or other drug 
     available from the manufacturer during the rebate period to 
     any wholesaler, retailer, provider, health maintenance 
     organization, nonprofit entity, or governmental entity within 
     the United States, excluding those prices described in 
     subclauses (I) through (IV) of clause (i).''; and

       (2) in subsection (k)--
       (A) in paragraph (1), as amended by section 6001(a)(1)(B), 
     by adding at the end the following:
       ``(F) Inclusion of authorized generic drugs.--In the case 
     of a manufacturer that approves, allows, or otherwise permits 
     an authorized generic drug or any other drug of the 
     manufacturer to be sold under a new drug application approved 
     under section 505(c) of the Federal Food, Drug, and Cosmetic 
     Act, such term shall be inclusive of the average price paid 
     for such authorized generic or other drug.''; and
       (B) by adding at the end the following:
       ``(10) Authorized generic drug.--The term `authorized 
     generic drug' means a listed drug (as that term is used in 
     section 505(j) of the Federal Food, Drug, and Cosmetic Act) 
     that--
       ``(A) has been approved under section 505(c) of such Act; 
     and
       ``(B) is marketed, sold, or distributed directly or 
     indirectly to the retail class of trade under a different 
     labeling, packaging (other than repackaging as the listed 
     drug in blister packs, unit doses, or similar packaging for 
     use in institutions), product code, labeler code, trade name, 
     or trade mark than the listed drug.''.
       (c) Effective Date.--The amendments made by this section 
     take effect on January 1, 2006.

     SEC. 6004. COLLECTION OF REBATES FOR CERTAIN PHYSICIAN 
                   ADMINISTERED DRUGS.

       (a) In General.--Section 1927(a) (42 U.S.C. 1396r-8(a)) is 
     amended by adding at the end the following:
       ``(7) Requirement for submission of utilization data for 
     certain physician-administered drugs.--In order for payment 
     to be available under section 1903(a) for a covered 
     outpatient drug that is physician administered (as determined 
     by the Secretary), and that is administered on or after 
     January 1, 2006, the State shall provide for the submission 
     of such utilization data and coding (including both J-codes 
     and National Drug Code numbers) for each such drug as the 
     Secretary may specify as necessary in order to secure rebates 
     for payments made under this title.''.
       (b) Limitation on Payment.--Section 1903(i)(10) (42 U.S.C. 
     1396b(i)(10)), as amended by section 6001(b)(2)(B), is 
     amended--
       (1) in subparagraph (B), by striking ``and'' at the end;
       (2) in subparagraph (C), by striking ``; or'' at the end 
     and inserting ``, and''; and
       (3) by adding at the end the following:
       ``(D) with respect to covered outpatient drugs described in 
     section 1927(a)(7), unless information with respect to 
     utilization data and coding on such drugs is submitted in 
     accordance with that section; or''.

                CHAPTER 2--LONG-TERM CARE UNDER MEDICAID

     SEC. 6011. REFORM OF MEDICAID ASSET TRANSFER RULES.

       (a) Requirement To Impose Partial Months of 
     Ineligibility.--Section 1917(c)(1)(E) (42 U.S.C. 
     1396p(c)(1)(E)) is amended by adding at the end the 
     following:
       ``(iv) A State shall not round down, or otherwise disregard 
     any fractional period of ineligibility determined under 
     clause (i) or (ii) with respect to the disposal of assets.''.
       (b) Authority for States To Accumulate Multiple Transfers 
     Into 1 Penalty Period.--Section 1917(c)(1) (42 U.S.C. 
     1396p(c)(1)) is amended by adding at the end the following:

[[Page 26722]]

       ``(F) Notwithstanding the preceding provisions of this 
     paragraph, in the case of an individual (or individual's 
     spouse) who disposes of multiple assets in more than 1 month 
     for less than fair market value on or after the applicable 
     look-back date specified in subparagraph (B), a State may 
     determine the period of ineligibility applicable to such 
     individual under this paragraph by--
       ``(i) treating the total, cumulative uncompensated value of 
     all assets transferred by the individual (or individual's 
     spouse) during all months on or after the look-back date 
     specified in subparagraph (B) as 1 transfer for purposes of 
     clause (i) or (ii) (as the case may be) of subparagraph (E); 
     and
       ``(ii) beginning such period on the earliest date which 
     would apply under subparagraph (D) to any of such 
     transfers.''.
       (c) Inclusion of Transfer of Certain Notes and Loans 
     Assets.--Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)), as 
     amended by subsection (b), is amended by adding at the end 
     the following:
       ``(G) For purposes of this paragraph with respect to a 
     transfer of assets, the term `assets' includes funds used to 
     purchase a promissory note, loan, or mortgage unless such 
     note, loan, or mortgage--
       ``(i) has a repayment term that is actuarially sound (as 
     determined in accordance with actuarial publications of the 
     Office of the Chief Actuary of the Social Security 
     Administration);
       ``(ii) provides for payments to be made in equal amounts 
     during the term of the loan, with no deferral and no balloon 
     payments made; and
       ``(iii) prohibits the cancellation of the balance upon the 
     death of the lender.
     In the case of a promissory note, loan, or mortgage that does 
     not satisfy the requirements of clauses (i) through (iii), 
     the value of such note, loan, or mortgage shall be the 
     outstanding balance due as of the date of the individual's 
     application for medical assistance for services described in 
     subparagraph (C).''.
       (d) Treatment of Annuities.--
       (1) Inclusion of transfers to purchase balloon annuities.--
     Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)), as amended by 
     subsection (c), is amended by adding at the end the 
     following:
       ``(H) For purposes of this paragraph with respect to a 
     transfer of assets, the term `assets' includes an annuity 
     purchased by or on behalf of an annuitant who has applied for 
     medical assistance with respect to nursing facility services 
     or other long-term care services under this title unless--
       ``(i) the annuity is--
       ``(I) an annuity described in subsection (b) or (q) of 
     section 408 of the Internal Revenue Code of 1986; or
       ``(II) purchased with proceeds from--
       ``(aa) an account or trust described in subsection (a), 
     (c), (p) of section 408 of such Code;
       ``(bb) a simplified employee pension (within the meaning of 
     section 408(k) of such Code); or
       ``(cc) a Roth IRA described in section 408A of such Code; 
     or
       ``(ii) the annuity--
       ``(I) is irrevocable and nonassignable;
       ``(II) is actuarially sound (as determined in accordance 
     with actuarial publications of the Office of the Chief 
     Actuary of the Social Security Administration); and
       ``(III) provides for payments in equal amounts during the 
     term of the annuity, with no deferral and no balloon payments 
     made.''.
       (2) Requirement for state to be named as a remainder 
     beneficiary.--Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)), as 
     amended by paragraph (1), is amended by adding at the end the 
     following:
       ``(I) For purposes of this paragraph, the purchase of an 
     annuity shall be treated as the disposal of an asset for less 
     than fair market value unless the State is named as the 
     remainder beneficiary in the first position for at least the 
     total amount of medical assistance paid on behalf of the 
     annuitant under this title or is named as such a beneficiary 
     in the second position after the community spouse and such 
     spouse does not dispose of any such remainder for less than 
     fair market value.''.
       (3) Inclusion of certain annuities in an estate.--Section 
     1917(b)(4) (42 U.S.C. 1396p(b)(4)) is amended--
       (A) in subparagraph (A), by striking ``and'' at the end;
       (B) in subparagraph (B), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following:
       ``(C) shall include an annuity unless the annuity was 
     purchased from a financial institution or other business that 
     sells annuities in the State as part of its regular 
     business.''.
       (e) Inclusion of Transfers To Purchase Life Estates.--
     Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)), as amended by 
     subsection (d)(2), is amended by adding at the end the 
     following:
       ``(J) For purposes of this paragraph with respect to a 
     transfer of assets, the term `assets' includes the purchase 
     of a life estate interest in another individual's home unless 
     the purchaser resides in the home for a period of at least 1 
     year after the date of the purchase.
       (f) Protection Against Undue Hardship.--Section 1917(c) (42 
     U.S.C. 1396p(c)) is amended by adding at the end the 
     following:
       ``(6) For purposes of paragraph (2)(D) and subsection 
     (d)(5), the procedures established by the State in accordance 
     with standards specified by the Secretary shall provide for--
       ``(A) notice, before application of the provisions of 
     paragraph (1) or subsection (d), to an individual who is an 
     applicant for medical assistance under this title who would 
     be subject to such a penalty under such provisions that an 
     undue hardship exception exists;
       ``(B) a timely process before the imposition of a penalty 
     for determining whether an undue hardship waiver will be 
     granted for the individual;
       ``(C) a process under which an adverse determination can be 
     appealed; and
       ``(D) application of criteria that specifies that an undue 
     hardship exists when application of the provisions of 
     paragraph (1) or subsection (d) would deprive the individual 
     of medical care such that the individual's health or life 
     would be endangered or when the application of such 
     provisions would deprive the individual of food, clothing, 
     shelter, or other necessities of life.''.
       (g) Effective Dates.--
       (1) In general.--Except as provided in paragraphs (2) and 
     (3), the amendments made by this section shall apply to 
     payments under title XIX of the Social Security Act (42 
     U.S.C. 1396 et seq.) for calendar quarters beginning on or 
     after the date of enactment of this Act, without regard to 
     whether or not final regulations to carry out such amendments 
     have been promulgated by such date.
       (2) Exceptions.--The amendments made by this section shall 
     not apply--
       (A) to medical assistance provided for services furnished 
     before the date of enactment;
       (B) with respect to assets disposed of on or before the 
     date of enactment of this Act; or
       (C) with respect to trusts established on or before the 
     date of enactment of this Act.
       (3) Extension of effective date for state law amendment.--
     In the case of a State plan under title XIX of the Social 
     Security Act (42 U.S.C. 1396 et seq.) which the Secretary of 
     Health and Human Services determines requires State 
     legislation in order for the plan to meet the additional 
     requirements imposed by the amendments made by a provision of 
     this section, the State plan shall not be regarded as failing 
     to comply with the requirements of such title solely on the 
     basis of its failure to meet these additional requirements 
     before the first day of the first calendar quarter beginning 
     after the close of the first regular session of the State 
     legislature that begins after the date of the enactment of 
     this Act. For purposes of the previous sentence, in the case 
     of a State that has a 2-year legislative session, each year 
     of the session is considered to be a separate regular session 
     of the State legislature.

     SEC. 6012. STATE LONG-TERM CARE PARTNERSHIPS.

       (a) Expansion of State Long-Term Care Partnerships.--
       (1) In general.--Section 1917(b)(1)(C)(ii) (42 U.S.C. 
     1396p(b)(1)(C)(ii)) is amended to read as follows:
       ``(ii) Clause (i) shall not apply in the case of an 
     individual who received medical assistance under--
       ``(I) a Qualified State Long-Term Care Insurance 
     Partnership (as defined in paragraph (5)); or
       ``(II) under a State plan of a State which--
       ``(aa) had a State plan amendment approved as of May 14, 
     1993, which provided for the disregard of any assets or 
     resources to the extent that payments are made under a long-
     term care insurance policy or because an individual has 
     received (or is entitled to receive) benefits under a long-
     term care insurance policy; and
       ``(bb) has a State plan amendment which satisfies the 
     requirements of subparagraphs (B) through (G) of paragraph 
     (5) in the case of any long-term care insurance policy sold 
     under such plan amendment on or after the date that is 2 
     years after the date of enactment of such paragraph.
     For purposes of this clause and paragraphs (5) and (6), the 
     term `long-term care insurance policy' includes a certificate 
     issued under a group insurance contract.''.
       (2) Satisfaction of minimum federal standards, tax 
     qualifications, inflation protection, and other requirements 
     for long-term care insurance partnerships.--Section 1917(b) 
     (42 U.S.C. 1396p(b)) is amended by inserting at the end the 
     following:
       ``(5) The term `Qualified State Long-Term Care Insurance 
     Partnership' means a program offered in a State with an 
     approved State plan amendment that provides for the 
     following:
       ``(A) Subject to the limit specified in subparagraph (D), 
     the disregard of any assets or resources in an amount equal 
     to the amount of payments made to, or on behalf of, an 
     individual who is a beneficiary under any long-term care 
     insurance policy sold under such plan amendment.
       ``(B) A requirement that the State will treat benefits paid 
     under any long-term care insurance policy sold under a plan 
     amendment of another State that maintains a Qualified Long-
     Term Care Insurance Partnership or is described in subsection 
     (b)(1)(C)(ii)(II) the same as the State treats benefits paid 
     under such a policy sold under the State's plan amendment.

[[Page 26723]]

       ``(C) A requirement that any long-term care insurance 
     policy sold under such plan amendment--
       ``(i) be a qualified long-term care insurance contract 
     within the meaning of section 7702B(b) of the Internal 
     Revenue Code of 1986; and
       ``(ii) meet the requirements described in paragraph (6).
       ``(D) A requirement that any such policy sold under the 
     State plan amendment shall provide for--
       ``(i) compound annual inflation protection of at least 5 
     percent; and
       ``(ii) asset protection that does not exceed $250,000.
     The dollar amount specified in the preceding sentence shall 
     be increased, beginning with 2007, from year to year based on 
     the percentage increase in the medical care expenditure 
     category of the Consumer Price Index for All Urban Consumers 
     (United States city average), published by the Bureau of 
     Labor Statistics, rounded to the nearest $100.
       ``(E) A requirement that an insurer may rescind a long-term 
     care insurance policy sold under such State plan amendment 
     that has been in effect for at least 2 years or deny an 
     otherwise valid long-term care insurance claim under such a 
     policy only upon a showing of misrepresentation that is 
     material to the acceptance of coverage, pertains to the claim 
     made, and could not have been known by the insurer at the 
     time the policy was sold.
       ``(F) A requirement that any individual who sells such a 
     policy receive training, and demonstrate evidence of an 
     understanding of, the policy and how the policy relates to 
     other public and private coverage of long-term care.
       ``(G) A requirement that the issuer of any such policy 
     report--
       ``(i) to the Secretary, such information or data as the 
     Secretary may require; and
       ``(ii) to the State, the information or data reported to 
     the Secretary (if any), the information or data required 
     under the minimum reporting requirements developed under 
     section 6012(b)(2)(B) of the Deficit Reduction Omnibus 
     Reconciliation Act of 2005, and such additional information 
     or data as the State may require.
     For purposes of applying this paragraph, if a long-term care 
     insurance policy is exchanged for another such policy, the 
     date coverage became effective under the first policy shall 
     determine when coverage first becomes effective.
       ``(6)(A) For purposes of subparagraph (C)(ii) of paragraph 
     (5), the requirements of this paragraph are met if a long-
     term care insurance policy sold under a plan amendment 
     described in that paragraph meets--
       ``(i) Model regulation.--The following requirements of the 
     model regulation:
       ``(I) Section 6A (relating to guaranteed renewal or 
     noncancellability), other than paragraph (5) thereof, and the 
     requirements of section 6B of the model Act relating to such 
     section 6A.
       ``(II) Section 6B (relating to prohibitions on limitations 
     and exclusions) other than paragraph (7) thereof.
       ``(III) Section 6C (relating to extension of benefits).
       ``(IV) Section 6D (relating to continuation or conversion 
     of coverage).
       ``(V) Section 6E (relating to discontinuance and 
     replacement of policies).
       ``(VI) Section 7 (relating to unintentional lapse).
       ``(VII) Section 8 (relating to disclosure), other than 
     sections 8F, 8G, 8H, and 8I thereof.
       ``(VIII) Section 9 (relating to required disclosure of 
     rating practices to consumer).
       ``(IX) Section 11 (relating to prohibitions against post-
     claims underwriting).
       ``(X) Section 12 (relating to minimum standards).
       ``(XI) Section 14 (relating to application forms and 
     replacement coverage).
       ``(XII) Section 15 (relating to reporting requirements).
       ``(XIII) Section 22 (relating to filing requirements for 
     marketing).
       ``(XIV) Section 23 (relating to standards for marketing), 
     including inaccurate completion of medical histories, other 
     than paragraphs (1), (6), and (9) of section 23C.
       ``(XV) Section 25 (relating to prohibition against 
     preexisting conditions and probationary periods in 
     replacement policies or certificates).
       ``(XVI) The provisions of section 26 relating to contingent 
     nonforfeiture benefits, if the policyholder declines the 
     offer of a nonforfeiture provision described in paragraph 
     (4).
       ``(XVII) Section 29 (relating to standard format outline of 
     coverage).
       ``(XVIII) Section 30 (relating to requirement to deliver 
     shopper's guide).
       ``(ii) Model act.--The following requirements of the model 
     Act:
       ``(I) Section 6C (relating to preexisting conditions).
       ``(II) Section 6D (relating to prior hospitalization).
       ``(III) The provisions of section 8 relating to contingent 
     nonforfeiture benefits.
       ``(IV) Section 6F (relating to right to return).
       ``(V) Section 6G (relating to outline of coverage).
       ``(VI) Section 6H (relating to requirements for 
     certificates under group plans).
       ``(VII) Section 6J (relating to policy summary).
       ``(VIII) Section 6K (relating to monthly reports on 
     accelerated death benefits).
       ``(B) Definitions.--For purposes of this paragraph--
       ``(i) Model provisions.--The terms `model regulation' and 
     `model Act' mean the long-term care insurance model 
     regulation, and the long-term care insurance model Act, 
     respectively, promulgated by the National Association of 
     Insurance Commissioners (as adopted as of October 2000).
       ``(ii) Coordination.--Any provision of the model regulation 
     or model Act listed under clause (i) or (ii) of subparagraph 
     (A) shall be treated as including any other provision of such 
     regulation or Act necessary to implement the provision.
       ``(iii) Determination.--For purposes of this paragraph, the 
     determination of whether any requirement of a model 
     regulation or the model Act has been met shall be made by the 
     Secretary.''.
       (3) Effective date.--The amendments made by this subsection 
     take effect on October 1, 2007, and apply to long-term care 
     insurance policies sold on or after that date.
       (b) Development of Uniform Standards and Recommendations.--
       (1) In general.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary, in consultation with 
     the National Association of Insurance Commissioners, issuers 
     of long-term care insurance policies, States with experience 
     with long-term care insurance partnership plans, other 
     States, and representatives of consumers of long-term care 
     insurance policies shall develop the uniform standards 
     described in paragraph (2) and submit recommendations to 
     Congress with respect to the issues identified in paragraph 
     (3).
       (2) Uniform standards.--The uniform standards described in 
     this paragraph are the following:
       (A) Reciprocity.--Standards for ensuring that long-term 
     care insurance policies issued under a State long-term care 
     insurance partnership under section 1917(b)(1)(C)(ii) of the 
     Social Security Act (42 U.S.C. 1396p(b)(1)(C)(ii)) (as 
     amended by subsection (a)) are portable to other States with 
     such a partnership.
       (B) Minimum reporting requirements.--Standards for minimum 
     reporting requirements for issuers of long-term care 
     insurance policies under such State long-term care insurance 
     partnerships that shall specify the data and information that 
     each such issuer shall report to the State with which it has 
     such a partnership. The requirements developed in accordance 
     with this subparagraph shall specify the type and format of 
     the data and information to be reported and the frequency 
     with which such reports are to be made.
       (C) Suitability.--Suitability standards for determining 
     whether a long-term care insurance policy is appropriate for 
     the needs of an applicant, based on guidance of the National 
     Association of Insurance Commissioners regarding suitability.
       (3) Recommendations.--The recommendations described in this 
     paragraph are the following:
       (A) Incontestability.--Recommendations regarding whether 
     the requirements relating to incontestability for long-term 
     care insurance policies sold under a State long-term care 
     insurance partnership program under section 1917(b)(1)(C)(ii) 
     of the Social Security Act should be modified based on 
     guidance of the National Association of Insurance 
     Commissioners regarding incontestability.
       (B) Nonforfeiture.--Recommendations regarding whether 
     requirements relating to nonforfeiture for issuers of long-
     term care insurance policies under a State long-term care 
     insurance partnership program under section 1917(b)(1)(C)(ii) 
     of such Act should be modified to reflect changes in an 
     insured's financial circumstances.
       (C) Independent certification for benefits assessment.--
     Recommendations regarding whether uniform standards for 
     requiring benefits assessment evaluations to be conducted by 
     independent entities should be established for issuers of 
     long-term care insurance policies under such a State 
     partnership program and, if so, what such standards should 
     be.
       (D) Rating requirements.--Recommendations regarding whether 
     uniform standards for the establishment of, and annual 
     increases in, premiums for long-term care insurance policies 
     sold under such a State partnership program should be 
     established and, if so, what such standards should be.
       (E) Dispute resolution.--Recommendations regarding whether 
     uniform standards are needed to ensure fair adjudication of 
     coverage disputes under long-term care insurance policies 
     sold under such a State partnership program and the delivery 
     of the benefits promised under such policies.
       (4) State reporting requirements.--Nothing in paragraph 
     (2)(B) shall be construed as prohibiting a State from 
     requiring an issuer of a long-term care insurance policy sold 
     in the State (regardless of whether the policy is issued 
     under a State long-term care insurance partnership under 
     section 1917(b)(1)(C)(ii) of the Social Security Act) to 
     require the issuer to report information or

[[Page 26724]]

     data to the State that is in addition to the information or 
     data required under the minimum reporting requirements 
     developed under that paragraph.
       (c) Annual Reports to Congress.--The Secretary of Health 
     and Human Services shall annually report to Congress on the 
     long-term care insurance partnerships established in 
     accordance with section 1917(b)(1)(C)(ii) of the Social 
     Security Act (42 U.S.C. 1396p(b)(1)(C)(ii)) (as amended by 
     subsection (a)(1)). Such reports shall include analyses of 
     the extent to which such partnerships expand or limit access 
     of individuals to long-term care and the impact of such 
     partnerships on Federal and State expenditures under the 
     Medicare and Medicaid programs.

       CHAPTER 3--ELIMINATING FRAUD, WASTE, AND ABUSE IN MEDICAID

     SEC. 6021. ENHANCING THIRD PARTY RECOVERY.

       (a) Clarification of Right of Recovery Against Any Third 
     Party Legally Responsible for Payment of a Claim for a Health 
     Care Item or Service.--Section 1902(a)(25) (42 U.S.C. 
     1396a(a)(25)) is amended--
       (1) in subparagraph (A), in the matter preceding clause 
     (i)--
       (A) by inserting ``, including self-insured plans'' after 
     ``health insurers''; and
       (B) by striking ``and health maintenance organizations'' 
     and inserting ``health maintenance organizations, pharmacy 
     benefit managers, or other parties that are, by statute, 
     contract, or agreement, legally responsible for payment of a 
     claim for a health care item or service''; and
       (2) in subparagraph (G)--
       (A) by inserting ``a self-insured plan,'' after ``1974,''; 
     and
       (B) by striking ``and a health maintenance organization'' 
     and inserting ``a health maintenance organization, a pharmacy 
     benefit manager, or other party that is, by statute, 
     contract, or agreement, legally responsible for payment of a 
     claim for a health care item or service''.
        (b) Requirement for Third Parties To Provide the State 
     With Coverage Eligibility and Claims Data.--Section 
     1902(a)(25) (42 U.S.C. 1396a(a)(25)) is amended--
       (1) in subparagraph (G), by striking ``and'' at the end;
       (2) in subparagraph (H), by adding ``and'' after the 
     semicolon at the end; and
       (3) by inserting after subparagraph (H), the following:
       ``(I) that the State shall provide assurances satisfactory 
     to the Secretary that the State has in effect laws requiring 
     health insurers, including self-insured plans, group health 
     plans (as defined in section 607(1) of the Employee 
     Retirement Income Security Act of 1974), service benefit 
     plans, health maintenance organizations, pharmacy benefit 
     managers, or other parties that are, by statute, contract, or 
     agreement, legally responsible for payment of a claim for a 
     health care item or service, as a condition of doing business 
     in the State, to--
       ``(i) provide eligibility and claims payment data with 
     respect to an individual who is eligible for, or is provided, 
     medical assistance under the State plan, upon the request of 
     the State;
       ``(ii) accept the subrogation of the State to any right of 
     an individual or other entity to payment from the party for 
     an item or service for which payment has been made under the 
     State plan;
       ``(iii) respond to any inquiry by the State regarding a 
     claim for payment for any health care item or service 
     submitted not later than 3 years after the date of the 
     provision of such health care item or service; and
       ``(iv) agree not to deny a claim submitted by the State 
     solely on the basis of the date of submission of the 
     claim;''.
       (c) Effective Date.--Except as provided in section 6026(e), 
     the amendments made by this section take effect on January 1, 
     2006.

     SEC. 6022. LIMITATION ON USE OF CONTINGENCY FEE ARRANGEMENTS.

       (a) In General.--Section 1903(i) (42 U.S.C. 1396b(i)), as 
     amended by section 104(b) of the QI, TMA, and Abstinence 
     Programs Extension and Hurricane Katrina Unemployment Relief 
     Act of 2005 (Public Law 109-91), is amended--
       (1) in paragraph (19), by adding ``or'' at the end;
       (2) by striking the period at the end of paragraph (21) and 
     inserting ``; or''; and
       (3) by inserting after paragraph (21), the following:
       ``(22) with respect to any amount expended in connection 
     with a contract or agreement (other than a risk contract 
     under section 1903(m)) between the State agency under section 
     1902(a)(5) (or any State or local agency designated by such 
     agency to administer any portion of the State plan under this 
     title) and a consultant or other contractor if the terms of 
     compensation for the consultant or other contractor do not 
     meet the standards established by the Inspector General of 
     the Department of Health and Human Services under section 
     6022(b) of the Deficit Reduction Omnibus Reconciliation Act 
     of 2005.''.
       (b) Contingency Fee Arrangement Standards.--Not later than 
     6 months after the date of enactment of this Act, the 
     Inspector General of the Department of Health and Human 
     Services shall issue standards for the terms of compensation 
     of consultants and other individuals or entities contracting 
     with State agencies (or their designees) administering State 
     Medicaid plans under title XIX of the Social Security Act 
     that ensure prudent purchasing and program integrity with 
     respect to Federal funds. The Inspector General shall 
     annually review and, as necessary, revise such standards to 
     promptly address new compensation arrangements that may 
     present a risk to program integrity under such title.
       (c) Effective Date.--Except as provided in section 6026(e), 
     the amendments made by subsection (a) take effect on January 
     1, 2007.

     SEC. 6023. ENCOURAGING THE ENACTMENT OF STATE FALSE CLAIMS 
                   ACTS.

       (a) In General.--Title XIX (42 U.S.C. 1396 et seq.) is 
     amended by inserting after section 1908A the following:


  ``STATE FALSE CLAIMS ACT REQUIREMENTS FOR INCREASED STATE SHARE OF 
                               RECOVERIES

       ``Sec. 1909. (a) In General.--Notwithstanding section 
     1905(b), if a State has in effect a law relating to false or 
     fraudulent claims that meets the requirements of subsection 
     (b), the Federal medical assistance percentage with respect 
     to any amounts recovered under a State action brought under 
     such law, shall be decreased by 10 percentage points.
       ``(b) Requirements.--For purposes of subsection (a), the 
     requirements of this subsection are that the Inspector 
     General of the Department of Health and Human Services, in 
     consultation with the Attorney General, determines that the 
     State has in effect a law that meets the following 
     requirements:
       ``(1) The law establishes liability to the State for false 
     or fraudulent claims described in section 3729 of title 31, 
     United States Code, with respect to any expenditure described 
     in section 1903(a).
       ``(2) The law contains provisions that are at least as 
     effective in rewarding and facilitating qui tam actions for 
     false or fraudulent claims as those described in sections 
     3730 through 3732 of title 31, United States Code.
       ``(3) The law contains a requirement for filing an action 
     under seal for 60 days with review by the State Attorney 
     General.
       ``(4) The law contains a civil penalty that is not less 
     than the amount of the civil penalty authorized under section 
     3729 of title 31, United States Code.
       ``(5) The law contains provisions that are designed to 
     prevent a windfall recovery for a qui tam relator in the 
     event that the relator files a Federal and State action for 
     the same false or fraudulent claim.
       ``(c) Deemed Compliance.--A State that, as of January 1, 
     2007, has a law in effect that meets the requirements of 
     subsection (b) shall be deemed to be in compliance with such 
     requirements for so long as the law continues to meet such 
     requirements.
       ``(d) No Preclusion of Broader Laws.--Nothing in this 
     section shall be construed as prohibiting a State that has in 
     effect a law that establishes liability to the State for 
     false or fraudulent claims described in section 3729 of title 
     31, United States Code, with respect to programs in addition 
     to the State program under this title, or with respect to 
     expenditures in addition to expenditures described in section 
     1903(a), from being considered to be in compliance with the 
     requirements of subsection (a) so long as the law meets such 
     requirements.''.
       (b) Effective Date.--Except as provided in section 6026(e), 
     the amendments made by this section take effect on January 1, 
     2007.

     SEC. 6024. EMPLOYEE EDUCATION ABOUT FALSE CLAIMS RECOVERY.

       (a) In General.--Section 1902(a) (42 U.S.C. 1396a(a)) is 
     amended--
       (1) in paragraph (66), by striking ``and'' at the end;
       (2) in paragraph (67) by striking the period at the end and 
     inserting ``; and''; and
       (3) by inserting after paragraph (67) the following:
       ``(68) provide that any entity that receives or makes 
     annual payments under the State plan of at least $1,000,000, 
     as a condition of receiving such payments, shall--
       ``(A) establish written policies, procedures, and protocols 
     for training of all employees of the entity (including 
     management), and of any contractor or agent of the entity, 
     that includes a detailed discussion of the False Claims Act 
     established under sections 3729 through 3733 of title 31, 
     United States Code, administrative remedies for false claims 
     and statements established under chapter 38 of title 31, 
     United States Code, any State laws pertaining to civil or 
     criminal penalties for false claims and statements, and 
     whistleblower protections under such laws, with respect to 
     the role of such laws in preventing and detecting fraud, 
     waste, and abuse in Federal health care programs (as defined 
     in section 1128B(f));
       ``(B) include as part of such written policies, procedures, 
     and protocols, detailed provisions and training regarding the 
     entity's policies and procedures for detecting and preventing 
     fraud, waste, and abuse;
       ``(C) include in any employee handbook for the entity, a 
     specific discussion of the laws described in subparagraph 
     (A), the rights of employees to be protected as 
     whistleblowers, and the entity's policies and procedures for 
     detecting and preventing fraud, waste, and abuse; and
       ``(D) require mandatory training for all employees of the 
     entity and of any contractor or agent of the entity, at the 
     time of hiring, with respect to the laws described in

[[Page 26725]]

     subparagraph (A) (including the whistleblower protections 
     under such laws) and the entity's policies and procedures for 
     detecting fraud, waste, and abuse.''.
       (b) Effective Date.--Except as provided in section 6026(e), 
     the amendments made by subsection (a) take effect on January 
     1, 2007.

     SEC. 6025. PROHIBITION ON RESTOCKING AND DOUBLE BILLING OF 
                   PRESCRIPTION DRUGS.

       (a) In General.--Section 1903(i)(10) (42 U.S.C. 1396b(i)), 
     as amended by section 6004(b), is amended--
       (1) in subparagraph (C), by striking ``and'' at the end;
       (2) in subparagraph (D), by striking ``; or'' at the end 
     and inserting ``, and''; and
       (3) by adding at the end the following:
       ``(E) with respect to any amount expended for reimbursement 
     to a pharmacy under this title for the ingredient cost of a 
     covered outpatient drug for which the pharmacy has already 
     received payment under this title (other than with respect to 
     a reasonable restocking fee for such drug); or''.
       (b) Effective Date.--The amendments made by subsection (a) 
     take effect on the first day of the first fiscal year quarter 
     that begins after the date of enactment of this Act.

     SEC. 6026. MEDICAID INTEGRITY PROGRAM.

       (a) Establishment of Medicaid Integrity Program; Medicaid 
     CFO; Medicaid Program Integrity Oversight Board.--Title XIX 
     (42 U.S.C. 1396 et seq.) is amended--
       (1) by redesignating section 1936 as section 1938; and
       (2) by inserting after section 1935 the following:


                      ``MEDICAID INTEGRITY PROGRAM

       ``Sec. 1936. (a) In General.--There is hereby established 
     the Medicaid Integrity Program (in this section referred to 
     as the `Program') under which the Secretary shall promote the 
     integrity of the program under this title by entering into 
     contracts in accordance with this section with eligible 
     entities to carry out the activities described in subsection 
     (b).
       ``(b) Activities Described--Activities described in this 
     subsection are as follows:
       ``(1) Review of the actions of individuals or entities 
     furnishing items or services (whether on a fee-for-service, 
     risk, or other basis) for which payment may be made under a 
     State plan approved under this title (or under any waiver of 
     such plan approved under section 1115) to determine whether 
     fraud, waste, or abuse has occurred, is likely to occur, or 
     whether such actions have any potential for resulting in an 
     expenditure of funds under this title in a manner which is 
     not intended under the provisions of this title.
       ``(2) Audit of claims for payment for items or services 
     furnished, or administrative services rendered, under a State 
     plan under this title, including--
       ``(A) cost reports;
       ``(B) consulting contracts; and
       ``(C) risk contracts under section 1903(m).
       ``(3) Identification and recovery of overpayments to 
     individuals or entities receiving Federal funds under this 
     title.
       ``(4) Education of providers of services, managed care 
     entities, beneficiaries, and other individuals with respect 
     to payment integrity and benefit quality assurance issues.
       ``(c) Eligible Entity and Contracting Requirements.--
       ``(1) In general.--An entity is eligible to enter into a 
     contract under the Program to carry out any of the activities 
     described in subsection (b) if the entity satisfies the 
     requirements of paragraphs (2) and (3).
       ``(2) Eligibility Requirements.--The requirements of this 
     paragraph are the following:
       ``(A) The entity has demonstrated capability to carry out 
     the activities described in subsection (b).
       ``(B) In carrying out such activities, the entity agrees to 
     cooperate with the Inspector General of the Department of 
     Health and Human Services, the Attorney General, and other 
     law enforcement agencies, as appropriate, in the 
     investigation and deterrence of fraud and abuse in relation 
     to this title and in other cases arising out of such 
     activities.
       ``(C) The entity complies with such conflict of interest 
     standards as are generally applicable to Federal acquisition 
     and procurement.
       ``(D) The entity meets such other requirements as the 
     Secretary may impose.
       ``(3) Contracting Requirements.--The entity has contracted 
     with the Secretary in accordance with such procedures as the 
     Secretary shall by regulation establish, except that such 
     procedures shall include the following:
       ``(A) Procedures for identifying, evaluating, and resolving 
     organizational conflicts of interest that are generally 
     applicable to Federal acquisition and procurement.
       ``(B) Competitive procedures to be used--
       ``(i) when entering into new contracts under this section;
       ``(ii) when entering into contracts that may result in the 
     elimination of responsibilities under section 202(b) of the 
     Health Insurance Portability and Accountability Act of 1996; 
     and
       ``(iii) at any other time considered appropriate by the 
     Secretary.
       ``(C) Procedures under which a contract under this section 
     may be renewed without regard to any provision of law 
     requiring competition if the contractor has met or exceeded 
     the performance requirements established in the current 
     contract.
     The Secretary may enter into such contracts without regard to 
     final rules having been promulgated.
       ``(4) Limitation on contractor liability.--The Secretary 
     shall by regulation provide for the limitation of a 
     contractor's liability for actions taken to carry out a 
     contract under the Program, and such regulation shall, to the 
     extent the Secretary finds appropriate, employ the same or 
     comparable standards and other substantive and procedural 
     provisions as are contained in section 1157.
       ``(d) Comprehensive Plan for Program Integrity.--
       ``(1) 5-year plan.--With respect to the 5 fiscal year 
     period beginning with fiscal year 2006, and each such 5-
     fiscal year period that begins thereafter, the Secretary 
     shall establish a comprehensive plan for ensuring the 
     integrity of the program established under this title by 
     combatting fraud, waste, and abuse.
       ``(2) Consultation.--Each 5-fiscal year plan established 
     under paragraph (1) shall be developed by the Secretary in 
     consultation with the Attorney General, the Director of the 
     Federal Bureau of Investigation, the Comptroller General of 
     the United States, the Inspector General of the Department of 
     Health and Human Services, and State officials with 
     responsibility for controlling provider fraud and abuse under 
     State plans under this title.
       ``(e) Appropriation.--
       ``(1) In general.--Out of any money in the Treasury of the 
     United States not otherwise appropriated, there are 
     appropriated to carry out the Medicaid Integrity Program 
     under this section, without further appropriation--
       ``(A) for fiscal year 2006, $50,000,000;
       ``(B) for each of fiscal years 2007 and 2008, $49,000,000;
       ``(C) for each of fiscal years 2009 and 2010, $74,000,000; 
     and
       ``(D) for fiscal year 2011 and each fiscal year thereafter, 
     $75,000,000.
       ``(2) Availability.--Amounts appropriated pursuant to 
     paragraph (1) shall remain available until expended.
       ``(3) Annual report.--Not later than 180 days after the end 
     of each fiscal year (beginning with fiscal year 2006), the 
     Secretary shall submit a report to Congress which 
     identifies--
       ``(A) the use of funds appropriated pursuant to paragraph 
     (1); and
       ``(B) the effectiveness of the use of such funds.''.


    ``MEDICAID CHIEF FINANCIAL OFFICER; MEDICAID PROGRAM INTEGRITY 
                            OVERSIGHT BOARD

       ``Sec. 1937. (a) Establishment of Medicaid CFO.--
       ``(1) In general.--There is established in the Centers for 
     Medicare & Medicaid Services within the Office of Financial 
     Management the position of Medicaid Chief Financial Officer. 
     The Medicaid Chief Financial Officer shall be appointed by, 
     and report directly to, the Administrator of such Centers. 
     The Medicaid Chief Financial Officer may be removed only for 
     cause.
       ``(2) Duties and authority.--The duties and authority of 
     the Medicaid Chief Financial Officer with respect to the 
     management and expenditure of Federal funds under this title 
     shall be comparable to the duties and authority of other 
     Chief Financial Officers with respect to the management and 
     expenditure of Federal funds under Federal health care 
     programs (as defined in section 1128B(f)).
       ``(b) Program Integrity Oversight Board.--The Secretary 
     shall establish a Medicaid Program Integrity Oversight Board. 
     The duties and authority of the Medicaid Program Integrity 
     Oversight Board shall be comparable to the duties and 
     authority of other oversight boards established for purposes 
     of Federal health care programs (as so defined) and shall 
     include responsibility for identifying vulnerabilities in the 
     State programs established under this title and developing 
     strategies for minimizing integrity risks to such 
     programs.''.
       (b) State Requirement To Cooperate With Integrity Program 
     Efforts.--Section 1902(a) (42 U.S.C. 1396a(a)), as amended by 
     section 6024(a), is amended--
       (1) in paragraph (67), by striking ``and'' at the end;
       (2) in paragraph (68), by striking the period at the end 
     and inserting ``; and''; and
       (3) by inserting after paragraph (68), the following:
       ``(69) provide that the State must comply with any 
     requirements determined by the Secretary to be necessary for 
     carrying out the Medicaid Integrity Program established under 
     section 1936, or the duties of the Medicaid Chief Financial 
     Officer and the Medicaid Program Integrity Oversight Board 
     established under section 1937.''.
       (c) Increased Funding for Medicaid Fraud and Abuse Control 
     Activities.--
       (1) In general.--Out of any money in the Treasury of the 
     United States not otherwise appropriated, there are 
     appropriated to the Office of the Inspector General of the 
     Department of Health and Human Services, without further 
     appropriation, $25,000,000 for each of

[[Page 26726]]

     fiscal years 2006 through 2010, for activities of such Office 
     with respect to the Medicaid program under title XIX of the 
     Social Security Act (42 U.S.C. 1396 et seq.).
       (2) Availability; amounts in addition to other amounts 
     appropriated for such activities.--Amounts appropriated 
     pursuant to paragraph (1) shall--
       (A) remain available until expended; and
       (B) be in addition to any other amounts appropriated or 
     made available to the Office of the Inspector General of the 
     Department of Health and Human Services for activities of 
     such Office with respect to the Medicaid program.
       (3) Annual report.--Not later than 180 days after the end 
     of each fiscal year (beginning with fiscal year 2006), the 
     Inspector General of the Department of Health and Human 
     Services shall submit a report to Congress which identifies--
       (A) the use of funds appropriated pursuant to paragraph 
     (1); and
       (B) the effectiveness of the use of such funds.
       (d) Increase in CMS Staffing Devoted To Ensuring Medicaid 
     Program Integrity.--The Secretary shall significantly 
     increase the number of full-time equivalent employees whose 
     duties consist solely of ensuring the integrity of the 
     Medicaid program established under title XIX of the Social 
     Security Act by providing effective support and assistance to 
     States to combat provider fraud and abuse.
       (e) Delayed Effective Date for Chapter.--in the case of a 
     State plan under title XIX of the Social Security Act which 
     the Secretary determines requires State legislation in order 
     for the plan to meet the additional requirements imposed by 
     the amendments made by a provision of this chapter, the State 
     plan shall not be regarded as failing to comply with the 
     requirements of such Act solely on the basis of its failure 
     to meet these additional requirements before the first day of 
     the first calendar quarter beginning after the close of the 
     first regular session of the State legislature that begins 
     after the date of enactment of this Act. For purposes of the 
     previous sentence, in the case of a State that has a 2-year 
     legislative session, each year of the session shall be 
     considered to be a separate regular session of the State 
     legislature.

               CHAPTER 4--STATE FINANCING UNDER MEDICAID

     SEC. 6031. REFORMS OF TARGETED CASE MANAGEMENT.

       (a) In General.--Section 1915(g) (42 U.S.C. 1396n(g)(2)) is 
     amended by striking paragraph (2) and inserting the 
     following:
       ``(2) For purposes of this subsection:
       ``(A)(i) The term `case management services' means services 
     which will assist individuals eligible under the plan in 
     gaining access to needed medical, social, educational, and 
     other services.
       ``(ii) Such term includes the following:
       ``(I) Assessment of an eligible individual to determine 
     service needs, including activities that focus on needs 
     identification, to determine the need for any medical, 
     educational, social, or other services. Such assessment 
     activities include the following:
       ``(aa) Taking client history.
       ``(bb) Identifying the needs of the individual, and 
     completing related documentation.
       ``(cc) Gathering information from other sources such as 
     family members, medical providers, social workers, and 
     educators, if necessary, to form a complete assessment of the 
     eligible individual.
       ``(II) Development of a specific care plan based on the 
     information collected through an assessment, that specifies 
     the goals and actions to address the medical, social, 
     educational, and other services needed by the eligible 
     individual, including activities such as ensuring the active 
     participation of the eligible individual and working with the 
     individual (or the individual's authorized health care 
     decision maker) and others to develop such goals and identify 
     a course of action to respond to the assessed needs of the 
     eligible individual.
       ``(III) Referral and related activities to help an 
     individual obtain needed services, including activities that 
     help link eligible individuals with medical, social, 
     educational providers or other programs and services that are 
     capable of providing needed services, such as making 
     referrals to providers for needed services and scheduling 
     appointments for the individual.
       ``(IV) Monitoring and followup activities, including 
     activities and contacts that are necessary to ensure the care 
     plan is effectively implemented and adequately addressing the 
     needs of the eligible individual, and which may be with the 
     individual, family members, providers, or other entities and 
     conducted as frequently as necessary to help determine such 
     matters as--
       ``(aa) whether services are being furnished in accordance 
     with an individual's care plan;
       ``(bb) whether the services in the care plan are adequate; 
     and
       ``(cc) whether there are changes in the needs or status of 
     the eligible individual, and if so, making necessary 
     adjustments in the care plan and service arrangements with 
     providers.
       ``(iii) Such term does not include the direct delivery of 
     an underlying medical, educational, social, or other service 
     to which an eligible individual has been referred, including, 
     with respect to the direct delivery of foster care services, 
     services such as (but not limited to) the following:
       ``(I) Research gathering and completion of documentation 
     required by the foster care program.
       ``(II) Assessing adoption placements.
       ``(III) Recruiting or interviewing potential foster care 
     parents.
       ``(IV) Serving legal papers.
       ``(V) Home investigations.
       ``(VI) Providing transportation.
       ``(VII) Administering foster care subsidies.
       ``(VIII) Making placement arrangements.
       ``(B) The term `targeted case management services' are case 
     management services that are furnished without regard to the 
     requirements of section 1902(a)(1) and section 1902(a)(10)(B) 
     to specific classes of individuals or to individuals who 
     reside in specified areas.
       ``(3) With respect to contacts with individuals who are not 
     eligible for medical assistance under the State plan or, in 
     the case of targeted case management services, individuals 
     who are eligible for such assistance but are not part of the 
     target population specified in the State plan, such 
     contacts--
       ``(A) are considered an allowable case management activity, 
     when the purpose of the contact is directly related to the 
     management of the eligible individual's care; and
       ``(B) are not considered an allowable case management 
     activity if such contacts relate directly to the 
     identification and management of the noneligible or 
     nontargeted individual's needs and care.
       ``(4)(A) In accordance with section 1902(a)(25), Federal 
     financial participation only is available under this title 
     for case management services or targeted case management 
     services if there are no other third parties liable to pay 
     for such services, including as reimbursement under a 
     medical, social, educational, or other program.
       ``(B) A State shall allocate the costs of any part of such 
     services which are reimbursable under another federally 
     funded program in accordance with OMB Circular A-87 (or any 
     related or successor guidance or regulations regarding 
     allocation of costs among federally funded programs) under an 
     approved cost allocation program.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 2006.

     SEC. 6032. TEMPORARY FEDERAL MATCHING PAYMENTS FOR FEDERAL 
                   ASSISTANCE.

       (a) 100 Percent Federal Matching Payments for Medical 
     Assistance Provided to Specified Individuals.--
       (1) In general.--Notwithstanding section 1905(b) of the 
     Social Security Act (42 U.S.C. 1396d(b)), for items and 
     services furnished during the period that begins on August 
     28, 2005, and ends on May 15, 2006, the Federal medical 
     assistance percentage for providing medical assistance for 
     such items and services under a State Medicaid plan to a 
     specified individual (as defined in subsection (b)), and for 
     costs directly attributable to all administrative activities 
     that relate to the provision of such medical assistance, 
     shall be 100 percent.
       (2) Application to child health assistance.--
     Notwithstanding section 2105(b) of the Social Security Act 
     (42 U.S.C. 1397ee(b)), for items and services furnished 
     during the period described in paragraph (1), the Federal 
     matching rate for providing child health assistance for such 
     items and services under a State child health plan to a 
     specified individual (as so defined), and for costs directly 
     attributable to all administrative activities that relate to 
     the provision of such child health assistance, shall be 100 
     percent.
       (b) Specified Individual.--
       (1) In general.--For purposes of subsection (a), the term 
     ``specified individual'' means an individual who, on any day 
     during the week preceding August 28, 2005, had a primary 
     residence in a Louisiana parish described in paragraph (2), a 
     Mississippi county described in paragraph (3), or an Alabama 
     county described in paragraph (4).
       (2) Louisiana parishes described.--For purposes of 
     paragraph (1), the Louisiana parishes described in this 
     paragraph are the following:
       (A) Acadia.
       (B) Ascension.
       (C) Assumption.
       (D) Calcasieu.
       (E) Cameron.
       (F) East Baton Rouge.
       (G) East Feliciana.
       (H) Iberia.
       (I) Iberville.
       (J) Jefferson.
       (K) Jefferson Davis.
       (L) Lafayette.
       (M) Lafourche.
       (N) Livingston.
       (O) Orleans.
       (P) Pointe Coupee.
       (Q) Plaquemines.
       (R) St. Bernard.
       (S) St. Charles.
       (T) St. Helena.
       (U) St. James.
       (V) St. John.
       (W) St. Mary.
       (X) St. Martin.

[[Page 26727]]

       (Y) St. Tammany.
       (Z) Tangipahoa.
       (AA) Terrebonne.
       (BB) Vermilion.
       (CC) Washington.
       (DD) West Baton Rouge.
       (EE) West Feliciana.
       (3) Mississippi counties described.--For purposes of 
     paragraph (1), the Mississippi counties described in this 
     paragraph are the following:
       (A) Adams.
       (B) Amite.
       (C) Attala.
       (D) Clairborne.
       (E) Choctaw.
       (F) Clarke.
       (G) Copiah.
       (H) Covington.
       (I) Forrest.
       (J) Franklin.
       (K) George.
       (L) Greene.
       (M) Hancock.
       (N) Harrison.
       (O) Hinds.
       (P) Jackson.
       (Q) Jasper.
       (R) Jefferson.
       (S) Jefferson Davis.
       (T) Jones.
       (U) Kemper.
       (V) Lamar.
       (W) Lauderdale.
       (X) Lawrence.
       (Y) Leake.
       (Z) Lincoln.
       (AA) Lowndes.
       (BB) Madison.
       (CC) Marion.
       (DD) Neshoba.
       (EE) Newton.
       (FF) Noxubee.
       (GG) Oktibbeha.
       (HH) Pearl River.
       (II) Perry.
       (JJ) Pike.
       (KK) Rankin.
       (LL) Scott.
       (MM) Simpson.
       (NN) Smith.
       (OO) Stone.
       (PP) Walthall.
       (QQ) Warren.
       (RR) Wayne.
       (SS) Wilkinson.
       (TT) Winston.
       (UU) Yazoo.
       (4) Alabama counties described.--For purposes of paragraph 
     (1) the Alabama counties described in this paragraph are the 
     following:
       (A) Baldwin.
       (B) Choctaw.
       (C) Clarke.
       (D) Greene.
       (E) Hale.
       (F) Marengo.
       (G) Mobile.
       (H) Pickens.
       (I) Sumter.
       (J) Tuscaloosa.
       (K) Washington.
       (c) FMAP Adjustment.--Notwithstanding the first sentence of 
     section 1905(b) of the Social Security Act (42 U.S.C. 
     1396d(b)), if, for purposes of titles XIX and XXI of the 
     Social Security Act (42 U.S.C. 1396 et seq., 1397aa et seq.), 
     the Federal medical assistance percentage determined for 
     Alaska for fiscal year 2006 or fiscal year 2007 is less than 
     the Federal medical assistance percentage determined for 
     Alaska for fiscal year 2005, the Federal medical assistance 
     percentage determined for Alaska for fiscal year 2005 shall 
     be substituted for the Federal medical assistance percentage 
     otherwise determined for Alaska for fiscal year 2006 or 
     fiscal year 2007, as the case may be.

     SEC. 6033. MANAGED CARE ORGANIZATION PROVIDER TAX REFORM.

       (a) In General.--Section 1903(w)(7)(A)(viii) (42 U.S.C. 
     1396b(w)(7)(A)(viii)) is amended to read as follows:
       ``(viii) Services of managed care organizations (including 
     health maintenance organizations, preferred provider 
     organizations, and such other similar organizations as the 
     Secretary may specify by regulation).''.
       (b) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendment made by subsection (a) shall take effect on January 
     1, 2006.
       (2) Nonapplication.--The amendment made by subsection (a) 
     shall not apply in the case of a State that, as of December 
     31, 2005, has in effect a tax imposed on the class of health 
     care items and services described in section 
     1903(w)(7)(A)(viii) of the Social Security Act (42 U.S.C. 
     1396b(w)(7)(A)(viii)) (as in effect before the date of 
     enactment of this Act).

     SEC. 6034. INCLUSION OF PODIATRISTS AS PHYSICIANS.

       (a) In General.--Section 1905(a)(5)(A) (42 U.S.C. 
     1396d(a)(5)(A)) is amended by striking ``section 1861(r)(1)'' 
     and inserting ``paragraphs (1) and (3) of section 1861(r)''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to services furnished on or after January 1, 
     2006.

     SEC. 6035. DSH ALLOTMENT FOR THE DISTRICT OF COLUMBIA.

       (a) In General.--The table in section 1923(f)(2) (42 U.S.C. 
     1396r-4(f)(2)) is amended under each of the columns for FY 
     00, FY 01, and FY 02, in the entry for the District of 
     Columbia, by striking ``32'' and inserting ``49''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect as if enacted on October 1, 2005 and shall 
     apply to expenditures made on or after that date.

     SEC. 6036. DEMONSTRATION PROJECT REGARDING MEDICAID 
                   REIMBURSEMENT FOR STABILIZATION OF EMERGENCY 
                   MEDICAL CONDITIONS BY NON-PUBLICLY OWNED OR 
                   OPERATED INSTITUTIONS FOR MENTAL DISEASES.

       (a) Authority To Conduct Demonstration Project.--The 
     Secretary shall establish a demonstration project under which 
     an eligible State (as defined in subsection (b)) shall 
     provide reimbursement under the State medicaid plan to an 
     institution for mental diseases that is not publicly owned or 
     operated and that is subject to the requirements of section 
     1867 of the Social Security Act (42 U.S.C, 1395dd) for the 
     provision of medical assistance available under such plan to 
     an individual who--
       (1) has attained age 21, but has not attained age 65;
       (2) is eligible for medical assistance under such plan; and
       (3) requires such medical assistance to stabilize an 
     emergency medical condition.
       (b) Eligible State Defined.--
       (1) Application.--Upon approval of an application submitted 
     by a State described in paragraph (2), the State shall be an 
     eligible State for purposes of conducting a demonstration 
     project under this section.
       (2) State described.--A State described in this paragraph 
     is each of the following:
       (A) Arizona.
       (B) Arkansas.
       (C) Louisiana.
       (D) Maine.
       (E) North Dakota.
       (F) Wyoming.
       (G) Four other States selected by the Secretary to provide 
     geographic diversity on the basis of the application to 
     conduct a demonstration project under this section submitted 
     by such States.
       (c) Length of Demonstration Project.--The demonstration 
     project established under this section shall be conducted for 
     a period of 3 consecutive years.
       (d) Limitations on Federal Funding.--
       (1) Appropriation.--
       (A) In general.--Out of any funds in the Treasury not 
     otherwise appropriated, there is appropriated to carry out 
     this section, $30,000,000 for fiscal year 2006.
       (B) Budget authority.--Subparagraph (A) constitutes budget 
     authority in advance of appropriations Act and represents the 
     obligation of the Federal Government to provide for the 
     payment of the amounts appropriated under that subparagraph.
       (2) 3-year availability.--Funds appropriated under 
     paragraph (1) shall remain available for obligation through 
     December 31, 2008.
       (3) Limitation on payments.--In no case may--
       (A) the aggregate amount of payments made by the Secretary 
     to eligible States under this section exceed $30,000,000; or
       (B) payments be provided by the Secretary under this 
     section after December 31, 2008.
       (4) Funds allocated to states.--The Secretary shall 
     allocate funds to eligible States based on their applications 
     and the availability of funds.
       (5) Payments to states.--The Secretary shall pay to each 
     eligible State, from its allocation under paragraph (4), an 
     amount each quarter equal to the Federal medical assistance 
     percentage of expenditures in the quarter for medical 
     assistance described in subsection (a).
       (e) Reports.--
       (1) Annual progress reports.--The Secretary shall submit 
     annual reports to Congress on the progress of the 
     demonstration project conducted under this section.
       (2) Final report and recommendation.--Not later than March 
     31, 2009, the Secretary shall submit to Congress a final 
     report on the demonstration project conducted under this 
     section that shall include the following:
       (A) A determination as to whether the demonstration project 
     resulted in increased access to inpatient mental health 
     services under the medicaid program.
       (B) An analysis regarding whether the demonstration project 
     produced a significant reduction in the use of higher cost 
     emergency room visits for individuals eligible for medical 
     assistance under the medicaid program.
       (C) An assessment of the impact of the demonstration 
     project on the costs related to the provision of inpatient 
     psychiatric care and services under the medicaid program.
       (D) A recommendation regarding whether the demonstration 
     project should be continued after December 31, 2008, and 
     expanded on a national basis.
       (f) Waiver Authority.--
       (1) In general.--The Secretary shall waive the limitation 
     of subdivision (B) following paragraph (28) of section 
     1905(a) of the Social Security Act (42 U.S.C. 1396d(a)) 
     (relating to limitations on payments for care or services for 
     individuals under 65 years of age who are patients in an 
     institution for mental diseases) for purposes of carrying out 
     the demonstration project under this section.

[[Page 26728]]

       (2) Limited other waiver authority.--The Secretary may 
     waive other requirements of titles XI and XIX of the Social 
     Security Act (including the requirements of sections 
     1902(a)(1) (relating to statewideness) and 1902(a)(10)(B) 
     (relating to comparability)) only to extent necessary to 
     carry out the demonstration project under this section.
       (g) Definitions.--In this section:
       (1) Emergency medical condition.--The term ``emergency 
     medical condition'' has the meaning given that term in 
     section 1867(e)(1) of the Social Security Act (42 U.S.C. 
     1395dd(e)(1)).
       (2) Federal medical assistance percentage.--The term 
     ``Federal medical assistance percentage'' has the meaning 
     given that term with respect to a State in section 1905(b) of 
     the Social Security Act (42 U.S.C. 1396d(b)).
       (3) Institution for mental diseases.--The term 
     ``institution for mental diseases'' has the meaning given 
     that term in section 1905(i) of the Social Security Act (42 
     U.S.C. 1396d(i)).
       (4) Medical assistance.--The term ``medical assistance'' 
     has the meaning given that term in section 1905(a) of the 
     Social Security Act (42 U.S.C. 1396d(a)).
       (5) Stabilize.--The term ``stabilize'' has the meaning 
     given that term in section 1867(e)(3)(A) of the Social 
     Security Act (42 U.S..C 1395dd(e)(3)(A)).
       (6) State.--The term ``State'' has the meaning given that 
     term for purposes of title XIX of the Social Security Act (42 
     U.S.C. 1396 et seq.).

     SEC. 6037. LIMITATION ON SEVERE REDUCTION IN THE MEDICAID 
                   FMAP FOR FISCAL YEAR 2006.

       (a) Limitation on Reduction.--In no case shall the FMAP for 
     a State for fiscal year 2006 be less than the greater of the 
     following:
       (1) 2005 fmap decreased by the applicable percentage 
     points.--The FMAP determined for the State for fiscal year 
     2005, decreased by--
       (A) 0.1 percentage points in the case of Delaware and 
     Michigan;
       (B) 0.3 percentage points in the case of Kentucky; and
       (C) 0.5 percentage points in the case of any other State.
       (2) Computation without retroactive application of 
     rebenchmarked per capita income.--The FMAP that would have 
     been determined for the State for fiscal year 2006 if the per 
     capita incomes for 2001 and 2002 that was used to determine 
     the FMAP for the State for fiscal year 2005 were used.
       (b) Scope of Application.--The FMAP applicable to a State 
     for fiscal year 2006 after the application of subsection (a) 
     shall apply only for purposes of titles XIX and XXI of the 
     Social Security Act (including for purposes of making 
     disproportionate share hospital payments described in section 
     1923 of such Act (42 U.S.C. 1396r-4) and payments under such 
     titles that are based on the enhanced FMAP described in 
     section 2105(b) of such Act (42 U.S.C. 1397ee(b))) and shall 
     not apply with respect to payments under title IV of such Act 
     (42 U.S.C. 601 et seq.).
       (c) Definitions.--In this section:
       (1) FMAP.--The term ``FMAP'' means the Federal medical 
     assistance percentage, as defined in section 1905(b) of the 
     Social Security Act (42 U.S.C. 1396d(b)).
       (2) State.--The term ``State'' has the meaning given such 
     term for purposes of title XIX of the Social Security Act (42 
     U.S.C. 1396 et seq.).
       (d) Repeal.--Effective as of October 1, 2006, this section 
     is repealed and shall not apply to any fiscal year after 
     fiscal year 2006.

     SEC. 6038. EXTENSION OF PRESCRIPTION DRUG REBATES TO 
                   ENROLLEES IN MEDICAID MANAGED CARE 
                   ORGANIZATIONS.

       (a) In General.--Section 1927(j)(1) (42 U.S.C. 1396r-
     8(j)(1)) is amended by striking ``dispensed'' and all that 
     follows through the period and inserting ``are not subject to 
     the requirements of this section if such drugs are--
       ``(A) dispensed by health maintenance organizations that 
     contract under section 1903(m); and
       ``(B) subject to discounts under section 340B of the Public 
     Health Service Act (42 U.S.C. 256b).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of enactment of this Act and 
     apply to rebate agreements entered into or renewed under 
     section 1927 of the Social Security Act (42 U.S.C. 1396r-8) 
     on or after such date.

     SEC. 6039. EXTENSION OF THE MEDICARE PART A AND B PAYMENT 
                   HOLIDAY.

       Section 6112(b)(1) of this Act is amended by striking 
     ``September 22, 2006'' and inserting ``September 21, 2006''.

     SEC. 6039A. SENSE OF THE SENATE.

       (a) Findings.--The Senate makes the following findings:
       (1) On October 26, 2005, the Committee on Ways and Means of 
     the United States House of Representatives approved a budget 
     reconciliation package that would significantly reduce the 
     Federal Government's funding used to pay for the child 
     support program established under part D of title IV of the 
     Social Security Act (42 U.S.C. 651 et seq.) and would 
     restrict the ability of States to use Federal child support 
     incentive payments for child support program expenditures 
     that are eligible for Federal matching payments.
       (2) The child support program enforces the responsibility 
     of non-custodial parents to support their children. The 
     program is jointly funded by Federal, State and local 
     governments.
       (3) The Office of Management and Budget gave the child 
     support program a 90 percent rating under the Program 
     Assessment Rating Tool (PART), making it the highest 
     performing social services program.
       (4) The President's 2006 budget cites the child support 
     program as ``one of the highest rated block/formula grants of 
     all reviewed programs government-wide. This high rating is 
     due to its strong mission, effective management, and 
     demonstration of measurable progress toward meeting annual 
     and long term performance measures.''
       (5) In 2004, the child support program spent $5,300,000,000 
     to collect $21,900,000,000 in support payments. Public 
     investment in the child support program provides more than a 
     four-fold return, collecting $4.38 in child support for every 
     Federal and State dollar that the program spends.
       (6) In 2004, 17,300,000 children, or 60 percent of all 
     children living apart from a parent, received child support 
     services through the program. The percentage is higher for 
     poor children--84 percent of poor children living apart from 
     their parent receive child support services through the 
     program. Families assisted by the child support program 
     generally have low or moderate incomes.
       (7) Children who receive child support from their parents 
     do better in school than those that do not receive support 
     payments. Older children with child support payments are more 
     likely to finish high school and attend college.
       (8) The child support program directly decreases the costs 
     of other public assistance programs by increasing family 
     self-sufficiency. The more effective the child support 
     program in a State, the higher the savings in public 
     assistance costs.
       (9) Child support helps lift more than 1,000,000 Americans 
     out of poverty each year.
       (10) Families that are former recipients of assistance 
     under the temporary assistance for needy families program 
     (TANF) have seen the greatest increase in child support 
     payments. Collections for these families increased 94 percent 
     between 1999 and 2004, even though the number of former TANF 
     families did not increase during this period.
       (11) Families that receive child support are more likely to 
     find and hold jobs, and less likely to be poor than 
     comparable families without child support.
       (12) The child support program saved costs in the TANF, 
     Medicaid, Food Stamps, Supplemental Security Income, and 
     subsidized housing programs.
       (13) The Congressional Budget Office estimates that the 
     funding cuts proposed by the Committee on Ways and Means of 
     the House of Representatives would reduce child support 
     collections by nearly $7,900,000,000 in the next 5 years and 
     $24,100,000,000 in the next 10 years.
       (14) That National Governor's Association has stated that 
     such cuts are unduly burdensome and will force States to 
     reevaluate several services that make the child support 
     program so effective.
       (15) The Federal Government has a moral responsibility to 
     ensure that parents who do not live with their children meet 
     their financial support obligations for those children.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that the Senate will not accept any reduction in funding for 
     the child support program established under part D of title 
     IV of the Social Security Act (42 U.S.C. 651 et seq.), or any 
     restrictions on the ability of States to use Federal child 
     support incentive payments for child support program 
     expenditures that are eligible for Federal matching payments, 
     during this Congress.

     SEC. 6039B. AUTHORITY TO CONTINUE PROVIDING CERTAIN ADULT DAY 
                   HEALTH CARE SERVICES OR MEDICAL ADULT DAY CARE 
                   SERVICES.

       The Secretary shall not--
       (1) withhold, suspend, disallow, or otherwise deny Federal 
     financial participation under section 1903(a) of the Social 
     Security Act (42 U.S.C. 1396b(a)) for adult day health care 
     services or medical adult day care services, as defined under 
     a State medicaid plan approved on or before 1982, if such 
     services are provided consistent with such definition and the 
     requirements of such plan; or
       (2) withdraw Federal approval of any such State plan or 
     part thereof regarding the provision of such services.

     SEC. 6039C. DEMONSTRATION PROJECT REGARDING MEDICAID COVERAGE 
                   OF LOW-INCOME HIV-INFECTED INDIVIDUALS.

       (a) Requirement To Conduct Demonstration Project.--
       (1) In general.--The Secretary shall establish a 
     demonstration project under which a State may apply under 
     section 1115 of the Social Security Act (42 U.S.C. 1315) to 
     provide medical assistance under a State medicaid program to 
     HIV-infected individuals described in subsection (b) in 
     accordance with the provisions of this section.
       (2) Limitation on number of approved applications.--The 
     Secretary shall only approve as many State applications to 
     provide medical assistance in accordance with this section as 
     will not exceed the limitation on

[[Page 26729]]

     aggregate payments under subsection (d)(2)(A).
       (3) Authority to waive restrictions on payments to 
     territories.--The Secretary shall waive the limitations on 
     payment under subsections (f) and (g) of section 1108 of the 
     Social Security Act (42 U.S.C. 1308) in the case of a State 
     that is subject to such limitations and submits an approved 
     application to provide medical assistance in accordance with 
     this section.
       (b) HIV-Infected Individuals Described.--For purposes of 
     subsection (a), HIV-infected individuals described in this 
     subsection are individuals who are not described in section 
     1902(a)(10)(A)(i) of the Social Security Act (42 U.S.C. 
     1396a(a)(10)(A)(i))--
       (1) who have HIV infection;
       (2) whose income (as determined under the State Medicaid 
     plan with respect to disabled individuals) does not exceed 
     200 percent of the poverty line (as defined in section 
     2110(c)(5) of the Social Security Act (42 U.S.C. 
     1397jj(c)(5)); and
       (3) whose resources (as determined under the State Medicaid 
     plan with respect to disabled individuals) do not exceed the 
     maximum amount of resources a disabled individual described 
     in section 1902(a)(10)(A)(i) of such Act may have and obtain 
     medical assistance under such plan.
       (c) Length of Period for Provision of Medical Assistance.--
     A State shall not be approved to provide medical assistance 
     to an HIV-infected individual in accordance with the 
     demonstration project established under this section for a 
     period of more than 5 consecutive years.
       (d) Limitations on Federal Funding.--
       (1) Appropriation.--
       (A) In general.--Out of any funds in the Treasury not 
     otherwise appropriated, there is appropriated to carry out 
     this section, $450,000,000 for the period of fiscal years 
     2006 through 2010.
       (B) Budget authority.--Subparagraph (A) constitutes budget 
     authority in advance of appropriations Act and represents the 
     obligation of the Federal Government to provide for the 
     payment of the amounts appropriated under that subparagraph.
       (2) Limitation on payments.--In no case may--
       (A) the aggregate amount of payments made by the Secretary 
     to eligible States under this section exceed $450,000,000; or
       (B) payments be provided by the Secretary under this 
     section after September 30, 2010.
       (3) Funds allocated to states.--The Secretary shall 
     allocate funds to States with approved applications under 
     this section based on their applications and the availability 
     of funds.
       (4) Payments to states.--The Secretary shall pay to each 
     State, from its allocation under paragraph (3), an amount 
     each quarter equal to the enhanced Federal medical assistance 
     percentage described in section 2105(b) of the Social 
     Security Act (42 U.S.C. 1397ee(b)) of expenditures in the 
     quarter for medical assistance provided to HIV-infected 
     individuals who are eligible for such assistance under a 
     State Medicaid program in accordance with the demonstration 
     project established under this section.
       (e) Evaluation and Report.--
       (1) Evaluation.--The Secretary shall conduct an evaluation 
     of the demonstration project established under this section. 
     Such evaluation shall include an analysis of the cost-
     effectiveness of the project and the impact of the project on 
     the Medicare, Medicaid, and Supplemental Security Income 
     programs established under titles XVIII, XIX, and XVI, 
     respectively, of the Social Security Act (42 U.S.C. 1395 et 
     seq., 1396 et seq., 1381 et seq.).
       (2) Report to congress.--Not later than December 31, 2010, 
     the Secretary shall submit a report to Congress on the 
     results of the evaluation of the demonstration project 
     established under this section.
       (f) Effective Date.--This section shall take effect on 
     January 1, 2006.

     SEC. 6039D. ADDITIONAL INCREASE IN REBATE FOR SINGLE SOURCE 
                   AND INNOVATOR MULTIPLE SOURCE DRUGS.

       Section 1927(c)(1)(B)(i)(VI) (42 U.S.C. 1396r-
     8(c)(1)(B)(i)(VI)), as added by section 6002(a)(3), is 
     amended by striking ``17'' and inserting ``17.8''.

CHAPTER 5--IMPROVING THE MEDICAID AND STATE CHILDREN'S HEALTH INSURANCE 
                                PROGRAMS

                  Subchapter A--Family Opportunity Act

     SEC. 6041. SHORT TITLE OF SUBCHAPTER.

       This subchapter may be cited as the ``Family Opportunity 
     Act of 2005'' or the ``Dylan Lee James Act''.

     SEC. 6042. OPPORTUNITY FOR FAMILIES OF DISABLED CHILDREN TO 
                   PURCHASE MEDICAID COVERAGE FOR SUCH CHILDREN.

       (a) State Option To Allow Families of Disabled Children To 
     Purchase Medicaid Coverage for Such Children.--
       (1) In general.--Section 1902 (42 U.S.C. 1396a) is 
     amended--
       (A) in subsection (a)(10)(A)(ii)--
       (i) by striking ``or'' at the end of subclause (XVII);
       (ii) by adding ``or'' at the end of subclause (XVIII); and
       (iii) by adding at the end the following new subclause:

       ``(XIX) who are disabled children described in subsection 
     (cc)(1);''; and

       (B) by adding at the end the following new subsection:
       ``(cc)(1) Individuals described in this paragraph are 
     individuals--
       ``(A) who are children who have not attained 19 years of 
     age and are born--
       ``(i) on or after January 1, 2002 (or, at the option of a 
     State, on or after an earlier date), in the case of the 
     second, third, and fourth quarters of fiscal year 2008;
       ``(ii) on or after October 1, 1996 (or, at the option of a 
     State, on or after an earlier date), in the case of each 
     quarter of fiscal year 2009; and
       ``(iii) after October 1, 1990, in the case of each quarter 
     of fiscal year 2010 and each quarter of any fiscal year 
     thereafter;
       ``(B) who would be considered disabled under section 
     1614(a)(3)(C) but for having earnings or deemed income or 
     resources (as determined under title XVI for children) that 
     exceed the requirements for receipt of supplemental security 
     income benefits; and
       ``(C) whose family income does not exceed such income level 
     as the State establishes and does not exceed--
       ``(i) 300 percent of the poverty line (as defined in 
     section 2110(c)(5)) applicable to a family of the size 
     involved; or
       ``(ii) such higher percent of such poverty line as a State 
     may establish, except that--
       ``(I) any medical assistance provided to an individual 
     whose family income exceeds 300 percent of such poverty line 
     may only be provided with State funds; and
       ``(II) no Federal financial participation shall be provided 
     under section 1903(a) for any medical assistance provided to 
     such an individual.''.
       (2) Interaction with employer-sponsored family coverage.--
     Section 1902(cc) (42 U.S.C. 1396a(cc)), as added by paragraph 
     (1)(B), is amended by adding at the end the following new 
     paragraph:
       ``(2)(A) If an employer of a parent of an individual 
     described in paragraph (1) offers family coverage under a 
     group health plan (as defined in section 2791(a) of the 
     Public Health Service Act), the State shall--
       ``(i) require such parent to apply for, enroll in, and pay 
     premiums for such coverage as a condition of such parent's 
     child being or remaining eligible for medical assistance 
     under subsection (a)(10)(A)(ii)(XIX) if the parent is 
     determined eligible for such coverage and the employer 
     contributes at least 50 percent of the total cost of annual 
     premiums for such coverage; and
       ``(ii) if such coverage is obtained--
       ``(I) subject to paragraph (2) of section 1916(h), reduce 
     the premium imposed by the State under that section in an 
     amount that reasonably reflects the premium contribution made 
     by the parent for private coverage on behalf of a child with 
     a disability; and
       ``(II) treat such coverage as a third party liability under 
     subsection (a)(25).
       ``(B) In the case of a parent to which subparagraph (A) 
     applies, a State, subject to paragraph (1)(C)(ii), may 
     provide for payment of any portion of the annual premium for 
     such family coverage that the parent is required to pay. Any 
     payments made by the State under this subparagraph shall be 
     considered, for purposes of section 1903(a), to be payments 
     for medical assistance.''.
       (b) State Option To Impose Income-Related Premiums.--
     Section 1916 (42 U.S.C. 1396o) is amended--
       (1) in subsection (a), by striking ``subsection (g)'' and 
     inserting ``subsections (g) and (h)''; and
       (2) by adding at the end the following new subsection:
       ``(h)(1) With respect to disabled children provided medical 
     assistance under section 1902(a)(10)(A)(ii)(XIX), subject to 
     paragraph (2), a State may (in a uniform manner for such 
     children) require the families of such children to pay 
     monthly premiums set on a sliding scale based on family 
     income.
       ``(2) A premium requirement imposed under paragraph (1) may 
     only apply to the extent that--
       ``(A) in the case of a disabled child described in that 
     paragraph whose family income--
       ``(i) does not exceed 200 percent of the poverty line, the 
     aggregate amount of such premium and any premium that the 
     parent is required to pay for family coverage under section 
     1902(cc)(2)(A)(i) and other cost-sharing charges do not 
     exceed 5 percent of the family's income; and
       ``(ii) exceeds 200, but does not exceed 300, percent of the 
     poverty line, the aggregate amount of such premium and any 
     premium that the parent is required to pay for family 
     coverage under section 1902(cc)(2)(A)(i) and other cost-
     sharing charges do not exceed 7.5 percent of the family's 
     income; and
       ``(B) the requirement is imposed consistent with section 
     1902(cc)(2)(A)(ii)(I).
       ``(3) A State shall not require prepayment of a premium 
     imposed pursuant to paragraph (1) and shall not terminate 
     eligibility of a child under section 1902(a)(10)(A)(ii)(XIX) 
     for medical assistance under this title on the basis of 
     failure to pay any such premium until such failure continues 
     for a period of at least 60 days from the date on which the 
     premium became past due. The State may waive payment of any 
     such premium in any case where the State determines that 
     requiring such payment would create an undue hardship.''.

[[Page 26730]]

       (c) Conforming Amendments.--(1) Section 1903(f)(4) (42 
     U.S.C. 1396b(f)(4)) is amended in the matter preceding 
     subparagraph (A), by inserting ``1902(a)(10)(A)(ii)(XIX),'' 
     after ``1902(a)(10)(A)(ii)(XVIII),''.
       (2) Section 1905(u)(2)(B) (42 U.S.C. 1396d(u)(2)(B)) is 
     amended by adding at the end the following sentence: ``Such 
     term excludes any child eligible for medical assistance only 
     by reason of section 1902(a)(10)(A)(ii)(XIX).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to medical assistance for items and services 
     furnished on or after January 1, 2008.

     SEC. 6043. DEMONSTRATION PROJECTS REGARDING HOME AND 
                   COMMUNITY-BASED ALTERNATIVES TO PSYCHIATRIC 
                   RESIDENTIAL TREATMENT FACILITIES FOR CHILDREN.

       (a) In General.--The Secretary is authorized to conduct, 
     during each of fiscal years 2007 through 2011, demonstration 
     projects (each in the section referred to as a 
     ``demonstration project'') in accordance with this section 
     under which up to 10 States (as defined for purposes of title 
     XIX of the Social Security Act) are awarded grants, on a 
     competitive basis, to test the effectiveness in improving or 
     maintaining a child's functional level and cost-effectiveness 
     of providing coverage of home and community-based 
     alternatives to psychiatric residential treatment for 
     children enrolled in the Medicaid program under title XIX of 
     such Act.
       (b) Application of Terms and Conditions.--
       (1) In general.--Subject to the provisions of this section, 
     for the purposes of the demonstration projects, and only with 
     respect to children enrolled under such demonstration 
     projects, a psychiatric residential treatment facility (as 
     defined in section 483.352 of title 42 of the Code of Federal 
     Regulations) shall be deemed to be a facility specified in 
     section 1915(c) of the Social Security Act (42 U.S.C. 
     1396n(c)), and to be included in each reference in such 
     section 1915(c) to hospitals, nursing facilities, and 
     intermediate care facilities for the mentally retarded.
       (2) State option to assure continuity of medicaid 
     coverage.--Upon the termination of a demonstration project 
     under this section, the State that conducted the project may 
     elect, only with respect to a child who is enrolled in such 
     project on the termination date, to continue to provide 
     medical assistance for coverage of home and community-based 
     alternatives to psychiatric residential treatment for the 
     child in accordance with section 1915(c) of the Social 
     Security Act (42 U.S.C. 1396n(c)), as modified through the 
     application of paragraph (1). Expenditures incurred for 
     providing such medical assistance shall be treated as a home 
     and community-based waiver program under section 1915(c) of 
     the Social Security Act (42 U.S.C. 1396n(c)) for purposes of 
     payment under section 1903 of such Act (42 U.S.C. 1396b).
       (c) Terms of Demonstration Projects.--
       (1) In general.--Except as otherwise provided in this 
     section, a demonstration project shall be subject to the same 
     terms and conditions as apply to a waiver under section 
     1915(c) of the Social Security Act (42 U.S.C. 1396n(c)), 
     including the waiver of certain requirements under the first 
     sentence of paragraph (3) of such section but not applying 
     the second sentence of such paragraph.
       (2) Budget neutrality.--In conducting the demonstration 
     projects under this section, the Secretary shall ensure that 
     the aggregate payments made by the Secretary under title XIX 
     of the Social Security Act (42 U.S.C. 1396 et seq.) do not 
     exceed the amount which the Secretary estimates would have 
     been paid under that title if the demonstration projects 
     under this section had not been implemented.
       (3) Evaluation.--The application for a demonstration 
     project shall include an assurance to provide for such 
     interim and final evaluations of the demonstration project by 
     independent third parties, and for such interim and final 
     reports to the Secretary, as the Secretary may require.
       (d) Payments to States; Limitations to Scope and Funding.--
       (1) In general.--Subject to paragraph (2), a demonstration 
     project approved by the Secretary under this section shall be 
     treated as a home and community-based waiver program under 
     section 1915(c) of the Social Security Act (42 U.S.C. 
     1396n(c)) for purposes of payment under section 1903 of such 
     Act (42 U.S.C. 1396b).
       (2) Limitation.--In no case may the amount of payments made 
     by the Secretary under this section for State demonstration 
     projects for a fiscal year exceed the amount available under 
     subsection (f)(2)(A) for such fiscal year.
       (e) Secretary's Evaluation and Report.--The Secretary shall 
     conduct an interim and final evaluation of State 
     demonstration projects under this section and shall report to 
     the President and Congress the conclusions of such 
     evaluations within 12 months of completing such evaluations.
       (f) Funding.--
       (1) In general.--For the purpose of carrying out this 
     section, there are appropriated, from amounts in the Treasury 
     not otherwise appropriated, for fiscal years 2007 through 
     2011, a total of $218,000,000, of which--
       (A) the amount specified in paragraph (2) shall be 
     available for each of fiscal years 2007 through 2011; and
       (B) a total of $1,000,000 shall be available to the 
     Secretary for the evaluations and report under subsection 
     (e).
       (2) Fiscal year limit.--
       (A) In general.--For purposes of paragraph (1), the amount 
     specified in this paragraph for a fiscal year is the amount 
     specified in subparagraph (B) for the fiscal year plus the 
     difference, if any, between the total amount available under 
     this paragraph for prior fiscal years and the total amount 
     previously expended under paragraph (1)(A) for such prior 
     fiscal years.
       (B) Fiscal year amounts.--The amount specified in this 
     subparagraph for--
       (i) fiscal year 2007 is $21,000,000;
       (ii) fiscal year 2008 is $37,000,000;
       (iii) fiscal year 2009 is $49,000,000;
       (iv) fiscal year 2010 is $53,000,000; and
       (v) fiscal year 2011 is $57,000,000.

     SEC. 6044. DEVELOPMENT AND SUPPORT OF FAMILY-TO-FAMILY HEALTH 
                   INFORMATION CENTERS.

       Section 501 (42 U.S.C. 701) is amended by adding at the end 
     the following new subsection:
       ``(c)(1)(A) For the purpose of enabling the Secretary 
     (through grants, contracts, or otherwise) to provide for 
     special projects of regional and national significance for 
     the development and support of family-to-family health 
     information centers described in paragraph (2)--
       ``(i) there is appropriated to the Secretary, out of any 
     money in the Treasury not otherwise appropriated--
       ``(I) $3,000,000 for fiscal year 2007;
       ``(II) $4,000,000 for fiscal year 2008; and
       ``(III) $5,000,000 for fiscal year 2009; and
       ``(ii) there is authorized to be appropriated to the 
     Secretary, $5,000,000 for each of fiscal years 2010 and 2011.
       ``(B) Funds appropriated or authorized to be appropriated 
     under subparagraph (A) shall--
       ``(i) be in addition to amounts appropriated under 
     subsection (a) and retained under section 502(a)(1) for the 
     purpose of carrying out activities described in subsection 
     (a)(2); and
       ``(ii) remain available until expended.
       ``(2) The family-to-family health information centers 
     described in this paragraph are centers that--
       ``(A) assist families of children with disabilities or 
     special health care needs to make informed choices about 
     health care in order to promote good treatment decisions, 
     cost-effectiveness, and improved health outcomes for such 
     children;
       ``(B) provide information regarding the health care needs 
     of, and resources available for, such children;
       ``(C) identify successful health delivery models for such 
     children;
       ``(D) develop with representatives of health care 
     providers, managed care organizations, health care 
     purchasers, and appropriate State agencies, a model for 
     collaboration between families of such children and health 
     professionals;
       ``(E) provide training and guidance regarding caring for 
     such children;
       ``(F) conduct outreach activities to the families of such 
     children, health professionals, schools, and other 
     appropriate entities and individuals; and
       ``(G) are staffed--
       ``(i) by such families who have expertise in Federal and 
     State public and private health care systems; and
       ``(ii) by health professionals.
       ``(3) The Secretary shall develop family-to-family health 
     information centers described in paragraph (2) in accordance 
     with the following:
       ``(A) With respect to fiscal year 2007, such centers shall 
     be developed in not less than 25 States.
       ``(B) With respect to fiscal year 2008, such centers shall 
     be developed in not less than 40 States.
       ``(C) With respect to fiscal year 2009 and each fiscal year 
     thereafter, such centers shall be developed in all States.
       ``(4) The provisions of this title that are applicable to 
     the funds made available to the Secretary under section 
     502(a)(1) apply in the same manner to funds made available to 
     the Secretary under paragraph (1)(A).
       ``(5) For purposes of this subsection, the term `State' 
     means each of the 50 States and the District of Columbia.''.

     SEC. 6045. RESTORATION OF MEDICAID ELIGIBILITY FOR CERTAIN 
                   SSI BENEFICIARIES.

       (a)In general.--Section 1902(a)(10)(A)(i)(II)(42 U.S.C. 
     1396a(a)(10)(A)(i)(II)) is amended--
       (1) by inserting ``(aa)'' after ``(II)'';
       (2) by striking ``) and'' and inserting ``and'';
       (3) by striking ``section or who are'' and inserting 
     ``section), (bb) who are''; and
       (4) by inserting before the comma at the end the following: 
     ``, or (cc) who are under 21 years of age and with respect to 
     whom supplemental security income benefits would be paid 
     under title XVI if subparagraphs (A) and (B) of section 
     1611(c)(7) were applied without regard to the phrase `the 
     first day of the month following'''.

[[Page 26731]]

       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to medical assistance for items and services 
     furnished on or after the date that is 1 year after the date 
     of enactment of this Act.

        Subchapter B--State Children's Health Insurance Program

     SEC. 6051. RULES FOR AVAILABILITY, REDISTRIBUTION, AND 
                   EXTENDED AVAILABILITY OF ALLOTMENTS FOR FISCAL 
                   YEARS 2003, 2004, AND 2005.

       (a) In General.--Section 2104 (42 U.S.C. 1397dd) is 
     amended--
       (1) by amending subsection (e) to read as follows:
       ``(e) Availability of Amounts Allotted.--
       ``(1) In general.--Except as provided in paragraph (2), 
     amounts allotted to a State pursuant to this section--
       ``(A) for each of fiscal years 1998 through 2003, and for 
     fiscal year 2006 and each fiscal year thereafter, shall 
     remain available for expenditure by the State through the end 
     of the second succeeding fiscal year; and
       ``(B) for each of fiscal years 2004 and 2005, shall remain 
     available for expenditure by the State during the initial 
     availability period (as defined in paragraph (3)(A)).
       ``(2) Availability of reallotments, redistributed amounts, 
     and extended availability.--
       ``(A) In general.--Amounts reallotted to a State under 
     subsection (f) shall be available for expenditure by the 
     State through the end of the fiscal year in which they are 
     reallotted.
       ``(B) Availability of redistributed funds and extended 
     availability.--Amounts redistributed to a State under 
     subsection (i)(3) or (j)(3) and unused allotments of a State 
     extended under subsection (i)(4) or (j)(4) are available for 
     expenditure by the State during the redistribution/extension 
     period (as defined in paragraph (3)(B)).
       ``(3) Periods defined.--For purposes of this section:
       ``(A) Initial availability period.--The term `initial 
     availability period' means, with respect to allotments for a 
     fiscal year, the 2-fiscal year period beginning with that 
     fiscal year.
       ``(B) Redistribution/extension period.--The term 
     `redistribution/extension period' means, with respect to 
     allotments for a fiscal year, the second year following that 
     fiscal year.''; and
       (2) by adding at the end the following new subsections:
       ``(h) Rule for Redistribution of Fiscal Year 2003 
     Allotments.--
       ``(1) Computation of unexpended allotments for fiscal year 
     2003.--The Secretary shall determine--
       ``(A) the amount of each State's allotment under this 
     section for fiscal year 2003 that was not expended by the end 
     of fiscal year 2005; and
       ``(B) the total of the unexpended allotments determined 
     under subparagraph (A).
       ``(2) Determination of initial projected shortfalls for 
     fiscal year 2006.--For each State that receives an allotment 
     for fiscal year 2006 under subsection (b), the Secretary 
     shall determine the following:
       ``(A) Fiscal year 2005 carryover.--The amount of the 
     State's allotment for 2005 that was not expended in fiscal 
     year 2005.
       ``(B) Projected expenditures for fiscal year 2006.--The 
     estimated expenditures for the State as would be reported as 
     quarterly expenditures under section 2105(a) for quarters in 
     fiscal year 2006.
       ``(C) Initial projected shortfall for fiscal year 2006.--
     The amount, if any, by which the projected expenditures 
     determined under subparagraph (B) for the State for quarters 
     in fiscal year 2006 exceeds the sum of the following:
       ``(i) Fiscal year 2005 carryover.--The amount determined 
     under subparagraph (A) for the State.
       ``(ii) Fiscal year 2006 allotment.--The amount of the 
     State's allotment for fiscal year 2006.
       ``(D) State's proportion of aggregate shortfall.--For each 
     State for which there is an excess determined under 
     subparagraph (C), the ratio of--
       ``(i) the amount of such excess; to
       ``(ii) the total of such excesses determined for all States 
     with such an excess.
       ``(3) Redistribution of unexpended allotments for fiscal 
     year 2003.--From the total of the unexpended allotments for 
     fiscal year 2003 determined under paragraph (1)(B) the 
     Secretary shall redistribute under subsection (f) the 
     following:
       ``(A) States other than territories.--There shall be 
     redistributed to each State for which there is an excess 
     determined under paragraph (2)(C) an amount equal to the 
     product of the following:
       ``(i) State redistribution pool.--The amount determined 
     under paragraph (1)(B), reduced by the total amount 
     redistributed under subparagraph (B).
       ``(ii) State's shortfall proportion.--The ratio described 
     in paragraph (2)(D) for that State.
       ``(B) Territories.--There shall be redistributed to each 
     commonwealth or territory described in subsection (c)(3) an 
     amount equal to the product of the following:
       ``(i) Territorial redistribution pool.--1.05 percent of the 
     amount determined under paragraph (1)(B).
       ``(ii) Territorial proportion.--The ratio of--

       ``(I) the allotment for fiscal year 2003 for such 
     commonwealth or territory under subsection (c), to
       ``(II) the total of all such allotments for such fiscal 
     year for such commonwealths or territories under such 
     subsection.

       ``(4) Determination of amounts.--For purposes of 
     calculating the amounts described in--
       ``(A) paragraphs (1) and (2)(A), the Secretary shall use 
     the amounts reported by the States not later than November 
     30, 2005, on Form CMS-64 or Form CMS-21, as the case may be, 
     as approved by the Secretary; and
       ``(B) paragraph (2)(B), the Secretary shall use the amounts 
     reported by the States not later than September 30, 2005, on 
     Form CMS-37 or Form CMS-21B, as the case may be, as approved 
     by the Secretary.
       ``(i) Redistribution and Extension of Availability of 
     Unused Allotments for Fiscal Year 2004.--Notwithstanding 
     subsection (f):
       ``(1) Computation of unexpended allotments for fiscal year 
     2004.--
       ``(A) In general.--The Secretary shall determine with 
     respect to each State that receives an allotment for fiscal 
     year 2004 under subsection (b)--
       ``(i) the amount of the State's allotment for such fiscal 
     year that was not expended by the end of fiscal year 2005; 
     and
       ``(ii) the total of the unexpended allotments determined 
     under clause (i).
       ``(B) Reduction of unexpended allotment by net fiscal year 
     2006 shortfall.--
       ``(i) In general.--In the case of a State described in 
     clause (ii), the Secretary shall reduce, but not below 0, the 
     amount determined for the State under subparagraph (A)(i) 
     (relating to the State's unexpended allotment for fiscal year 
     2004) by the amount of the allotment of the State for which 
     availability is extended under paragraph (4)(A).
       ``(ii) State described.--A State described in this clause 
     is a State that meets the following requirements:

       ``(I) Fully spent fiscal year 2003 allotment.--The State's 
     allotment under this section for fiscal year 2003 was fully 
     expended by the end of fiscal year 2005.
       ``(II) Did not fully expend fiscal year 2004 allotment by 
     end of fiscal year 2005.--The State's allotment under this 
     section for fiscal year 2004 was not fully expended by the 
     end of fiscal year 2005.
       ``(III) Projected fiscal year 2006 shortfall.--The State 
     has an excess determined under subsection (h)(2)(C) (relating 
     to initial projected fiscal year 2006 shortfall).

       ``(C) Totals and ratios.--The Secretary shall determine the 
     following:
       ``(i) Redistribution pool.--A redistribution pool equal to 
     the total of the amounts determined under subparagraph 
     (A)(i), as reduced (if applicable) under subparagraph (B)(i).
       ``(ii) State proportion toward redistribution pool.--For 
     each State in which the amount determined under subparagraph 
     (A)(i) (as reduced, if applicable, under subparagraph (B)(i)) 
     exceeds 0, the ratio of--

       ``(I) such amount (as so reduced) for the State; to
       ``(II) the total determined under clause (i).

       ``(D) Amount of unexpended fiscal year 2004 allotment 
     applied to redistributions.--For each State described in 
     subparagraph (C)(ii), the Secretary shall determine a 
     redistribution/reduction amount equal to the product of the 
     following:
       ``(i) Total amount redistributed.--The total amount 
     redistributed under paragraph (3).
       ``(ii) State's proportion of unexpended allotments.--The 
     ratio for the State determined under subparagraph (C)(ii).
       ``(2) Determination of net projected shortfalls for fiscal 
     year 2006.--For each State that has an excess determined 
     under subsection (h)(2)(C) (relating to initial projected 
     fiscal year 2006 shortfall), the Secretary shall determine an 
     amount equal to the amount determined under such subsection, 
     reduced by the sum of--
       ``(A) the amount redistributed to the State under 
     subsection (h)(3)(A), and
       ``(B) the amount of funds of the State for which 
     availability is extended under paragraph (4)(A).
       ``(3) Redistribution from redistribution pool.--From the 
     redistribution pool determined under paragraph (1)(C)(i)--
       ``(A) States other than territories.--There shall be 
     redistributed to each State which has a net projected 
     shortfall under paragraph (2) an amount determined under such 
     paragraph for the State.
       ``(B) Territories.--There shall be redistributed to each 
     commonwealth or territory described in subsection (c)(3) an 
     amount equal to the product of the following:
       ``(i) Territorial redistribution pool.--1.05 percent of the 
     amount of such unexpended allotments determined under 
     paragraph (1)(A)(ii).
       ``(ii) Territorial proportion.--The ratio of--

       ``(I) the allotment under subsection (c) for such 
     commonwealth or territory for fiscal year 2004, to
       ``(II) the total of all such allotments for such 
     commonwealths and territories.

       ``(4) Extended availability of remaining unexpended 
     allotments.--

[[Page 26732]]

       ``(A) To meet net shortfall for fiscal year 2006.--In the 
     case of a State described in paragraph (1)(B)(ii), the 
     Secretary shall extend the availability of funds from the 
     State's allotment for fiscal year 2004 to the extent that--
       ``(i) the amount determined under subsection (h)(2)(C) 
     (relating to initial shortfall for fiscal year 2006), exceeds
       ``(ii) the amount redistributed to the State under 
     subsection (h)(3)(A).
       ``(B) Other extensions.--The Secretary shall extend the 
     availability of funds from allotments for fiscal year 2004 
     for each State which has an unexpended allotment for fiscal 
     year 2004 determined under paragraph (1)(A) (as reduced, if 
     applicable, under paragraph (1)(B)) by an amount equal to the 
     amount (if any) by which--
       ``(i) the amount of such unexpended allotment (as so 
     reduced) for the State, exceeds
       ``(ii) the redistribution/reduction amount determined under 
     paragraph (1)(D) for the State (relating to the portion of 
     the unexpended allotment applied to redistributions).
       ``(5) Determination of amounts.--For purposes of 
     calculating the amounts described in--
       ``(A) paragraph (1)(A)(i), the Secretary shall use the 
     amounts reported by the States not later than November 30, 
     2005, on Form CMS-64 or Form CMS-21, as the case may be, as 
     approved by the Secretary; and
       ``(B) paragraph (1)(B)(i), the Secretary shall use the 
     amounts reported by the States not later than September 30, 
     2005, on Form CMS-37 or Form CMS-21B, as the case may be, as 
     approved by the Secretary.
       ``(j) Redistribution and Extension of Availability of 
     Unused Allotments for Fiscal Year 2005.--Notwithstanding 
     subsection (f):
       ``(1) Computation of unexpended allotments for fiscal year 
     2005.--
       ``(A) In general.--The Secretary shall determine with 
     respect to each State that receives an allotment for fiscal 
     year 2005 under subsection (b)--
       ``(i) the amount of the State's allotment for fiscal year 
     2005 that was not expended by the end of fiscal year 2006; 
     and
       ``(ii) the total of the unexpended allotments determined 
     under clause (i).
       ``(B) Reduction of unexpended allotment by net fiscal year 
     2007 shortfall.--
       ``(i) In general.--In the case of a State described in 
     clause (ii), the Secretary shall reduce, but not below 0, the 
     amount determined for the State under subparagraph (A)(i) 
     (relating to the State's unexpended allotment for fiscal year 
     2005) by the amount of the allotment of the State for which 
     availability is extended under paragraph (4)(A).
       ``(ii) State described.--A State described in this clause 
     is a State that meets the following requirements:

       ``(I) Did not fully expend fiscal year 2005 allotment by 
     end of fiscal year 2006.--The State's allotment under this 
     section for fiscal year 2005 was not fully expended by the 
     end of fiscal year 2006.
       ``(II) Projected shortfall for fiscal year 2007.--The State 
     has an excess determined under paragraph (2)(C) for fiscal 
     year 2007 (relating to initial projected fiscal year 2007 
     shortfall).

       ``(C) Totals and ratios.--The Secretary shall determine the 
     following:
       ``(i) Redistribution pool.--A redistribution pool equal to 
     the total of the amounts determined under subparagraph 
     (A)(i), as reduced (if applicable) under subparagraph (B)(i).
       ``(ii) State proportion toward redistribution pool.--For 
     each State in which the amount determined under subparagraph 
     (A)(i) (as reduced, if applicable, under subparagraph (B)(i)) 
     exceeds 0, the ratio of--

       ``(I) such amount (as so reduced) for the State; to
       ``(II) the total determined under clause (i).

       ``(D) Amount of unexpended fiscal year 2005 allotment 
     applied to redistributions.--For each State described in 
     subparagraph (C)(ii), the Secretary shall determine a 
     redistribution/reduction amount equal to the product of the 
     following:
       ``(i) Total amount redistributed.--The total amount 
     redistributed under paragraph (3).
       ``(ii) State's proportion of unexpended allotments.--The 
     ratio for the State determined under subparagraph (C)(ii).
       ``(2) Determination of initial projected shortfalls for 
     fiscal year 2007.--For each State that receives an allotment 
     for fiscal year 2007 under subsection (b), the Secretary 
     shall determine the following:
       ``(A) Fiscal year 2006 carryover.--The amount of the 
     State's allotment for fiscal year 2006 that was not expended 
     in fiscal year 2006.
       ``(B) Projected expenditures for fiscal year 2007.--The 
     estimated expenditures for the State as would be reported as 
     quarterly expenditures under section 2105(a) for quarters in 
     fiscal year 2007.
       ``(C) Initial projected shortfall for fiscal year 2007.--
     The amount, if any, by which the projected expenditures 
     determined under subparagraph (B) for the State for quarters 
     in fiscal year 2007 exceeds the sum of the following:
       ``(i) Fiscal year 2006 carryover.--The amount determined 
     under subparagraph (A) for the State.
       ``(ii) Fiscal year 2007 allotment.--The amount of the 
     State's allotment for fiscal year 2007.
       ``(D) Determination of net projected shortfalls for fiscal 
     year 2007.--For each State that has an excess determined 
     under subparagraph (C), the Secretary shall determine an 
     amount equal to the amount determined under such 
     subparagraph, reduced by the amount of funds (if any) of the 
     State for which availability is extended under paragraph 
     (4)(A).
       ``(E) State's proportion of net aggregate shortfall.--For 
     each State for which there is a net excess determined under 
     subparagraph (D), the ratio of--
       ``(i) the amount of such net excess; to
       ``(ii) the total of such net excesses.
       ``(3) Redistribution from redistribution pool.--From the 
     redistribution pool determined under paragraph (1)(C)(i)--
       ``(A) States other than territories.--There shall be 
     redistributed to each State for which there is a net 
     projected shortfall under paragraph (2)(D) an amount equal 
     the lesser of the following:
       ``(i) Net fiscal year 2007 shortfall.--The amount of the 
     net excess described in paragraph (2)(D) for the State.
       ``(ii) Portion of unexpended funds available.--The product 
     of the following:

       ``(I) State redistribution pool.--The amount determined 
     under paragraph (1)(C)(i), reduced by the total amount 
     redistributed under subparagraph (B).
       ``(II) State's shortfall proportion.--The ratio described 
     in paragraph (2)(E) for that State.

       ``(B) Territories.--There shall be redistributed to each 
     commonwealth or territory described in subsection (c)(3) an 
     amount equal to the product of the following:
       ``(i) Territorial redistribution pool.--1.05 percent of the 
     total amount of unexpended allotments determined under 
     paragraph (1)(A)(ii).
       ``(ii) Territorial proportion.--The ratio of--

       ``(I) the allotment under subsection (c) for such 
     commonwealth or territory for fiscal year 2005, to
       ``(II) the total of all such allotments for such 
     commonwealths and territories.

       ``(4) Extended availability of remaining unexpended 
     allotments.--
       ``(A) To meet initial projected shortfall for fiscal year 
     2007.--In the case of a State that is described in paragraph 
     (1)(B)(ii), the Secretary shall extend the availability of 
     funds from the State's allotment for fiscal year 2005 to the 
     extent of the amount described in paragraph (2)(C).
       ``(B) Other extensions.--If the redistribution pool amount 
     determined under paragraph (1)(C)(i) exceeds the total amount 
     redistributed under paragraph (3), the Secretary shall extend 
     the availability of funds from allotments for fiscal year 
     2005 for each State which has an unexpended allotment for 
     that fiscal year determined under paragraph (1)(A) (as 
     reduced, if applicable, under paragraph (1)(B)) by an amount 
     equal to the amount (if any) by which--
       ``(i) the amount of the unexpended allotment (as so 
     reduced) for the State, exceeds
       ``(ii) the redistribution/reduction amount determined under 
     paragraph (1)(D) for the State (relating to the portion of 
     the unexpended allotment applied to redistributions).
       ``(5) Determination of amounts.--For purposes of 
     calculating the amounts described in--
       ``(A) paragraph (1)(A), the Secretary shall use the amounts 
     reported by the States not later than November 30, 2006, on 
     Form CMS-64 or Form CMS-21, as the case may be, as approved 
     by the Secretary; or
       ``(B) paragraph (2), the Secretary shall use the amounts 
     reported by the States not later than September 30, 2006, on 
     Form CMS-37 or Form CMS-21B, as the case may be, as approved 
     by the Secretary.''.
       (b) Use of Redistributed Funds for Child Health Assistance 
     for Targeted Low-Income Children.--Section 2105(a) (42 U.S.C. 
     1397ee(a)) is amended--
       (1) in paragraph (1), in the matter preceding subparagraph 
     (A), by inserting ``or paragraph (3)'' after ``subparagraph 
     (B)''; and
       (2) by adding at the end the following:
       ``(3) Use of redistributed funds for child health 
     assistance for targeted low-income children.--For purposes of 
     paragraph (1), the expenditures described in this paragraph 
     are expenditures that are not expenditures for child health 
     assistance for targeted low-income children, but only if such 
     expenditures are from any amounts redistributed under 
     subparagraphs (A) or (B) of subsection (h)(3), (i)(3), or 
     (j)(3) of section 2104.''.

     SEC. 6052. AUTHORITY TO USE UP TO 10 PERCENT OF FISCAL YEAR 
                   2006 AND 2007 ALLOTMENTS FOR OUTREACH.

       Section 2105(c)(2) (42 U.S.C. 1397ee(c)(2)) is amended by 
     adding at the end the following:
       ``(C) Use of up to 10 percent of 2006 and 2007 allotments 
     for outreach activities.--Notwithstanding subparagraph (A), a 
     State may use up to 10 percent of the allotment for the State 
     for fiscal year 2006 and for fiscal year 2007 for 
     expenditures incurred during the respective fiscal year for 
     outreach activities as provided in section 2102(c)(1) under 
     the plan.''.

[[Page 26733]]



     SEC. 6053. PROHIBITION AGAINST COVERING NONPREGNANT CHILDLESS 
                   ADULTS WITH SCHIP FUNDS.

       (a) Prohibition on Use of SCHIP Funds.--Section 2107 (42 
     U.S.C. 1397gg) is amended by adding at the end the following:
       ``(f) Limitation of Waiver Authority.--Notwithstanding 
     subsection (e)(2)(A) and section 1115(a), on and after the 
     date of enactment of this subsection, the Secretary may not 
     approve a waiver, experimental, pilot, or demonstration 
     project that would allow funds made available under this 
     title to be used to provide child health assistance or other 
     health benefits coverage to a nonpregnant childless adult. 
     For purposes of the preceding sentence, a caretaker relative 
     (as such term is defined for purposes of carrying out section 
     1931) shall not be considered a childless adult.''.
       (b) Conforming Amendments.--Section 2105(c)(1) (42 U.S.C. 
     1397ee(c)(1)) is amended--
       (1) by inserting ``and may not include coverage of a 
     nonpregnant childless adult'' after ``section 2101)''; and
       (2) by adding at the end the following: ``For purposes of 
     the preceding sentence, a caretaker relative (as such term is 
     defined for purposes of carrying out section 1931) shall not 
     be considered a childless adult.''.
       (c) Rule of Construction.--Nothing in this section or the 
     amendments made by this section shall be construed to--
       (1) authorize the waiver of any provision of title XIX or 
     XXI of the Social Security Act (42 U.S.C. 1396 et seq., 
     1397aa et seq.) that is not otherwise authorized to be waived 
     under such titles or under title XI of such Act (42 U.S.C. 
     1301 et seq.) as of the date of enactment of this Act;
       (2) imply congressional approval of any waiver, 
     experimental, pilot, or demonstration project affecting funds 
     made available under the State children's health insurance 
     program under title XXI of the Social Security Act (42 U.S.C. 
     1397aa et. seq.) or any amendment to such a waiver or project 
     that has been approved as of such date of enactment; or
       (3) apply to any waiver, experimental, pilot, or 
     demonstration project that would allow funds made available 
     under title XXI of the Social Security Act (42 U.S.C. 1397aa 
     et seq.) to be used to provide child health assistance or 
     other health benefits coverage to a nonpregnant childless 
     adult that is approved before the date of enactment of this 
     Act or to any extension, renewal, or amendment of such a 
     waiver or project that is approved on or after such date of 
     enactment.

     SEC. 6054. CONTINUED AUTHORITY FOR QUALIFYING STATES TO USE 
                   CERTAIN FUNDS FOR MEDICAID EXPENDITURES.

       (a) In General.--Section 2105(g)(1)(A) (42 U.S.C. 
     1397ee(g)(1)(A)) is amended by striking ``or 2001'' and 
     inserting ``2001, 2004, or 2005''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to expenditures made under title XIX of the 
     Social Security Act (42 U.S.C. 1396 et seq.) on or after 
     October 1, 2005.

     SEC. 6055. GRANTS TO PROMOTE INNOVATIVE OUTREACH AND 
                   ENROLLMENT UNDER MEDICAID AND SCHIP.

       Title XXI (42 U.S.C. 1397aa et seq.) is amended by adding 
     at the end the following:

     ``SEC. 2111. EXPANDED OUTREACH ACTIVITIES.

       ``(a) Grants To Conduct Innovative Outreach and Enrollment 
     Efforts.--
       ``(1) In general.--The Secretary shall award grants to 
     eligible entities to--
       ``(A) conduct innovative outreach and enrollment efforts 
     that are designed to increase the enrollment and 
     participation of eligible children under this title and title 
     XIX; and
       ``(B) promote understanding of the importance of health 
     insurance coverage for prenatal care and children.
       ``(2) Performance bonuses.--The Secretary may reserve a 
     portion of the funds appropriated under subsection (g) for a 
     fiscal year for the purpose of awarding performance bonuses 
     during the succeeding fiscal year to eligible entities that 
     meet enrollment goals or other criteria established by the 
     Secretary.
       ``(b) Priority for Award of Grants.--
       ``(1) In general.--In making grants under subsection 
     (a)(1), the Secretary shall give priority to--
       ``(A) eligible entities that propose to target geographic 
     areas with high rates of--
       ``(i) eligible but unenrolled children, including such 
     children who reside in rural areas; or
       ``(ii) racial and ethnic minorities and health disparity 
     populations, including those proposals that address cultural 
     and linguistic barriers to enrollment; and
       ``(B) eligible entities that plan to engage in outreach 
     efforts with respect to individuals described in subparagraph 
     (A) and that are--
       ``(i) Federal health safety net organizations; or
       ``(ii) faith-based organizations or consortia.
       ``(2) 10 percent set aside for outreach to indian 
     children.--An amount equal to 10 percent of the funds 
     appropriated under subsection (g) for a fiscal year shall be 
     used by the Secretary to award grants to Indian Health 
     Service providers and urban Indian organizations receiving 
     funds under title V of the Indian Health Care Improvement Act 
     (25 U.S.C. 1651 et seq.) for outreach to, and enrollment of, 
     children who are Indians.
       ``(c) Application.--An eligible entity that desires to 
     receive a grant under subsection (a)(1) shall submit an 
     application to the Secretary in such form and manner, and 
     containing such information, as the Secretary may decide. 
     Such application shall include--
       ``(1) quality and outcomes performance measures to evaluate 
     the effectiveness of activities funded by a grant awarded 
     under this section to ensure that the activities are meeting 
     their goals; and
       ``(2) an assurance that the entity shall--
       ``(A) conduct an assessment of the effectiveness of such 
     activities against such performance measures; and
       ``(B) cooperate with the collection and reporting of 
     enrollment data and other information determined as a result 
     of conducting such assessments to the Secretary, in such form 
     and manner as the Secretary shall require.
       ``(d) Dissemination of Enrollment Data and Information 
     Determined From Effectiveness Assessments; Annual Report.--
     The Secretary shall--
       ``(1) disseminate to eligible entities and make publicly 
     available the enrollment data and information collected and 
     reported in accordance with subsection (c)(2)(B); and
       ``(2) submit an annual report to Congress on the outreach 
     activities funded by grants awarded under this section.
       ``(e) Supplement, Not Supplant.--Federal funds awarded 
     under this section shall be used to supplement, not supplant, 
     non-Federal funds that are otherwise available for activities 
     funded under this section.
       ``(f) Definitions.--In this section:
       ``(1) Eligible entity.--The term `eligible entity' means 
     any of the following:
       ``(A) A State or local government.
       ``(B) A Federal health safety net organization.
       ``(C) A national, local, or community-based public or 
     nonprofit private organization.
       ``(D) A faith-based organization or consortia, to the 
     extent that a grant awarded to such an entity is consistent 
     with the requirements of section 1955 of the Public Health 
     Service Act (42 U.S.C. 300x-65) relating to a grant award to 
     non-governmental entities.
       ``(E) An elementary or secondary school.
       ``(2) Federal health safety net organization.--The term 
     `Federal health safety net organization' means--
       ``(A) an Indian tribe, tribal organization, or an urban 
     Indian organization receiving funds under title V of the 
     Indian Health Care Improvement Act (25 U.S.C. 1651 et seq.), 
     or an Indian Health Service provider;
       ``(B) a Federally-qualified health center (as defined in 
     section 1905(l)(2)(B));
       ``(C) a hospital defined as a disproportionate share 
     hospital for purposes of section 1923;
       ``(D) a covered entity described in section 340B(a)(4) of 
     the Public Health Service Act (42 U.S.C. 256b(a)(4)); and
       ``(E) any other entity or a consortium that serves children 
     under a federally-funded program, including the special 
     supplemental nutrition program for women, infants, and 
     children (WIC) established under section 17 of the Child 
     Nutrition Act of 1966 (42 U.S.C. 1786), the head start and 
     early head start programs under the Head Start Act (42 U.S.C. 
     9801 et seq.), the school lunch program established under the 
     Richard B. Russell National School Lunch Act, and an 
     elementary or secondary school.
       ``(3) Indians; indian tribe; tribal organization; urban 
     indian organization.--The terms `Indian', `Indian tribe', 
     `tribal organization', and `urban Indian organization' have 
     the meanings given such terms in section 4 of the Indian 
     Health Care Improvement Act (25 U.S.C. 1603).
       ``(g) Appropriation.--There is appropriated, out of any 
     money in the Treasury not otherwise appropriated, $25,000,000 
     for fiscal year 2007 for the purpose of awarding grants under 
     this section. Amounts appropriated and paid under the 
     authority of this section shall--
       ``(1) be in addition to amounts appropriated under section 
     2104 and paid to States in accordance with section 2105; and
       ``(2) not be subject to the limitation on expenditures 
     described in section 2105(c)(2)(A).''.

    Subchapter C--Money Follows the Person Rebalancing Demonstration

     SEC. 6061. MONEY FOLLOWS THE PERSON REBALANCING 
                   DEMONSTRATION.

       (a) Program Purpose and Authority.--The Secretary is 
     authorized to award, on a competitive basis, grants to States 
     in accordance with this section for demonstration projects 
     (each in this section referred to as an ``MFP demonstration 
     project'') designed to achieve the following objectives with 
     respect to institutional and home and community-based long-
     term care services under State Medicaid programs:
       (1) Rebalancing.--Increase the use of home and community-
     based, rather than institutional, long-term care services.
       (2) Money follows the person.--Eliminate barriers or 
     mechanisms, whether in the State law, the State Medicaid 
     plan, the State budget, or otherwise, that prevent or 
     restrict the flexible use of Medicaid funds to enable 
     Medicaid-eligible individuals to receive support for 
     appropriate and necessary long-term services in the settings 
     of their choice.

[[Page 26734]]

       (3) Continuity of service.--Increase the ability of the 
     State Medicaid program to assure continued provision of home 
     and community-based long-term care services to eligible 
     individuals who choose to transition from an institutional to 
     a community setting.
       (4) Quality assurance and quality improvement.--Ensure that 
     procedures are in place (at least comparable to those 
     required under the qualified HCB program) to provide quality 
     assurance for eligible individuals receiving Medicaid home 
     and community-based long-term care services and to provide 
     for continuous quality improvement in such services.
       (b) Definitions.--For purposes of this section:
       (1) Home and community-based long-term care services.--The 
     term ``home and community-based long-term care services'' 
     means, with respect to a State Medicaid program, home and 
     community-based services (including home health and personal 
     care services) that are provided under the State's qualified 
     HCB program or that could be provided under such a program 
     but are otherwise provided under the Medicaid program.
       (2) Eligible individual.--The term ``eligible individual'' 
     means, with respect to an MFP demonstration project of a 
     State, an individual in the State--
       (A) who, immediately before beginning participation in the 
     MFP demonstration project--
       (i) resides (and has resided, for a period of not less than 
     6 months or for such longer minimum period, not to exceed 2 
     years, as may be specified by the State) in an inpatient 
     facility;
       (ii) is receiving Medicaid benefits for inpatient services 
     furnished by such inpatient facility; and
       (iii) with respect to whom a determination has been made 
     that, but for the provision of home and community-based long-
     term care services, the individual would continue to require 
     the level of care provided in an inpatient facility; and
       (B) who resides in a qualified residence beginning on the 
     initial date of participation in the demonstration project.
       (3) Inpatient facility.--The term ``inpatient facility'' 
     means a hospital, nursing facility, or intermediate care 
     facility for the mentally retarded. Such term includes an 
     institution for mental diseases, but only, with respect to a 
     State, to the extent medical assistance is available under 
     the State Medicaid plan for services provided by such 
     institution.
       (4) Medicaid.--The term ``Medicaid'' means, with respect to 
     a State, the State program under title XIX of the Social 
     Security Act (including any waiver or demonstration under 
     such title or under section 1115 of such Act relating to such 
     title).
       (5) Qualified hcb program.--The term ``qualified HCB 
     program'' means a program providing home and community-based 
     long-term care services operating under Medicaid, whether or 
     not operating under waiver authority.
       (6) Qualified residence.--The term ``qualified residence'' 
     means, with respect to an eligible individual--
       (A) a home owned or leased by the individual or the 
     individual's family member;
       (B) an apartment with an individual lease, with lockable 
     access and egress, and which includes living, sleeping, 
     bathing, and cooking areas over which the individual or the 
     individual's family has domain and control; and
       (C) a residence, in a community-based residential setting, 
     in which no more than 4 unrelated individuals reside.
       (7) Qualified expenditures.--The term ``qualified 
     expenditures'' means expenditures by the State under its MFP 
     demonstration project for home and community-based long-term 
     care services for an eligible individual participating in the 
     MFP demonstration project, but only with respect to services 
     furnished during the 12-month period beginning on the date 
     the individual is discharged from an inpatient facility 
     referred to in paragraph (2)(A)(i).
       (8) Self-directed services.--The term ``self-directed'' 
     means, with respect to home and community-based long-term 
     care services for an eligible individual, such services for 
     the individual which are planned and purchased under the 
     direction and control of such individual or the individual's 
     authorized representative (as defined by the Secretary), 
     including the amount, duration, scope, provider, and location 
     of such services, under the State Medicaid program consistent 
     with the following requirements:
       (A) Assessment.--There is an assessment of the needs, 
     capabilities, and preferences of the individual with respect 
     to such services.
       (B) Service plan.--Based on such assessment, there is 
     developed jointly with such individual or the individual's 
     authorized representative a plan for such services for such 
     individual that is approved by the State and that--
       (i) specifies those services, if any, which the individual 
     or the individual's authorized representative would be 
     responsible for directing;
       (ii) identifies the methods by which the individual or the 
     individual's authorized representative or an agency 
     designated by an individual or representative will select, 
     manage, and dismiss providers of such services;
       (iii) specifies the role of family members and others whose 
     participation is sought by the individual or the individual's 
     authorized representative with respect to such services;
       (iv) is developed through a person-centered process that--

       (I) is directed by the individual or the individual's 
     authorized representative;
       (II) builds upon the individual's capacity to engage in 
     activities that promote community life and that respects the 
     individual's preferences, choices, and abilities; and
       (III) involves families, friends, and professionals as 
     desired or required by the individual or the individual's 
     authorized representative;

       (v) includes appropriate risk management techniques that 
     recognize the roles and sharing of responsibilities in 
     obtaining services in a self-directed manner and assure the 
     appropriateness of such plan based upon the resources and 
     capabilities of the individual or the individual's authorized 
     representative; and
       (vi) may include an individualized budget which identifies 
     the dollar value of the services and supports under the 
     control and direction of the individual or the individual's 
     authorized representative.
       (C) Budget Process.--With respect to individualized budgets 
     described in subparagraph (B)(vi), the State application 
     under subsection (c)--
       (i) describes the method for calculating the dollar values 
     in such budgets based on reliable costs and service 
     utilization;
       (ii) defines a process for making adjustments in such 
     dollar values to reflect changes in individual assessments 
     and service plans; and
       (iii) provides a procedure to evaluate expenditures under 
     such budgets.
       (9) State.--The term ``State'' has the meaning given such 
     term for purposes of title XIX of the Social Security Act.
       (c) State Application.--A State seeking approval of an MFP 
     demonstration project shall submit to the Secretary, at such 
     time and in such format as the Secretary requires, an 
     application meeting the following requirements and containing 
     such additional information, provisions, and assurances, as 
     the Secretary may require:
       (1) Assurance of a public development process.--The 
     application contains an assurance that the State has engaged, 
     and will continue to engage, in a public process for the 
     design, development, and evaluation of the MFP demonstration 
     project that allows for input from eligible individuals, the 
     families of such individuals, authorized representatives of 
     such individuals, providers, and other interested parties.
       (2) Operation in connection with qualified hcb program to 
     assure continuity of services.--The State will conduct the 
     MFP demonstration project for eligible individuals in 
     conjunction with the operation of a qualified HCB program 
     that is in operation (or approved) in the State for such 
     individuals in a manner that assures continuity of Medicaid 
     coverage for such individuals so long as such individuals 
     continue to be eligible for medical assistance.
       (3) Demonstration project period.--The application shall 
     specify the period of the MFP demonstration project, which 
     shall include at least 2 consecutive fiscal years in the 5-
     fiscal-year period beginning with fiscal year 2009.
       (4) Service area.--The application shall specify the 
     service area or areas of the MFP demonstration project, which 
     may be a statewide area or one or more geographic areas of 
     the State.
       (5) Targeted groups and numbers of individuals served.--The 
     application shall specify--
       (A) the target groups of eligible individuals to be 
     assisted to transition from an inpatient facility to a 
     qualified residence during each fiscal year of the MFP 
     demonstration project;
       (B) the projected numbers of eligible individuals in each 
     targeted group of eligible individuals to be so assisted 
     during each such year; and
       (C) the estimated total annual qualified expenditures for 
     each fiscal year of the MFP demonstration project.
       (6) Individual choice, continuity of care.--The application 
     shall contain assurances that--
       (A) each eligible individual or the individual's authorized 
     representative will be provided the opportunity to make an 
     informed choice regarding whether to participate in the MFP 
     demonstration project;
       (B) each eligible individual or the individual's authorized 
     representative will choose the qualified residence in which 
     the individual will reside and the setting in which the 
     individual will receive home and community-based long-term 
     care services;
       (C) the State will continue to make available, so long as 
     the State operates its qualified HCB program consistent with 
     applicable requirements, home and community-based long-term 
     care services to each individual who completes participation 
     in the MFP demonstration project for as long as the 
     individual remains eligible for medical assistance for such 
     services under such qualified HCB program (including meeting 
     a requirement relating to requiring a level of care

[[Page 26735]]

     provided in an inpatient facility and continuing to require 
     such services).
       (7) Rebalancing.--The application shall--
       (A) provide such information as the Secretary may require 
     concerning the dollar amounts of State Medicaid expenditures 
     for the fiscal year, immediately preceding the first fiscal 
     year of the State's MFP demonstration project, for long-term 
     care services and the percentage of such expenditures that 
     were for institutional long-term care services or were for 
     home and community-based long-term care services;
       (B)(i) specify the methods to be used by the State to 
     increase, for each fiscal year during the MFP demonstration 
     project, the dollar amount of such total expenditures for 
     home and community-based long-term care services and the 
     percentage of such total expenditures for long-term care 
     services that are for home and community-based long-term care 
     services; and
       (ii) describe the extent to which the MFP demonstration 
     project will contribute to accomplishment of objectives 
     described in subsection (a).
       (8) Money follows the person.--The application shall 
     describe the methods to be used by the State to eliminate any 
     legal, budgetary, or other barriers to flexibility in the 
     availability of Medicaid funds to pay for long-term care 
     services for eligible individuals participating in the 
     project in the appropriate settings of their choice, 
     including costs to transition from an institutional setting 
     to a qualified residence.
       (9) Maintenance of effort and cost-effectiveness.--The 
     application shall contain or be accompanied by such 
     information and assurances as may be required to satisfy the 
     Secretary that--
       (A) total expenditures under the State Medicaid program for 
     home and community-based long-term care services will not be 
     less for any fiscal year during the MFP demonstration project 
     than for the greater of such expenditures for--
       (i) fiscal year 2005; or
       (ii) any succeeding fiscal year before the first year of 
     the MFP demonstration project; and
       (B) in the case of a qualified HCB program operating under 
     a waiver under subsection (c) or (d) of section 1915 of the 
     Social Security Act (42 U.S.C. 1396n), but for the amount 
     awarded under a grant under this section, the State program 
     would continue to meet the cost-effectiveness requirements of 
     subsection (c)(2)(D) of such section or comparable 
     requirements under subsection (d)(5) of such section, 
     respectively.
       (10) Waiver requests.--The application shall contain or be 
     accompanied by requests for any modification or adjustment of 
     waivers of Medicaid requirements described in subsection 
     (d)(3), including adjustments to the maximum numbers of 
     individuals included and package of benefits, including one-
     time transitional services, provided.
       (11) Quality assurance and quality improvement.--The 
     application shall include--
       (A) a plan satisfactory to the Secretary for quality 
     assurance and quality improvement for home and community-
     based long-term care services under the State Medicaid 
     program, including a plan to assure the health and welfare of 
     individuals participating in the MFP demonstration project; 
     and
       (B) an assurance that the State will cooperate in carrying 
     out activities under subsection (f) to develop and implement 
     continuous quality assurance and quality improvement systems 
     for home and community-based long-term care services.
       (12) Optional program for self-directed services.--If the 
     State elects to provide for any home and community-based 
     long-term care services as self-directed services (as defined 
     in subsection (b)(8)) under the MFP demonstration project, 
     the application shall provide the following:
       (A) Meeting requirements.--A description of how the project 
     will meet the applicable requirements of such subsection for 
     the provision of self-directed services.
       (B) Voluntary election.--A description of how eligible 
     individuals will be provided with the opportunity to make an 
     informed election to receive self-directed services under the 
     project and after the end of the project.
       (C) State support in service plan development.--
     Satisfactory assurances that the State will provide support 
     to eligible individuals who self-direct in developing and 
     implementing their service plans.
       (D) Oversight of receipt of services.--Satisfactory 
     assurances that the State will provide oversight of eligible 
     individual's receipt of such self-directed services, 
     including steps to assure the quality of services provided 
     and that the provision of such services are consistent with 
     the service plan under such subsection.
     Nothing in this section shall be construed as requiring a 
     State to make an election under the project to provide for 
     home and community-based long-term care services as self-
     directed services, or as requiring an individual to elect to 
     receive self-directed services under the project.
       (13) Reports and evaluation.--The application shall provide 
     that--
       (A) the State will furnish to the Secretary such reports 
     concerning the MFP demonstration project, on such timetable, 
     in such uniform format, and containing such information as 
     the Secretary may require, as will allow for reliable 
     comparisons of MFP demonstration projects across States; and
       (B) the State will participate in and cooperate with the 
     evaluation of the MFP demonstration project.
       (d) Secretary's Award of Competitive Grants.--
       (1) In general.--The Secretary shall award grants under 
     this section on a competitive basis to States selected from 
     among those with applications meeting the requirements of 
     subsection (c), in accordance with the provisions of this 
     subsection.
       (2) Selection and modification of state applications.--In 
     selecting State applications for the awarding of such a 
     grant, the Secretary--
       (A) shall take into consideration the manner in which, and 
     extent to which, the State proposes to achieve the objectives 
     specified in subsection (a);
       (B) shall seek to achieve an appropriate national balance 
     in the numbers of eligible individuals, within different 
     target groups of eligible individuals, who are assisted to 
     transition to qualified residences under MFP demonstration 
     projects, and in the geographic distribution of States 
     operating MFP demonstration projects;
       (C) shall give preference to State applications proposing--
       (i) to provide transition assistance to eligible 
     individuals within multiple target groups; and
       (ii) to provide eligible individuals with the opportunity 
     to receive home and community-based long-term care services 
     as self-directed services, as defined in subsection (b)(8); 
     and
       (D) shall take such objectives into consideration in 
     setting the annual amounts of State grant awards under this 
     section.
       (3) Waiver authority.--The Secretary is authorized to waive 
     the following provisions of title XIX of the Social Security 
     Act, to the extent necessary to enable a State initiative to 
     meet the requirements and accomplish the purposes of this 
     section:
       (A) Statewideness.--Section 1902(a)(1), in order to permit 
     implementation of a State initiative in a selected area or 
     areas of the State.
       (B) Comparability.--Section 1902(a)(10)(B), in order to 
     permit a State initiative to assist a selected category or 
     categories of individuals described in subsection (b)(2)(A).
       (C) Income and resources eligibility.--Section 
     1902(a)(10)(C)(i)(III), in order to permit a State to apply 
     institutional eligibility rules to individuals transitioning 
     to community-based care.
       (D) Provider agreements.--Section 1902(a)(27), in order to 
     permit a State to implement self-directed services in a cost-
     effective manner.
       (4) Conditional approval of outyear grant.--In awarding 
     grants under this section, the Secretary shall condition the 
     grant for the second and any subsequent fiscal years of the 
     grant period on the following:
       (A) Numerical benchmarks.--The State must demonstrate to 
     the satisfaction of the Secretary that it is meeting 
     numerical benchmarks specified in the grant agreement for--
       (i) increasing State Medicaid support for home and 
     community-based long-term care services under subsection 
     (c)(5); and
       (ii) numbers of eligible individuals assisted to transition 
     to qualified residences.
       (B) Quality of care.--The State must demonstrate to the 
     satisfaction of the Secretary that it is meeting the 
     requirements under subsection (c)(11) to assure the health 
     and welfare of MFP demonstration project participants.
       (e) Payments to States; Carryover of Unused Grant 
     Amounts.--
       (1) Payments.--For each calendar quarter in a fiscal year 
     during the period a State is awarded a grant under subsection 
     (d), the Secretary shall pay to the State from its grant 
     award for such fiscal year an amount equal to the lesser of--
       (A) 90 percent of the amount of qualified expenditures made 
     during such quarter; or
       (B) the total amount remaining in such grant award for such 
     fiscal year (taking into account the application of paragraph 
     (2)).
       (2) Carryover of unused amounts.--Any portion of a State 
     grant award for a fiscal year under this section remaining at 
     the end of such fiscal year shall remain available to the 
     State for the next 4 fiscal years, subject to paragraph (3).
       (3) Reawarding of certain unused amounts.--In the case of a 
     State that the Secretary determines pursuant to subsection 
     (d)(4) has failed to meet the conditions for continuation of 
     a MFP demonstration project under this section in a 
     succeeding year or years, the Secretary shall rescind the 
     grant awards for such succeeding year or years, together with 
     any unspent portion of an award for prior years, and shall 
     add such amounts to the appropriation for the immediately 
     succeeding fiscal year for grants under this section.
       (4) Preventing duplication of payment.--The payment under a 
     MFP demonstration project with respect to qualified 
     expenditures shall be in lieu of any payment with respect to 
     such expenditures that could otherwise be paid under 
     Medicaid, including under

[[Page 26736]]

     section 1903(a) of the Social Security Act. Nothing in the 
     previous sentence shall be construed as preventing the 
     payment under Medicaid for such expenditures in a grant year 
     after amounts available to pay for such expenditures under 
     the MFP demonstration project have been exhausted.
       (f) Quality Assurance and Improvement; Technical 
     Assistance; Oversight.--
       (1) In general.--The Secretary, either directly or by grant 
     or contract, shall provide for technical assistance to, and 
     oversight of, States for purposes of upgrading quality 
     assurance and quality improvement systems under Medicaid home 
     and community-based waivers, including--
       (A) dissemination of information on promising practices;
       (B) guidance on system design elements addressing the 
     unique needs of participating beneficiaries;
       (C) ongoing consultation on quality, including assistance 
     in developing necessary tools, resources, and monitoring 
     systems; and
       (D) guidance on remedying programmatic and systemic 
     problems.
       (2) Funding.--From the amounts appropriated under 
     subsection (h)(1) for the portion of fiscal year 2009 that 
     begins on January 1, 2009, and ends on September 30, 2009, 
     and for fiscal year 2010, not more than $2,400,000 shall be 
     available to the Secretary to carry out this subsection 
     during the period that begins on January 1, 2009, and ends on 
     September 30, 2013.
       (g) Research and Evaluation.--
       (1) In general.--The Secretary, directly or through grant 
     or contract, shall provide for research on, and a national 
     evaluation of, the program under this section, including 
     assistance to the Secretary in preparing the final report 
     required under paragraph (2). The evaluation shall include an 
     analysis of projected and actual savings related to the 
     transition of individuals to qualified residences in each 
     State conducting an MFP demonstration project.
       (2) Final report.--The Secretary shall make a final report 
     to the President and Congress, not later than September 30, 
     2013, reflecting the evaluation described in paragraph (1) 
     and providing findings and conclusions on the conduct and 
     effectiveness of MFP demonstration projects.
       (3) Funding.--From the amounts appropriated under 
     subsection (h)(1) for each of fiscal years 2010 through 2013, 
     not more than $1,100,000 per year shall be available to the 
     Secretary to carry out this subsection.
       (h) Appropriations.--
       (1) In general.--There are appropriated, from any funds in 
     the Treasury not otherwise appropriated, for grants to carry 
     out this section--
       (A) $250,000,000 for the portion of fiscal year 2009 
     beginning on January 1, 2009, and ending on September 30, 
     2009;
       (B) $300,000,000 for fiscal year 2010;
       (C) $350,000,000 for fiscal year 2011;
       (D) $400,000,000 for fiscal year 2012; and
       (E) $450,000,000 for fiscal year 2013.
       (2) Availability.--Amounts made available under paragraph 
     (1) for a fiscal year shall remain available for the awarding 
     of grants to States by not later than September 30, 2013.

   CHAPTER 6--OPTION FOR HURRICANE KATRINA DISASTER STATES TO DELAY 
                              APPLICATION

     SEC. 6071. OPTION FOR HURRICANE KATRINA DISASTER STATES TO 
                   DELAY APPLICATION.

       Notwithstanding any provision of this subtitle, or any 
     amendment made by this subtitle, the State of Louisiana, 
     Mississippi, or Alabama may elect to not have the provisions 
     of this subtitle, or of any amendment made by this subtitle, 
     apply with respect to the State during any period for which a 
     major disaster declared in accordance with section 401 of the 
     Robert T. Stafford Disaster Relief and Emergency Assistance 
     Act (42 U.S.C. 5170) with respect to a parish, in the case of 
     Louisiana, or a county, in the case of Mississippi or 
     Alabama, as a result of Hurricane Katrina is in effect.

                          Subtitle B--Medicare

     SEC. 6101. IMPROVEMENTS TO THE MEDICARE-DEPENDENT HOSPITAL 
                   (MDH) PROGRAM.

       (a) 5-Year Extension.--
       (1) Extension of Payment Methodology.--Section 
     1886(d)(5)(G) (42 U.S.C. 1395ww(d)(5)(G)) is amended--
       (A) in clause (i), by striking ``October 1, 2006'' and 
     inserting ``October 1, 2011''; and
       (B) in clause (ii)(II)--
       (i) by striking ``October 1, 2006'' and inserting ``October 
     1, 2011''; and
       (ii) by inserting ``or for discharges in the fiscal year'' 
     after ``for the cost reporting period''.
       (2) Conforming amendments.--
       (A) Extension of target amount.--Section 1886(b)(3)(D) (42 
     U.S.C. 1395ww(b)(3)(D)) is amended--
       (i) in the matter preceding clause (i)--

       (I) by striking ``beginning'' and inserting ``occurring''; 
     and
       (II) by striking ``October 1, 2006'' and inserting 
     ``October 1, 2011''; and

       (ii) in clause (iv), by striking ``through fiscal year 
     2005'' and inserting ``through fiscal year 2011''.
       (B) Permitting hospitals to decline reclassification.--
     Section 13501(e)(2) of the Omnibus Budget Reconciliation Act 
     of 1993 (42 U.S.C. 1395ww note) is amended by striking 
     ``through fiscal year 2005'' and inserting ``through fiscal 
     year 2011''.
       (b) Option to Use of 2002 as Base Year.--Section 1886(b)(3) 
     (42 U.S.C. 1395ww(b)(3)) is amended--
       (1) in subparagraph (D), by inserting ``subject to 
     subparagraph (K),'' after ``(d)(5)(G)),''; and
       (2) by adding at the end the following new subparagraph:
       ``(K)(i) With respect to discharges occurring on or after 
     October 1, 2006, in the case of a medicare-dependent, small 
     rural hospital, for purposes of applying subparagraph (D)--
       ``(I) there shall be substituted for the base cost 
     reporting period described in subparagraph (D)(i) the 12-
     month cost reporting period beginning during fiscal year 
     2002; and
       ``(II) any reference in such subparagraph to the `first 
     cost reporting period' described in such subparagraph is 
     deemed a reference to the first cost reporting period 
     beginning on or after October 1, 2006.
       ``(ii) This subparagraph shall only apply to a hospital if 
     the substitution described in clause (i)(I) results in an 
     increase in the target amount under subparagraph (D) for the 
     hospital.''.
       (c) Enhanced Payment for Amount by Which the Target Exceeds 
     the PPS Rate.--Section 1886(d)(5)(G)(ii)(II) (42 U.S.C. 
     1395ww(d)(5)(G)(iv)(II)) is amended by inserting ``(or 75 
     percent in the case of discharges occurring on or after 
     October 1, 2006)'' after ``50 percent''.
       (d) Enhanced Disproportionate Share Hospital (DSH) 
     Treatment for Medicare Dependent Hospitals.--Section 
     1886(d)(5)(F)(xiv)(II) (42 U.S.C. 1395ww(d)(5)(F)(xiv)(II)) 
     is amended by inserting ``or, in the case of discharges 
     occurring on or after October 1, 2006, as a medicare-
     dependent, small rural hospital under subparagraph (G)(iv)'' 
     before the period at the end.

     SEC. 6102. REDUCTION IN PAYMENTS TO SKILLED NURSING 
                   FACILITIES FOR BAD DEBT.

       (a) In General.--Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(V) In determining such reasonable costs for skilled 
     nursing facilities with respect to services furnished on or 
     after October 1, 2005, the amount of bad debts otherwise 
     treated as allowed costs which are attributable to the 
     deductibles and coinsurance amounts under this title shall be 
     reduced by 30 percent of such amount otherwise allowable.''.
       (b) Technical Amendment.--Section 1861(v)(1)(T) (42 U.S.C. 
     1395x(v)(1)(T)) is amended by striking ``section 
     1833(t)(5)(B)'' and inserting ``section 1833(t)(8)(B)''.

     SEC. 6103. TWO-YEAR EXTENSION OF THE 50 PERCENT COMPLIANCE 
                   THRESHOLD USED TO DETERMINE WHETHER A HOSPITAL 
                   OR UNIT OF A HOSPITAL IS AN INPATIENT 
                   REHABILITATION FACILITY UNDER THE MEDICARE 
                   PROGRAM.

       (a) Extension.--
       (1) In general.--Effective as if enacted on June 30, 2005, 
     notwithstanding section 412.23(b)(2) of title 42, Code of 
     Federal Regulations, during the period beginning on July 1, 
     2005, and ending on June 30, 2007, the Secretary of Health 
     and Human Services shall not--
       (A) require a compliance rate, pursuant to the criterion 
     (commonly known as the ``75 percent rule'') that is used to 
     determine whether a hospital or unit of a hospital is an 
     inpatient rehabilitation facility (as defined in the rule 
     published in the Federal Register on May 7, 2004, entitled 
     ``Medicare Program; Final Rule; Changes to the Criteria for 
     Being Classified as an Inpatient Rehabilitation Facility'' 
     (69 Fed. Reg. 25752)), that is greater than the 50 percent 
     compliance threshold that became effective on July 1, 2004; 
     or
       (B) change the designation of an inpatient rehabilitation 
     facility that is in compliance with such 50 percent 
     threshold.
       (2) Retroactive Status as an Inpatient Rehabilitation 
     Facility; Payments; Expedited Review.--The Secretary of 
     Health and Human Services shall establish procedures for--
       (A) making any necessary retroactive adjustment to restore 
     the status of a facility as an inpatient rehabilitation 
     facility as a result of subsection (a); and
       (B) making any necessary payments to inpatient 
     rehabilitation facilities based on such adjustment for 
     discharges occurring on or after July 1, 2005, and before the 
     date of enactment of this Act.
       (b) Special Rule.--In the case of a hospital or unit of a 
     hospital that failed to meet the 50 percent compliance 
     threshold described in subsection (a)(1)(A) with respect to 
     the first cost reporting period of the hospital or unit that 
     began on or after July 1, 2004, the following rules shall 
     apply:
       (1) Such hospital or unit shall be deemed to meet such 50 
     percent threshold for purposes of subsection (a).
       (2) The Secretary shall examine all the claims of the 
     hospital or unit under title XVIII of the Social Security Act 
     submitted during the 6-month period beginning after the end 
     of such first cost reporting period.
       (3) If the Secretary determines after such review that the 
     hospital or unit is still not in compliance with such 50 
     percent compliance threshold--

[[Page 26737]]

       (A) the deemed status of the hospital or unit under 
     paragraph (1) shall be revoked retroactive to the beginning 
     of such 6-month period; and
       (B) the Secretary shall provide for the collection of any 
     necessary overpayments by reason of the revocation under 
     subparagraph (A).
       (c) Study and Report by the HHS Inspector General.--
       (1) Study.--
       (A) In general.--The Inspector General of the Department of 
     Health and Human Services shall conduct a study of hospitals 
     and units of hospitals that--
       (i) are designated as inpatient rehabilitation facilities 
     under title XVIII of the Social Security Act; and
       (ii) would not be so designated if this section had not 
     been enacted because the hospital or unit has a compliance 
     rate that is greater than the 50 percent compliance threshold 
     described in subsection (a)(1)(A) but is less than the 60 
     percent compliance threshold that would have become effective 
     on July 1, 2005, but for this section.
       (B) Requirement.--In conducting the study under 
     subparagraph (A), the Inspector General shall analyze the 
     types of patients the hospitals and units are treating and 
     issues relating to the medical conditions of such patients 
     that do not meet the medical requirements for determining 
     compliance with such threshold.
       (2) Report.--Not later than January 1, 2007, the Inspector 
     General shall submit to Congress and the Secretary a report 
     on the study conducted under paragraph (1), together with 
     such recommendations as the Inspector General determines 
     appropriate.
       (d) Rehabilitation Advisory Council.--
       (1) Establishment.--The Secretary shall establish an 
     advisory council to be known as the ``Rehabilitation Advisory 
     Council''.
       (2) Membership.--The membership of the Rehabilitation 
     Advisory Council shall include--
       (A) physicians;
       (B) Medicare beneficiaries;
       (C) representatives of inpatient rehabilitation facilities; 
     and
       (D) representatives of other entities and practitioners 
     that provide rehabilitative care in settings other than in 
     such facilities, such as skilled nursing facilities.
       (3) Duties.--
       (A) Advice and recommendations.--The Rehabilitation 
     Advisory Council shall provide advice and recommendations to 
     Congress and the Secretary concerning the coverage of 
     rehabilitation services under the Medicare program, including 
     the appropriate medical criteria for determining the 
     appropriateness of inpatient rehabilitation facility 
     admissions.
       (B) Periodic reports.--The Rehabilitation Advisory Council 
     shall provide Congress and the Secretary with periodic 
     reports that summarize--
       (i) the Council's activities; and
       (ii) any recommendations for legislation or administrative 
     action the Council considers to be appropriate.
       (4) Termination.--The Rehabilitation Advisory Council shall 
     terminate on September 30, 2010.

     SEC. 6104. PROHIBITION ON PHYSICIAN SELF REFERRALS TO 
                   PHYSICIAN OWNED, LIMITED SERVICE HOSPITALS.

       (a) Prohibition.--Section 1877(d) (42 U.S.C. 1395nn(d)) is 
     amended in each of paragraphs (2)(B) and (3)(B) by striking 
     ``effective for the 18-month period beginning on the date of 
     enactment of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003'' and inserting ``on and after 
     December 8, 2003''.
       (b) Revisions to the Requirements To Qualify for the 
     Exception to the Definition of Specialty Hospital.--Section 
     1877(h)(7)(B) (42 U.S.C. 1395nn(h)(7)(B)) is amended--
       (1) by redesignating clauses (iii), (iv), and (v) as 
     clauses (vi), (vii), and (viii), respectively;
       (2) by inserting after clause (ii) the following new 
     clauses:
       ``(iii) for which the percent of investment in the hospital 
     by physician investors at any time on or after June 8, 2005, 
     is no greater than the percent of such investment by 
     physician investors as of such date;
       ``(iv) for which the percent of investment in the hospital 
     by any physician investor at any time on or after June 8, 
     2005, is no greater than the percent of such investment by 
     such physician as of such date;
       ``(v) for which the number of operating rooms at the 
     hospital at any time on or after June 8, 2005, is no greater 
     than the number of such rooms as of such date;''; and
       (3) by striking clause (vii), as so redesignated, and 
     inserting the following:
       ``(vii) for which--

       ``(I) during the period beginning on December 8, 2003, and 
     ending on June 7, 2005, any increase in the number of beds 
     occurs only in the facilities on the main campus of the 
     hospital and does not exceed 50 percent of the number of beds 
     in the hospital as of November 18, 2003, or 5 beds, whichever 
     is greater; and
       ``(II) the number of beds at the hospital at any time on or 
     after June 8, 2005, is no greater than the number of such 
     beds as of such date; and''.

       (c) Effective Date.--The amendments made by this section 
     shall take effect on June 8, 2005.

     SEC. 6105. MINIMUM UPDATE FOR PHYSICIANS' SERVICES FOR 2006.

       (a) Minimum Update for 2006.--Section 1848(d) (42 U.S.C. 
     1395w-4(d)), as amended by section 6110(c), is amended by 
     adding at the end the following new paragraph:
       ``(7) Update for 2006.--The update to the single conversion 
     factor established in paragraph (1)(C) for 2006 shall be not 
     less than 1 percent.''.
       (b) Conforming Amendment.--Section 1848(d)(4)(B) (42 U.S.C. 
     1395w-4(d)(4)(B)) is amended, in the matter preceding clause 
     (i), by striking ``paragraph (5)'' and inserting ``paragraphs 
     (5) and (7)''.
       (c) Not Treated as Change in Law and Regulation in 
     Sustainable Growth Rate Determination.--The amendments made 
     by this section shall not be treated as a change in law for 
     purposes of applying section 1848(f)(2)(D) of the Social 
     Security Act (42 U.S.C. 1395w-4(f)(2)(D)).

     SEC. 6106. ONE-YEAR EXTENSION OF HOLD HARMLESS PROVISIONS FOR 
                   SMALL RURAL HOSPITALS AND SOLE COMMUNITY 
                   HOSPITALS UNDER THE PROSPECTIVE PAYMENT SYSTEM 
                   FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES.

       Section 1833(t)(7)(D)(i) (42 U.S.C. 1395l(t)(7)(D)(i)) is 
     amended by striking ``January 1, 2006'' and inserting 
     ``January 1, 2007''.

     SEC. 6107. UPDATE TO THE COMPOSITE RATE COMPONENT OF THE 
                   BASIC CASE-MIX ADJUSTED PROSPECTIVE PAYMENT 
                   SYSTEM FOR DIALYSIS SERVICES.

       Section 1881(b)(12) (42 U.S.C. 1395rr(b)(12)) is amended--
       (1) in subparagraph (F), in the flush matter at the end, by 
     striking ``Nothing'' and inserting ``Except as provided in 
     subparagraph (G), nothing'';
       (2) by redesignating subparagraph (G) as subparagraph (H); 
     and
       (3) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G) The Secretary shall increase the amount of the 
     composite rate component of the basic case-mix adjusted 
     system under subparagraph (B) for dialysis services furnished 
     on or after January 1, 2006, by 1.6 percent above the amount 
     of such composite rate component for such services furnished 
     on December 31, 2005.''.

     SEC. 6108. ONE-YEAR EXTENSION OF MORATORIUM ON THERAPY CAPS.

       Section 1833(g)(4) (42 U.S.C. 1395l(g)(4)) is amended by 
     striking ``and 2005'' and inserting ``2005, and 2006''.

     SEC. 6109. TRANSFER OF TITLE OF CERTAIN DME TO PATIENT AFTER 
                   13-MONTH RENTAL.

       (a) In General.--Section 1834(a)(7)(A) (42 U.S.C. 
     1395m(a)(7)(A)) is amended to read as follows:
       ``(A) Payment.--In the case of an item of durable medical 
     equipment not described in paragraphs (2) through (6), the 
     following rules shall apply:
       ``(i) Rental.--

       ``(I) In general.--Payment for the item shall be made on a 
     monthly basis for the rental of the item during the period of 
     medical need (but payments under this clause may not extend 
     over a period of continuous use (as determined by the 
     Secretary) of longer than 13 months).
       ``(II) Payment amount.--Subject to subparagraph (B), the 
     amount recognized for the item--

       ``(aa) for each of the first 3 months of such period is 10 
     percent of the purchase price recognized under paragraph (8) 
     with respect to the item; and
       ``(bb) for each of the remaining months of such period is 
     7.5 percent of such purchase price.
       ``(ii) Ownership after rental.--

       ``(I) Transfer of title.--On the first day that begins 
     after the 13th continuous month during which payment is made 
     for the rental of an item under clause (i), the supplier of 
     the item shall transfer title to the item to the individual.
       ``(II) Maintenance and servicing.--After the supplier 
     transfers title to the item under subclause (I), maintenance 
     and servicing payments shall, if the Secretary determines 
     such payments are reasonable and necessary, be made (for 
     parts and labor not covered by the supplier's or 
     manufacturer's warranty, as determined by the Secretary to be 
     appropriate for the particular type of durable medical 
     equipment), and such payments shall be in an amount 
     determined to be appropriate by the Secretary.''.

       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to items furnished for which the first rental 
     month occurs on or after January 1, 2006.

     SEC. 6110. ESTABLISHMENT OF MEDICARE VALUE-BASED PURCHASING 
                   PROGRAMS.

       (a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) is 
     amended--
       (1) by redesignating part E as part F; and
       (2) by inserting after part D the following new part:

                    ``Part E--Value-Based Purchasing


   ``quality measurement systems for value-based purchasing programs

       ``Sec. 1860E-1. (a) Establishment.--
       ``(1) In general.--The Secretary shall develop quality 
     measurement systems in accordance with subsections (b), (c), 
     (d), and

[[Page 26738]]

     (e), for purposes of providing value-based payments to--
       ``(A) hospitals pursuant to section 1860E-2;
       ``(B) physicians and practitioners pursuant to section 
     1860E-3;
       ``(C) plans pursuant to section 1860E-4;
       ``(D) end stage renal disease providers and facilities 
     pursuant to section 1860E-5; and
       ``(E) home health agencies pursuant to section 1860E-6.
       ``(2) Quality.--The systems developed under paragraph (1) 
     shall measure the quality of the care furnished by the 
     provider involved.
       ``(3) High quality health care defined.--In this part, the 
     term `high quality health care' means health care that is 
     safe, effective, patient-centered, timely, equitable, 
     efficient, necessary, and appropriate.
       ``(b) Requirements for Systems.--Under each quality 
     measurement system described in subsection (a)(1), the 
     Secretary shall do the following:
       ``(1) Measures.--
       ``(A) In general.--Subject to subparagraph (B), the 
     Secretary shall select measures of quality to be used by the 
     Secretary under each system.
       ``(B) Requirements.--In selecting the measures to be used 
     under each system pursuant to subparagraph (A), the Secretary 
     shall, to the extent feasible and practicable, ensure that--
       ``(i) such measures are evidence-based, reliable and valid, 
     actionable, and reasonable to collect and report;
       ``(ii) measures of process, structure, outcomes, and 
     beneficiary experience of care are included;
       ``(iii) except for the system that is used to provide 
     value-based payments to physicians and practitioners under 
     section 1860E-3, measures of efficiency (where efficiency is 
     improved quality care through the effective use of resources) 
     are included;
       ``(iv) measures of overuse and underuse of health care 
     items and services are included;
       ``(v)(I) at least 1 measure of health information 
     technology infrastructure that enables the provision of high 
     quality health care and facilitates the exchange of health 
     information, such as the use of 1 or more elements of a 
     qualified health information system (as defined in 
     subparagraph (E)), is included during the first year each 
     system is implemented; and
       ``(II) additional measures of health information technology 
     infrastructure are included in subsequent years;
       ``(vi) in the case of the system that is used to provide 
     value-based payments to hospitals under section 1860E-2, by 
     not later than January 1, 2008, at least 5 measures that take 
     into account the unique characteristics of small hospitals 
     located in rural areas and frontier areas are included; and
       ``(vii) measures that assess the quality of care furnished 
     to frail individuals over the age of 75 and to individuals 
     with multiple complex chronic conditions are included.
       ``(C) Requirement for collection of data on a measure for 1 
     year prior to use under the systems.--Data on any measure 
     selected by the Secretary under subparagraph (A) must be 
     collected by the Secretary for at least a 12-month period 
     before such measure may be used to determine whether a 
     provider receives a value-based payment under a program 
     described in subsection (a)(1).
       ``(D) Authority to vary measures.--The Secretary may vary 
     the measures selected under subparagraph (A) by the entity or 
     individual involved based on factors such as the type of, the 
     size of, and the scope and volume of services provided by, 
     the entity or individual. If the Secretary varies the 
     measures for providers under the preceding sentence, the 
     Secretary shall ensure that such measures are aligned to 
     promote coordinated quality of care across provider settings.
       ``(E) Qualified health information system defined.--For 
     purposes of subparagraph (B)(iv)(I), the term `qualified 
     health information system' means a computerized system 
     (including hardware, software, and training) that--
       ``(i) protects the privacy and security of health 
     information and properly encrypts such health information;
       ``(ii) maintains and provides access to patients' health 
     records in an electronic format;
       ``(iii) incorporates decision support software to reduce 
     medical errors and enhance health care quality;
       ``(iv) is consistent with data standards and certification 
     processes recommended by the Secretary;
       ``(v) allows for the reporting of quality measures; and
       ``(vi) includes other features determined appropriate by 
     the Secretary.
       ``(2) Weights of measures.--The Secretary shall assign 
     weights to the measures used by the Secretary under each 
     system. If the Secretary determines appropriate, in assigning 
     the weights under the preceding sentence, some measures may 
     be weighted more heavily than other measures.
       ``(3) Risk adjustment.--The Secretary shall establish 
     procedures, as appropriate, to control for differences in 
     beneficiary health status and beneficiary characteristics. To 
     the extent feasible, such procedures may be based on existing 
     models for controlling for such differences.
       ``(4) Maintenance.--
       ``(A) In general.--The Secretary shall, as determined 
     appropriate, but not more often than once each 12-month 
     period, review and revise each system, including through--
       ``(i) the refinement of measures under the systems and the 
     retirement of existing outdated measures under the system;
       ``(ii) the refinement of the weights assigned to measures 
     under the system; and
       ``(iii) the refinement of the risk adjustment procedures 
     established pursuant to paragraph (3) under the system.
       ``(B) Revision shall allow for comparison of data.--Each 
     revision under subparagraph (A) of a quality measurement 
     system shall allow for the comparison of data from one year 
     to the next for purposes of providing value-based payments 
     under the programs described in subsection (a)(1).
       ``(5) Use of most recent quality data.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the Secretary shall use the most recent quality data with 
     respect to the provider involved that is available to the 
     Secretary.
       ``(B) Insufficient data due to low volume.--If the 
     Secretary determines that there is insufficient data with 
     respect to a measure or measures because of a low number of 
     services provided, the Secretary may aggregate data across 
     more than 1 fiscal or calendar year, as the case may be.
       ``(c) Requirements for Developing and Reviewing and 
     Revising the Systems.--In developing and reviewing and 
     revising each quality measurement system under this section, 
     the Secretary shall--
       ``(1) consult with, and take into account the 
     recommendations of, the entity that the Secretary has an 
     arrangement with under subsection (e);
       ``(2) consult with provider-based groups, clinical 
     specialty societies, and certification boards;
       ``(3) take into account existing quality measurement 
     systems that have been developed through a rigorous process 
     of validation and with the involvement of entities and 
     persons described in subsection (e)(2)(B); and
       ``(4) take into account--
       ``(A) each of the reports by the Medicare Payment Advisory 
     Commission that are required under section 1860E-3(a)(1);
       ``(B) the results of appropriate studies, reports, and 
     demonstration programs; and
       ``(C) the report by the Institute of Medicine of the 
     National Academy of Sciences under section 238(b) of the 
     Medicare Prescription Drug, Improvement, and Modernization 
     Act of 2003 (Public Law 108-173).
       ``(d) Requirements for Implementing the Systems.--In 
     implementing each quality measurement system under this 
     section, the Secretary shall consult with entities--
       ``(1) that have joined together to develop strategies for 
     quality measurement and reporting, including the feasibility 
     of collecting and reporting meaningful data on quality 
     measures; and
       ``(2) that involve representatives of health care 
     providers, health plans, consumers, employers, purchasers, 
     quality experts, government agencies, and other individuals 
     and groups that are interested in quality of care.
       ``(e) Arrangement With an Entity To Provide Advice and 
     Recommendations.--
       ``(1) Arrangement.--On and after July 1, 2006, the 
     Secretary shall have in place an arrangement with an entity 
     that meets the requirements described in paragraph (2) under 
     which such entity provides the Secretary with advice on, and 
     recommendations with respect to, the development and review 
     and revision of the quality measurement systems under this 
     section, including the assigning of weights to the measures 
     under subsection (b)(2).
       ``(2) Requirements described.--The requirements described 
     in this paragraph are the following:
       ``(A) The entity is a private nonprofit entity governed by 
     an executive director and a board.
       ``(B) The members of the entity include representatives 
     of--
       ``(i)(I) health plans and providers receiving reimbursement 
     under this title for the provision of items and services, 
     including health plans and providers with experience in the 
     care of the frail elderly and individuals with multiple 
     complex chronic conditions; or
       ``(II) groups representing such health plans and providers;
       ``(ii) groups representing individuals receiving benefits 
     under this title;
       ``(iii) purchasers and employers or groups representing 
     purchasers or employers;
       ``(iv) organizations that focus on quality improvement as 
     well as the measurement and reporting of quality measures;
       ``(v) organizations that certify and license such 
     providers;
       ``(vi) State government health programs;
       ``(vii) persons skilled in the conduct and interpretation 
     of biomedical, health services, and health economics research 
     and with expertise in outcomes and effectiveness research and 
     technology assessment; and
       ``(viii) persons or entities involved in the development 
     and establishment of standards and certification for health 
     information technology systems and clinical data.
       ``(C) The membership of the entity is representative of 
     individuals with experience with--

[[Page 26739]]

       ``(i) urban health care issues;
       ``(ii) safety net health care issues; and
       ``(iii) rural and frontier health care issues.
       ``(D) The entity does not charge a fee for membership for 
     participation in the work of the entity related to the 
     arrangement with the Secretary under paragraph (1). If the 
     entity does require a fee for membership for participation in 
     other functions of the entity, there shall be no linkage 
     between such fee and participation in the work of the entity 
     related to such arrangement with the Secretary.
       ``(E) The entity--
       ``(i) permits members described in subparagraph (B) to vote 
     on matters of the entity related to the arrangement with the 
     Secretary under paragraph (1); and
       ``(ii) ensures that such members have an equal vote on such 
     matters.
       ``(F) With respect to matters related to the arrangement 
     with the Secretary under paragraph (1), the entity conducts 
     its business in an open and transparent manner and provides 
     the opportunity for public comment.
       ``(G) The entity operates as a voluntary consensus 
     standards setting organization as defined for purposes of 
     section 12(d) of the National Technology Transfer and 
     Advancement Act of 1995 (Public Law 104-113) and Office of 
     Management and Budget Revised Circular A-119 (published in 
     the Federal Register on February 10, 1998).
       ``(3) Authorization of appropriations.--For the purpose of 
     carrying out the provisions of this subsection, there are 
     authorized to be appropriated--
       ``(A) for each of the fiscal years 2006 and 2007, 
     $3,000,000; and
       ``(B) for fiscal year 2008 and each subsequent fiscal year, 
     an amount equal to the sum of--
       ``(i) $3,000,000; and
       ``(ii) such amount multiplied by the percentage (if any) by 
     which the average of the Consumer Price Index for all urban 
     consumers (United States city average) for the 12-month 
     period ending with June of the calendar year in which such 
     fiscal year begins exceeds such average for the 12-month 
     period ending with June 2006.


             ``pps hospital value-based purchasing program

       ``Sec. 1860E-2. (a) Program.--
       ``(1) In general.--The Secretary shall establish a program 
     under which value-based payments are provided each fiscal 
     year to hospitals that demonstrate the provision of high 
     quality health care to individuals who are entitled to 
     benefits under part A and are inpatients of the hospital.
       ``(2) Program to begin in fiscal year 2007.--The Secretary 
     shall establish the program under this section so that value-
     based payments described in subsection (b) are made with 
     respect to fiscal year 2007 and each subsequent fiscal year.
       ``(3) Applicability of program to hospitals.--For purposes 
     of this section, the term `hospital' means a subsection (d) 
     hospital (as defined in section 1886(d)(1)(B)).
       ``(b) Value-Based Payments.--
       ``(1) In general.--Subject to paragraph (4), the Secretary 
     shall make a value-based payment to a hospital with respect 
     to a fiscal year if the Secretary determines that the quality 
     of the care provided in that year to individuals who are 
     entitled to benefits under part A and are inpatients of the 
     hospital--
       ``(A) has substantially improved (as determined by the 
     Secretary) over the prior year; or
       ``(B) exceeds a threshold established by the Secretary.
       ``(2) Use of system.--In determining which hospitals 
     qualify for a value-based payment under paragraph (1), the 
     Secretary shall use the quality measurement system developed 
     for this section pursuant to section 1860E-1(a).
       ``(3) Determination of amount of award and allocation of 
     awards.--
       ``(A) In general.--The Secretary shall determine--
       ``(i) the amount of a value-based payment under paragraph 
     (1) provided to a hospital; and
       ``(ii) subject to subparagraph (B), the allocation of the 
     total amount available under subsection (d) for value-based 
     payments for any fiscal year between payments with respect to 
     hospitals that meet the requirement under subparagraph (A) of 
     paragraph (1) and hospitals that meet the requirement under 
     subparagraph (B) of such paragraph.
       ``(B) Requirements regarding the amount of funding 
     available for value-based payments for hospitals exceeding a 
     threshold.--The Secretary shall ensure that--
       ``(i) a majority of the total amount available under 
     subsection (d) for value-based payments for any fiscal year 
     is provided to hospitals that are receiving such payments 
     because they meet the requirement under paragraph (1)(B); and
       ``(ii) with respect to fiscal year 2008 and each subsequent 
     fiscal year, the percentage of the total amount available 
     under subsection (d) for value-based payments for any fiscal 
     year that is used to make payments to hospitals that meet 
     such requirement is greater than such percentage in the 
     previous fiscal year.
       ``(4) Requirements.--
       ``(A) Required submission of data.--In order for a hospital 
     to be eligible for a value-based payment for a fiscal year, 
     the hospital must have complied with the requirements under 
     section 1886(b)(3)(B)(viii)(II) with respect to that fiscal 
     year.
       ``(B) Attestation regarding data.--In order for a hospital 
     to be eligible for a value-based payment for a fiscal year, 
     the hospital must have provided the Secretary (under 
     procedures established by the Secretary) with an attestation 
     that the data submitted under section 1886(b)(3)(B)(viii)(II) 
     for the fiscal year is complete and accurate.
       ``(5) Total amount of value-based payments equal to total 
     amount of available funding.--The Secretary shall establish 
     payment amounts under paragraph (3)(A) so that, as estimated 
     by the Secretary, the total amount of value-based payments 
     made in a fiscal year under paragraph (1) is equal to the 
     total amount available under subsection (d) for such payments 
     for the year.
       ``(6) Payment methods and timing of payments.--
       ``(A) In general.--Subject to subparagraph (B), the payment 
     of value-based payments under paragraph (1) shall be based on 
     such a method as the Secretary determines appropriate.
       ``(B) Timing.--The Secretary shall ensure that value-based 
     payments under paragraph (1) with respect to a fiscal year 
     are made by not later than the close of the following fiscal 
     year.
       ``(c) Description of How Hospitals Would Have Fared Under 
     Program.--Not later than January 1, 2007, the Secretary shall 
     provide each hospital with a description of the Secretary's 
     estimate of how payments to the hospital under this title 
     would have been affected with respect to items and services 
     furnished during a period, as determined by the Secretary, if 
     the program under this section (and the amendments made by 
     paragraphs (1) and (2) of section 6110(b) of the Deficit 
     Reduction Omnibus Reconciliation Act of 2005) had been in 
     effect with respect to that period.
       ``(d) Funding.--
       ``(1) Amount.--The amount available for value-based 
     payments under this section with respect to a fiscal year 
     shall be equal to the amount of the reduction in expenditures 
     under the Federal Hospital Insurance Trust Fund under section 
     1817 in the year as a result of the amendments made by 
     section 6110(b)(2) of the Deficit Reduction Omnibus 
     Reconciliation Act of 2005, as estimated by the Secretary.
       ``(2) Payments from trust fund.--Payments to hospitals 
     under this section shall be made from the Federal Hospital 
     Insurance Trust Fund.


      ``physician and practitioner value-based purchasing program

       ``Sec. 1860E-3. (a) Program.--
       ``(1) In general.--The Secretary shall establish a program 
     under which value-based payments are provided each year to 
     physicians and practitioners that demonstrate the provision 
     of high quality health care to individuals enrolled under 
     part B and the Medicare Payment Advisory Commission shall (A) 
     conduct a study, and submit to Congress and the Secretary an 
     initial report by not later than March 1, 2008, and a final 
     report by not later than June 1, 2012, on how the Medicare 
     value-based purchasing programs under this part will impact 
     Medicare beneficiaries, Medicare providers, and Medicare 
     financing, including how such programs will impact the access 
     of such beneficiaries to items and services under this title, 
     the volume and utilization of such items and services, and 
     low-volume providers; and (B) conduct a study, and submit to 
     Congress and the Secretary a report by not later than March 
     1, 2007, on the advisability and feasibility of establishing 
     a value-based purchasing program under the this title for 
     critical access hospitals (as defined in section 
     1861(mm)(1)); and (C) conduct a study, and submit to Congress 
     and the Secretary a report by not later than June 1, 2007, on 
     the advisability and feasibility of including renal dialysis 
     facilities described in subsection (a)(3)(A) of section 
     1860E-5 in the value-based purchasing program under such 
     section 1860E-5 or establishing a value-based purchasing 
     program under this title for such facilities; (D) taking into 
     account the results to date of the demonstration of bundled 
     case-mix adjusted payment system for ESRD services under 
     section 623(e) of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003, conduct a study, 
     and submit to Congress and the Secretary a report by not 
     later than June 1, 2008, on the implementation of the ESRD 
     provider and facility value-based purchasing program under 
     section 1860E-5, including issues for the Secretary to 
     consider in operating the ESRD provider and facility value-
     based purchasing program and recommendations on such issues; 
     and (E) conduct a study, and submit to Congress and the 
     Secretary a report by not later than June 1, 2007, on the 
     advisability and feasibility of establishing a value-based 
     purchasing program under this title for skilled nursing 
     facilities (as defined in section 1819(a)).
       ``(2) Program to begin in 2009.--The Secretary shall 
     establish the program under this

[[Page 26740]]

     section so that value-based payments described in subsection 
     (b) are made with respect to 2009 and each subsequent year.
       ``(3) Definition of physician and practitioner.--In this 
     section:
       ``(A) Physician.--The term `physician' has the meaning 
     given that term in section 1861(r).
       ``(B) Practitioner.--The term `practitioner' means--
       ``(i) a practitioner described in section 1842(b)(18)(C);
       ``(ii) a physical therapist (as described in section 
     1861(p));
       ``(iii) an occupational therapist (as so described); and
       ``(iv) a qualified speech-language pathologist (as defined 
     in section 1861(ll)(3)(A)).
       ``(4) Identification of physicians and practitioners.--For 
     purposes of applying this section and paragraphs (4)(G) and 
     (6) of section 1848(d), the Secretary shall establish 
     procedures for the identification of physicians and 
     practitioners, such as through physician or practitioner 
     billing units or other units, provider identification 
     numbers, taxpayer identification numbers, the National 
     Provider Identifier, and unique physician identifier numbers.
       ``(b) Value-Based Payments.--
       ``(1) In general.--Subject to paragraph (4), the Secretary 
     shall make a value-based payment to a physician or a 
     practitioner with respect to a year if the Secretary 
     determines that both the quality of the care and the 
     efficiency of the care provided in that year by the physician 
     or practitioner to individuals enrolled under part B--
       ``(A) has substantially improved (as determined by the 
     Secretary) over the prior year; or
       ``(B) exceeds a threshold established by the Secretary.
       ``(2) Use of systems and data.--
       ``(A) In general.--In determining which physicians and 
     practitioners qualify for a value-based payment under 
     paragraph (1), the Secretary shall use--
       ``(i) the quality measurement system developed for this 
     section pursuant to section 1860E-1(a) with respect to the 
     quality of the care provided by the physician or 
     practitioner; and
       ``(ii) the comparative utilization system developed under 
     subsection (c) with respect to the efficiency and 
     appropriateness of such care.
       ``(3) Determination of amount of award and allocation of 
     awards.--
       ``(A) In general.--The Secretary shall determine--
       ``(i) the amount of a value-based payment under paragraph 
     (1) provided to a physician or a practitioner; and
       ``(ii) subject to subparagraph (B), the allocation of the 
     total amount available under subsection (e) for value-based 
     payments for any year between payments with respect to 
     physicians and practitioners that meet the requirement under 
     subparagraph (A) of paragraph (1) and physicians and 
     practitioners that meet the requirement under subparagraph 
     (B) of such paragraph.
       ``(B) Requirements regarding the amount of funding 
     available for value-based payments for physicians and 
     practitioners exceeding a threshold.--The Secretary shall 
     ensure that--
       ``(i) a majority of the total amount available under 
     subsection (e) for value-based payments for any year is 
     provided to physicians and practitioners that are receiving 
     such payments because they meet the requirement under 
     paragraph (1)(B); and
       ``(ii) with respect to 2010 and each subsequent year, the 
     percentage of the total amount available under subsection (e) 
     for value-based payments for any year that is used to make 
     payments to physicians and practitioners that meet such 
     requirement is greater than such percentage in the previous 
     year.
       ``(4) Requirements.--
       ``(A) Required submission of data.--In order for a 
     physician or a practitioner to be eligible for a value-based 
     payment for a year, the physician or practitioner must have 
     complied with the requirements under section 
     1848(d)(6)(B)(ii) with respect to that year.
       ``(B) Attestation regarding data.--In order for a physician 
     or a practitioner to be eligible for a value-based payment 
     for a year, the physician or practitioner must have provided 
     the Secretary (under procedures established by the Secretary) 
     with an attestation that the data submitted under section 
     1848(d)(6)(B)(ii) with respect to that year is complete and 
     accurate.
       ``(5) Total amount of value-based payments equal to total 
     amount of available funding.--The Secretary shall establish 
     payment amounts under paragraph (3)(A) so that, as estimated 
     by the Secretary, the total amount of value-based payments 
     made in a year under paragraph (1) is equal to the total 
     amount available under subsection (e) for such payments for 
     the year.
       ``(6) Payment methods and timing of payments.--
       ``(A) In general.--Subject to subparagraph (B), the payment 
     of value-based payments under paragraph (1) shall be based on 
     such a method as the Secretary determines appropriate.
       ``(B) Timing.--The Secretary shall ensure that value-based 
     payments under paragraph (1) with respect to a year are made 
     by not later than December 31 of the subsequent year.
       ``(c) Comparative Utilization System.--
       ``(1) Development.--The Secretary, in consultation with 
     relevant stakeholders, shall develop a comparative 
     utilization system for purposes of providing value-based 
     payments under subsection (b).
       ``(2) Measures of efficiency and appropriateness of care.--
     The comparative utilization system developed under paragraph 
     (1) shall measure the efficiency and appropriateness of the 
     care provided by a physician or practitioner.
       ``(3) Requirements for system.--Under the comparative 
     utilization system described in paragraph (1), the Secretary 
     shall do the following:
       ``(A) Measures.--The Secretary shall select measures of 
     efficiency appropriateness to be used by the Secretary under 
     the system. The Secretary may vary the measures selected 
     under the preceding sentence by the type or specialty of the 
     physician or practitioner. If the Secretary varies the 
     measures for providers under the preceding sentence, the 
     Secretary shall ensure that such measures are aligned to 
     promote coordinated quality of care across provider settings.
       ``(B) Use of claims data for utilization patterns.--
       ``(i) Review of claims data.--The Secretary shall review 
     claims data with respect to services furnished or ordered by 
     physicians and practitioners.
       ``(ii) Use of most recent claims data.--The Secretary shall 
     use the most recent claims data with respect to the physician 
     or practitioner that is available to the Secretary.
       ``(C) Risk adjustment.--The Secretary shall establish 
     procedures, as appropriate, to control for differences in 
     beneficiary health status and beneficiary characteristics.
       ``(4) Annual reports.--Beginning in 2007, the Secretary 
     shall provide physicians and practitioners with annual 
     reports on the utilization of items and services under this 
     title based upon the review of claims data under paragraph 
     (3)(B). With respect to reports provided in 2007 and 2008, 
     such reports are confidential and the Secretary shall not 
     make such reports available to the public.
       ``(d) Description of How Physicians and Practitioners Would 
     Have Fared Under Program.--Not later than March 1, 2009, the 
     Secretary shall provide each physician and practitioner with 
     a description of the Secretary's estimate of how payments to 
     the physician or practitioner under this title would have 
     been affected with respect to items and services furnished 
     during a period, as determined by the Secretary, if the 
     program under this section (and the amendments made by 
     paragraphs (1) and (2) of section 6110(c) of the Deficit 
     Reduction Omnibus Reconciliation Act of 2005) had been in 
     effect with respect to that period.
       ``(e) Funding.--
       ``(1) Amount.--The amount available for value-based 
     payments under this section with respect to a year shall be 
     equal to the amount of the reduction in expenditures under 
     the Federal Supplementary Medical Insurance Trust Fund under 
     section 1841 in the year as a result of the amendments made 
     by section 6110(c)(2) of the Deficit Reduction Omnibus 
     Reconciliation Act of 2005, as estimated by the Secretary.
       ``(2) Payments from trust fund.--Payments to physicians and 
     practitioners under this section shall be made from the 
     Federal Supplementary Medical Insurance Trust Fund.


                 ``plan value-based purchasing program

       ``Sec. 1860E-4. (a) Program.--
       ``(1) In general.--The Secretary shall establish a program 
     under which value-based payments are provided each year to 
     Medicare Advantage organizations offering Medicare Advantage 
     plans under part C that demonstrate the provision of high 
     quality health care to enrollees under the plan.
       ``(2) Program to begin in 2009.--The Secretary shall 
     establish the program under this section so that value-based 
     payments under subsection (b) are made with respect to 2009 
     and each subsequent year.
       ``(3) Definitions of medicare advantage organization and 
     plan.--
       ``(A) In general.--In this section:
       ``(i) Medicare advantage organization.--The term `Medicare 
     Advantage organization' has the meaning given such term in 
     section 1859(a)(1).
       ``(ii) Medicare advantage plan.--The term `Medicare 
     Advantage plan' has the meaning given such term in section 
     1859(b)(1).
       ``(B) Applicability of program to medicare advantage 
     regional and local plans.--For purposes of this section, the 
     term `Medicare Advantage plan' shall include both Medicare 
     Advantage regional plans (as defined in section 1859(b)(4)) 
     and Medicare Advantage local plans (as defined in section 
     1859(b)(5)).
       ``(C) Applicability of program to reasonable cost 
     contracts.--Except for paragraphs (5) and (6) of subsection 
     (b), for purposes of this section, the terms--
       ``(i) `Medicare Advantage organization' and `organization' 
     include an organization that is providing benefits under a 
     reasonable cost

[[Page 26741]]

     reimbursement contract under section 1876(h); and
       ``(ii) `Medicare Advantage plan' and `plan' include such a 
     contract.
       ``(b) Value-Based Payments.--
       ``(1) In general.--Subject to paragraph (4), the Secretary 
     shall make value-based payments to Medicare Advantage 
     organizations with respect to each Medicare Advantage plan 
     offered by the organization during a year if the Secretary 
     determines that the quality of the care provided under the 
     plan--
       ``(A) has substantially improved (as determined by the 
     Secretary) over the prior year; or
       ``(B) exceeds a threshold established by the Secretary.
       ``(2) Use of system.--In determining which organizations 
     offering Medicare Advantage plans qualify for a value-based 
     payment under paragraph (1), the Secretary shall--
       ``(A) use the quality measurement system developed for this 
     section pursuant to section 1860E-1(a); and
       ``(B) ensure that awards are based on data from a full 12-
     month period (or 24-month period in the case of an award 
     described in paragraph (1)(A)), such periods determined 
     without regard to calendar year periods.
       ``(3) Determination of amount of award and allocation of 
     awards.--
       ``(A) In general.--The Secretary shall determine--
       ``(i) the amount of a value-based payment under paragraph 
     (1) provided to an organization with respect to a plan; and
       ``(ii) subject to subparagraph (B), the allocation of the 
     total amount available under subsection (d) for value-based 
     payments for any year between payments with respect to plans 
     that meet the requirement under subparagraph (A) of paragraph 
     (1) and plans that meet the requirement under subparagraph 
     (B) of such paragraph.
       ``(B) Requirement regarding the amount of funding available 
     for value-based payments for plans exceeding a threshold.--
     The Secretary shall ensure that--
       ``(i) a majority of the total amount available under 
     subsection (d) for value-based payments for any year is 
     provided to organizations, with respect to plans offered by 
     such organizations, that are receiving such payments because 
     they meet the requirement under paragraph (1)(B); and
       ``(ii) with respect to 2010 and each subsequent year, the 
     percentage of the total amount available under subsection (d) 
     for value-based payments for any year that is used to make 
     payments to organizations, with respect to plans offered by 
     such organizations, that meet such requirement is greater 
     than such percentage in the previous year.
       ``(4) Use of payments.--Value-based payments received under 
     this section may only be used for the following purposes:
       ``(A) To invest in quality improvement programs operated by 
     the organization with respect to the plan.
       ``(B) To enhance beneficiary benefits under the plan.
       ``(5) Required submission of data.--In order for an 
     organization to be eligible for a value-based payment for a 
     year with respect to a Medicare Advantage plan or a 
     reasonable cost contract, the organization must have provided 
     for the collection, analysis, and reporting of data pursuant 
     to sections 1852(e)(3) (or submitted the data under section 
     1876(h)(6) in the case of a reasonable cost contract) with 
     respect to the plan or contract for the 2 years preceding 
     that year.
       ``(6) No effect on medicare advantage plan bids.--In order 
     for a Medicare Advantage organization to be eligible for a 
     value-based payment for a year with respect to a Medicare 
     Advantage plan, the organization must have provided the 
     Secretary with an attestation that the program under this 
     section, including the payment adjustments made by reason of 
     the amendments made by section 6110(d)(2)(A) of the Deficit 
     Reduction Omnibus Reconciliation Act of 2005, had no effect 
     on the integrity and actuarial soundness of the bid submitted 
     under section 1854 for the plan for the year.
       ``(7) Total amount of value-based payments equal to total 
     amount of reduction in payments.--The Secretary shall 
     establish payment amounts under paragraph (3)(A) so that, as 
     estimated by the Secretary, the total amount of value-based 
     payments made in a year under paragraph (1) is equal to the 
     total amount available under subsection (d) for such payments 
     for the year.
       ``(8) Payment methods and timing of payments.--
       ``(A) In general.--Subject to subparagraph (B), the payment 
     of value-based payments under paragraph (1) shall be based on 
     such a method as the Secretary determines appropriate.
       ``(B) Timing.--The Secretary shall ensure that value-based 
     payments under paragraph (1) with respect to a year are made 
     by not later than March 1 of the subsequent year.
       ``(c) Description of How Plans Would Have Fared Under 
     Program--Not later than March 1, 2009, the Secretary shall 
     provide each Medicare Advantage organization offering a 
     Medicare Advantage plan with a description of the Secretary's 
     estimate of how payments under this title to such 
     organization with respect to the plan for a period, as 
     determined by the Secretary, would have been affected if the 
     program under this section (and the amendments made by 
     section 6110(d) of the Deficit Reduction Omnibus 
     Reconciliation Act of 2005) had been in effect with respect 
     to that period.
       ``(d) Funding.--
       ``(1) Amount.--The amount available for value-based 
     payments under this section with respect to a year shall be 
     equal to the amount of the reduction in expenditures under 
     the Federal Hospital Insurance Trust Fund under section 1817 
     and the Federal Supplementary Medical Insurance Trust Fund 
     under section 1841 in the year as a result of the amendments 
     made by section 6110(d)(2) of the Deficit Reduction Omnibus 
     Reconciliation Act of 2005, as estimated by the Secretary.
       ``(2) Payments from trust funds.--Payments to organizations 
     under this section shall be made from the Federal Hospital 
     Insurance Trust Fund and the Federal Supplementary Medical 
     Insurance Trust Fund in the same proportion as payments to 
     Medicare Advantage organizations are made from such Trust 
     Funds under the first sentence of section 1853(f).


      ``esrd provider and facility value-based purchasing program

       ``Sec. 1860E-5. (a) Program.--
       ``(1) In general.--The Secretary shall establish a program 
     under which value-based payments are provided each year to 
     providers of services and renal dialysis facilities that--
       ``(A) provide items and services to individuals with end 
     stage renal disease who are enrolled under part B; and
       ``(B) demonstrate the provision of high quality health care 
     to such individuals.
       ``(2) Program to begin in 2007.--The Secretary shall 
     establish the program under this section so that value-based 
     payments described in subsection (b) are made with respect to 
     2007 and each subsequent year.
       ``(3) Exclusions from program.--
       ``(A) Pediatric facilities.--Any renal dialysis facility at 
     least 50 percent of whose patients are individuals under 18 
     years of age shall not be included in the program under this 
     section.
       ``(B) Providers and facilities currently participating in 
     bundled case-mix demonstration not included in program.--Any 
     provider of services or renal dialysis facility that is 
     currently participating in the bundled case-mix adjusted 
     payment system for ESRD services demonstration project under 
     section 623(e) of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (Public Law 108-
     173) shall not be included in the program under this section, 
     but only for so long as the provider or facility is so 
     participating.
       ``(b) Value-Based Payments.--
       ``(1) In general.--Subject to paragraph (4), the Secretary 
     shall make a value-based payment to a provider of services or 
     a renal dialysis facility with respect to a year if the 
     Secretary determines that the quality of the care provided in 
     that year by the provider or facility to individuals with end 
     stage renal disease who are enrolled under part B--
       ``(A) has substantially improved (as determined by the 
     Secretary) over the prior year; or
       ``(B) exceeds a threshold established by the Secretary.
       ``(2) Use of system.--In determining which providers of 
     services and renal dialysis facilities qualify for a value-
     based payment under paragraph (1), the Secretary shall use 
     the quality measurement system developed for this section 
     pursuant to section 1860E-1(a).
       ``(3) Determination of amount of award and allocation of 
     awards.--
       ``(A) In general.--The Secretary shall determine--
       ``(i) the amount of a value-based payment under paragraph 
     (1) provided to a provider of services or a renal dialysis 
     facility; and
       ``(ii) subject to subparagraphs (B) and (C), the allocation 
     of the total amount available under subsection (c) for value-
     based payments for any year between payments with respect to 
     providers and facilities that meet the requirement under 
     subparagraph (A) of paragraph (1) and providers and 
     facilities that meet the requirement under subparagraph (B) 
     of such paragraph.
       ``(B) Requirement regarding amount of funding available for 
     value-based payments for providers and facilities exceeding a 
     threshold.--The Secretary shall ensure that--
       ``(i) a majority of the total amount available under 
     subsection (c) for value-based payments for any year is 
     provided to providers of services and renal dialysis 
     facilities that are receiving such payments because they meet 
     the requirement under paragraph (1)(B); and
       ``(ii) with respect to 2009 and each subsequent year, the 
     percentage of the total amount available under subsection (c) 
     for value-based payments for any year that is used to make 
     payments to providers and facilities that meet such 
     requirement is greater than such percentage in the previous 
     year.
       ``(C) Only value-based payments for providers and 
     facilities exceeding a threshold in 2007.--With respect to 
     2007, the entire amount available under subsection (c) for 
     value-based payments for that year shall be used to make 
     payments to providers of services and renal dialysis 
     facilities that meet the requirement under paragraph (1)(B).

[[Page 26742]]

       ``(4) Requirements.--
       ``(A) Required submission of data.--
       ``(i) In general.--In order for a provider of services or a 
     renal dialysis facility to be eligible for a value-based 
     payment for a year, the provider or facility must have 
     provided for the submission of data in accordance with clause 
     (ii) with respect to that year.
       ``(ii) Submission of data.--For 2007 and each subsequent 
     year, each provider of services and renal dialysis facility 
     that receives payments under paragraph (12) shall submit to 
     the Secretary such data that the Secretary determines is 
     appropriate for the measurement of health outcomes and other 
     indices of quality, including data necessary for the 
     operation of the program under this section. Such data shall 
     be submitted in a form and manner, and at a time, specified 
     by the Secretary for purposes of this clause.
       ``(iii) Availability to the public.--The Secretary shall 
     establish procedures for making data submitted under clause 
     (ii) available to the public in a clear and understandable 
     form. Such procedures shall ensure that a provider or 
     facility has the opportunity to review the data that is to be 
     made public with respect to the provider or facility prior to 
     such data being made public.
       ``(B) Attestation regarding data.--In order for a provider 
     of services or a renal dialysis facility to be eligible for a 
     value-based payment for a year, the provider or facility must 
     have provided the Secretary (under procedures established by 
     the Secretary) with an attestation that the data submitted 
     under subparagraph (A)(ii) for the year is complete and 
     accurate.
       ``(5) Total amount of value-based payments equal to total 
     amount of available funding.--The Secretary shall establish 
     payment amounts under paragraph (3)(A) so that, as estimated 
     by the Secretary, the total amount of value-based payments 
     made in a year under paragraph (1) is equal to the total 
     amount available under subsection (c) for such payments for 
     the year.
       ``(6) Payment methods and timing of payments.--
       ``(A) In general.--Subject to subparagraph (B), the payment 
     of value-based payments under paragraph (1) shall be based on 
     such a method as the Secretary determines appropriate.
       ``(B) Timing.--The Secretary shall ensure that value-based 
     payments under paragraph (1) with respect to a year are made 
     by not later than December 31 of the subsequent year.
       ``(c) Funding.--
       ``(1) Amount.--The amount available for value-based 
     payments under this section with respect to a year shall be 
     equal to the amount of the reduction in expenditures under 
     the Federal Supplementary Medical Insurance Trust Fund under 
     section 1841 in the year by reason of the application of 
     section 1881(b)(12)(G), as estimated by the Secretary.
       ``(2) Payments from trust fund.--Payments to providers of 
     services and renal dialysis facilities under this section 
     shall be made from the Federal Supplementary Medical 
     Insurance Trust Fund.


          ``home health agency value-based purchasing program

       ``Sec. 1860E-6. (a) Program.--
       ``(1) In general.--The Secretary shall establish a program 
     under which value-based payments are provided each year to 
     home health agencies that demonstrate the provision of high 
     quality health care to individuals entitled to benefits under 
     part A or enrolled under part B.
       ``(2) Program to begin in 2008.--The Secretary shall 
     establish the program under this section so that value-based 
     payments described in subsection (b) are made with respect to 
     2008 and each subsequent year.
       ``(3) Home health agency defined.--In this section, the 
     term ``home health agency'' has the meaning given that term 
     in section 1861(o).
       ``(b) Value-Based Payments.--
       ``(1) In general.--Subject to paragraph (4), the Secretary 
     shall make a value-based payment to a home health agency with 
     respect to a year if the Secretary determines that the 
     quality of the care provided in that year by the agency to 
     individuals entitled to benefits under part A or enrolled 
     under part B--
       ``(A) has substantially improved (as determined by the 
     Secretary) over the prior year; or
       ``(B) exceeds a threshold established by the Secretary.
       ``(2) Use of system.--In determining which home health 
     agencies qualify for a value-based payment under paragraph 
     (1), the Secretary shall use the quality measurement system 
     developed for this section pursuant to section 1860E-1(a).
       ``(3) Determination of amount of award and allocation of 
     awards.--
       ``(A) In general.--The Secretary shall determine--
       ``(i) the amount of a value-based payment under paragraph 
     (1) provided to a home health agency; and
       ``(ii) subject to subparagraph (B), the allocation of the 
     total amount available under subsection (d) for value-based 
     payments for any year between payments with respect to 
     agencies that meet the requirement under subparagraph (A) of 
     paragraph (1) and agencies that meet the requirement under 
     subparagraph (B) of such paragraph.
       ``(B) Requirements regarding the amount of funding 
     available for value-based payments for agencies exceeding a 
     threshold.--The Secretary shall ensure that--
       ``(i) a majority of the total amount available under 
     subsection (d) for value-based payments for any year is 
     provided to home health agencies that are receiving such 
     payments because they meet the requirement under paragraph 
     (1)(B); and
       ``(ii) with respect to 2009 and each subsequent year, the 
     percentage of the total amount available under subsection (d) 
     for value-based payments for any year that is used to make 
     payments to agencies that meet such requirement is greater 
     than such percentage in the previous year.
       ``(4) Requirements.--
       ``(A) Required submission of data.--In order for a home 
     health agency to be eligible for a value-based payment for a 
     year, the agency must have complied with the requirements 
     under section 1895(b)(3)(B)(v)(II) with respect to that year.
       ``(B) Attestation regarding data.--In order for a home 
     health agency to be eligible for a value-based payment for a 
     year, the agency must have provided the Secretary (under 
     procedures established by the Secretary) with an attestation 
     that the data submitted under section 1895(b)(3)(B)(v)(II) 
     with respect to that year is complete and accurate.
       ``(5) Total amount of value-based payments equal to total 
     amount of available funding.--The Secretary shall establish 
     payment amounts under paragraph (3)(A) so that, as estimated 
     by the Secretary, the total amount of value-based payments 
     made in a year under paragraph (1) is equal to the total 
     amount available under subsection (d) for such payments for 
     the year.
       ``(6) Payment methods and timing of payments.--
       ``(A) In general.--Subject to subparagraph (B), the payment 
     of value-based payments under paragraph (1) shall be based on 
     such a method as the Secretary determines appropriate.
       ``(B) Timing.--The Secretary shall ensure that value-based 
     payments under paragraph (1) with respect to a year are made 
     by not later than December 31 of the subsequent year.
       ``(c) Description of How Agencies Would Have Fared Under 
     Program.--Not later than January 1, 2008, the Secretary shall 
     provide each home health agency with a description of the 
     Secretary's estimate of how payments to the agency under this 
     title would have been affected with respect to items and 
     services furnished during a period, as determined by the 
     Secretary, if the program under this section (and the 
     amendments made by section 6110(f) of the Deficit Reduction 
     Omnibus Reconciliation Act of 2005) had been in effect with 
     respect to that period.
       ``(d) Funding.--
       ``(1) Amount.--The amount available for value-based 
     payments under this section with respect to a year shall be 
     equal to the amount of the reduction in expenditures under 
     the Federal Hospital Insurance Trust Fund under section 1817 
     and Federal Supplementary Medical Insurance Trust Fund under 
     section 1841 in the year as a result of the application of 
     section 1895(b)(3)(D), as estimated by the Secretary.
       ``(2) Payments from trust fund.--Payments to home health 
     agencies under this section shall be made from the Federal 
     Hospital Insurance Trust Fund and Federal Supplementary 
     Medical Insurance Trust Fund, in the same proportion as 
     payments for home health services are made from such trust 
     funds.''.
       (b) Hospitals.--
       (1) Voluntary submission of hospital quality data.--
       (A) Update for hospitals that submit quality data.--Section 
     1886(b)(3)(B) (42 U.S.C. 1395ww(b)(3)(B)) is amended--
       (i) in clause (vii)--

       (I) in subclause (I), by striking ``for each of fiscal 
     years 2005 through 2007'' and inserting ``for fiscal years 
     2005 and 2006''; and
       (II) in subclause (II), by striking ``Each'' and inserting 
     ``For fiscal years 2005 and 2006, each''; and

       (ii) by adding at the end the following new clause:
       ``(viii)(I) For purposes of clause (i)(XX), for fiscal year 
     2007 and each subsequent fiscal year, in the case of a 
     subsection (d) hospital that does not submit data in 
     accordance with subclause (II) with respect to such a fiscal 
     year, the applicable percentage increase under such clause 
     for such fiscal year shall be reduced by 2 percentage points. 
     Such reduction shall apply only with respect to the fiscal 
     year involved, and the Secretary shall not take into account 
     such reduction in computing the applicable percentage 
     increase under clause (i)(XX) for a subsequent fiscal year.
       ``(II) For fiscal year 2007 and each subsequent fiscal 
     year, each subsection (d) hospital shall submit to the 
     Secretary such data that the Secretary determines is 
     appropriate for the measurement of health care quality, 
     including data necessary for the operation of the PPS 
     hospital value-based purchasing program under section 1860E-
     2. Such data shall be submitted in a form and manner, and at 
     a time, specified by the Secretary for purposes of this 
     clause.

[[Page 26743]]

       ``(III) The Secretary shall establish procedures for making 
     data submitted under subclause (II) available to the public 
     in a clear and understandable form. Such procedures shall 
     ensure that a subsection (d) hospital has the opportunity to 
     review the data that is to be made public with respect to the 
     hospital prior to such data being made public.''.
       (B) Conforming amendments.--Section 1886(b)(3)(B)(i) (42 
     U.S.C. 1395ww(b)(3)(B)(i)) is amended--
       (i) in subclause (XIX), by striking ``2007'' and inserting 
     ``2006''; and
       (ii) in subclause (XX)--

       (I) by striking ``2008'' and inserting ``2007''; and
       (II) by inserting ``subject to clause (viii),'' after 
     ``fiscal year,''.

       (2) Reduction in payments in order to fund program.--
       (A) Reduction in payments.--Section 1886(d)(5)(A) (42 
     U.S.C. 1395ww(d)(5)(A)) is amended--
       (i) in clause (iv), by striking ``5 percent nor more than 6 
     percent'' and inserting ``the applicable lower percent nor 
     more than the applicable upper percent''; and
       (ii) by adding at the end the following new clause:
       ``(vii) For purposes of clause (iv)--
       ``(I) for fiscal years prior to 2007, the `lower percent' 
     is 5.0 percent and the `upper percent' is 6.0 percent;
       ``(II) for fiscal year 2007, the `lower percent' is 4.0 
     percent and the `upper percent' is 5.0 percent;
       ``(III) for fiscal year 2008, the `lower percent' is 3.75 
     percent and the `upper percent' is 4.75 percent;
       ``(IV) for fiscal year 2009, the `lower percent' is 3.5 
     percent and the `upper percent' is 4.5 percent;
       ``(V) for fiscal year 2010, the `lower percent' is 3.25 
     percent and the `upper percent' is 4.25 percent; and
       ``(VI) for fiscal year 2011 and each subsequent fiscal 
     year, the `lower percent' is 3.0 percent and the `upper 
     percent' is 4.0 percent.''.
       (B) Continuation of current level of reductions to the 
     average standardized amount.--Section 1886(d)(3)(B) (42 
     U.S.C. 1395ww(d)(3)(B)) is amended to read as follows:
       ``(B) Reducing for value of outlier payments and for 
     funding of hospital value-based purchasing program.--
       ``(i) In general.--The Secretary shall reduce each of the 
     average standardized amounts determined under subparagraph 
     (A) by a factor equal to a fraction--
       ``(I) the numerator of which is the sum of--

       ``(aa) the additional payments described in paragraph 
     (5)(A) (relating to outlier payments); and
       ``(bb) the applicable percent of the total payments 
     projected or estimated to be made based on DRG prospective 
     payment rates for discharges in that year; and

       ``(II) the denominator of which is the total payments 
     projected or estimated to be made based on DRG prospective 
     payment rates for discharges in that year.
       ``(ii) Applicable percent.--For purposes of clause 
     (i)(I)(bb), the term `applicable percent' means--
       ``(I) for fiscal years prior to fiscal year 2007, 0 
     percent;
       ``(II) for fiscal year 2007, 1.0 percent;
       ``(III) for fiscal year 2008, 1.25 percent;
       ``(IV) for fiscal year 2009, 1.5 percent;
       ``(V) for fiscal year 2010, 1.75 percent; and
       ``(VI) for fiscal year 2011 and each subsequent year, 2.0 
     percent.''.
       (3) Value-based purchasing demonstration program for 
     critical access hospitals.--
       (A) Establishment.--Not later than 6 months after the date 
     of enactment of this Act, the Secretary shall establish a 2-
     year demonstration program under which the Secretary 
     establishes a value-based purchasing program under the 
     Medicare program under title XVIII of the Social Security Act 
     for critical access hospitals (as defined in section 
     1861(mm)(1) of such Act (42 U.S.C. 1395x(mm)(1)) in order to 
     test innovative methods of measuring and rewarding quality 
     health care furnished by such hospitals.
       (B) Sites.--The Secretary shall conduct the demonstration 
     program at 6 critical access hospitals. The Secretary shall 
     ensure that such hospitals are representative of the spectrum 
     of such hospitals that participate in the Medicare program.
       (C) Waiver Authority.--The Secretary may waive such 
     requirements of titles XI and XVIII of the Social Security 
     Act as may be necessary to carry out the demonstration 
     program.
       (D) Funding.--The Secretary shall provide for the transfer 
     from the Federal Hospital Insurance Trust Fund under section 
     1817 of the Social Security Act (42 U.S.C. 1395i) of such 
     funds as are necessary for the costs of carrying out the 
     demonstration program.
       (E) Report.--Not later than 6 months after the 
     demonstration program is completed, the Secretary shall 
     submit to Congress a report on the demonstration program 
     together with recommendations on the establishment of a 
     permanent value-based purchasing program under the Medicare 
     program for critical access hospitals and recommendations for 
     such other legislation or administrative action as the 
     Secretary determines appropriate.
       (c) Physicians and Practitioners.--
       (1) Voluntary submission of physician and practitioner 
     quality data.--
       (A) Update for physicians and practitioners that submit 
     quality data.--Section 1848(d)(4) (42 U.S.C. 1395w-4(d)(4)) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(G) Adjustment if quality data not submitted.--
       ``(i) Adjustment.--For 2007 and each subsequent year, in 
     the case of services furnished by a physician or a 
     practitioner (as defined in section 1860E-3(a)(3)) that does 
     not submit data in accordance with clause (ii) with respect 
     to such a year, the update otherwise determined under 
     subparagraph (A) shall be reduced by 2 percentage points. 
     Such reduction shall apply only with respect to the year 
     involved, and the Secretary shall not take into account such 
     reduction in computing the conversion factor for a subsequent 
     year.
       ``(ii) Submission of quality data.--For 2007 and each 
     subsequent year, each physician and practitioner (as defined 
     in section 1860E-3(a)(3)) shall submit to the Secretary such 
     data that the Secretary determines is appropriate for the 
     measurement of health outcomes and other indices of quality, 
     including data necessary for the operation of the physician 
     and practitioner value-based purchasing program under section 
     1860E-3. Such data shall be submitted in a form and manner, 
     and at a time, specified by the Secretary for purposes of 
     this subparagraph.
       ``(iii) Available to the public.--

       ``(I) In general.--Subject to subclauses (II) and (III), 
     the Secretary shall establish procedures for making data 
     submitted under clause (ii), with respect to items and 
     services furnished on or after January 1, 2008, available to 
     the public in 3 phases as follows:

       ``(aa) Phase I.--During phase I, the Secretary shall make 
     available to the public the identity of physicians and 
     practitioners that are submitting such data.
       ``(bb) Phase II.--During phase II, the Secretary shall make 
     available to the public the identity of physicians and 
     practitioners that are receiving a value-based payment under 
     section 1860E-3.
       ``(cc) Phase III.--During phase III, the Secretary shall 
     make data submitted under clause (ii) available to the public 
     in a clear and understandable form.

       ``(II) Review.--The procedures established under subclause 
     (I) shall ensure that a physician or practitioner has the 
     opportunity to review the data that is to be made public with 
     respect to the physician or practitioner under subclause 
     (I)(cc) prior to such data being made public.
       ``(III) Exceptions.--The Secretary shall establish 
     exceptions to the requirement for making data available to 
     the public under subclause (I). In providing for such 
     exceptions, the Secretary shall take into account the size 
     and specialty representation of the practice involved.''.

       (B) Conforming amendment.--Section 1848(d)(4)(A) (42 U.S.C. 
     1395w-4(d)(4)(A)) is amended, in the matter preceding clause 
     (i), by striking ``subparagraph (F)'' and inserting 
     ``subparagraphs (F) and (G)''.
       (2) Reduction in conversion factor for physicians and 
     practitioners that submit quality data in order to fund 
     program.--
       (A) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is 
     amended by adding at the end the following new paragraph:
       ``(6) Reduction in conversion factor for physicians and 
     practitioners in order to fund value-based purchasing 
     program.--
       ``(A) In general.--For 2009 and each subsequent year, the 
     single conversion factor otherwise applicable under this 
     subsection to services furnished in the year by a physician 
     or a practitioner (as defined in section 1860E-3(a)(3)) that 
     complies with the requirements under paragraph (4)(G)(ii) for 
     the year (determined after application of the update under 
     paragraph (4)) shall be reduced by the applicable percent.
       ``(B) Applicable percent.--For purposes of subparagraph 
     (A), the term `applicable percent' means--
       ``(i) for 2009, 1.0 percent;
       ``(ii) for 2010, 1.25 percent;
       ``(iii) for 2011, 1.5 percent;
       ``(iv) for 2012, 1.75 percent; and
       ``(v) for 2013 and each subsequent year, 2.0 percent.''.
       (B) Conforming amendment.--Section 1848(d)(1)(A) (42 U.S.C. 
     1395w-4(d)(1)(A)) is amended by striking ``The conversion 
     factor'' and inserting ``Subject to paragraph (6), the 
     conversion factor''.
       (d) Plans.--
       (1) Submission of quality data.--
       (A) Medicare advantage organizations.--Section 1852(e) (42 
     U.S.C. 1395w-22(e)), as amended by section 722 of the 
     Medicare Prescription Drug, Improvement, and Modernization 
     Act of 2003 (Public Law 108-173; 117 Stat. 2347), is 
     amended--
       (i) in paragraph (1), by striking ``an MA private fee-for-
     service plan or''; and
       (ii) in paragraph (3)--

       (I) in subparagraph (A)--

       (aa) in clause (i), by adding at the end the following new 
     sentence: ``Such data shall include data necessary for the 
     operation of the plan value-based purchasing program under 
     section 1860E-4.'';
       (bb) by redesignating clause (iv) as clause (vi); and

[[Page 26744]]

       (cc) by inserting after clause (iii) the following new 
     clauses:
       ``(iv) Application to ma private fee-for-service plans.--
     The Secretary shall establish as appropriate by regulation 
     requirements for the collection, analysis, and reporting of 
     data that permits the measurement of health outcomes and 
     other indices of quality for MA organizations with respect to 
     MA private fee-for-service plans.''.
       ``(v) Availability to the public.--The Secretary shall 
     establish procedures for making data reported under this 
     subparagraph available to the public in a clear and 
     understandable form. Such procedures shall ensure that an MA 
     organization has the opportunity to review the data that is 
     to be made public with respect to the plan offered by the 
     organization prior to such data being made public.''; and

       (II) in subparagraph (B)--

       (aa) in clause (i), by striking ``The'' and inserting 
     ``Subject to clause (ii), the''; and
       (bb) by striking clause (ii) and inserting the following 
     new clause:
       ``(ii) Changes in types of data.--Subject to clause (iii), 
     the Secretary may only change the types of data that are 
     required to be submitted under subparagraph (A) after 
     submitting to Congress a report on the reasons for such 
     changes that was prepared--

       ``(I) in the case of data necessary for the operation of 
     the plan value-based purchasing program under section 1860E-
     4, after the requirements under subsections (c) and (d) of 
     section 1860E-1 have been complied with; and
       ``(II) in the case of any other data, in consultation with 
     MA organizations and private accrediting bodies.''.

       (B) Eligible entities with reasonable cost contracts.--
     Section 1876(h) (42 U.S.C. 1395mm(h)) is amended by adding at 
     the end the following new paragraph:
       ``(6)(A) With respect to plan years beginning on or after 
     January 1, 2006, an eligible entity with a reasonable cost 
     reimbursement contract under this subsection shall submit to 
     the Secretary such data that the Secretary determines is 
     appropriate for the measurement of health outcomes and other 
     indices of quality, including data necessary for the 
     operation of the plan value-based purchasing program under 
     section 1860E-4. Such data shall be submitted in a form and 
     manner, and at a time, specified by the Secretary for 
     purposes of this subparagraph.
       ``(B) The Secretary shall establish procedures for making 
     data reported under subparagraph (A) available to the public 
     in a clear and understandable form. Such procedures shall 
     ensure that an eligible entity has the opportunity to review 
     the data that is to be made public with respect to the 
     contract prior to such data being made public.''.
       (C) Effective date.--The amendments made by this subsection 
     shall apply to plan years beginning on or after January 1, 
     2006.
       (D) Sense of the senate.--It is the sense of the Senate 
     that, in establishing the timeframes for Medicare Advantage 
     organizations and entities with a reasonable cost 
     reimbursement contract under section 1876(h) of the Social 
     Security Act (42 U.S.C. 1395mm(h)) to report quality data 
     under sections 1852(e)(3) and 1876(h)(6), respectively, of 
     such Act, as added by this section, the Secretary should take 
     into account other timeframes for reporting quality data that 
     such organizations and entities are subject to under other 
     Federal and State programs and in the commercial market.
       (2) Reduction in payments to organizations in order to fund 
     program.--
       (A) Medicare advantage payments.--
       (i) In general.--Section 1853(a)(1) (42 U.S.C. 1395w-
     23(a)(1)), as amended by section 222(e) of the Medicare 
     Prescription Drug, Improvement, and Modernization Act of 2003 
     (Public Law 108-173; 117 Stat. 2200), is amended--

       (I) in clauses (i) and (ii) of subparagraph (B), by 
     inserting ``and, for 2009 and each subsequent year, except in 
     the case of an MSA plan or an MA plan for which there was no 
     contract under section 1857 during either of the preceding 2 
     years, reduced by the applicable percent (as defined in 
     subparagraph (I))'' after ``(G)''; and
       (II) by adding at the end the following new subparagraph:

       ``(I) Applicable percent.--For purposes of clauses (i) and 
     (ii) of subparagraph (B), the term `applicable percent' 
     means--
       ``(i) for 2009, 1.0 percent;
       ``(ii) for 2010, 1.25 percent;
       ``(iii) for 2011, 1.5 percent;
       ``(iv) for 2012, 1.75 percent; and
       ``(v) for 2013 and each subsequent year, 2.0 percent.''.
       (iii) Reductions in payments do not affect the rebate for 
     bids below the benchmark.--The amendments made by 
     subparagraph (A) shall not be construed to have any effect 
     on--

       (I) the determination of whether a Medicare Advantage plan 
     has average per capita monthly savings described in paragraph 
     (3)(C) or (4)(C) of section 1854(b) of the Social Security 
     Act (42 U.S.C. 1395w-24(b)); or
       (II) the amount of such savings.

       (A) Reasonable cost contract payments.--Section 1876(h) (42 
     U.S.C. 1395mm(h)), as amended by subsection (a)(2), is 
     amended by adding at the end the following new paragraph:
       ``(7) Notwithstanding the preceding provisions of this 
     subsection, the Secretary shall reduce each payment to an 
     eligible organization under this subsection with respect to 
     benefits provided on or after January 1, 2009, by an amount 
     equal to the applicable percent (as defined in section 
     1853(a)(1)(I)) of the payment amount.''.
       (3) Requirement for reporting on use of value-based 
     payments.--
       (A) MA plans.--Section 1854(a) (42 U.S.C. 1395w-24(a)), as 
     amended by section 222(a) of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (Public Law 108-
     173; 117 Stat. 2193), is amended--
       (i) in paragraph (1)(A)(i), by striking ``or (6)(A)'' and 
     inserting ``(6)(A), or (7)''; and
       (ii) by adding at the end the following:
       ``(7) Submission of information of how value-based payments 
     will be used.--For an MA plan for a plan year beginning on or 
     after January 1, 2011, the information described in this 
     paragraph is a description of how the organization offering 
     the plan will use any value-based payments that the 
     organization received under section 1860E-4 with respect to 
     the plan for the year preceding the year in which such 
     information is submitted.''.
       (B) Reasonable cost contracts.--Section 1876(h) (42 U.S.C. 
     1395mm(h)), as amended by subsection (c)(2), is amended by 
     adding at the end the following new paragraph:
       ``(8) Not later than July 1 of each year (beginning in 
     2010), any eligible entity with a reasonable cost 
     reimbursement contract under this subsection that received a 
     value-based payment under section 1860E-4 with respect to the 
     contract for the preceding year shall submit to the Secretary 
     a report containing a description of how the organization 
     will use such payments under the contract.''.
       (e) ESRD Providers and Facilities.--
       (1) Voluntary submission of quality data.--Section 1881(b) 
     (42 U.S.C. 1395rr(b)) is amended by adding at the end the 
     following new paragraph:
       ``(14) By not later than July 31, 2006, the Secretary shall 
     establish procedures under which providers of services and 
     renal dialysis facilities that receive payments under 
     paragraph (12) or (13) may submit to the Secretary data that 
     permits the measurement of health outcomes and other indices 
     of quality.''.
       (2) Reduction in case-mix adjusted prospective payment 
     amount in order to fund program.--Section 1881(b)(12) (42 
     U.S.C. 1395rr(b)(12)) is amended--
       (A) by redesignating subparagraph (G) as subparagraph (H); 
     and
       (B) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G)(i) In the case of any payment made under this 
     paragraph for an item or service furnished on or after 
     January 1, 2007, such payment shall be reduced by the 
     applicable percent. The preceding sentence shall not apply to 
     a payment for an item or service furnished by a provider of 
     services or a renal dialysis facility that is excluded from 
     the program under section 1860E-5 by reason of subsection 
     (a)(3) of such section at the time the item or service is 
     furnished.
       ``(ii) For purposes of clause (i), the term `applicable 
     percent' means--
       ``(I) for 2007, 1.0 percent;
       ``(II) for 2008, 1.25 percent;
       ``(III) for 2009, 1.5 percent;
       ``(IV) for 2010, 1.75 percent; and
       ``(V) for 2011 and each subsequent year, 2.0 percent.''.
       (3) Value-based purchasing under the demonstration of 
     bundled case-mix adjusted payment system for esrd services.--
     Section 623(e) of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (42 U.S.C. 1395rr 
     note) is amended by adding at the end the following new 
     paragraph:
       ``(7) Value-based purchasing program.--As part of the 
     demonstration project under this subsection, the Secretary 
     shall, beginning January 1, 2007, implement a value-based 
     purchasing program for providers and facilities participating 
     in the demonstration project. The Secretary shall implement 
     such value-based purchasing program in a similar manner as 
     the ESRD provider and facility value-based purchasing program 
     is implemented under section 1860E-5 of the Social Security 
     Act, including the funding of such program.''.
       (f) Home Health Agencies.--
       (1) Update for home health agencies that submit quality 
     data.--Section 1895(b)(3)(B) (42 U.S.C.fff(b)(3)(B)) is 
     amended--
       (A) in clause (ii)(IV), by inserting ``subject to clause 
     (v),'' after ``subsequent year,''; and
       (B) by adding at the end the following new clause:
       ``(v) Adjustment if quality data not submitted.--

       ``(I) Adjustment.--For purposes of clause (ii)(IV), for 
     2007 and each subsequent year, in the case of a home health 
     agency that does not submit data in accordance with subclause 
     (II) with respect to such a year, the home health market 
     basket percentage increase applicable under such clause for 
     such year shall be reduced by 2 percentage points. Such 
     reduction shall apply only with respect to the year involved, 
     and the Secretary shall not take into account such reduction 
     in computing the prospective payment amount under this 
     section for a subsequent year.

[[Page 26745]]

       ``(II) Submission of quality data.--For 2007 and each 
     subsequent year, each home health agency shall submit to the 
     Secretary such data that the Secretary determines is 
     appropriate for the measurement of health care quality, 
     including data necessary for the operation of the home health 
     agency value-based purchasing program under section 1860E-6. 
     Such data shall be submitted in a form and manner, and at a 
     time, specified by the Secretary for purposes of this clause.
       ``(III) Public availability of data submitted.--The 
     Secretary shall establish procedures for making data 
     submitted under subclause (II) available to the public in a 
     clear and understandable form. Such procedures shall ensure 
     that a home health agency has the opportunity to review the 
     data that is to be made public with respect to the agency 
     prior to such data being made public.''.

       (2) Reduction in standard prospective payment amount for 
     agencies that submit quality data in order to fund program.--
     Section 1895(b)(3) (42 U.S.C. 1395fff(b)(3)) is amended by 
     adding at the end the following new subparagraph:
       ``(D) Reduction in order to fund value-based purchasing 
     program.--
       ``(i) In general.--For 2008 and each subsequent year, in 
     the case of a home health agency that complies with the 
     submission requirements under section 1895(b)(3)(B)(v)(II) 
     for the year, the standard prospective payment amount (or 
     amounts) otherwise applicable under this paragraph for the 
     year shall be reduced by the applicable percent.
       ``(ii) Applicable percent.--For purposes of clause (i), the 
     term `applicable percent' means--

       ``(I) for 2008, 1.0 percent;
       ``(II) for 2009, 1.25 percent;
       ``(III) for 2010, 1.5 percent;
       ``(IV) for 2011, 1.75 percent; and
       ``(V) for 2012 and each subsequent year, 2.0 percent.''.

       (g) Skilled Nursing Facilities.--
       (1) Requirement for skilled nursing facilities to report 
     functional capacity of medicare residents upon admission and 
     discharge.--Section 1819(b) (42 U.S.C. 1395i-3(b)) is amended 
     by adding at the end the following new paragraph:
       ``(9) Reporting functional capacity at admission and 
     discharge.--
       ``(A) In general.--On and after October 1, 2006, a skilled 
     nursing facility must submit a report to the Secretary on the 
     functional capacity of each resident who is entitled to 
     benefits under this part at the time of--
       ``(i) the admission of such resident; and
       ``(ii) the discharge of such resident.
       ``(B) Timeframe.--A report required under subparagraph (A) 
     shall be submitted within 10 days of the admission or 
     discharge, as the case may be.''.
       (2) Voluntary submission of skilled nursing facility 
     quality data.--Section 1888(e)(4)(E) (42 U.S.C. 
     1395yy(e)(4)(E)) is amended--
       (A) in clause (ii)(IV), by inserting ``subject to clause 
     (iii),'' after ``subsequent fiscal year,''; and
       (B) by adding at the end the following new clause:
       ``(iii) Adjustment if quality data not submitted.--

       ``(I) Adjustment.--For purposes of clause (ii)(IV), for 
     fiscal year 2009 and each subsequent fiscal year, in the case 
     of a skilled nursing facility that does not submit data in 
     accordance with subclause (II) with respect to such a fiscal 
     year, the skilled nursing facility market basket percentage 
     change applicable under such clause for such fiscal year 
     shall be reduced by 2 percentage points. Such reduction shall 
     apply only with respect to the fiscal year involved, and the 
     Secretary shall not take into account such reduction in 
     computing the Federal per diem rate under this section for a 
     subsequent fiscal year.
       ``(II) Submission of quality data.--For fiscal year 2008 
     and each subsequent fiscal year, each skilled nursing 
     facility shall submit to the Secretary such data that the 
     Secretary determines, after conducting a study in 
     consultation with the entities described in subsections 
     (c)(1), (c)(2), and (d) of section 1860E-1, is appropriate 
     for the measurement of health outcomes and other indices of 
     quality. Such data shall be submitted in a form and manner, 
     and at a time, specified by the Secretary for purposes of 
     this clause.
       ``(III) Public availability of data submitted.--The 
     Secretary shall establish procedures for making data 
     submitted under subclause (II) available to the public in a 
     clear and understandable form. Such procedures shall ensure 
     that a facility has the opportunity to review the data that 
     is to be made public with respect to the facility prior to 
     such data being made public.''.

       (h) Conforming References to Previous Part E.--Any 
     reference in law (in effect before the date of the enactment 
     of this Act) to part E of title XVIII of the Social Security 
     Act is deemed a reference to part F of such title (as in 
     effect after such date).

     SEC. 6111. PHASE-OUT OF RISK ADJUSTMENT BUDGET NEUTRALITY IN 
                   DETERMINING THE AMOUNT OF PAYMENTS TO MEDICARE 
                   ADVANTAGE ORGANIZATIONS.

       (a) In General.--Section 1853 (42 U.S.C. 1395w-23) is 
     amended--
       (1) in subsection (j)(1)--
       (A) in subparagraph (A)--
       (i) by inserting ``(or, beginning with 2007, \1/12\ of the 
     applicable amount determined under subsection (k)(1))'' after 
     ``1853(c)(1)''; and
       (ii) by inserting ``(for years before 2007)'' after 
     ``adjusted as appropriate'';
       (B) in subparagraph (B), by inserting ``(for years before 
     2007)'' after ``adjusted as appropriate''; and
       (2) by adding at the end the following new subsection:
       ``(k) Determination of Applicable Amount for Purposes of 
     Calculating the Benchmark Amounts.--
       ``(1) Applicable amount defined.--For purposes of 
     subsection (j), subject to paragraph (2), the term 
     `applicable amount' means for an area--
       ``(A) for 2007--
       ``(i) if such year is not specified under subsection 
     (c)(1)(D)(ii), an amount equal to the amount specified in 
     subsection (c)(1)(C) for the area for 2006--

       ``(I) first adjusted by the rescaling factor for 2006 for 
     the area (as made available by the Secretary in the 
     announcement of the rates on April 4, 2005, under subsection 
     (b)(1), but excluding any national adjustment factors for 
     coding intensity and risk adjustment budget neutrality that 
     were included in such factor); and
       ``(II) then increased by the national per capita MA growth 
     percentage, described in subsection (c)(6) for that 
     succeeding year, but not taking into account any adjustment 
     under subparagraph (C) of such subsection for a year before 
     2004;

       ``(ii) if such year is specified under subsection 
     (c)(1)(D)(ii), an amount equal to the greater of--

       ``(I) the amount determined under clause (i) for the area 
     for the year; or
       ``(II) the amount specified in subsection (c)(1)(D) for the 
     area for the year; and

       ``(B) for a subsequent year--
       ``(i) if such year is not specified under subsection 
     (c)(1)(D)(ii), an amount equal to the amount determined under 
     this paragraph for the area for the previous year, increased 
     by the national per capita MA growth percentage, described in 
     subsection (c)(6) for that succeeding year, but not taking 
     into account any adjustment under subparagraph (C) of such 
     subsection for a year before 2004; and
       ``(ii) if such year is specified under subsection 
     (c)(1)(D)(ii), an amount equal to the greater of--

       ``(I) the amount determined under clause (i) for the area 
     for the year; or
       ``(II) the amount specified in subsection (c)(1)(D) for the 
     area for the year.

       ``(2) Adjustment.--
       ``(A) In general.--Except as provided in subparagraph (D), 
     in the case of 2007 through 2010, the applicable amount 
     determined under paragraph (1) shall be increased by a factor 
     equal to 1 plus the product of--
       ``(i) the percent determined under subparagraph (B) for the 
     year; and
       ``(ii) the applicable percent for the year under 
     subparagraph (C).
       ``(B) Percent determined.--
       ``(i) In general.--For purposes of subparagraph (A)(i), 
     subject to clause (ii), the percent determined under this 
     subparagraph for a year is a percent equal to a fraction--

       ``(I) the numerator of which is an amount equal to--

       ``(aa) the Secretary's estimate of the total payments that 
     would have been made under this part in the year if all the 
     monthly payment amounts for all MA plans were equal to \1/12\ 
     of the annual MA capitation rate under subsection (c)(1) for 
     the area and year; minus
       ``(bb) the Secretary's estimate of the total payments that 
     would have been made under this part in the year if all the 
     monthly payment amounts for all MA plans were equal to \1/12\ 
     of the MA area-specific non-drug monthly benchmark amount 
     under subsection (j) for the area and year; and

       ``(II) the denominator of which is equal to the total 
     amount estimated for the year under subclause (I)(bb).

       ``(ii) Requirements.--In estimating the amounts under 
     clause (i), the Secretary--

       ``(I) shall--

       ``(aa) use a complete set of the most recent and 
     representative Medicare Advantage risk scores under 
     subsection (a)(3) that are available from the risk adjustment 
     model announced for the year;
       ``(bb) adjust the risk scores to reflect changes in 
     treatment and coding practices in the fee-for-service sector;
       ``(cc) adjust the risk scores for differences in coding 
     patterns between Medicare Advantage plans and providers under 
     part A and B to the extent that the Secretary has identified 
     such differences;
       ``(dd) as necessary, adjust the risk scores for late data 
     submitted by Medicare Advantage organizations;
       ``(ee) as necessary, adjust the risk scores for lagged 
     cohorts; and
       ``(ff) as necessary, adjust the risk scores for changes in 
     enrollment in Medicare Advantage plans during the year; and

       ``(II) may take into account the estimated health risk of 
     enrollees in preferred provider organization plans (including 
     MA regional plans) for the year.

     In order to make the adjustment required under item (cc) and 
     to ensure payment accuracy, the Secretary shall conduct an 
     analysis

[[Page 26746]]

     of the differences described in such item. The Secretary 
     shall complete such analysis by a date necessary to ensure 
     that the results of such analysis are incorporated into the 
     payment rates for a year not later than 2008. In conducting 
     such analysis, the Secretary shall use data submitted with 
     respect to 2004 and subsequent years, as available.
       ``(C) Applicable percent.--For purposes of subparagraph 
     (A)(ii), the term `applicable percent' means--
       ``(i) for 2007, 55 percent;
       ``(ii) for 2008, 40 percent;
       ``(iii) for 2009, 25 percent; and
       ``(iv) for 2010, 5 percent.
       ``(D) Termination of adjustment.--The Secretary shall not 
     make any adjustment under subparagraph (A) in a year if the 
     amount estimated under subparagraph (B)(i)(I)(bb) for the 
     year is equal to or greater than the amount estimated under 
     subparagraph (B)(i)(I)(aa) for the year.
       ``(3) No additional adjustments.--
       ``(A) In general.--Except for the adjustment provided for 
     in paragraph (2), the Secretary may not make any adjustment 
     to the applicable amount determined in paragraph (1) for any 
     year.
       ``(B) Rule of construction.--Nothing in this subsection 
     shall be construed to limit the authority of the Secretary to 
     risk adjust the amount under subsection (c)(1)(D) pursuant to 
     clause (i) of such subsection.''.
       (b) Refinements to Health Status Adjustment.--Section 
     1853(a)(1)(C) (42 U.S.C. 1395w-23) is amended by inserting 
     after the first sentence the following new sentence: ``In 
     applying such adjustment for health status to such payment 
     amounts, the Secretary shall ensure that such adjustment 
     reflects changes in treatment and coding practices in the 
     fee-for-service sector and reflects differences in coding 
     patterns between Medicare Advantage plans and providers under 
     part A and B to the extent that the Secretary has identified 
     such differences.''.

     SEC. 6112. ELIMINATION OF MEDICARE ADVANTAGE REGIONAL PLAN 
                   STABILIZATION FUND.

       (a) Elimination.--
       (1) In general.--Subsection (e) of section 1858 (42 U.S.C. 
     1395w-27a) is repealed.
       (2) Conforming amendment.--Section 1858(f)(1) (42 U.S.C. 
     1395w-27a(f)(1)) is amended by striking ``subject to 
     subsection (e),''.
       (3) Effective date.--The amendments made by this subsection 
     shall take effect as if included in the enactment of section 
     221(c) of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003 (Public Law 108-173; 117 Stat. 
     2181).
       (b) Timeframe for Part A and B Payments.--Notwithstanding 
     sections 1816(c) and 1842(c)(2) of the Social Security Act or 
     any other provision of law--
       (1) any payment from the Federal Hospital Insurance Trust 
     Fund under section 1817 of the Social Security Act (42 U.S.C. 
     1395i) or from the Federal Supplementary Medical Insurance 
     Trust Fund under section 1841 of such Act (42 U.S.C. 1395t) 
     for claims submitted under part A or B of title XVIII of such 
     Act for items and services furnished under such part A or B, 
     respectively, that would otherwise be payable during the 
     period beginning on September 22, 2006, and ending on 
     September 30, 2006, shall be paid on the first business day 
     of October 2006; and
       (2) no interest or late penalty shall be paid to an entity 
     or individual for any delay in a payment by reason of the 
     application of paragraph (1).

     SEC. 6113. RURAL PACE PROVIDER GRANT PROGRAM.

       (a) Definitions.--In this section:
       (1) CMS.--The term ``CMS'' means the Centers for Medicare & 
     Medicaid Services.
       (2) Eligible participant.--The term ``eligible 
     participant'' means a PACE program eligible individual (as 
     defined in sections 1894(a)(5) and 1934(a)(5) of the Social 
     Security Act (42 U.S.C. 1395eee(a)(5); 1396u-4(a)(5))).
       (3) PACE program.--The term ``PACE program'' has the 
     meaning given that term in sections 1894(a)(2) and 1934(a)(2) 
     of the Social Security Act (42 U.S.C. 1395eee(a)(2); 1396u-
     4(a)(2)).
       (4) PACE provider.--The term ``PACE provider'' has the 
     meaning given that term in section 1894(a)(3) or 1934(a)(3) 
     of the Social Security Act (42 U.S.C. 1395eee(a)(3); 1396u-
     4(a)(3)).
       (5) Rural area.--The term ``rural area'' has the meaning 
     given that term in section 1886(d)(2)(D) of the Social 
     Security Act (42 U.S.C. 1395ww(d)(2)(D)).
       (6) Rural pace pilot site.--The term ``rural PACE pilot 
     site'' means a PACE provider that has been approved to 
     provide services in a geographic service area that is, in 
     whole or in part, a rural area, and that has received a site 
     development grant under this section.
       (7) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (b) Site Development Grants and Technical Assistance 
     Program.--
       (1) Site development grants.--
       (A) In general.--The Secretary shall establish a process 
     and criteria to award site development grants to qualified 
     PACE providers that have been approved to serve a geographic 
     service area that is, in whole or in part, a rural area.
       (B) Amount per award.--A site development grant awarded 
     under subparagraph (A) to any individual rural PACE pilot 
     site shall not exceed $750,000.
       (C) Number of awards.--Not more than 15 rural PACE pilot 
     sites shall be awarded a site development grant under 
     subparagraph (A).
       (D) Use of funds.--Funds made available under a site 
     development grant awarded under subparagraph (A) may be used 
     for the following expenses only to the extent such expenses 
     are incurred in relation to establishing or delivering PACE 
     program services in a rural area:
       (i) Feasibility analysis and planning.
       (ii) Interdisciplinary team development.
       (iii) Development of a provider network, including contract 
     development.
       (iv) Development or adaptation of claims processing 
     systems.
       (v) Preparation of special education and outreach efforts 
     required for the PACE program.
       (vi) Development of expense reporting required for 
     calculation of outlier payments or reconciliation processes.
       (vii) Development of any special quality of care or patient 
     satisfaction data collection efforts.
       (viii) Establishment of a working capital fund to sustain 
     fixed administrative, facility, or other fixed costs until 
     the provider reaches sufficient enrollment size.
       (ix) Startup and development costs incurred prior to the 
     approval of the rural PACE pilot site's PACE provider 
     application by CMS.
       (x) Any other efforts determined by the rural PACE pilot 
     site to be critical to its successful startup, as approved by 
     the Secretary.
       (E) Appropriation.--
       (i) In general.--Out of funds in the Treasury not otherwise 
     appropriated, there are appropriated to the Secretary to 
     carry out this subsection for the period of fiscal years 2006 
     through 2007, $7,500,000.
       (ii) Availability.--Funds appropriated under clause (i) 
     shall remain available for expenditure through fiscal year 
     2010.
       (2) Technical assistance program.--The Secretary shall 
     establish a technical assistance program to provide--
       (A) outreach and education to State agencies and provider 
     organizations interested in establishing PACE programs in 
     rural areas; and
       (B) technical assistance necessary to support rural PACE 
     pilot sites.
       (c) Cost Outlier Protection for Rural Pace Pilot Sites.--
       (1) Establishment of fund for reimbursement of outlier 
     costs.--
       (A) In general.--Notwithstanding any other provision of 
     law, the Secretary shall establish an outlier fund to 
     reimburse rural PACE pilot sites for outlier costs (as 
     defined in subparagraph (B)) incurred for eligible 
     participants who reside in a rural area in accordance with 
     the expense payment specified in subparagraph (C).
       (B) Outlier costs defined.--
       (i) In general.--In subparagraph (A), the term ``outlier 
     costs'' means the inpatient and related physician and 
     ancillary costs in excess of $50,000 incurred within a given 
     12-month period for an eligible participant who resides in a 
     rural area.
       (ii) Inclusion in only 1 period.--Outlier costs may not be 
     included in more than one 12-month period for purposes of 
     calculating an outlier expense payment under subparagraph 
     (C).
       (C) Outlier expense payment.--
       (i) Payment for outlier costs.--Subject to clause (ii), in 
     the case of a rural PACE pilot site that has incurred outlier 
     costs for an eligible participant, the rural PACE pilot site 
     shall receive an outlier expense payment equal to 80 percent 
     of such costs.
       (ii) Limitations.--

       (I) Costs incurred per eligible participant.--The total 
     amount of outlier expense payments made under clause (i) to a 
     rural PACE pilot site for outlier costs incurred with respect 
     to an eligible participant shall not exceed $100,000 for the 
     12-month period used to calculate the payment.
       (II) Costs incurred per provider.--No rural PACE pilot site 
     may receive more than $500,000 in total outlier expense 
     payments in a 12-month period.
       (III) Limitation of outlier cost reimbursement period.--A 
     rural PACE pilot site shall only receive outlier expense 
     payments under this subparagraph with respect to outlier 
     costs incurred during the first 3 years of the site's 
     operation.

       (D) Requirement to access risk reserves prior to payment.--
     A rural PACE pilot site shall access and exhaust any risk 
     reserves held or arranged for the provider (other than 
     revenue or reserves maintained to satisfy the requirements of 
     section 460.80(c) of title 42, Code of Federal Regulations) 
     and any working capital established through a site 
     development grant awarded under subsection (b)(1), prior to 
     receiving any payment from the outlier fund.
       (E) Appropriation.--
       (i) In general.--Out of funds in the Treasury not otherwise 
     appropriated, there are appropriated to the Secretary to 
     carry out this subsection for the period of fiscal years 2006 
     through 2007, $10,000,000.
       (ii) Availability.--Funds appropriated under clause (i) 
     shall remain available for expenditure through fiscal year 
     2010.

[[Page 26747]]

       (d) Evaluation of PACE Providers Serving Rural Service 
     Areas.--Not later than 60 months after the date of enactment 
     of this Act, the Secretary shall submit a report to Congress 
     containing an evaluation of the experience of rural PACE 
     pilot sites.
       (e) Amounts in Addition to Payments under Social Security 
     Act.--Any amounts paid under the authority of this section to 
     a PACE provider shall be in addition to payments made to the 
     provider under section 1894 or 1934 of the Social Security 
     Act (42 U.S.C. 1395eee; 1396u-4).

     SEC. 6114. WAIVER OF PART B LATE ENROLLMENT PENALTY FOR 
                   CERTAIN INTERNATIONAL VOLUNTEERS.

       (a) In General.--
       (1) Waiver of penalty.--Section 1839(b)(42 U.S.C. 1395r(b)) 
     is amended in the second sentence by inserting the following 
     before the period at the end: ``or months for which the 
     individual can demonstrate that the individual was an 
     individual described in section 1837(k)(3)''.
       (2) Special enrollment period.--
       (A) In general.--Section 1837 (42 U.S.C. 1395p) is amended 
     by adding at the end the following new subsection:
       ``(k)(1) In the case of an individual who--
       ``(A) at the time the individual first satisfies paragraph 
     (1) or (2) of section 1836, is described in paragraph (3), 
     and has elected not to enroll (or to be deemed enrolled) 
     under this section during the individual's initial enrollment 
     period; or
       ``(B) has terminated enrollment under this section during a 
     month in which the individual is described in paragraph (3),

     there shall be a special enrollment period described in 
     paragraph (2).
       ``(2) The special enrollment period referred to in 
     paragraph (1) is the 6-month period beginning on the first 
     day of the month which includes the date that the individual 
     is no longer described in paragraph (3).
       ``(3) For purposes of paragraph (1), an individual 
     described in this paragraph is an individual that is serving 
     as a volunteer outside of the United States through a 
     program--
       ``(A) that covers at least a 12-month period; and
       ``(B) that is sponsored by an organization described in 
     section 501(c)(3) of the Internal Revenue Code of 1986 and 
     exempt from taxation under section 501(a) of such Code.''.
       (B) Coverage period.--Section 1838 (42 U.S.C. 1395q) is 
     amended by adding at the end the following new subsection:
       ``(f) Notwithstanding subsection (a), in the case of an 
     individual who enrolls during a special enrollment period 
     pursuant to section 1837(k), the coverage period shall begin 
     on the first day of the month following the month in which 
     the individual so enrolls.''.
       (b) Effective Date.--The amendment made by subsection 
     (a)(1) shall apply to months beginning with January 2007 and 
     the amendments made by subsection (a)(2) shall take effect on 
     January 1, 2007.

     SEC. 6115. DELIVERY OF SERVICES AT FEDERALLY QUALIFIED HEALTH 
                   CENTERS.

       (a) Coverage.--
       (1) In general.--Section 1861(aa)(3) (42 U.S.C. 
     1395x(aa)(3)) is amended--
       (A) in subparagraph (A), by striking ``, and'' and 
     inserting ``and services described in subsections (qq) and 
     (vv); and'';
       (B) in subparagraph (B), by striking ``sections 329, 330, 
     and 340'' and inserting ``section 330''; and
       (C) in the flush matter at the end, by inserting ``by the 
     center or by a health care professional under contract with 
     the center'' after ``outpatient of a Federally qualified 
     health center''.
       (2) Consolidated billing.--The first sentence of section 
     1842(b)(6)(F) (42 U.S.C. 1395u(b)(6)(F)) is amended--
       (A) by striking ``and (G)'' and inserting ``(G)''; and
       (B) by inserting before the period at the end the 
     following: ``, and (H) in the case of services described in 
     section 1861(aa)(3) that are furnished by a health care 
     professional under contract with a Federally qualified health 
     center, payment shall be made to the center''.
       (b) Technical Corrections.--Clauses (i) and (ii)(II) of 
     section 1861(aa)(4)(A) (42 U.S.C. 1395x(aa)(4)(A)) are each 
     amended by striking ``(other than subsection (h))''.
       (c) Effective Dates.--The amendments made by this section 
     shall apply to services furnished on or after January 1, 
     2006.

     SEC. 6116. TECHNICAL CORRECTION REGARDING PURCHASE AGREEMENTS 
                   FOR POWER-DRIVEN WHEELCHAIRS.

       (a) In General.--Section 1834(a)(7)(A) (42 U.S.C. 
     1395m(a)(7)(A)), as amended by section 6109 of this Act, is 
     amended--
       (1) in clause (i)(I), by striking ``Payment'' and inserting 
     ``Except as provided in clause (iii), payment''; and
       (2) by adding at the end the following new clause:
       ``(iii) Purchase agreement option for power-driven 
     wheelchairs.--

       ``(I) In general.--In the case of a power-driven 
     wheelchair, at the time the supplier furnishes the item, the 
     supplier shall offer the individual the option to purchase 
     the item, and payment for such item shall be made on a lump-
     sum basis if the individual exercises such option.
       ``(II) Maintenance and servicing.--In the case of a power-
     driven wheelchair for which a purchase agreement has been 
     entered into under subclause (I), maintenance and servicing 
     payments shall, if the Secretary determines such payments are 
     reasonable and necessary, be made (for parts and labor not 
     covered by the supplier's or manufacturer's warranty, as 
     determined by the Secretary to be appropriate), and such 
     payments shall be in an amount determined to be appropriate 
     by the Secretary.''.

       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to items furnished on or after October 1, 2006.

     SEC. 6117. MEDICARE COVERAGE OF ULTRASOUND SCREENING FOR 
                   ABDOMINAL AORTIC ANEURYSMS; NATIONAL 
                   EDUCATIONAL AND INFORMATION CAMPAIGN.

       (a) In General.--Section 1861 (42 U.S.C. 1395x) is 
     amended--
       (1) in subsection (s)(2)--
       (A) by striking ``and'' at the end of subparagraph (Y);
       (B) by adding ``and'' at the end of subparagraph (Z); and
       (C) by adding at the end the following new subparagraph:
       ``(AA) ultrasound screening for abdominal aortic aneurysm 
     (as defined in subsection (bbb)) for an individual--
       ``(i) who receives a referral for such an ultrasound 
     screening as a result of an initial preventive physical 
     examination (as defined in section 1861(ww)(1));
       ``(ii) who has not been previously furnished such an 
     ultrasound screening under this title; and
       ``(iii) who--
       ``(I) has a family history of abdominal aortic aneurysm; or
       ``(II) manifests risk factors included in a beneficiary 
     category (not including categories related to age) 
     recommended for screening by the United States Preventive 
     Services Task Force regarding abdominal aortic aneurysms;''; 
     and
       (2) by adding at the end the following new subsection:

          ``Ultrasound Screening for Abdominal Aortic Aneurysm

       ``(bbb) The term `ultrasound screening for abdominal aortic 
     aneurysm' means--
       ``(1) a procedure using sound waves (or such other 
     procedures using alternative technologies, of commensurate 
     accuracy and cost, that the Secretary may specify) provided 
     for the early detection of abdominal aortic aneurysm; and
       ``(2) includes a physician's interpretation of the results 
     of the procedure.''.
       (b) Inclusion of Ultrasound Screening for Abdominal Aortic 
     Aneurysm in Screening Services for Which Education, 
     Counseling, and Referral Is Provided for Under Benefits for 
     Initial Preventive Physical Examination.--Section 1861(ww)(2) 
     (42 U.S.C. 1395x(ww)(2)) is amended by adding at the end the 
     following new subparagraph:
       ``(L) Ultrasound screening for abdominal aortic aneurysm as 
     defined in section 1861(bbb).''.
       (c) Payment for Ultrasound Screening for Abdominal Aortic 
     Aneurysm.--Section 1848(j)(3) (42 U.S.C. 1395w-4(j)(3)) is 
     amended by inserting ``(2)(AA),'' after ``(2)(W),''.
       (d) Frequency and Quality Standards.--Section 1862(a)(1) 
     (42 U.S.C. 1395y(a)(1)) is amended--
       (1) by striking ``and'' at the end of subparagraph (L);
       (2) by striking the semicolon at the end of subparagraph 
     (M) and inserting ``, and''; and
       (3) by adding at the end the following new subparagraph:
       ``(N) in the case of ultrasound screening for abdominal 
     aortic aneurysm--
       ``(i) which is performed more frequently than is provided 
     for under section 1861(s)(2)(AA); or
       ``(ii) which is performed by an individual or diagnostic 
     laboratory that does not meet quality assurance standards 
     that the Secretary, in consultation with national medical, 
     vascular technologist and sonographer societies, shall 
     establish, including with respect to individuals performing 
     ultrasound screening for abdominal aortic aneurysm (other 
     than physicians) and diagnostic laboratories, that the 
     individual or laboratory is certified by the appropriate 
     State licensing or certification agency or, in the case of a 
     service performed in a State that does not license or certify 
     such individuals or laboratories, by a national certification 
     or accreditation organization recognized by the Secretary;''.
       (e) Non-Application of Part B Deductible.--Section 1833(b) 
     (42 U.S.C. 1395l(b)) is amended in the first sentence--
       (1) by striking ``and (6)'' and inserting ``(6)''; and
       (2) by inserting ``, and (7) such deductible shall not 
     apply with respect to ultrasound screening for abdominal 
     aortic aneurysm (as defined in section 1861(bbb))'' before 
     the period at the end.
       (f) National Educational and Information Campaign.--
       (1) In general.--After consultation with national medical, 
     vascular technologist, and sonographer societies, the 
     Secretary of Health and Human Services shall carry out a 
     national education and information campaign to promote 
     awareness among health care practitioners and the general 
     public with respect to the importance of early detection and 
     treatment of abdominal aortic aneurysms.

[[Page 26748]]

       (2) Use of funds.--The Secretary may use amounts 
     appropriated pursuant to this subsection to make grants to 
     national medical, vascular technologist, and sonographer 
     societies (in accordance with procedures and criteria 
     specified by the Secretary) to enable them to educate 
     practitioners and providers about matters relating to such 
     aneurysms.
       (3) Authorization of Appropriations.--There is authorized 
     to be appropriated for fiscal year 2006 and each fiscal year 
     thereafter such sums as may be necessary to carry out this 
     subsection.
       (g) Effective Date.--The amendments made by this section 
     shall apply to ultrasound screenings for abdominal aortic 
     aneurysm performed on or after January 1, 2007.

     SEC. 6118. IMPROVING PATIENT ACCESS TO, AND UTILIZATION OF, 
                   COLORECTAL CANCER SCREENING UNDER MEDICARE.

       (a) Increase in Part B Reimbursement for Colorectal Cancer 
     Screening and Diagnostic Tests.--
       (1) In general.--Section 1834(d) (42 U.S.C. 1395m(d)) is 
     amended by adding at the end the following new paragraph:
       ``(4) Enhanced part b payment for colorectal cancer 
     screening and diagnostic tests.--
       ``(A) Nonfacility rates.--Notwithstanding paragraphs (2)(A) 
     and (3)(A), the Secretary shall establish national minimum 
     payment amounts for CPT codes 45378, 45380, and 45385, and 
     HCPCS codes G0105 and GO121 for items and services furnished 
     on or after January 1, 2007, which reflect a 5-percent 
     increase above the relative value units in effect as the 
     nonfacility rates for such codes on December 31, 2006, with 
     such revised payment level to apply to items and services 
     performed in a nonfacility setting.
       ``(B) Facility rates.--Notwithstanding paragraphs (2)(A) 
     and (3)(A), the Secretary shall establish national minimum 
     payment amounts for CPT codes 45378, 45380, and 45385, and 
     HCPCS codes G0105 and GO121 for items and services furnished 
     on or after January 1, 2007, which reflect a 5-percent 
     increase above the relative value units in effect as the 
     facility rates for such codes on December 31, 2006, with such 
     revised payment level to apply to items and services 
     performed in a facility setting.
       ``(C) Annual adjustments.--In the case of items and 
     services furnished on or after January 1, 2007, the payment 
     rates described in subparagraphs (A) and (B) shall, subject 
     to the minimum payment amounts established in such 
     subparagraphs, be adjusted annually as provided in section 
     1848.''.
       (2) No effect on hopd payments.--The Secretary shall not 
     take into account the provisions of section 1834(d)(4) of the 
     Social Security Act, as added by subsection (a), in 
     determining the amount of payment for any covered OPD service 
     under the prospective payment system for hospitals outpatient 
     department services under section 1833(t) of such Act (42 
     U.S.C. 1395l(t)).
       (b) Medicare Coverage of Office Visit or Consultation Prior 
     to a Screening Colonoscopy or in Conjunction With a 
     Beneficiary's Decision To Obtain Such a Screening.--
       (1) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)), 
     as amended by section 6117, is amended--
       (A) in subparagraph (Z), by striking ``and'' at the end;
       (B) in subparagraph (AA), by inserting ``and'' at the end; 
     and
       (C) by adding at the end the following new subparagraph:
       ``(BB) an outpatient office visit or consultation for the 
     purpose of beneficiary education, assuring selection of the 
     proper screening test, and securing information relating to 
     the procedure and sedation of the beneficiary, prior to a 
     colorectal cancer screening test consisting of a screening 
     colonoscopy or in conjunction with the beneficiary's decision 
     to obtain such a screening, regardless of whether such 
     screening is medically indicated with respect to the 
     beneficiary;''.
       (2) Payment.--
       (A) In general.--Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) 
     is amended--
       (i) by striking ``and'' before ``(V)''; and
       (ii) by inserting before the semicolon at the end the 
     following: ``, and (W) with respect to an outpatient office 
     visit or consultation under section 1861(s)(2)(BB), the 
     amounts paid shall be 80 percent of the lesser of the actual 
     charge or the amount established under section 1848''.
       (B) Payment under physician fee schedule.--Section 
     1848(j)(3) (42 U.S.C. 1395w-4(j)(3)), as amended by section 
     6117, is amended by inserting ``(2)(BB),'' after 
     ``(2)(AA),''.
       (C) Requirement for establishment of payment amount under 
     physician fee schedule.--Section 1834(d) (42 U.S.C. 
     1395m(d)), as amended by subsection (a), is amended by adding 
     at the end the following new paragraph:
       ``(5) Payment for outpatient office visit or consultation 
     prior to screening colonoscopy.--With respect to an 
     outpatient office visit or consultation under section 
     1861(s)(2)(BB), payment under section 1848 shall be 
     consistent with the payment amounts for CPT codes 99203 and 
     99243.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to items and services provided on or after 
     January 1, 2007.
       (c) Waiver of Deductible for Colorectal Cancer Screening 
     Tests.--
       (1) In general.--Section 1833(b) (42 U.S.C. 1395l(b)), as 
     amended by section 6117, is amended in the first sentence--
       (A) by striking ``and'' before ``(7)''; and
       (B) by inserting before the period at the end the 
     following: ``, and (8) such deductible shall not apply with 
     respect to colorectal cancer screening tests (as described in 
     section 1861(pp)(1))''.
       (2) Conforming amendments.--Paragraphs (2)(C)(ii) and 
     (3)(C)(ii) of section 1834(d) (42 U.S.C. 1395m(d)) are each 
     amended--
       (A) by striking ``deductible and'' in the heading; and
       (B) in subclause (I), by striking ``deductible or'' each 
     place it appears.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to items and services furnished on or after 
     January 1, 2007.

     SEC. 6119. COVERAGE OF MARRIAGE AND FAMILY THERAPIST SERVICES 
                   AND MENTAL HEALTH COUNSELOR SERVICES UNDER PART 
                   B OF THE MEDICARE PROGRAM.

       (a) Coverage of Services.--
       (1) In general.--Section 1861(s)(2) (42 U.S.C. 
     1395x(s)(2)), as amended by section 6118(b), is amended--
       (A) in subparagraph (AA), by striking ``and'' after the 
     semicolon at the end;
       (B) in subparagraph (BB), by inserting ``and'' after the 
     semicolon at the end; and
       (C) by adding at the end the following new subparagraph:
       ``(CC) marriage and family therapist services (as defined 
     in subsection (ccc)(1)) and mental health counselor services 
     (as defined in subsection (ccc)(3));''.
       (2) Definitions.--Section 1861 (42 U.S.C. 1395x), as 
     amended by section 6117, is amended by adding at the end the 
     following new subsection:

     ``Marriage and Family Therapist Services; Marriage and Family 
  Therapist; Mental Health Counselor Services; Mental Health Counselor

       ``(ccc)(1) The term `marriage and family therapist 
     services' means services performed by a marriage and family 
     therapist (as defined in paragraph (2)) for the diagnosis and 
     treatment of mental illnesses, which the marriage and family 
     therapist is legally authorized to perform under State law 
     (or the State regulatory mechanism provided by State law) of 
     the State in which such services are performed, as would 
     otherwise be covered if furnished by a physician or as an 
     incident to a physician's professional service, but only if 
     no facility or other provider charges or is paid any amounts 
     with respect to the furnishing of such services.
       ``(2) The term `marriage and family therapist' means an 
     individual who--
       ``(A) possesses a master's or doctoral degree which 
     qualifies for licensure or certification as a marriage and 
     family therapist pursuant to State law;
       ``(B) after obtaining such degree has performed at least 2 
     years of clinical supervised experience in marriage and 
     family therapy; and
       ``(C) in the case of an individual performing services in a 
     State that provides for licensure or certification of 
     marriage and family therapists, is licensed or certified as a 
     marriage and family therapist in such State.
       ``(3) The term `mental health counselor services' means 
     services performed by a mental health counselor (as defined 
     in paragraph (4)) for the diagnosis and treatment of mental 
     illnesses which the mental health counselor is legally 
     authorized to perform under State law (or the State 
     regulatory mechanism provided by the State law) of the State 
     in which such services are performed, as would otherwise be 
     covered if furnished by a physician or as incident to a 
     physician's professional service, but only if no facility or 
     other provider charges or is paid any amounts with respect to 
     the furnishing of such services.
       ``(4) The term `mental health counselor' means an 
     individual who--
       ``(A) possesses a master's or doctor's degree in mental 
     health counseling or a related field;
       ``(B) after obtaining such a degree has performed at least 
     2 years of supervised mental health counselor practice; and
       ``(C) in the case of an individual performing services in a 
     State that provides for licensure or certification of mental 
     health counselors or professional counselors, is licensed or 
     certified as a mental health counselor or professional 
     counselor in such State.''.
       (3) Provision for payment under part b.--Section 
     1832(a)(2)(B) (42 U.S.C. 1395k(a)(2)(B)) is amended by adding 
     at the end the following new clause:
       ``(v) marriage and family therapist services and mental 
     health counselor services;''.
       (4) Amount of payment.--Section 1833(a)(1) (42 U.S.C. 
     1395l(a)(1)), as amended by section 6118, is amended--
       (A) by striking ``and (W)'' and inserting ``(W)''; and
       (B) by inserting before the semicolon at the end the 
     following: ``, and (X) with respect to marriage and family 
     therapist services and mental health counselor services under

[[Page 26749]]

     section 1861(s)(2)(CC), the amounts paid shall be 80 percent 
     of the lesser of the actual charge for the services or 75 
     percent of the amount determined for payment of a 
     psychologist under subparagraph (L)''.
       (5) Exclusion of marriage and family therapist services and 
     mental health counselor services from skilled nursing 
     facility prospective payment system.--Section 
     1888(e)(2)(A)(ii) (42 U.S.C. 1395yy(e)(2)(A)(ii)) is amended 
     by inserting ``marriage and family therapist services (as 
     defined in section 1861(ccc)(1)), mental health counselor 
     services (as defined in section 1861(ccc)(3)),'' after 
     ``qualified psychologist services,''.
       (6) Inclusion of marriage and family therapists and mental 
     health counselors as practitioners for assignment of 
     claims.--Section 1842(b)(18)(C) (42 U.S.C. 1395u(b)(18)(C)) 
     is amended by adding at the end the following new clauses:
       ``(vii) A marriage and family therapist (as defined in 
     section 1861(ccc)(2)).
       ``(viii) A mental health counselor (as defined in section 
     1861(ccc)(4)).''.
       (b) Coverage of Certain Mental Health Services Provided in 
     Certain Settings.--
       (1) Rural health clinics and federally qualified health 
     centers.--Section 1861(aa)(1)(B) (42 U.S.C. 1395x(aa)(1)(B)) 
     is amended by striking ``or by a clinical social worker (as 
     defined in subsection (hh)(1)),'' and inserting ``, by a 
     clinical social worker (as defined in subsection (hh)(1)), by 
     a marriage and family therapist (as defined in subsection 
     (ccc)(2)), or by a mental health counselor (as defined in 
     subsection (ccc)(4)),''.
       (2) Hospice programs.--Section 1861(dd)(2)(B)(i)(III) (42 
     U.S.C. 1395x(dd)(2)(B)(i)(III)) is amended by inserting ``or 
     one marriage and family therapist (as defined in subsection 
     (bbb)(2))'' after ``social worker''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to services furnished on or after 
     January 1, 2007.

     SEC. 6120. QUALITY MEASUREMENT SYSTEMS AMENDMENTS.

       Section 1860E-1, as added by section 6110(a)(2), is 
     amended--
       (1) in subsection (b)(1)--
       (A) in subparagraph (B)--
       (i) in clause (vi), by striking ``and'' at the end;
       (ii) in clause (vii), by striking the period at the end and 
     inserting ``; and''; and
       (iii) by adding at the end the following new clause:
       ``(viii) measures that address conditions where there is 
     the greatest disparity of health care provided and health 
     outcomes between majority and minority groups.''; and
       (B) in subparagraph (E)--
       (i) in clause (v), by striking ``and'' at the end;
       (ii) by redesignating clause (vi) as clause (vii); and
       (iii) by inserting after clause (v) the following new 
     clause:
       ``(vi) allows quality measures that are reported to be 
     stratified according to patient group characteristics, and'';
       (2) in subsection (c)(4)--
       (A) in subparagraph (B), by striking ``and'' at the end;
       (B) in subparagraph (C), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following new subparagraph:
       ``(D) The report commissioned by Congress from the 
     Institute of Medicine of the National Academy of Sciences, 
     titled `Unequal Treatment: Confronting Racial and Ethnic 
     Disparities in Health Care'.''; and
       (3) in subsection (d)(2), by inserting ``experts in 
     minority health,'' after ``government agencies,''.

     TITLE VII--COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                    Subtitle A--Education Provisions

                          CHAPTER 1--EDUCATION

     SEC. 7101. PROVISIONAL GRANT ASSISTANCE PROGRAM.

       (a) Amendment.--Subpart 1 of part A of title IV of the 
     Higher Education Act of 1965 (20 U.S.C. 1070a) is amended by 
     adding at the end the following:

     ``SEC. 401A. PROVISIONAL GRANT ASSISTANCE PROGRAM.

       ``(a) Grants.--
       ``(1) In general.--From amounts appropriated under 
     subsection (e) for a fiscal year and subject to subsection 
     (b), the Secretary shall award grants to students (which 
     shall be known as `ProGAP awards') in the same manner as the 
     Secretary awards grants to students under section 401, except 
     that--
       ``(A) at the beginning of each award year, the Secretary 
     shall establish a maximum and minimum award level based on 
     amounts made available under subsection (e);
       ``(B) the Secretary shall only award grants under this 
     section to students eligible for a grant under section 401 
     for the award year; and
       ``(C) when determining eligibility for the awards, the 
     Secretary shall consider only those students who are eligible 
     for a grant under section 401, as of June 30 of the award 
     year for which the determination is made.
       ``(D) the Secretary--
       ``(i) shall determine if an increase in the amount of a 
     grant under this section is needed to help encourage students 
     to pursue courses of study that are important to the current 
     and future national, homeland, and economic security needs of 
     the United States; and
       ``(ii) after making the determination described in clause 
     (i), may increase the maximum and minimum award level 
     established under subparagraph (A) by not more than 25 
     percent, for students eligible for a grant under this section 
     who are pursuing a degree with a major in mathematics, 
     science, technology, engineering, or a foreign language that 
     is critical to the national security of the United States; 
     and
       ``(E) not later than September 30 of each fiscal year, the 
     Secretary shall notify Congress, in writing, of the 
     Secretary's determination with respect to subparagraph (D)(i) 
     and of any increase in award levels under subparagraph 
     (D)(ii).
       ``(2) Students with the greatest need.--The Secretary shall 
     ensure grants are awarded under this section to students with 
     the greatest need as determined in accordance with section 
     471.
       ``(b) Cost of Attendance Limitation.--A grant awarded under 
     this section for an award year shall be awarded in an amount 
     that does not exceed--
       ``(1) the student's cost of attendance for the award year; 
     less
       ``(2) an amount equal to the expected family contribution 
     for that student for the award year.
       ``(c) Supplement Not Supplant.--Grants awarded from funds 
     made available under subsection (e) shall be used to 
     supplement, and not supplant, other Federal, State, or 
     institutional grant funds.
       ``(d) Use of Excess Funds.--
       ``(1) 15 percent or less.--If, at the end of a fiscal year, 
     the funds available for making grant payments under this 
     section exceed the amount necessary to make the grant 
     payments required under this section to eligible students by 
     15 percent or less, then all of the excess funds shall remain 
     available for making grant payments under this section during 
     the next succeeding fiscal year.
       ``(2) More than 15 percent.--If, at the end of a fiscal 
     year, the funds available for making grant payments under 
     this section exceed the amount necessary to make the grant 
     payments required under this section to eligible students by 
     more than 15 percent, then all of such funds shall remain 
     available for making such grant payments but grant payments 
     may be made under this paragraph only with respect to awards 
     for that fiscal year.''.
       ``(e) Authorization and Appropriation of Funds.--There are 
     authorized to be appropriated, and there are appropriated, 
     out of any money in the Treasury not otherwise appropriated, 
     for the Department of Education to carry out this section and 
     section 401B--
       ``(1) $1,897,000,000 for fiscal year 2006;
       ``(2) $1,901,000,000 for fiscal year 2007;
       ``(3) $1,899,000,000 for fiscal year 2008;
       ``(4) $1,898,000,000 for fiscal year 2009; and
       ``(5) $1,897,000,000 for fiscal year 2010.
       ``(f) Sunset Provision.--This section shall be effective 
     with respect to amounts appropriated for fiscal year 2006 and 
     each of the 4 succeeding fiscal years.''.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that the amounts appropriated to carry out sections 401A and 
     401B of the Higher Education Act of 1965 are the result of 
     the savings generated by the amendments made by this chapter.

     SEC. 7102. NATIONAL SMART GRANTS.

       Subpart 1 of part A of title IV of the Higher Education Act 
     of 1965 (20 U.S.C. 1070a) is further amended by adding after 
     section 401A (as added by section 7101):

     ``SEC. 401B. NATIONAL SMART GRANTS.

       ``(a) Findings.--Congress makes the following findings:
       ``(1) If the United States is to remain a world leader in 
     the global economy, its college students must have the 
     training they need to compete for the best jobs of the 21st 
     century.
       (2) The United States intelligence community faces major 
     shortages in foreign languages critical to national security, 
     and will also require major incentives to fill projected 
     workforce needs.
       ``(3) Increasingly, the best jobs of the 21st century will 
     require baccalaureate degrees in the sciences, mathematics, 
     technology, engineering, and foreign languages critical to 
     national security, or be generated by people who have such 
     degrees.
       ``(4) Congress should establish a National Science and 
     Mathematics Access to Retain Talent (SMART) grant program to 
     meet the goals described in paragraphs (1) through (3).
       ``(b) Purpose.--The purpose of this section is to increase 
     the number of postsecondary students from low-income 
     backgrounds who are enrolled in studies leading to 
     baccalaureate degrees in physical, life, or computer 
     sciences, mathematics, technology, engineering, and foreign 
     languages critical to national security.
       ``(c) Grants Authorized.--From amounts appropriated under 
     section 401A(c) for a fiscal year, the Secretary shall award 
     grants to eligible students to assist the eligible students 
     in paying their college education expenses.
       ``(d) Designation.--A grant under this section shall be 
     known as a `National Science

[[Page 26750]]

     and Mathematics Access to Retain Talent Grant' or a `National 
     SMART Grant'.
       ``(e) Definition of Eligible Student.--In this section the 
     term `eligible student' means a student who, for the academic 
     year for which the determination is made--
       ``(1) is eligible for a Federal Pell Grant; and
       ``(2) is in the student's 3rd or 4th year at an institution 
     of higher education majoring in--
       ``(A) mathematics, science, technology, or engineering (as 
     determined by the Secretary pursuant to regulations); or
       ``(B) a foreign language that the Secretary, in 
     consultation with the Director of National Intelligence, 
     determines is critical to the national security of the United 
     States.
       ``(f) Grant Amount.--The Secretary shall award a grant 
     under this section in an amount that does not exceed $1,500 
     for an academic year.
       ``(g) Funding Rule.--The Secretary shall use not more than 
     $450,000,000 of the funds appropriated under section 401A(c) 
     for each of the fiscal years 2006 through 2010 to carry out 
     this section.
       ``(h) Unobligated Funds Available for Federal Grant 
     Assistance.--The Secretary shall make any funds made 
     available under subsection (g) for a fiscal year that remain 
     unobligated at the end of the fiscal year available to carry 
     out section 401A.
       ``(i) Matching Assistance.--An institution of higher 
     education may, from funds provided from private sources, 
     provide additional assistance to a student receiving a grant 
     under this section, except that the total assistance provided 
     under this title to a student shall not exceed the student's 
     cost of attendance.''.

     SEC. 7103. LOAN LIMITS.

       (a) Federal Insurance Limits.--Section 425(a)(1)(A) of the 
     Higher Education Act of 1965 (20 U.S.C. 1075(a)(1)(A)) is 
     amended--
       (1) in clause (i)(I), by striking ``$2,625'' and inserting 
     ``$3,500''; and
       (2) in clause (ii)(I), by striking ``$3,500'' and inserting 
     ``$4,500''.
       (b) Guarantee Limits.--Section 428(b)(1)(A) of the Higher 
     Education Act of 1965 (20 U.S.C. 1078(b)(1)(A)) is amended--
       (1) in clause (i)(I), by striking ``$2,625'' and inserting 
     ``$3,500''; and
       (2) in clause (ii)(I), by striking ``$3,500'' and inserting 
     ``$4,500''.
       (c) Federal PLUS Loans.--Section 428B of the Higher 
     Education Act of 1965 (20 U.S.C. 1078-2) is amended--
       (1) in subsection (a)(1)--
       (A) in the matter preceding subparagraph (A), by striking 
     ``Parents'' and inserting ``A graduate or professional 
     student or the parents'';
       (B) in subparagraph (A), by striking ``the parents'' and 
     inserting ``the graduate or professional student or the 
     parents''; and
       (C) in subparagraph (B), by striking ``the parents'' and 
     inserting ``the graduate or professional student or the 
     parents'';
       (2) in subsection (b), by striking ``any parent'' and 
     inserting ``any graduate or professional student or any 
     parent'';
       (3) in subsection (c)(2), by striking ``parent'' and 
     inserting ``graduate or professional student or parent''; and
       (4) in subsection (d)(1), by striking ``the parent'' and 
     inserting ``the graduate or professional student or the 
     parent''.
       (d) Unsubsidized Stafford Loans for Graduate or 
     Professional Students.--Section 428H(d)(2) of the Higher 
     Education Act of 1965 (20 U.S.C. 1078-8(d)(2)) is amended--
       (1) in subparagraph (C), by striking ``$10,000'' and 
     inserting ``$12,000''; and
       (2) in subparagraph (D)--
       (A) in clause (i), by striking ``$5,000'' and inserting 
     ``$7,000''; and
       (B) in clause (ii), by striking ``$5,000'' and inserting 
     ``$7,000''.

     SEC. 7104. PLUS LOAN INTEREST RATES AND ZERO SPECIAL 
                   ALLOWANCE PAYMENT.

       (a) PLUS Loans.--Section 427A(l)(2) of the Higher Education 
     Act of 1965 (20 U.S.C. 1077a(l)(2)) is amended by striking 
     ``7.9 percent'' and inserting ``8.5 percent''.
       (b) Conforming Amendments for Special Allowances.--
       (1) Amendments.--Subparagraph (I) of section 438(b)(2) of 
     the Higher Education Act of 1965 (20 U.S.C. 1087-1(b)(2)) is 
     amended--
       (A) in clause (iv), by striking ``, subject to clause (vi) 
     of this subparagraph'';
       (B) in clause (v), by striking ``July 1, 2006'' each place 
     it appears and inserting ``April 1, 2006''; and
       (C) by striking clauses (vi) and (vii) and inserting the 
     following:
       ``(vi) Recapture of excess interest.--

       ``(I) Excess credited.--With respect to a loan on which the 
     applicable interest rate is determined under subsection (k) 
     or (l) of section 427A and for which the first disbursement 
     of principal is made on or after April 1, 2006, if the 
     applicable interest rate for any 3-month period exceeds the 
     special allowance support level applicable to such loan under 
     this subparagraph for such period, then an adjustment shall 
     be made by calculating the excess interest in the amount 
     computed under subclause (II) of this clause, and by 
     crediting the excess interest to the Government not less 
     often than annually.

       ``(II) Calculation of excess.--The amount of any adjustment 
     of interest on a loan to be made under this subsection for 
     any quarter shall be equal to--

       ``(aa) the applicable interest rate minus the special 
     allowance support level determined under this subparagraph; 
     multiplied by
       ``(bb) the average daily principal balance of the loan (not 
     including unearned interest added to principal) during such 
     calendar quarter; divided by
       ``(cc) four.

       ``(III) Special allowance support level.--For purposes of 
     this clause, the term `special allowance support level' 
     means, for any loan, a number expressed as a percentage equal 
     to the sum of the rates determined under subclauses (I) and 
     (III) of clause (i), and applying any substitution rules 
     applicable to such loan under clauses (ii), (iii), and (iv) 
     in determining such sum.''.

       (2) Effective date.--The amendments made by this subsection 
     shall not apply with respect to any special allowance payment 
     made under section 438 of the Higher Education Act of 1965 
     (20 U.S.C 1087-1) before April 1, 2006.

     SEC. 7105. REDUCTION OF LENDER INSURANCE REIMBURSEMENT RATES.

       (a) Amendment.--Subparagraph (G) of section 428(b)(1) of 
     the Higher Education Act of 1965 (20 U.S.C. 1078(b)(1)) is 
     amended to read as follows:
       ``(G) insures 97 percent of the unpaid principal of loans 
     insured under the program;''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to any loan made, insured, or 
     guaranteed under part B of title IV of the Higher Education 
     Act of 1965 (20 U.S.C. 1071 et seq.) for which the first 
     disbursement is made on or after January 1, 2006.

     SEC. 7106. GUARANTY AGENCY ORIGINATION FEE.

       (a) Amendment.--Section 428(b)(1)(H) of the Higher 
     Education Act of 1965 (20 U.S.C. 1078(b)(1)(H)) is amended to 
     read as follows:
       ``(H) provides for the collection, and the deposit in the 
     Federal Fund established under section 422A(a), of a guaranty 
     agency origination fee of 1.0 percent of each disbursement of 
     the proceeds of the loan, which fee may be provided from 
     funds in the guaranty agency's operating fund under section 
     422B or from other non-Federal funds;''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall be effective with respect to any loan disbursed under 
     part B of title IV of the Higher Education Act of 1965 on or 
     after April 1, 2006.

     SEC. 7107. DEFERMENT OF STUDENT LOANS FOR MILITARY SERVICE.

       (a) Federal Family Education Loans.--Section 428(b)(1)(M) 
     of the Higher Education Act of 1965 (20 U.S.C. 1078(b)(1)(M)) 
     is amended--
       (1) by striking ``or'' at the end of clause (ii);
       (2) by redesignating clause (iii) as clause (iv); and
       (3) by inserting after clause (ii) the following new 
     clause:
       ``(iii) not in excess of 3 years during which the 
     borrower--

       ``(I) is serving on active duty during a war or other 
     military operation or national emergency; or
       ``(II) is performing qualifying National Guard duty during 
     a war or other military operation or national emergency; 
     or''.

       (b) Direct Loans.--Section 455(f)(2) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087e(f)(2)) is amended--
       (1) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (2) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) not in excess of 3 years during which the borrower--
       ``(i) is serving on active duty during a war or other 
     military operation or national emergency; or
       ``(ii) is performing qualifying National Guard duty during 
     a war or other military operation or national emergency; 
     or''.
       (c) Perkins Loans.--Section 464(c)(2)(A) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087dd(c)(2)(A)) is 
     amended--
       (1) by redesignating clauses (iii) and (iv) as clauses (iv) 
     and (v), respectively; and
       (2) by inserting after clause (ii) the following new 
     clause:
       ``(iii) not in excess of 3 years during which the 
     borrower--

       ``(I) is serving on active duty during a war or other 
     military operation or national emergency; or
       ``(II) is performing qualifying National Guard duty during 
     a war or other military operation or national emergency;''.

       (d) Definitions.--Section 481 of the Higher Education Act 
     of 1965 (20 U.S.C. 1088) is amended by adding at the end the 
     following new subsection:
       ``(d) Definitions for Military Defer-
     ments.--For purposes of parts B, D, and E of this title:
       ``(1) Active duty.--The term `active duty' has the meaning 
     given such term in section 101(d)(1) of title 10, United 
     States Code, except that such term does not include active 
     duty for training or attendance at a service school.
       ``(2) Military operation.--The term `military operation' 
     means a contingency operation as such term is defined in 
     section 101(a)(13) of title 10, United States Code.

[[Page 26751]]

       ``(3) National emergency.--The term `national emergency' 
     means the national emergency by reason of certain terrorist 
     attacks declared by the President on September 14, 2001, or 
     subsequent national emergencies declared by the President by 
     reason of terrorist attacks.
       ``(4) Serving on active duty.--The term `serving on active 
     duty during a war or other military operation or national 
     emergency' means service by an individual who is--
       ``(A) a Reserve of an Armed Force ordered to active duty 
     under section 12301(a), 12301(g), 12302, 12304, or 12306 of 
     title 10, United States Code, or any retired member of an 
     Armed Force ordered to active duty under section 688 of such 
     title, for service in connection with a war or other military 
     operation or national emergency, regardless of the location 
     at which such active duty service is performed; and
       ``(B) any other member of an Armed Force on active duty in 
     connection with such emergency or subsequent actions or 
     conditions who has been assigned to a duty station at a 
     location other than the location at which such member is 
     normally assigned.
       ``(5) Qualifying national guard duty.--The term `qualifying 
     National Guard duty during a war or other military operation 
     or national emergency' means service as a member of the 
     National Guard on full-time National Guard duty (as defined 
     in section 101(d)(5) of title 10, United States Code) under a 
     call to active service authorized by the President or the 
     Secretary of Defense for a period of more than 30 consecutive 
     days under section 502(f) of title 32, United States Code, in 
     connection with a war, other military operation, or a 
     national emergency declared by the President and supported by 
     Federal funds.''.
       (e) Rule of Construction.--Nothing in the amendments made 
     by this section shall be construed to authorize any refunding 
     of any repayment of a loan.
       (f) Effective Date.--The amendments made by this section 
     shall apply with respect to loans for which the first 
     disbursement is made on or after July 1, 2001.

     SEC. 7108. RECOVERY THROUGH CONSOLIDATION.

       Section 428(c) of the Higher Education Act of 1965 (20 
     U.S.C 1078(c)) is amended--
       (1) in paragraph (2)(A)--
       (A) by inserting ``(i)'' after ``including''; and
       (B) by inserting before the semicolon at the end the 
     following: ``and (ii) requirements establishing procedures to 
     preclude consolidation lending from being an excessive 
     proportion of guaranty agency recoveries on defaulted loans 
     under this part'';
       (2) in paragraph (2)(D), by striking ``paragraph (6)'' and 
     inserting ``paragraph (6)(A)''; and
       (3) in paragraph (6)--
       (A) by inserting ``(A)'' before ``For the purposes of 
     paragraph (2)(D),'';
       (B) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii), respectively; and
       (C) by adding at the end the following new subparagraphs:
       ``(B) Guaranty agency obligations.--A guaranty agency 
     shall--
       ``(i) on or after October 1, 2006--
       ``(I) not charge the borrower collection costs in an amount 
     in excess of 18.5 percent of the outstanding principal and 
     interest of a defaulted loan that is paid off through 
     consolidation by the borrower under this title; and
       ``(II) remit to the Secretary a portion of the collection 
     charge under subclause (I) equal to 8.5 percent of the 
     outstanding principal and interest of such defaulted loan; 
     and
       ``(ii) on and after October 1, 2009, remit to the Secretary 
     the entire amount charged under clause (i)(I) with respect to 
     each defaulted loan that is paid off with excess 
     consolidation proceeds.
       ``(C) Excess consolidation proceeds.--For purposes of 
     subparagraph (B), the term `excess consolidation proceeds' 
     means, with respect to any guaranty agency for any Federal 
     fiscal year beginning on or after October 1, 2009, the 
     proceeds of consolidation of defaulted loans under this title 
     that exceed 45 percent of the agency's total collections on 
     defaulted loans in such Federal fiscal year.''.

     SEC. 7109. SINGLE HOLDER RULE.

       Subparagraph (A) of section 428C(b)(1) of the Higher 
     Education Act of 1965 (20 U.S.C. 1078-3(b)(1)) is amended by 
     striking ``and (i)'' and all that follows through ``so 
     selected for consolidation)''.

     SEC. 7110. DEFAULT REDUCTION PROGRAM.

       Section 428F(a)(1) of the Higher Education Act of 1965 (20 
     U.S.C. 1078-6(a)(1)) is amended--
       (1) in subparagraph (A), by striking ``consecutive payments 
     for 12 months'' and inserting ``9 payments made within 20 
     days of the due date during 10 consecutive months'';
       (2) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (3) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) A guaranty agency may charge the borrower and retain 
     collection costs in an amount not to exceed 18.5 percent of 
     the outstanding principal and interest at the time of sale of 
     a loan rehabilitated under subparagraph (A).''.

     SEC. 7111. REQUIREMENTS FOR DISBURSEMENTS OF STUDENT LOANS.

       Section 428G of the Higher Education Act of 1965 (20 U.S.C. 
     1078-7) is amended--
       (1) in subsection (a)(3), by adding at the end the 
     following: ``Notwithstanding section 422(d) of the Higher 
     Education Amendments of 1998, this paragraph shall be 
     effective beginning on the date of enactment of the Higher 
     Education Amendments of 2005.''; and
       (2) in subsection (b)(1), by adding at the end the 
     following: ``Notwithstanding section 422(d) of the Higher 
     Education Amendments of 1998, the second sentence of this 
     paragraph shall be effective beginning on the date of 
     enactment of the Higher Education Amendments of 2005.''.

     SEC. 7112. SPECIAL INSURANCE AND REINSURANCE RULES.

       (a) Repeal.--Section 428I of the Higher Education Act of 
     1965 (20 U.S.C. 1078-9) is repealed.
       (b) Conforming Amendments.--Part A of title IV of the 
     Higher Education Act of 1965 (20 U.S.C.1070 et seq.) is 
     amended--
       (1) in section 428(c)(1)--
       (A) by striking subparagraph (D); and
       (B) by redesignating subparagraphs (E) and (F) as 
     subparagraphs (D) and (E), respectively; and
       (2) in section 438(b)(5), by striking the matter following 
     subparagraph (B).

     SEC. 7113. SCHOOL AS LENDER MORATORIUM.

       Section 435(d)(2) of the Higher Education Act of 1965 (20 
     U.S.C. 1085(d)(2)) is amended--
       (1) in subparagraph (E), by striking ``and'' after the 
     semicolon; and
       (2) by inserting before the matter following subparagraph 
     (F) (as amended by section 7390) the following:
       ``(G) shall have met the requirements of subparagraphs (A) 
     through (F), and made loans under this part, on or before 
     August 31, 2005;
       ``(H) shall hold each loan the eligible institution makes 
     under this part to a student enrolled at the eligible 
     institution until the student enters into a grace period 
     described in section 427(a)(2)(B) or 428(b)(7);
       ``(I) shall use the proceeds from the sale of a loan made 
     under this part, for need based grant aid programs, except 
     that such proceeds--
       ``(i) shall not be used to provide a grant to a student for 
     an academic year in an amount that is more than the student's 
     cost of attendance for the academic year; and
       ``(ii) shall supplement and not supplant other Federal, 
     State, and institutional grant aid; and
       ``(J) shall not be a foundation or alumni organization;''.

     SEC. 7114. PERMANENT REDUCTION OF SPECIAL ALLOWANCE PAYMENTS 
                   FOR LOANS FROM THE PROCEEDS OF TAX EXEMPT 
                   ISSUES.

       (a) Technical Clarification.--The matter preceding 
     paragraph (1) of section 2 of the Taxpayer-Teacher Protection 
     Act of 2004 (Public Law 108-409; 118 Stat. 2299) is amended 
     by inserting ``of the Higher Education Act of 1965'' after 
     ``Section 438(b)(2)(B)''. The amendment made by the preceding 
     sentence shall be effective as if enacted on October 30, 
     2004.
       (b) Amendment.--Section 438(b)(2)(B) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087-1(b)(2)(B)) is 
     amended--
       (1) in clause (iv), by striking ``and before January 1, 
     2006,''; and
       (2) in clause (v)(II)--
       (A) in item (aa), by striking ``and before January 1, 
     2006,'';
       (B) in item (bb), by striking ``and before January 1, 
     2006,''; and
       (C) in item (cc), by striking ``and before January 1, 
     2006,''.

     SEC. 7115. SPECIAL ALLOWANCES.

       (a) Origination Fees.--Paragraph (2) of section 438(c) of 
     the Higher Education Act of 1965 (20 U.S.C. 1087-1(c)) is 
     amended--
       (1) by striking the designation and heading of such 
     paragraph and inserting the following:
       ``(2) Amount of origination fees.--
       ``(A) In general.--''; and
       (2) by adding at the end the following new subparagraph:
       ``(B) Subsequent reductions.--Subparagraph (A) shall be 
     applied to loans made under this part (other than loans made 
     under sections 428C and 439(o)) by substituting `2.50 
     percent' for `3.0 percent' with respect to loans for which 
     the first disbursement of principal is made on or after July 
     1, 2007.''.
       (b) Loan Fees From Lenders.--
       (1) Amendment.--Paragraph (2) of section 438(d)(2) of the 
     Higher Education Act of 1965 (20 U.S.C. 1087-1(d)) is amended 
     to read as follows:
       ``(2) Amount of loan fees.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     with respect to any loan made under this part for which the 
     first disbursement was made on or after October 1, 1993, the 
     amount of the loan fee that shall be deducted under paragraph 
     (1) shall be equal to 0.50 percent of the principal amount of 
     the loan.
       ``(B) Consolidation loans.--With respect to any loan made 
     under section 428C on or after April 1, 2006, the amount of 
     the loan fee that shall be deducted under paragraph (1) shall 
     be equal to 1.0 percent of the principal amount of the 
     loan.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply with respect to any loan made, insured, or 
     guaranteed under part B of title IV of the Higher

[[Page 26752]]

     Education Act of 1965 (20 U.S.C. 1071 et seq.) for which the 
     first disbursement is made on or after April 1, 2006.

     SEC. 7116. ORIGINATION FEE.

       Section 455(c) of the Higher Education Act of 1965 (20 
     U.S.C. 1087e(c)) is amended--
       (1) by striking ``shall'' and inserting ``is authorized 
     to''; and
       (2) by striking ``4.0 percent of the principal amount of 
     loan'' and inserting ``not less than 1 percent and not more 
     than 3 percent of the principal amount of the loan, except 
     that the Secretary shall charge the borrower of a Federal 
     Direct PLUS Loan an origination fee of 4.0 percent of the 
     principal amount of the loan. Beginning on July 1, 2007, the 
     preceding sentence shall be applied by substituting `2.5 
     percent' for `3 percent'''.

     SEC. 7117. INCOME CONTINGENT REPAYMENT FOR PUBLIC SECTOR 
                   EMPLOYEES.

       Section 455(e) of the Higher Education Act of 1965 (20 
     U.S.C. 1087e(e)) is amended by adding at the end the 
     following:
       ``(7) Repayment plan for public sector employees.--
       ``(A) In general.--The Secretary shall forgive the balance 
     due on any loan made under this part or section 428C(b)(5) 
     for a borrower--
       ``(i) who has made 120 payments on such loan pursuant to 
     income contingent repayment; and
       ``(ii) who is employed, and was employed for the 10-year 
     period in which the borrower made the 120 payments described 
     in clause (i), in a public sector job.
       ``(B) Public sector job.--In this paragraph, the term 
     `public sector job' means a full-time job in emergency 
     management, government, public safety, law enforcement, 
     public health, education (including early childhood 
     education), or public interest legal services (including 
     prosecution or public defense).
       ``(8) Return to standard repayment.--A borrower who is 
     repaying a loan made under this part pursuant to income 
     contingent repayment may choose, at any time, to terminate 
     repayment pursuant to income contingent repayment and repay 
     such loan under the standard repayment plan.''.

     SEC. 7118. FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS.

       (a) Amendments.--Section 475 of the Higher Education Act of 
     1965 (20 U.S.C. 1087oo) is amended--
       (1) in subsection (g)(2)(D), by striking ``$2,200'' and 
     inserting ``$3,000''; and
       (2) in subsection (h), by striking ``35'' and inserting 
     ``20''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply with respect to determinations of need for 
     periods of enrollment beginning on or after July 1, 2007.

     SEC. 7119. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS 
                   WITHOUT DEPENDENTS OTHER THAN A SPOUSE.

       (a) Amendments.--Section 476 of the Higher Education Act of 
     1965 (20 U.S.C.1087pp) is amended--
       (1) in subsection (b)(1)(A)(iv)--
       (A) in subclause (I), by striking ``$5,000'' and inserting 
     ``$6,050'';
       (B) in subclause (II), by striking ``$5,000'' and inserting 
     ``$6,050''; and
       (C) in subclause (III), by striking ``$8,000'' and 
     inserting ``$9,700''; and
       (2) in subsection (c)(4), by striking ``35'' and inserting 
     ``20''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply with respect to determinations of need for 
     periods of enrollment beginning on or after July 1, 2007.

     SEC. 7120. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITH 
                   DEPENDENTS OTHER THAN A SPOUSE.

       (a) Amendment.--Section 477(c)(4) of the Higher Education 
     Act of 1965 (20 U.S.C. 1087qq(c)(4)) is amended by striking 
     ``12'' and inserting ``7''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to determinations of need for 
     periods of enrollment beginning on or after July 1, 2007.

     SEC. 7121. REGULATIONS; UPDATED TABLES.

       Section 478(b) of the Higher Education Act of 1965 (20 
     U.S.C. 1087rr(b)) is amended--
       (1) in paragraph (1), by adding at the end the following: 
     ``For the 2007-2008 academic year, the Secretary shall revise 
     the tables in accordance with this paragraph, except that the 
     Secretary shall increase the amounts contained in the table 
     in section 477(b)(4) by a percentage equal to the greater of 
     the estimated percentage increase in the Consumer Price Index 
     (as determined under the preceding sentence) or 5 percent.''; 
     and
       (2) in paragraph (2), by striking ``2000-2001'' and 
     inserting ``2007-2008''.

     SEC. 7122. SIMPLIFIED NEED TEST AND AUTOMATIC ZERO 
                   IMPROVEMENTS.

       (a) Amendments.--Section 479 of the Higher Education Act of 
     1965 (20 U.S.C. 1087ss) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1)--
       (i) in subparagraph (A), by striking clause (i) and 
     inserting the following:
       ``(i) the student's parents--

       ``(I) file, or are eligible to file, a form described in 
     paragraph (3);
       ``(II) certify that the parents are not required to file a 
     Federal income tax return; or
       ``(III) received, or the student received, benefits at some 
     time during the previous 12-month period under a means-tested 
     Federal benefit program as defined under subsection (d); 
     and''; and

       (ii) in subparagraph (B), by striking clause (i) and 
     inserting the following:
       ``(i) the student (and the student's spouse, if any)--

       ``(I) files, or is eligible to 1 file, a form described in 
     paragraph (3);
       ``(II) certifies that the student (and the student's 
     spouse, if any) is not required to file a Federal income tax 
     return; or
       ``(III) received benefits at some time during the previous 
     12-month period under a means-tested Federal benefit program 
     as defined under subsection (d); and''; and

       (B) in the matter preceding subparagraph (A) of paragraph 
     (3), by striking ``A student or family files a form described 
     in this subsection, or subsection (c), as the case maybe, if 
     the student or family, respectively, files'' and inserting 
     ``In the case of an independent student, the student, or in 
     the case of a dependent student, the family, files a form 
     described in this subsection, or subsection (c), as the case 
     may be, if the student or family, as appropriate, files'';
       (2) in subsection (c)--
       (A) in paragraph (1)--
       (i) by striking subparagraph (A) and inserting the 
     following:
       ``(A) the student's parents--
       ``(i) file, or are eligible to file, a form described in 
     subsection (b)(3);
       ``(ii) certify that the parents are not required to file a 
     Federal income tax return; or
       ``(iii) received, or the student received, benefits at some 
     time during the previous 12-month period under a means-tested 
     Federal benefit program as defined under subsection (d); 
     and''; and
       (ii) by striking subparagraph (B) and inserting the 
     following:
       ``(B) the sum of the adjusted gross income of the parents 
     is less than or equal to $20,000; or''; and
       (B) in paragraph (2)--
       (i) by striking subparagraph (A) and inserting the 
     following:
       ``(A) the student (and the student's spouse, if any)--
       ``(i) files, or is eligible to file, a form described in 
     subsection (b)(3);
       ``(ii) certifies that the student (and the student's 
     spouse, if any) is not required to file a Federal income tax 
     return; or
       ``(iii) received benefits at some time during the previous 
     12-month period under a means-tested Federal benefit program 
     as defined under subsection (d); and''; and
       (ii) by striking subparagraph (B) and inserting the 
     following:
       ``(B) the sum of the adjusted gross income of the student 
     and spouse (if appropriate) is less than or equal to 
     $20,000.''; and
       (3) by adding at the end the following:
       ``(d) Definitions.--In this section:
       ``(1) Means-tested federal benefit program.--In this 
     section, the term ``means-tested Federal benefit program'' 
     means a mandatory spending program of the Federal Government, 
     other than a program under this title, in which eligibility 
     for the program's benefits, or the amount of such benefits, 
     are determined on the basis of income or resources of the 
     individual or family seeking the benefit, and may include 
     such programs as--
       ``(A) the supplemental security income program under title 
     XVI of the Social Security Act (42 U.S.C. 1381 et seq.);
       ``(B) the food stamp program under the Food Stamp Act of 
     1977 (7 U.S.C. 2011 et seq.);
       ``(C) the free and reduced price school lunch program 
     established under the Richard B. Russell National School 
     Lunch Act (42 U.S.C. 1751 et seq.);
       ``(D) the program of block grants for States for temporary 
     assistance for needy families established under part A of 
     title IV of the Social Security Act (42 U.S.C. 601 et seq.);
       ``(E) the special supplemental nutrition program for women, 
     infants, and children established by section 17 of the Child 
     Nutrition Act of 1966 (42 U.S.C. 1786); and
       ``(F) other programs identified by the Secretary.''.
       (b) Evaluation of Simplified Needs Test.--
       (1) Eligibility guidelines.--The Secretary of Education 
     shall regularly evaluate the impact of the eligibility 
     guidelines in subsections (b)(1)(A)(i), (b)(1)(B)(i), 
     (c)(1)(A), and (c)(2)(A) of section 479 of the Higher 
     Education Act of 1965 (20 U.S.C. 1087ss(b)(1)(A)(i), 
     (b)(1)(B)(i), (c)(1)(A), and (c)(2)(A)).
       (2) Means-tested federal benefit program.--For each 3-year 
     period, the Secretary of Education shall evaluate the impact 
     of including the receipt of benefits by a student or parent 
     under a means-tested Federal benefit program (as defined in 
     section 479(d) of the Higher Education Act of 1965 (20 U.S.C. 
     1087ss(d)) as a factor in determining eligibility under 
     subsections (b) and (c) of section 479 of the Higher 
     Education Act of 1965 (20 U.S.C. 1087ss(b) and (c)).

     SEC. 7123. LOAN FORGIVENESS FOR TEACHERS.

       Section 3(b)(3) of the Taxpayer-Teacher Protection Act of 
     2004 (20 U.S.C. 1078-10 note) is amended by striking ``, and 
     before October 1, 2005''.

     SEC. 7124. EFFECTIVE DATE.

       Except as otherwise provided in this chapter or the 
     amendments made by this chapter, the amendments made by this 
     chapter shall take effect on July 1, 2006.

[[Page 26753]]



         CHAPTER 2--HURRICANE KATRINA HIGHER EDUCATION RECOVERY

     SEC. 7151. SHORT TITLE.

       This chapter may be cited as the ``Hurricane Katrina Higher 
     Education Recovery Act''.

     SEC. 7152. DEFINITIONS.

       In this chapter:
       (1) Affected borrower.--The term ``affected borrower'' 
     means an individual who--
       (A) was in repayment, but not in deferment, on a loan made, 
     insured, or guaranteed under part B, D, or E of the Higher 
     Education Act of 1965 (20 U.S.C. 1071 et seq., 1087a et seq., 
     1087aa et seq.) on August 22, 2005, or enters or entered 
     repayment after August 22, 2005 and before June 30, 2006; and
       (B)(i) lives or lived, as of August 22, 2005, in a county 
     or parish of Alabama, Louisiana, or Mississippi--
       (I) in which a major disaster has been declared in 
     accordance with section 401 of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170) 
     as a result of Hurricane Katrina; and
       (II) which the President has determined warrants individual 
     assistance from the Federal Government; or
       (ii) worked, as of August 22, 2005, in a county or parish 
     described in clause (i).
       (2) Affected institution.--
       (A) In general.--The term ``affected institution'' means an 
     institution of higher education, as defined in section 101 or 
     102 of the Higher Education Act of 1965 (20 U.S.C. 1001, 
     1002), that--
       (i) is located in an area in which a major disaster has 
     been declared in accordance with section 401 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act due to 
     the effects of Hurricane Katrina; and
       (ii) is impacted by Hurricane Katrina.
       (B) Length of time.--In determining eligibility for 
     assistance under this chapter, the Secretary, using 
     consistent, objective criteria, shall determine the time 
     period for which an institution of higher education is an 
     affected institution.
       (C) Special rule.--An organizational unit of an affected 
     institution that is not impacted by Hurricane Katrina shall 
     not be considered as part of such affected institution for 
     purposes of receiving assistance under this chapter.
       (3) Affected student.--The term ``affected student'' means 
     a student who was enrolled on August 29, 2005 in an affected 
     institution.
       (4) Distance education.--
       (A) In general.--The term ``distance education'' means a 
     course or program that uses 1 or more of the technologies 
     described in subparagraph (B) to--
       (i) deliver instruction to students who are separated from 
     the instructor; and
       (ii) support regular and substantive interaction between 
     the students and the instructor, either synchronously or 
     asynchronously.
       (B) Inclusions.--For the purposes of subparagraph (A), the 
     technologies used may include--
       (i) the Internet;
       (ii) one-way and two-way transmissions through open 
     broadcast, closed circuit, cable, microwave, broadband lines, 
     fiber optics, satellite, or wireless communications devices;
       (iii) audio conferencing; or
       (iv) video cassette, DVDs, and CD-ROMs, provided that they 
     are used in a course in conjunction with the technologies 
     listed in clauses (i) through (iii).
       (5) Secretary.--The term ``Secretary'' means the Secretary 
     of Education.

     SEC. 7153. WAIVER AUTHORITY AND MODIFICATIONS TO CERTAIN 
                   PROVISIONS OF THE HIGHER EDUCATION ACT OF 1965.

       (a) Waiver of Institutional Repayment.--Notwithstanding any 
     other provision of law, including requirements related to 
     cash management, an affected institution shall not be 
     required to return any funds received by the affected 
     institution for, or on behalf of, its students under subparts 
     1 and 3 of part A and parts B, C, D, and E of title IV of the 
     Higher Education Act of 1965 (20 U.S.C. 1070, 1070b et seq., 
     1071 et seq., 1087a et seq., 1087aa et seq., 42 U.S.C. 2751 
     et seq.) during the 2005-2006 academic year.
       (b) Waiver of Student Return of Assistance.--
     Notwithstanding any other provision of law, an affected 
     student who, as of the date of enactment of this Act, 
     received assistance under subpart 1 or 3 of part A or parts 
     B, C, D, or E of title IV of the Higher Education Act of 1965 
     for attendance at an affected institution of higher education 
     during the 2005-2006 academic year, shall not be required to 
     return such assistance.
       (c) Affected Students Who Do Not Enroll in Another 
     Institution and Borrowers in Grace Periods or Deferment.--
     With respect to a loan made, insured, or guaranteed under 
     part B, D, or E of title IV of the Higher Education Act of 
     1965 (20 U.S.C. 1071 et seq., 1087a et seq., 1087aa et 
     seq.)--
       (1) an affected student who does not enroll in another 
     institution of higher education shall be retained in in-
     school status during the period beginning on August 22, 2005, 
     and ending on June 30, 2006; and
       (2) a borrower in a grace period or in deferment as of 
     August 22, 2005 who satisfies the requirement described in 
     clause (i) or clause (ii) of section 201(1)(B) shall be 
     retained in such status, without documentation or action by 
     the borrower, until June 30, 2006.
       (d) Discharge or Cancellation of Loans.--The Secretary 
     shall--
       (1) discharge all loan amounts under parts B and D of title 
     IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et 
     seq., 1087a et seq.) disbursed to, or on behalf of, an 
     affected student for attendance at an affected institution of 
     higher education during the 2005-2006 academic year;
       (2) reimburse lenders for the purpose of discharging any 
     loan amounts disbursed to, or on behalf of, a student under 
     part B of title IV of the Higher Education Act of 1965 (20 
     U.S.C. 1071 et seq.), for attendance at an affected 
     institution of higher education during the 2005-2006 academic 
     year; and
       (3) cancel any loan under part E of title IV of the Higher 
     Education Act of 1965 (20 U.S.C. 1087aa et seq.) disbursed to 
     a student for attendance at an affected institution of higher 
     education during the 2005-2006 academic year.
       (e) Aggregate and Annual Limits.--In the case of an 
     affected student, any grant or loan assistance under title IV 
     of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) 
     that such student received, or was to have received, for a 
     program of study at an affected institution of higher 
     education during the 2005-2006 academic year shall not count 
     against such student's annual or aggregate grant or loan 
     limits for receipt of aid under such title.
       (f) Forbearance.--Notwithstanding the provisions of part B, 
     D, or E of title IV of the Higher Education Act of 1965 (20 
     U.S.C. 1071 et seq., 1087a et seq., 1087aa et seq.), a 
     lender, the Secretary, or an institution of higher education 
     is authorized to provide not more than 1 year of forbearance 
     to an affected borrower without documentation.
       (g) Professional Judgment.--A financial aid administrator 
     shall be considered to be making an adjustment in accordance 
     with section 479A(a) of the Higher Education Act of 1965 (20 
     U.S.C. 1087tt(a)) if the financial aid administrator makes 
     the adjustment with respect to the calculation of the 
     expected student or parent contribution (or both) for an 
     affected student, or for a student or a parent who resides or 
     resided on August 22, 2005, or was employed on August 22, 
     2005, in an area in which a major disaster has been declared 
     in accordance with section 401 of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act due to the 
     effects of Hurricane Katrina. The financial aid administrator 
     shall adequately document the need for the adjustment.
       (h) Modification of Part A of Title II Grants Authorized.--
     The Secretary is authorized to approve modifications to the 
     requirements for Teacher Quality Enhancement Grants for 
     States and Partnerships under part A of title II of the 
     Higher Education Act of 1965 (20 U.S.C. 1021 et seq.), at the 
     request of the grantee--
       (1) to assist States and local educational agencies to 
     recruit and retain highly qualified teachers in a school 
     district located in an area in which a major disaster has 
     been declared in accordance with section 401 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act due to 
     the effects of Hurricane Katrina; and
       (2) to assist institutions of higher education, as defined 
     in section 101 of such Act (20 U.S.C. 1001), located in such 
     area to recruit and retain faculty necessary to prepare 
     teachers and provide professional development.
       (i) Waiver Authority To Modify Authorized Uses of TRIO, 
     GEAR-UP, Part A or B of Title III, and Other Grants.--The 
     Secretary is authorized to modify the required and allowable 
     uses of funds under chapters 1 and 2 of subpart 2 of part A 
     of title IV of the Higher Education Act of 1965 (20 U.S.C. 
     1070a et seq., 1070a-21 et seq.), under part A or B of title 
     III (20 U.S.C. 1057 et seq., 1060 et seq.), and under any 
     other competitive grant program, at the request of an 
     affected institution or other grantee, with respect to 
     affected institutions and other grantees located in an area 
     in which a major disaster has been declared in accordance 
     with section 401 of the Robert T. Stafford Disaster Relief 
     and Emergency Assistance Act due to the effects of Hurricane 
     Katrina.
       (j) Authority To Extend or Waive Reporting Requirements 
     Under Section 131(a).--The Secretary is authorized to extend 
     reporting deadlines or waive reporting requirements under 
     section 131(a) of the Higher Education Act of 1965 (20 U.S.C. 
     1015(a)) for an affected institution.
       (k) Distance Education.--The Secretary may waive the 
     restrictions of subparagraphs (A) and (B) of section 
     102(a)(3) of the Higher Education Act of 1965 (20 U.S.C. 
     1002(a)(3)(A) and (B)) with respect to an institution of 
     higher education, other than a foreign institution, that 
     offers education or training programs through distance 
     education and is otherwise eligible to participate in 
     programs authorized under title IV of such Act (20 U.S.C. 
     1070 et seq.), if such institution exceeds such restrictions 
     described in such subparagraphs due to the enrollment of 
     affected students.

     SEC. 7154. GENERAL WAIVER AUTHORITY AND REQUIRED 
                   CONSULTATION.

       (a) Waiver Authority.--

[[Page 26754]]

       (1) In general.--Notwithstanding any other provision of 
     law, the Secretary may waive or modify any statutory 
     provision of the Higher Education Act of 1965 (20 U.S.C. 1001 
     et seq.) or any regulation implementing such Act as the 
     Secretary determines necessary in connection with a major 
     disaster that has been declared in accordance with section 
     401 of the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act due to the effects of Hurricane Katrina.
       (2) Actions authorized.--In carrying out paragraph (1), the 
     Secretary is authorized to waive or modify any provision 
     described in paragraph (1) as the Secretary determines 
     necessary to ensure that--
       (A) administrative requirements placed on affected 
     students, affected borrowers, institutions of higher 
     education, lenders, guaranty agencies and grantees are 
     minimized to the extent possible without impairing the 
     integrity of the higher education programs under the Higher 
     Education Act of 1965, to ease the burden on such 
     participants; or
       (B) institutions of higher education, lenders, guaranty 
     agencies, and other entities participating in the student 
     financial assistance programs under title IV of the Higher 
     Education Act of 1965 (20 U.S.C. 1070 et seq.), that serve an 
     area in which a major disaster has been declared in 
     accordance with section 401 of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act due to the 
     effects of Hurricane Katrina, may be granted temporary relief 
     from requirements that are rendered infeasible or 
     unreasonable due to the effects of Hurricane Katrina, 
     including due diligence requirements and reporting deadlines.
       (b) Construction.--Nothing in this section shall be 
     construed to allow the Secretary to waive or modify any 
     applicable statutory or regulatory requirements prohibiting 
     discrimination in a program or activity, or in employment or 
     contracting, under existing law (in existence on the date of 
     the Secretary's action).
       (c) Consultation.--Prior to granting any waiver or 
     modification under this section, the Secretary shall consult 
     with the Committee on Health, Education, Labor, and Pensions 
     and the Committee on Appropriations of the Senate and the 
     Committee on Education and the Workforce and the Committee on 
     Appropriations of the House of Representatives with respect 
     to waivers or modifications under this section.

     SEC. 7155. NOTICE OF WAIVERS, MODIFICATIONS, OR EXTENSIONS.

       Notwithstanding section 437 of the General Education 
     Provisions Act (20 U.S.C. 1232) and section 553 of title 5, 
     United States Code, the Secretary shall make publicly 
     available the waivers, modifications, or extensions granted 
     under section 7153 or 7154.

     SEC. 7156. REGULATORY REQUIREMENTS INAPPLICABLE.

       Sections 482(c) and 492 of the Higher Education Act of 1965 
     (20 U.S.C. 1089(c), 1098a), section 437 of the General 
     Education Provisions Act (20 U.S.C. 1232), and section 553 of 
     title 5, United States Code, shall not apply to this chapter.

     SEC. 7157. DEPARTMENT OF EDUCATION INSPECTOR GENERAL AUDIT 
                   AND REPORT.

       (a) In General.--The Inspector General of the Department of 
     Education (referred to in this section as the ``Inspector 
     General'') shall conduct an audit and investigation of each 
     program carried out by the Department of Education that 
     includes response and recovery activities related to 
     Hurricane Katrina.
       (b) Weekly Report.--Not less frequently than once a week, 
     the Inspector General shall provide a report to the Committee 
     on Health, Education, Labor, and Pensions and the Committee 
     on Appropriations of the Senate and the Committee on 
     Education and the Workforce and the Committee on 
     Appropriations of the House of Representatives listing the 
     audits and investigations initiated pursuant to subsection 
     (a).
       (c) Status Report.--Not later than 6 months after the date 
     of enactment of this Act, and biannually thereafter until the 
     audits and investigations described in subsection (a) are 
     complete, the Inspector General shall report to the Committee 
     on Health, Education, Labor, and Pensions and the Committee 
     on Appropriations of the Senate and the Committee on 
     Education and the Workforce and the Committee on 
     Appropriations of the House of Representatives on the full 
     status of the activities of the Inspector General under this 
     section.
       (d) Cooperative Ventures.--In carrying out this section, 
     the Inspector General is encouraged to enter into cooperative 
     ventures with Inspectors General of other Federal agencies.

     SEC. 7158. SUNSET PROVISION.

       Except as otherwise provided in this chapter, the 
     provisions of this chapter shall be effective for the period 
     beginning on the date of enactment of this Act and ending on 
     September 30, 2006.

       Subtitle B--Pension Benefit Guaranty Corporation Premiums

     SEC. 7201. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME 
                   SECURITY ACT OF 1974.

       (a) Flat-Rate Premiums.--
       (1) Single-employer plans.--Section 4006(a)(3)(A)(i) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1306(a)(3)(A)(i)) is amended to read as follows:
       ``(i) in the case of a single-employer plan, an amount 
     equal to--
       ``(I) for plan years beginning after December 31, 1990, and 
     before January 1, 2006, $19, or
       ``(II) except as provided in subparagraph (F), for plan 
     years beginning after December 31, 2005, $46.75,
     plus the additional premium (if any) determined under 
     subparagraph (E) for each individual who is a participant in 
     such plan during the plan year;''.
       (2) Multiemployer plans.--Section 4006(a)(3)(A) of such Act 
     (29 U.S.C. 1306(a)(3)(A)) is amended--
       (A) in clause (iii), by--
       (i) inserting ``and before January 1, 2006,'' after ``Act 
     of 1980,''; and
       (ii) striking the period at the end and inserting ``, or''; 
     and
       (B) by adding at the end the following:
       ``(iv) in the case of a multiemployer plan an amount equal 
     to the following for each individual who is a participant in 
     such plan during the applicable plan year:

       ``(I) $8.00 for plan years beginning in 2006.
       ``(II) For plan years after December 31, 2006, the amount 
     determined under subparagraph (G).

       (3) Indexing of flat-rate premiums.--
       (A) Single-employer premiums.--Section 4006(a)(3) of such 
     Act (29 U.S.C. 1306(a)(3)), as amended by this Act, is 
     amended by adding at the end the following:
       ``(F) Indexing of single-employer flat-rate premiums.--
       ``(i) In general.--In the case of any plan year beginning 
     after 2006, the adjusted amount under clause (ii) shall be 
     substituted for the dollar amount under clause (i)(II) of 
     subparagraph (A), if such adjusted amount is greater than 
     such dollar amount.
       ``(ii) Adjusted amount.--The adjusted amount for the dollar 
     amount in clause (i)(II) of subparagraph (A) for any plan 
     year is the product derived by multiplying such dollar amount 
     by the ratio of--

       ``(I) the national average wage index (as defined in 
     section 209(k)(1) of the Social Security Act) for the first 
     of the 2 calendar years preceding the calendar year in which 
     the plan year begins, to
       ``(II) the national average wage index (as so defined) for 
     2004.

     If the amount determined under this clause is not a multiple 
     of $1, such product shall be rounded to the nearest multiple 
     of $1.''.
       (B) Multiemployer premiums--Section 4006(a)(3) of such Act 
     (29 U.S.C. 1306(a)(3)), as amended by this Act, is amended by 
     adding at the end the following:
       ``(G) Indexing of multiemployer flat-rate premiums.--The 
     amount determined under this subparagraph is the product 
     derived by multiplying $8.00 by the ratio of--
       ``(i) the national average wage index (as defined in 
     section 209(k)(1) of the Social Security Act) for the first 
     of the 2 calendar years preceding the calendar year in which 
     the plan year begins, to
       ``(ii) the national average wage index (as defined in 
     subparagraph (F)) for 2004.
     If the amount determined under this clause is not a multiple 
     of $1, such product shall be rounded to the nearest multiple 
     of $1.''.
       (b) Premium Rate for Certain Terminated Single-Employer 
     Plans.--Section 4006(a) of such Act (29 U.S.C. 1306(a)) is 
     amended by adding at the end the following:
       ``(7) Premium rate for certain terminated single-employer 
     plans.--
       ``(A) In general.--If there is a termination of a single-
     employer plan under clause (ii) or (iii) of section 
     4041(c)(2)(B) or section 4042, there shall be payable to the 
     corporation, with respect to each applicable 12-month period, 
     a premium at a rate equal to $1,250 multiplied by the number 
     of individuals who were participants in the plan immediately 
     before the termination date. Such premium shall be in 
     addition to any other premium under this section.
       ``(B) Special rule for plans terminated in bankruptcy 
     reorganization.--Subparagraph (A) shall not apply to a 
     single-employer plan terminated under section 
     4041(c)(2)(B)(ii) or under section 4042 during pendency of 
     any bankruptcy reorganization proceeding under chapter 11 of 
     title 11, United States Code, (or under any similar law of a 
     State or political subdivision of a State) until the plan 
     sponsor emerges from bankruptcy.
       ``(C) Applicable 12-month period.--For purposes of 
     subparagraph (A)--
       ``(i) In general.--The term `applicable 12-month period' 
     means--

       ``(I) the 12-month period beginning with the first month 
     following the month in which the termination date occurs, and
       ``(II) each of the first two 12-month periods immediately 
     following the period described in subclause (I).

       ``(ii) Plans terminated in bankruptcy reorganization.--In 
     the case of a plan described under subparagraph (B), the 12-
     month period described in clause (i)(I) shall be the 12-month 
     period beginning with the first month following the month 
     which includes the date the plan sponsor emerges from 
     bankruptcy.
       ``(D) Coordination with section 4007.--For purposes of 
     section 4007--
       ``(i) premiums under this paragraph shall be due within 30 
     days after the beginning of any applicable 12-month period,

[[Page 26755]]

       ``(ii) the fifth sentence of section 4007(a) shall not 
     apply, and
       ``(iii) the designated payor under section 4007(e)(1)(A) 
     shall be the contributing sponsor immediately before the 
     termination date.''.
       (c) Conforming Amendment.--Section 4006(a)(3)(B) of such 
     Act (29 U.S.C. 1306(a)(3)(B)) is amended by striking 
     ``subparagraph (A)(iii)'' and inserting ``clause (iii) or 
     (iv) of subparagraph (A)''.
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2005.
       (2) Special rule for plans terminated in bankruptcy.--The 
     amendment made by subsection (b) shall not apply to a 
     termination of a single-employer plan that is terminated 
     during the pendency of any bankruptcy reorganization 
     proceeding under chapter 11 of title 11, United States Code 
     (or under any similar law of a State or political subdivision 
     of a State), if the proceeding is pursuant to a bankruptcy 
     filing occurring before October 18, 2005.
       (3) Special rule if subsequent savings enacted.--The 
     amendments made by this section shall not take effect if, 
     after the date of enactment of this Act and before January 1, 
     2006, a Federal law is enacted which--
       (A) provides for decreases in Federal outlays which in the 
     aggregate are not less than the decreases in Federal outlays 
     by reason of the amendments made by this section; and
       (B) specifically provides that such decreases are to be in 
     lieu of the decreases in Federal outlays by reason of the 
     amendments made by this section.

              Subtitle C--Higher Education Reauthorization

       CHAPTER 1--SHORT TITLE; REFERENCES; GENERAL EFFECTIVE DATE

     SEC. 7301. SHORT TITLE.

       (a) Short Title.--This subtitle may be cited as the 
     ``Higher Education Amendments of 2005''.

     SEC. 7302. REFERENCES.

       Except as otherwise expressly provided, whenever in this 
     subtitle an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made to a section or 
     other provision of the Higher Education Act of 1965 (20 
     U.S.C. 1001 et seq.).

     SEC. 7303. GENERAL EFFECTIVE DATE.

       Except as otherwise provided in this subtitle or the 
     amendments made by this subtitle, the amendments made by this 
     subtitle shall take effect on July 1, 2006.

                     CHAPTER 2--GENERAL PROVISIONS

     SEC. 7311. ADDITIONAL DEFINITIONS.

       (a) Amendment.--Section 103 (20 U.S.C. 1003) is amended--
       (1) by redesignating paragraphs (1) through (16) as 
     paragraphs (2) through (17), respectively; and
       (2) by inserting before paragraph (2) (as redesignated by 
     paragraph (1)) the following:
       ``(1) Authorizing committees.--The term `authorizing 
     committees' means the Committee on Health, Education, Labor, 
     and Pensions of the Senate and the Committee on Education and 
     the Workforce of the House of Representatives.''.
       (b) Conforming Amendments.--The Act (20 U.S.C. 1001 et 
     seq.) is amended--
       (1) in section 131(a)(3)(B) (20 U.S.C. 1015(a)(3)(B)), by 
     striking ``Committee on Labor and Human Resources of the 
     Senate and the Committee on Education and the Workforce of 
     the House of Representatives'' and inserting ``authorizing 
     committees'';
       (2) in section 141(d)(4)(B) (20 U.S.C. 1018(d)(4)(B)), by 
     striking ``Committee on Education and the Workforce of the 
     House of Representatives and the Committee on Labor and Human 
     Resources of the Senate'' and inserting ``authorizing 
     committees'';
       (3) in section 207(c)(1) (20 U.S.C. 1027(c)(1)), by 
     striking ``Committee on Labor and Human Resources of the 
     Senate and the Committee on Education and the Workforce of 
     the House of Representatives'' and inserting ``authorizing 
     committees'';
       (4) in section 401(f)(3) (20 U.S.C. 1070a(f)(3)), by 
     striking ``to the Committee on Appropriations'' and all that 
     follows through ``House of Representatives'' and inserting 
     ``to the Committee on Appropriations of the Senate, the 
     Committee on Appropriations of the House of Representatives, 
     and the authorizing committees'';
       (5) in section 428 (20 U.S.C. 1078)--
       (A) in subsection (c)(9)(K), by striking ``House Committee 
     on Education and the Workforce and the Senate Committee on 
     Labor and Human Resources'' and inserting ``authorizing 
     committees'';
       (B) in the matter following paragraph (2) of subsection 
     (g), by striking ``Committee on Labor and Human Resources of 
     the Senate and the Committee on Education and the Workforce 
     of the House of Representatives'' and inserting ``authorizing 
     committees''; and
       (C) in subsection (n)(4), ``Committee on Education and the 
     Workforce of the House of Representatives and the Committee 
     on Labor and Human Resources of the Senate'' and inserting 
     ``authorizing committees'';
       (6) in section 428A (20 U.S.C. 1078-1)--
       (A) in the matter preceding subparagraph (A) of subsection 
     (a)(4), by striking ``Committee on Labor and Human Resources 
     of the Senate and the Committee on Education and the 
     Workforce of the House of Representatives'' and inserting 
     ``authorizing committees''; and
       (B) in subsection (c)--
       (i) in the matter preceding subparagraph (A) of paragraph 
     (2), by striking ``Chairperson'' and all that follows through 
     ``House of Representatives'' and inserting ``Chairpersons and 
     Ranking Members of the authorizing committees'';
       (ii) in paragraph (3), by striking ``Chairperson'' and all 
     that follows through ``House of Representatives'' and 
     inserting ``Chairpersons and Ranking Members of the 
     authorizing committees''; and
       (iii) in paragraph (5), by striking ``Chairperson'' and all 
     that follows through ``House of Representatives'' and 
     inserting ``Chairpersons and Ranking Members of the 
     authorizing committees'';
       (7) in section 432 (20 U.S.C. 1082)--
       (A) in subsection (f)(1)(C), by striking ``the Committee on 
     Education and the Workforce of the House of Representatives 
     or the Committee on Labor and Human Resources of the Senate'' 
     and inserting ``either of the authorizing committees''; and
       (B) in the matter following subparagraph (D) of subsection 
     (n)(3), by striking ``Committee on Education and the 
     Workforce of the House of Representatives and the Committee 
     on Labor and Human Resources of the Senate'' and inserting 
     ``authorizing committees'';
       (8) in section 437(c)(1) (20 U.S.C. 1087(c)(1)), by 
     striking ``Committee on Education and the Workforce of the 
     House of Representatives and the Committee on Labor and Human 
     Resources of the Senate'' and inserting ``authorizing 
     committees'';
       (9) in section 439 (20 U.S.C. 1087-2)--
       (A) in subsection (d)(1)(E)(iii), by striking ``advise the 
     Chairman'' and all that follows through ``House of 
     Representatives'' and inserting ``advise the Chairpersons and 
     Ranking Members of the authorizing committees'';
       (B) in subsection (r)--
       (i) in paragraph (3), by striking ``inform the Chairman'' 
     and all that follows through ``House of Representatives,'' 
     and inserting ``inform the Chairpersons and Ranking Members 
     of the authorizing committees'';
       (ii) in paragraph (5)(B), by striking ``plan, to the 
     Chairman'' and all that follows through ``Education and 
     Labor'' and inserting ``plan, to the Chairpersons and Ranking 
     Members of the authorizing committees'';
       (iii) in paragraph (6)(B)--

       (I) by striking ``plan, to the Chairman'' and all that 
     follows through ``House of Representatives'' and inserting 
     ``plan, to the Chairpersons and Ranking Members of the 
     authorizing committees''; and
       (II) by striking ``Chairmen and ranking minority members of 
     such Committees'' and inserting ``Chairpersons and Ranking 
     Members of the authorizing committees'';

       (iv) in paragraph (8)(C), by striking ``implemented to the 
     Chairman'' and all that follows through ``House of 
     Representatives, and'' and inserting ``implemented to the 
     Chairpersons and Ranking Members of the authorizing 
     committees, and to''; and
       (v) in the matter preceding subparagraph (A) of paragraph 
     (10), by striking ``days to the Chairman'' and all that 
     follows through ``Education and Labor'' and inserting ``days 
     to the Chairpersons and Ranking Members of the authorizing 
     committees''; and
       (C) in subsection (s)(2)--
       (i) in the matter preceding clause (i) of subparagraph (A), 
     by striking ``Treasury and to the Chairman'' and all that 
     follows through ``House of Representatives'' and inserting 
     ``Treasury and to the Chairpersons and Ranking Members of the 
     authorizing committees''; and
       (ii) in subparagraph (B), by striking ``Treasury and to the 
     Chairman'' and all that follows through ``House of 
     Representatives'' and inserting ``Treasury and to the 
     Chairpersons and Ranking Members of the authorizing 
     committees'';
       (10) in section 455(b)(8)(B) (20 U.S.C. 1087e(b)(8)(B)), by 
     striking ``Committee on Labor and Human Resources of the 
     Senate and the Committee on Education and the Workforce of 
     the House of Representatives'' and inserting ``authorizing 
     committees'';
       (11) in section 482(d) (20 U.S.C. 1089(d)), by striking 
     ``Committee on Labor and Human Resources of the Senate and 
     the Committee on Education and Labor of the House of 
     Representatives'' and inserting ``authorizing committees'';
       (12) in section 483(c) (20 U.S.C. 1090(c)), by striking 
     ``Committee on Labor and Human Resources of the Senate and 
     the Committee on Education and the Workforce of the House of 
     Representatives'' and inserting ``authorizing committees'';
       (13) in section 485 (20 U.S.C. 1092)--
       (A) in subsection (f)(5)(A), by striking ``Committee on 
     Education and the Workforce of the House of Representatives 
     and the Committee on Labor and Human Resources of the 
     Senate'' and inserting ``authorizing committees''; and
       (B) in subsection (g)(4)(B), by striking ``Committee on 
     Education and the Workforce of the House of Representatives 
     and the Committee on Labor and Human Resources of the 
     Senate'' and inserting ``authorizing committees'';

[[Page 26756]]

       (14) in section 486 (20 U.S.C. 1093)--
       (A) in subsection (e), by striking ``Committee on Labor and 
     Human Resources of the Senate and the Committee on Education 
     and the Workforce of the House of Representatives'' and 
     inserting ``authorizing committees''; and
       (B) in subsection (f)(3)--
       (i) in the matter preceding clause (i) of subparagraph (A), 
     by striking ``Committee on Labor and Human Resources of the 
     Senate and the Committee on Education and the Workforce of 
     the House of Representatives'' and inserting ``authorizing 
     committees''; and
       (ii) in the matter preceding clause (i) of subparagraph 
     (B), by striking ``Committee on Labor and Human Resources of 
     the Senate and the Committee on Education and the Workforce 
     of the House of Representatives'' and inserting ``authorizing 
     committees'';
       (15) in section 487A(a)(5) (20 U.S.C. 1094a(a)(5)), by 
     striking ``Committee on Labor and Human Resources of the 
     Senate and the Committee on Education and the Workforce of 
     the House of Representatives'' and inserting ``authorizing 
     committees''; and
       (16) in section 498B(d) (20 U.S.C. 1099c-2(d))--
       (A) in paragraph (1), by striking ``Committee on Labor and 
     Human Resources of the Senate and the Committee on Education 
     and the Workforce of the House of Representatives'' and 
     inserting ``authorizing committees''; and
       (B) in paragraph (2), by striking ``Committee on Labor and 
     Human Resources of the Senate and the Committee on Education 
     and the Workforce of the House of Representatives'' and 
     inserting ``authorizing committees''.

     SEC. 7312. GENERAL DEFINITION OF INSTITUTION OF HIGHER 
                   EDUCATION.

       Section 101 (20 U.S.C. 1001) is amended--
       (1) in subsection (a)(3), by inserting ``, or awards a 
     degree that is acceptable for admission to a graduate or 
     professional degree program, subject to the review and 
     approval by the Secretary'' after ``such a degree''; and
       (2) by striking subsection (b)(2) and inserting the 
     following:
       ``(2) a public or nonprofit private educational institution 
     in any State that, in lieu of the requirement in subsection 
     (a)(1), admits as regular students persons--
       ``(A) who meet the requirements of section 484(d)(3);
       ``(B) who are beyond the age of compulsory school 
     attendance in the State in which the institution is located; 
     or
       ``(C) who are dually or concurrently enrolled in such 
     institution and a secondary school.''.

     SEC. 7313. DEFINITION OF INSTITUTION OF HIGHER EDUCATION FOR 
                   PURPOSES OF TITLE IV PROGRAMS.

       Section 102 (20 U.S.C. 1002) is amended--
       (1) in subsection (a)--
       (A) by striking paragraph (2)(A)(i) and inserting the 
     following:
       ``(i) in the case of a graduate medical school located 
     outside the United States--

       ``(I) at least 60 percent of those enrolled in, and at 
     least 60 percent of the graduates of, the graduate medical 
     school outside the United States were not persons described 
     in section 484(a)(5) in the year preceding the year for which 
     a student is seeking a loan under part B of title IV; and
       ``(II) at least 60 percent of the individuals who were 
     students or graduates of the graduate medical school outside 
     the United States or Canada (both nationals of the United 
     States and others) taking the examinations administered by 
     the Educational Commission for Foreign Medical Graduates 
     received a passing score in the year preceding the year for 
     which a student is seeking a loan under part B of title IV; 
     or'';

       (B) by striking paragraph (3) and inserting the following:
       ``(3) Limitations based on enrollment.--An institution 
     shall not be considered to meet the definition of an 
     institution of higher education in paragraph (1) if such 
     institution--
       ``(A) has a student enrollment in which more than 25 
     percent of the students are incarcerated, except that the 
     Secretary may waive the limitation contained in this 
     subparagraph for a nonprofit institution that provides a 2- 
     or 4-year program of instruction (or both) for which the 
     institution awards a bachelor's degree, or an associate's 
     degree or a postsecondary diploma, respectively; or
       ``(B) has a student enrollment in which more than 50 
     percent of the students do not have a secondary school 
     diploma or its recognized equivalent, and does not provide a 
     2- or 4-year program of instruction (or both) for which the 
     institution awards a bachelor's degree or an associate's 
     degree, respectively, except that the Secretary may waive the 
     limitation contained in this subparagraph if a nonprofit 
     institution demonstrates to the satisfaction of the Secretary 
     that the institution exceeds such limitation because the 
     institution serves, through contracts with Federal, State, or 
     local government agencies, significant numbers of students 
     who do not have a secondary school diploma or its recognized 
     equivalent.'';
       (C) by redesignating paragraphs (4), (5), and (6), as 
     paragraphs (5), (6), and (7), respectively; and
       (D) by inserting after paragraph (3) the following:
       ``(4) Limitations based on mode of delivery.--
       ``(A) In general.--An institution shall not be considered 
     to meet the definition of an institution of higher education 
     in paragraph (1) if such institution--
       ``(i) offers more than 50 percent of such institution's 
     courses by correspondence, unless the institution is an 
     institution that meets the definition in section 3(3)(C) of 
     the Carl D. Perkins Vocational and Technical Education Act of 
     1998; or
       ``(ii) enrolls 50 percent or more of the institution's 
     students in correspondence courses, unless the institution is 
     an institution that meets the definition in such section 
     3(3)(C), except that the Secretary, at the request of such 
     institution, may waive the applicability of this subparagraph 
     to such institution for good cause, as determined by the 
     Secretary in the case of an institution of higher education 
     that provides a 2- or 4-year program of instruction (or both) 
     for which the institution awards an associate or 
     baccalaureate degree, respectively.
       ``(B) Distance education program eligibility.--
     Notwithstanding subparagraph (A), an institution of higher 
     education, other than a foreign institution, that offers 
     education or training programs principally through distance 
     education shall be considered to meet the definition of an 
     institution of higher education in paragraph (1) if such 
     institution--
       ``(i) has been evaluated and determined (before or after 
     the date of enactment of the Higher Education Amendments of 
     2005) to have the capability to effectively deliver distance 
     education programs by an accrediting agency or association 
     that--

       ``(I) is recognized by the Secretary under title IV; and
       ``(II) has evaluation of distance education programs within 
     the scope of its recognition, as described in section 
     496(n)(3);

       ``(ii) is otherwise eligible to participate in programs 
     authorized under title IV;
       ``(iii) has not had its participation in programs under 
     title IV suspended or terminated within the previous 5 years;
       ``(iv) has not had, or failed to resolve, an audit finding 
     or program review finding under this Act during the 2 years 
     preceding the year for which the determination is made that, 
     following any appeal to the Secretary, resulted in the 
     institution being required to repay an amount that is equal 
     to or greater than 25 percent of the total funds the 
     institution received under the programs authorized under 
     title IV for the most recent award year; and
       ``(v) has met the requirements of section 487(d), if 
     applicable.
       ``(C) Definition.--
       ``(i) In general.--In this Act, except as otherwise 
     provided, the term `distance education' means a course or 
     program that uses 1 or more of the technologies described in 
     clause (ii) to--

       ``(I) deliver instruction to students who are separated 
     from the instructor; and
       ``(II) support regular and substantive interaction between 
     the students and the instructor, either synchronously or 
     asynchronously.

       ``(ii) Inclusions.--For the purposes of clause (i), the 
     technologies used may include--

       ``(I) the Internet;
       ``(II) one-way and two-way transmissions through open 
     broadcast, closed circuit, cable, microwave, broadband lines, 
     fiber optics, satellite, or wireless communications devices;
       ``(III) audio conferencing; or
       ``(IV) video cassette, DVDs, and CD-ROMs, provided that 
     they are used in a course in conjunction with the 
     technologies listed in subclauses (I) through (III).''; and

       (2) in subsection (b)(1)--
       (A) in subparagraph (D), by inserting ``and'' after the 
     semicolon;
       (B) in subparagraph (E), by striking ``; and'' and 
     inserting a period; and
       (C) by striking subparagraph (F).

     SEC. 7314. PROTECTION OF STUDENT SPEECH AND ASSOCIATION 
                   RIGHTS.

       Section 112 (20 U.S.C. 1011a) is amended--
       (1) in subsection (a)--
       (A) by inserting ``(1)'' before ``It is the sense''; and
       (B) by adding at the end the following:
       ``(2) It is the sense of Congress that--
       ``(A) the diversity of institutions and educational 
     missions is one of the key strengths of American higher 
     education;
       ``(B) individual colleges and universities have different 
     missions and each institution should design its academic 
     program in accordance with its educational goals;
       ``(C) within the context of institutional mission, a 
     college should facilitate the free and open exchange of 
     ideas;
       ``(D) students should not be intimated, harassed, 
     discouraged from speaking out, or discriminated against;
       ``(E) students should be treated equally and fairly; and
       ``(F) nothing in this paragraph shall be construed to 
     modify, change, or infringe upon any constitutionally 
     protected religious liberty, freedom, expression, or 
     association.''; and
       (2) in subsection (b)(1), by inserting ``, provided that 
     the imposition of such sanction is done objectively and 
     fairly'' after ``higher education''.

[[Page 26757]]



     SEC. 7315. NATIONAL ADVISORY COMMITTEE ON INSTITUTIONAL 
                   QUALITY AND INTEGRITY.

       Section 114(g) (20 U.S.C. 1011c(g)) is amended by striking 
     ``September 30, 2004'' and inserting ``September 30, 2011''.

     SEC. 7316. DRUG AND ALCOHOL ABUSE PREVENTION.

       Section 120 (20 U.S.C. 1011i) is amended by striking 
     subsections (e) and (f) and inserting the following:
       ``(e) Grants Directed at Reducing Higher Education Drug and 
     Alcohol Abuse.--
       ``(1) Authorization of program.--The Secretary may award 
     grants to eligible entities to enable the entities to reduce 
     the rate of drug use, underage alcohol use, and binge 
     drinking among students at institutions of higher education.
       ``(2) Applications.--An eligible entity that desires to 
     receive a grant under this subsection shall submit an 
     application to the Secretary at such time, in such manner, 
     and accompanied by such information as the Secretary may 
     require. Each application shall include--
       ``(A) a description of how the eligible entity will work to 
     enhance an existing, or where none exists to build a, 
     statewide coalition;
       ``(B) a description of how the eligible entity will target 
     underage students in the State;
       ``(C) a description of how the eligible entity intends to 
     ensure that the statewide coalition is actually implementing 
     the purpose described in paragraph (1) and moving toward the 
     achievement indicators described in paragraph (4);
       ``(D) a list of the members of the statewide coalition or 
     interested parties involved in the work of the eligible 
     entity;
       ``(E) a description of how the eligible entity intends to 
     work with State agencies on substance abuse prevention and 
     education;
       ``(F) the anticipated impact of funds provided under this 
     subsection in reducing the rates of drug abuse and underage 
     alcohol use;
       ``(G) outreach strategies, including ways in which the 
     eligible entity proposes to--
       ``(i) reach out to students;
       ``(ii) promote the purpose described in paragraph (1);
       ``(iii) address the range of needs of the students and the 
     surrounding communities; and
       ``(iv) address community norms for underage students 
     regarding drug and alcohol use; and
       ``(H) such additional information as required by the 
     Secretary.
       ``(3) Uses of funds.--Each eligible entity that receives a 
     grant under this subsection shall use the grant funds to 
     carry out the activities described in such entity's 
     application submitted pursuant to paragraph (2).
       ``(4) Accountability.--On the date on which the Secretary 
     first publishes a notice in the Federal Register soliciting 
     applications for grants under this subsection, the Secretary 
     shall include in the notice achievement indicators for the 
     program authorized under this subsection. The achievement 
     indicators shall be designed--
       ``(A) to measure the impact that the statewide coalitions 
     assisted under this subsection are having on the institutions 
     of higher education and the surrounding communities, 
     including changes in the number of alcohol and drug-related 
     abuse incidents of any kind (including violations, physical 
     assaults, sexual assaults, reports of intimidation, 
     disruptions of school functions, disruptions of student 
     studies, mental health referrals, illnesses, or deaths);
       ``(B) to measure the quality and accessibility of the 
     programs or information offered by the statewide coalitions; 
     and
       ``(C) to provide such other measures of program impact as 
     the Secretary determines appropriate.
       ``(5) Supplement not supplant.--Grant funds provided under 
     this subsection shall be used to supplement, and not 
     supplant, Federal and non-Federal funds available for 
     carrying out the activities described in this subsection.
       ``(6) Definitions.--In this subsection:
       ``(A) Eligible entity.--The term `eligible entity' means a 
     State, an institution of higher education as defined in 
     section 102, or a nonprofit entity.
       ``(B) Institution of higher education.--The term 
     `institution of higher education' has the meaning given the 
     term in section 101(a).
       ``(C) State.--The term `State' means each of the 50 States, 
     the District of Columbia, and the Commonwealth of Puerto 
     Rico.
       ``(D) Statewide coalition.--The term `statewide coalition' 
     means a coalition that--
       ``(i) includes--

       ``(I) institutions of higher education within a State; and
       ``(II) a nonprofit group, a community anti-drug or underage 
     drinking prevention coalition, or another substance abuse 
     prevention group within a State; and

       ``(ii) works toward lowering alcohol abuse rates by 
     targeting underage students at institutions of higher 
     education throughout the State and in the surrounding 
     communities.
       ``(E) Surrounding community.--The term `surrounding 
     community' means the community--
       ``(i) that surrounds an institution of higher education 
     participating in a statewide coalition;
       ``(ii) where the students from the institution of higher 
     education take part in the community; and
       ``(iii) where students from the institution of higher 
     education live in off-campus housing.
       ``(7) Administrative expenses.--Not more than 5 percent of 
     a grant awarded under this subsection may be expended for 
     administrative expenses.
       ``(8) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this subsection 
     such sums as may be necessary for fiscal year 2006 and each 
     of the 5 succeeding fiscal years.''.

     SEC. 7317. PRIOR RIGHTS AND OBLIGATIONS.

       Section 121(a) (20 U.S.C. 1011j(a)) is amended--
       (1) in paragraph (1), by striking ``1999'' and inserting 
     ``2006''; and
       (2) in paragraph (2), by striking ``1999'' and inserting 
     ``2006''.

     SEC. 7318. COST OF HIGHER EDUCATION.

       Section 131 (20 U.S.C. 1015) is amended--
       (1) by striking subsection (b) and inserting the following:
       ``(b) College Consumer Information.--
       ``(1) In general.--The Secretary shall make available to 
     the public the information described in paragraph (2), in a 
     form that enables the public to compare the information among 
     institutions of higher education. Such information shall be 
     made available for each of the categories described in 
     paragraph (3) and updated annually.
       ``(2) Information.--The information described in this 
     paragraph is the following:
       ``(A) Tuition and fees for a first-time, full-time 
     undergraduate student.
       ``(B) Cost of attendance for a first-time, full-time 
     undergraduate student.
       ``(C) The average annual cost of attendance for a first-
     time, full-time undergraduate student for the preceding 
     periods of 5 and 10 academic years preceding the year for 
     which the information is made available under this 
     subsection, or if data are not available for such academic 
     years, data for as many of such academic years as are 
     available.
       ``(D) The percentage of full-time undergraduate students 
     receiving financial assistance, including--
       ``(i) Federal grants;
       ``(ii) State and local grants;
       ``(iii) institutional grants; and
       ``(iv) loans to students.
       ``(E) The average amount of financial aid received by 
     students from sources described in clauses (i) through (iv) 
     of subparagraph (D).
       ``(F) Graduation rates, as described in section 
     485(a)(1)(L).
       ``(G) A ranking of the dollar and percentage increases in 
     tuition and fees for all institutions of higher education for 
     which data are available in each of the categories described 
     in paragraph (3).
       ``(3) Categories.--The categories described in this 
     paragraph are as follows:
       ``(A) All institutions of higher education.
       ``(B) 4-year public, degree-granting, institutions of 
     higher education.
       ``(C) 2-year public, degree-granting, institutions of 
     higher education.
       ``(D) 4-year, nonprofit, private, degree-granting 
     institutions of higher education.
       ``(E) 2-year, nonprofit, private, degree-granting 
     institutions of higher education.
       ``(F) 4-year, for-profit, private, degree-granting 
     institutions of higher education.
       ``(G) 2-year, for-profit, private, degree-granting 
     institutions of higher education.
       ``(H) Less than 2-year, for-profit, private institutions of 
     higher education.
       ``(4) Standard definitions.--In carrying out this section, 
     the Secretary shall use the standard definitions developed 
     under subsection (a)(3).''; and
       (2) in subsection (c)--
       (A) in paragraph (1), by inserting ``be conducted on an 
     annual basis and'' after ``Such study shall'';
       (B) in paragraph (2)--
       (i) in subparagraph (B), by striking ``and'' after the 
     semicolon;
       (ii) in subparagraph (C), by striking the period and 
     inserting a semicolon; and
       (iii) by adding at the end the following:
       ``(D) the average cost of attending an institution of 
     higher education, disaggregated by category, as described in 
     subsection (b)(3);
       ``(E) the average annual cost of attending an institution 
     of higher education for the periods of 5 and 10 academic 
     years preceding the year for which the study is conducted (or 
     if data are not available for such academic years, data for 
     as many of such academic years as are available), 
     disaggregated by category, as described in subsection (b)(3); 
     and
       ``(F) the assistance provided to institutions of higher 
     education by each State.'';
       (C) in paragraph (3)--
       (i) in the paragraph heading, by striking ``Final'' and 
     inserting ``Annual'';
       (ii) by striking ``a report'' and inserting ``an annual 
     report''; and
       (iii) by striking ``not later than September 30, 2002'' and 
     inserting ``and the public''; and
       (D) by striking paragraph (4) and inserting the following:
       ``(4) Higher education cost index.--The Bureau of Labor 
     Statistics, in consultation with the Commissioner of 
     Education Statistics, shall develop a higher education cost

[[Page 26758]]

     index that tracks inflation changes in the relevant costs 
     associated with higher education.''.

     SEC. 7319. PERFORMANCE-BASED ORGANIZATION FOR THE DELIVERY OF 
                   FEDERAL STUDENT FINANCIAL ASSISTANCE.

       Section 141 (20 U.S.C. 1018) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1), by striking ``operational'' and 
     inserting ``administrative and oversight''; and
       (B) in paragraph (2)(D), by striking ``of the operational 
     functions'' and inserting ``and administration'';
       (2) in subsection (b)--
       (A) in paragraph (1)--
       (i) in subparagraph (A), by striking ``the information 
     systems administered by the PBO, and other functions 
     performed by the PBO'' and inserting ``the Federal student 
     financial assistance programs authorized under title IV''; 
     and
       (ii) by striking subparagraph (C) and inserting the 
     following:
       ``(C) assist the Chief Operating Officer in identifying 
     goals for--
       ``(i) the administration of the systems used to administer 
     the Federal student financial assistance programs authorized 
     under title IV; and
       ``(ii) the updating of such systems to current 
     technology.''; and
       (B) in paragraph (2)--
       (i) in the matter preceding subparagraph (A), by striking 
     ``administration of the information and financial systems 
     that support'' and inserting ``the administration of 
     Federal'';
       (ii) in subparagraph (A)--

       (I) in the matter preceding clause (i), by striking ``of 
     the delivery system for Federal student assistance'' and 
     inserting ``for the Federal student assistance programs 
     authorized under title IV'';
       (II) by striking clauses (i) and (ii) and inserting the 
     following:

       ``(i) the collection, processing, and transmission of data 
     to students, institutions, lenders, State agencies, and other 
     authorized parties;
       ``(ii) the design and technical specifications for software 
     development and procurement for systems supporting the 
     student financial assistance programs authorized under title 
     IV;'';

       (III) in clause (iii), by striking ``delivery'' and 
     inserting ``administration'';
       (IV) in clause (iv)--

       (aa) by inserting ``the'' after ``supporting''; and
       (bb) by striking ``and'' after the semicolon;

       (V) in clause (v), by striking ``systems that support those 
     programs.'' and inserting ``the administration of the Federal 
     student assistance programs authorized under title IV; and''; 
     and
       (VI) by adding at the end the following:

       ``(vi) ensuring the integrity of the student assistance 
     programs authorized under title IV.''; and
       (iii) in subparagraph (B), by striking ``operations and 
     services'' and inserting ``activities and functions''; and
       (3) in subsection (c)--
       (A) in paragraph (1)(C)--
       (i) in clause (iii), by striking ``information and 
     delivery''; and
       (ii) in clause (iv)--

       (I) by striking ``Developing an'' and inserting 
     ``Developing''; and
       (II) by striking ``delivery and information system'' and 
     inserting ``systems'';

       (B) in paragraph (2)--
       (i) in subparagraph (A), by inserting ``the'' after ``PBO 
     and''; and
       (ii) in subparagraph (B), by striking ``Officer'' and 
     inserting ``Officers''; and
       (C) in paragraph (3), by inserting ``students,'' after 
     ``consult with'';
       (4) in subsection (d)--
       (A) in paragraph (1), by striking the second sentence; and
       (B) in paragraph (5)--
       (i) in subparagraph (B), by striking ``paragraph (2)'' and 
     inserting ``paragraph (4)''; and
       (ii) in subparagraph (C), by striking ``this'';
       (5) in subsection (f)--
       (A) in paragraph (2), by striking ``to borrowers'' and 
     inserting ``to students, borrowers,''; and
       (B) in paragraph (3)(A), by striking ``(1)(A)'' and 
     inserting ``(1)'';
       (6) in subsection (g)(3), by striking ``not more than 25'';
       (7) in subsection (h), by striking ``organizational 
     effectiveness'' and inserting ``effectiveness'';
       (8) by striking subsection (i);
       (9) by redesignating subsection (j) as subsection (i); and
       (10) in subsection (i) (as redesignated by paragraph (9)), 
     by striking ``, including transition costs''.

     SEC. 7320. PROCUREMENT FLEXIBILITY.

       Section 142 (20 U.S.C. 1018a) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1)--
       (i) by striking ``for information systems supporting the 
     programs authorized under title IV''; and
       (ii) by striking ``and'' after the semicolon;
       (B) in paragraph (2), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(3) through the Chief Operating Officer--
       ``(A) to the maximum extent practicable, utilize 
     procurement systems that streamline operations, improve 
     internal controls, and enhance management; and
       ``(B) assess the efficiency of such systems and assess such 
     systems' ability to meet PBO requirements.'';
       (2) by striking subsection (c)(2) and inserting the 
     following:
       ``(2) Fee for service arrangements.--The Chief Operating 
     Officer shall, when appropriate and consistent with the 
     purposes of the PBO, acquire services related to the 
     functions set forth in section 141(b)(2) from any entity that 
     has the capability and capacity to meet the requirements set 
     by the PBO. The Chief Operating Officer is authorized to pay 
     fees that are equivalent to those paid by other entities to 
     an organization that provides services that meet the 
     requirements of the PBO, as determined by the Chief Operating 
     Officer.'';
       (3) in subsection (d)(2)(B), by striking ``on Federal 
     Government contracts'';
       (4) in subsection (g)--
       (A) in paragraph (4)(A)--
       (i) in the subparagraph heading, by striking ``Sole 
     source.--'' and inserting ``Single-source basis.--''; and
       (ii) by striking ``sole-source'' and inserting ``single-
     source''; and
       (B) in paragraph (7), by striking ``sole-source'' and 
     inserting ``single-source'';
       (5) in subsection (h)(2)(A), by striking ``sole-source'' 
     and inserting ``single-source''; and
       (6) in subsection (l), by striking paragraph (3) and 
     inserting the following:
       ``(3) Single-source basis.--The term `single-source basis', 
     with respect to an award of a contract, means that the 
     contract is awarded to a source after soliciting an offer or 
     offers from, and negotiating with, only such source (although 
     such source is not the only source in the marketplace capable 
     of meeting the need) because such source is the most 
     advantageous source for purposes of the award.''.

                 CHAPTER 3--TEACHER QUALITY ENHANCEMENT

     SEC. 7331. TEACHER QUALITY ENHANCEMENT GRANTS FOR STATES AND 
                   PARTNERSHIPS.

       Part A of title II (20 U.S.C. 1021 et seq.) is amended to 
     read as follows:

      ``PART A--TEACHER QUALITY ENHANCEMENT GRANTS FOR STATES AND 
                              PARTNERSHIPS

     ``SEC. 201. PURPOSES; DEFINITIONS.

       ``(a) Purposes.--The purposes of this part are to--
       ``(1) improve student achievement;
       ``(2) improve the quality of the current and future 
     teaching force by improving the preparation of prospective 
     teachers and enhancing professional development activities;
       ``(3) hold institutions of higher education accountable for 
     preparing highly qualified teachers; and
       ``(4) recruit qualified individuals, including minorities 
     and individuals from other occupations, into the teaching 
     force.
       ``(b) Definitions.--In this part:
       ``(1) Arts and sciences.--The term `arts and sciences' 
     means--
       ``(A) when referring to an organizational unit of an 
     institution of higher education, any academic unit that 
     offers 1 or more academic majors in disciplines or content 
     areas corresponding to the academic subject areas in which 
     teachers provide instruction; and
       ``(B) when referring to a specific academic subject area, 
     the disciplines or content areas in which academic majors are 
     offered by the arts and sciences organizational unit.
       ``(2) Children from low-income families.--The term 
     `children from low-income families' means children as 
     described in section 1124(c)(1)(A) of the Elementary and 
     Secondary Education Act of 1965.
       ``(3) Early childhood education program.--The term `early 
     childhood education program' means a Head Start program or an 
     Early Head Start program carried out under the Head Start Act 
     (42 U.S.C. 9831 et seq.), a State licensed or regulated child 
     care program or school, or a State prekindergarten program 
     that serves children from birth through kindergarten and that 
     addresses the children's cognitive (including language, early 
     literacy, and pre-numeracy), social, emotional, and physical 
     development.
       ``(4) Early childhood educator.--The term `early childhood 
     educator' means an individual with primary responsibility for 
     the education of children in an early childhood education 
     program.
       ``(5) Educational service agency.--The term `educational 
     service agency' has the meaning given such term in section 
     9101 of the Elementary and Secondary Education Act of 1965.
       ``(6) Exemplary teacher.--The term `exemplary teacher' has 
     the meaning given such term in section 9101 of the Elementary 
     and Secondary Education Act of 1965.
       ``(7) High-need local educational agency.--The term `high-
     need local educational agency' means a local educational 
     agency or educational service agency--
       ``(A)(i) that serves not fewer than 10,000 children from 
     low-income families;
       ``(ii) for which not less than 20 percent of the children 
     served by the agency are children from low-income families; 
     or
       ``(iii) with a total of less than 600 students in average 
     daily attendance at the schools

[[Page 26759]]

     that are served by the agency and all of whose schools are 
     designated with a school locale code of 7 or 8, as determined 
     by the Secretary; and
       ``(B)(i) for which there is a high percentage of teachers 
     not teaching in the academic subject areas or grade levels in 
     which the teachers were trained to teach; or
       ``(ii) for which there is a high teacher turnover rate or a 
     high percentage of teachers with emergency, provisional, or 
     temporary certification or licensure.
       ``(8) Highly qualified.--The term `highly qualified' has 
     the meaning given such term in section 9101 of the Elementary 
     and Secondary Education Act of 1965 and, with respect to 
     special education teachers, in section 602 of the Individuals 
     with Disabilities Education Act.
       ``(9) Professional development.--The term `professional 
     development' has the meaning given such term in section 9101 
     of the Elementary and Secondary Education Act of 1965.
       ``(10) Scientifically based reading research.--The term 
     `scientifically based reading research' has the meaning given 
     such term in section 1208 of the Elementary and Secondary 
     Education Act of 1965.
       ``(11) Scientifically based research.--The term 
     `scientifically based research' has the meaning given such 
     term in section 9101 of the Elementary and Secondary 
     Education Act of 1965.
       ``(12) Teacher mentoring.--The term `teacher mentoring' 
     means mentoring of teachers through an established or 
     implemented program--
       ``(A) that includes qualifications for mentors;
       ``(B) that provides training for mentors;
       ``(C) that provides regular and ongoing opportunities for 
     mentors and mentees to observe each other's teaching methods 
     in classroom settings during the school day;
       ``(D) in which the mentoring is provided by a colleague who 
     teaches in the same field, grade, or subject as the mentee; 
     and
       ``(E) that includes--
       ``(i) common planning time or regularly scheduled 
     collaboration with teachers in the teachers' same field, 
     grade, or subject area; and
       ``(ii) additional professional development opportunities.
       ``(13) Teaching skills.--The term `teaching skills' means 
     the ability to--
       ``(A) increase student achievement;
       ``(B) effectively convey and explain academic subject 
     matter;
       ``(C) employ strategies that--
       ``(i) are based on scientifically based research;
       ``(ii) are specific to academic subject matter; and
       ``(iii) focus on identification and tailoring of academic 
     instruction to students' specific learning needs, 
     particularly students with disabilities, students who are 
     limited English proficient, and students who are gifted and 
     talented;
       ``(D) conduct ongoing assessment of student learning;
       ``(E) effectively manage a classroom;
       ``(F) communicate and work with parents and guardians, and 
     involve parents and guardians in their children's education; 
     and
       ``(G) in the case of an early childhood educator, use age 
     appropriate strategies and practices for children in early 
     childhood education programs.

     ``SEC. 202. STATE GRANTS.

       ``(a) In General.--From amounts made available under 
     section 209(a)(1) for a fiscal year, the Secretary is 
     authorized to award grants under this section, on a 
     competitive basis, to eligible States to enable the eligible 
     States to carry out the activities described in subsections 
     (d) and (e).
       ``(b) Eligible State.--
       ``(1) Definition.--In this part, the term `eligible State' 
     means--
       ``(A) the Governor of a State; or
       ``(B) in the case of a State for which the constitution or 
     law of such State designates another individual, entity, or 
     agency in the State to be responsible for teacher 
     certification or licensure and preparation activity, such 
     individual, entity, or agency.
       ``(2) Consultation.--The Governor or the individual, 
     entity, or agency designated under paragraph (1)(B) shall 
     consult with the Governor, State board of education, State 
     educational agency, State agency for higher education, or 
     other applicable State entities (including the State agency 
     responsible for early childhood education), as appropriate, 
     with respect to the activities assisted under this section, 
     including the development of the grant application and 
     implementation of the activities.
       ``(3) Construction.--Nothing in this subsection shall be 
     construed to negate or supersede the legal authority under 
     State law of any State agency, State entity, or State public 
     official over programs that are under the jurisdiction of the 
     agency, entity, or official.
       ``(c) Application.--To be eligible to receive a grant under 
     this section, an eligible State shall submit an application 
     to the Secretary that--
       ``(1) meets the requirement of this section;
       ``(2) demonstrates that the eligible State is in full 
     compliance with--
       ``(A) sections 206(b) and 207; and
       ``(B) if applicable, sections 207(b) and 208, as such 
     sections were in effect on the day before the date of 
     enactment of the Higher Education Amendments of 2005;
       ``(3) includes a description of how the eligible State 
     intends to use funds provided under this section;
       ``(4) includes measurable objectives for the use of the 
     funds provided under this section;
       ``(5) describes how funded activities will--
       ``(A) reduce shortages, if any, of--
       ``(i) highly qualified general and special education 
     teachers, including in low-income urban and rural areas and 
     in high-need academic subject areas; and
       ``(ii) fully competent early childhood educators; and
       ``(B) be consistent with State, local, and other education 
     reform activities that promote effective teaching skills and 
     student academic achievement and consistent with State early 
     learning standards for early childhood education programs, 
     including how funded activities will support carrying out the 
     applicable requirements of the eligible State under sections 
     1111 and 1119 of the Elementary and Secondary Education Act 
     of 1965, and section 612(a)(14) of the Individuals with 
     Disabilities Education Act;
       ``(6) contains an assurance that the eligible State will 
     carry out each of the intended uses of grant funds described 
     in paragraph (3);
       ``(7) describes the eligible State's--
       ``(A) current capacity to measure the effectiveness of 
     teacher preparation programs and professional development 
     activities within the State using available statewide data;
       ``(B) activities to enhance or expand the integration of 
     existing data systems to better measure the effectiveness of 
     teacher preparation programs and professional development 
     activities within the State; or
       ``(C) if such data systems do not exist, plans for the 
     development of an integrated statewide data system to measure 
     the effectiveness of teacher preparation programs and 
     professional development activities within the State using 
     available statewide data; and
       ``(8) contains such other information and assurances as the 
     Secretary may require.
       ``(d) Required Uses of Funds.--An eligible State that 
     receives a grant under this section shall use the grant funds 
     to reform teacher preparation requirements, to coordinate 
     with State activities under section 2113(c) of the Elementary 
     and Secondary Education Act of 1965 and subsections (a) and 
     (b) of section 654 of the Individuals with Disabilities 
     Education Act, and to ensure that current and prospective 
     teachers are highly qualified, by carrying out each of the 
     following activities:
       ``(1) Reforms.--Ensuring that all teacher preparation 
     programs in the State are preparing current or prospective 
     teachers to become highly qualified, to understand 
     scientifically based research and its applicability, and to 
     use technology effectively, including use of instructional 
     techniques to improve student academic achievement, by 
     assisting such programs--
       ``(A) in retraining faculty;
       ``(B) in designing (or redesigning) teacher preparation 
     programs so that such programs--
       ``(i) are based on rigorous academic content and 
     scientifically based research (including scientifically based 
     reading research), and aligned with challenging State 
     academic content standards;
       ``(ii) promote effective teaching skills; and
       ``(iii) promote understanding of effective instructional 
     strategies for students with special needs, including 
     students with disabilities, students who are limited English 
     proficient, and students who are gifted and talented;
       ``(C) in ensuring collaboration with departments, programs, 
     or units outside of the teacher preparation program in 
     relevant academic content areas to ensure a successful 
     combination of training in both teaching and such content;
       ``(D) in developing high-quality, rigorous clinical 
     experiences (that include student teaching experience) in 
     which students participate while enrolled in a teacher 
     preparation program, lasting not less than 1 term, through 
     dissemination of best practices, technical assistance, or 
     other relevant activities; and
       ``(E) in collecting and using data, in collaboration with 
     institutions of higher education, schools, and local 
     educational agencies, on teacher retention rates, by school, 
     to evaluate and strengthen the effectiveness of the State's 
     teacher support system.
       ``(2) Certification or licensure requirements.--Reforming 
     teacher certification or licensure requirements to ensure 
     that--
       ``(A) teachers have the academic content knowledge and 
     teaching skills in the academic subject areas that the 
     teachers teach that are necessary to help students meet 
     challenging State student academic achievement standards, as 
     required under section 1111(b)(1) of the Elementary and 
     Secondary Education Act of 1965;
       ``(B) such requirements are aligned with challenging State 
     academic content standards, as required under section 
     1111(b)(1) of the Elementary and Secondary Education Act of 
     1965;
       ``(C) teacher certification and licensure assessments are--
       ``(i) used for purposes for which such assessments are 
     valid and reliable;

[[Page 26760]]

       ``(ii) consistent with relevant, professional, and 
     technical standards; and
       ``(iii) aligned with the reporting requirements of sections 
     205 and 206; and
       ``(D) such requirements for high-need academic subject 
     areas (such as reading, mathematics, science, and foreign 
     language, including less commonly taught languages) and high-
     need areas (such as special education, language instruction 
     educational programs, and early childhood education) exist 
     and reflect qualifications to help students meet high 
     standards, which may include the development of a State test 
     for such areas.
       ``(3) Evaluation.--
       ``(A) Annual evaluation.--An eligible State that receives a 
     grant under this section shall evaluate annually the 
     effectiveness of teacher preparation programs and 
     professional development activities within the State. To the 
     extent practicable, such evaluation shall examine--
       ``(i) teachers' contributions to improving student academic 
     achievement, as measured by State academic assessments 
     required under section 1111(b)(3) of the Elementary and 
     Secondary Education Act of 1965; and
       ``(ii) teacher mastery of the academic subject matter the 
     teachers teach.
       ``(B) Public reporting.--The eligible State shall make the 
     information described in subparagraph (A) widely available 
     through public means, such as posting on the Internet, 
     distribution to the media, and distribution through public 
     agencies, except such reporting shall not be made in a case 
     in which the reporting of the data would reveal personally 
     identifiable information about a teacher or student.
       ``(C) Better measurement of effectiveness.--
       ``(i) In general.--An eligible State that receives a grant 
     under this section and does not have the capacity to measure 
     the effectiveness of teacher preparation programs and 
     professional development activities within the State using 
     available statewide data, shall use a portion of funds 
     received under this section to enhance or expand the 
     integration of existing data systems, as described in 
     subsection (c)(7)(B), or develop an integrated statewide data 
     system, as described in subsection (c)(7)(C), to better 
     measure and provide information that will improve the 
     effectiveness of teacher preparation programs on student 
     learning and achievement, and the impact of pre-service and 
     ongoing professional development on teacher placement and 
     retention.
       ``(ii) Technical quality; student privacy; funds from other 
     sources.--In carrying out clause (i), the eligible State 
     shall ensure--

       ``(I) the technical quality of the data system to maximize 
     the validity, reliability, and accessibility of the data;
       ``(II) that student privacy is protected and that 
     individually identifiable information about students, their 
     achievements, and their families remains confidential, in 
     accordance with the Family Educational Rights and Privacy Act 
     of 1974; and
       ``(III) that funds provided under this section are used to 
     supplement State efforts to enhance or expand the integration 
     of existing data systems or to develop an integrated 
     statewide data system.

       ``(e) Allowable Uses of Funds.--An eligible State that 
     receives a grant under this section may use the grant funds 
     to reform teacher preparation requirements, to coordinate 
     with State activities under section 2113(c) of the Elementary 
     and Secondary Education Act of 1965 and subsections (a) and 
     (b) of section 654 of the Individuals with Disabilities 
     Education Act, and to ensure that current and future teachers 
     are highly qualified, by carrying out any of the following 
     activities:
       ``(1) Alternatives to traditional preparation for teaching 
     and state certification or licensure.--Providing prospective 
     teachers with alternative routes to State certification or 
     licensure and alternative route programs to become highly 
     qualified teachers through--
       ``(A) innovative approaches that reduce unnecessary 
     barriers to State certification or licensure while producing 
     highly qualified teachers;
       ``(B) a selective means for admitting individuals into such 
     programs that includes passage of State approved teacher 
     examinations in appropriate subject areas;
       ``(C) programs that help prospective teachers develop 
     effective teaching skills and strategies through knowledge of 
     research-based information on the learning process and 
     learning practices;
       ``(D) programs that provide support to teachers during the 
     teachers' initial years in the profession; and
       ``(E) alternative routes to State certification or 
     licensure of teachers for qualified individuals, including 
     mid-career professionals from other occupations, 
     paraprofessionals, former military personnel, and recent 
     college graduates with records of academic distinction.
       ``(2) Innovative programs.--Planning and implementing 
     innovative programs to enhance the ability of institutions of 
     higher education, including charter colleges of education, or 
     university and local educational agency partnership schools, 
     to prepare highly qualified teachers, which programs shall--
       ``(A) permit flexibility in the manner in which the 
     institution of higher education meets State requirements as 
     long as graduates, during the graduates' initial years in the 
     profession, increase student academic achievement;
       ``(B) provide a description in the application of long-term 
     data gathered from teachers' performance over multiple years 
     in the classroom regarding the teachers' ability to increase 
     student academic achievement;
       ``(C) ensure high-quality preparation of teachers from 
     underrepresented groups;
       ``(D) create performance measures that can be used to 
     document the effectiveness of innovative methods for 
     preparing highly qualified teachers; and
       ``(E) develop frameworks for exemplary induction programs 
     informed by research and best practices.
       ``(3) Teacher recruitment and retention.--Undertaking 
     activities that develop and implement effective mechanisms to 
     ensure that local educational agencies and schools are able 
     to recruit and retain highly qualified teachers, which may 
     include the following activities:
       ``(A) Performance based compensation.--Assisting local 
     educational agencies in developing--
       ``(i) performance systems that reward teachers who increase 
     student academic achievement and take on additional 
     responsibilities, such as teacher mentoring and serving as 
     master teachers; and
       ``(ii) strategies that provide differential and bonus pay 
     in high-need local educational agencies to recruit and 
     retain--

       ``(I) principals;
       ``(II) highly qualified teachers who teach in high-need 
     academic subject areas (such as reading, mathematics, 
     science, and foreign language, including less commonly taught 
     languages);
       ``(III) highly qualified teachers who teach in schools 
     identified for school improvement under section 1116(b) of 
     the Elementary and Secondary Education Act of 1965;
       ``(IV) highly qualified special education teachers;
       ``(V) highly qualified teachers specializing in teaching 
     children who are limited English proficient; and
       ``(VI) highly qualified teachers in low-income urban and 
     rural schools or districts.

       ``(B) Additional mechanisms.--Developing and implementing 
     effective mechanisms to ensure that local educational 
     agencies and schools are able to--
       ``(i) address needs identified with respect to--

       ``(I) underrepresented groups;
       ``(II) high-need academic subject areas (such as reading, 
     mathematics, science, and foreign language, including less 
     commonly taught languages);
       ``(III) high-need areas (such as special education, 
     language instruction educational programs for limited English 
     proficient students, and early childhood education);
       ``(IV) high-need communities, such as rural and urban 
     areas; and
       ``(V) high-need schools, including schools with high rates 
     of teacher turnover;

       ``(ii) offer teacher mentoring for new teachers during such 
     teachers' initial years of teaching; and
       ``(iii) provide access to ongoing professional development 
     and innovative training opportunities for teachers and 
     administrators.
       ``(C) Teacher advancement.--Assisting local educational 
     agencies in developing teacher advancement and retention 
     initiatives that promote professional growth and emphasize 
     multiple career paths (such as paths to becoming a highly 
     qualified mentor teacher or exemplary teacher) and pay 
     differentiation.
       ``(D) Recruit qualified professionals.--Developing 
     recruitment programs or assisting local educational agencies 
     in--
       ``(i) recruiting qualified professionals from other fields, 
     including highly qualified paraprofessionals (as defined in 
     section 2102 of the Elementary and Secondary Education Act of 
     1965); and
       ``(ii) providing such professionals with alternative routes 
     to teacher certification or licensure.
       ``(E) Underrepresented populations.--Providing increased 
     opportunities for minorities, individuals with disabilities, 
     and other individuals underrepresented in the teaching 
     profession to become highly qualified teachers.
       ``(F) Rural education recruitment and retention programs.--
     Making grants to rural school districts, or a consortia of 
     rural school districts, to implement--
       ``(i) teacher recruitment strategies, which may include 
     tuition assistance, student loan forgiveness, housing 
     assistance, bonus pay, and other effective approaches;
       ``(ii) teacher retention strategies, such as mentoring 
     programs and ongoing opportunities for professional growth 
     and advancement; and
       ``(iii) partnerships with institutions of higher education 
     designed to--

       ``(I) prepare beginning teachers to teach; and
       ``(II) assist teachers (including teachers who teach 
     multiple subjects) to become highly qualified.

       ``(4) Teacher scholarships and support.--Providing--

[[Page 26761]]

       ``(A) scholarships to help students, such as individuals 
     who have been accepted by, or who are enrolled in, a program 
     of undergraduate education or initial teacher preparation at 
     an institution of higher education, pay the costs of tuition, 
     room, board, and other expenses of completing a teacher 
     preparation program, if--
       ``(i) the Secretary establishes such requirements as the 
     Secretary determines necessary to ensure that recipients of 
     scholarships under this section who complete teacher 
     preparation programs--

       ``(I) subsequently teach in an early childhood education 
     program or a high-need local educational agency for a period 
     of time equivalent to the period of time for which the 
     recipient received scholarship assistance, plus an additional 
     1 year; or
       ``(II) repay the amount of the scholarship if the recipient 
     does not teach as described in subclause (I); and

       ``(ii) the eligible State provides an assurance that the 
     eligible State will recruit minority students to become 
     highly qualified teachers;
       ``(B) support services, if needed, to enable scholarship 
     recipients to complete postsecondary education programs, or 
     to move from a career outside of the field of education into 
     a teaching career; and
       ``(C) follow-up services to former scholarship recipients 
     during the recipients' initial years of teaching.
       ``(5) Teacher removal.--Developing and implementing 
     effective mechanisms to ensure that local educational 
     agencies and schools are able to expeditiously remove 
     incompetent or unqualified teachers consistent with 
     procedures to ensure due process for the teachers.
       ``(6) Teacher effectiveness.--Developing--
       ``(A) systems to measure the effectiveness of teacher 
     preparation programs and professional development programs; 
     and
       ``(B) strategies to document gains in student academic 
     achievement or increases in teacher mastery of the academic 
     subject matter the teachers teach, as a result of such 
     programs.
       ``(7) Early childhood educators.--Developing strategies to 
     improve and expand teacher preparation programs for early 
     childhood educators to teach in early childhood education 
     programs.
       ``(8) Professional development.--Developing and enhancing 
     high-quality professional development, instructional 
     materials, and relevant educational materials.
       ``(9) Technology.--Assisting teachers to use technology 
     effectively, including use for instructional techniques and 
     the collection, management, and analysis of data to improve 
     teaching, learning, and decision making for the purpose of 
     increasing student academic achievement.
       ``(10) Areas of instructional shortage.--Increasing the 
     number of--
       ``(A) teachers in the classroom providing instruction in 
     high-need academic subject areas (such as reading, 
     mathematics, science, and foreign language, including less 
     commonly taught languages) and high-need areas (such as 
     special education, language instruction educational programs 
     for limited English proficient students, and early childhood 
     education); and
       ``(B) special education faculty dedicated to preparing 
     highly qualified special education teachers at institutions 
     of higher education.
       ``(11) Technical assistance.--Providing technical 
     assistance to low-performing programs of teacher preparation 
     within institutions of higher education identified under 
     section 207(a).
       ``(12) Evaluation support.--Performing data collection, 
     evaluation, and reporting to meet the requirements of 
     subsection (d)(3).
       ``(13) Professional advancement.--Developing a professional 
     advancement system to--
       ``(A) initiate or enhance a system in which highly 
     qualified teachers who pursue advanced licensure levels are 
     required to demonstrate increased competencies and undertake 
     increased responsibilities for increased compensation as the 
     teachers progress through levels established by the State; or
       ``(B) provide opportunities for professional growth, 
     including through--
       ``(i) a nationally recognized advance credentialing system; 
     or
       ``(ii) special certification in advanced placement or 
     international baccalaureate content, teaching gifted and 
     talented students, and pedagogy.
       ``(f) Supplement, Not Supplant.--Funds made available under 
     this section shall be used to supplement, and not supplant, 
     other Federal, State, and local funds that would otherwise be 
     expended to carry out activities under this section.

     ``SEC. 203. PARTNERSHIP GRANTS.

       ``(a) Grants.--From amounts made available under section 
     209(a)(2) for a fiscal year, the Secretary is authorized to 
     award grants under this section, on a competitive basis, to 
     eligible partnerships to enable the eligible partnerships to 
     carry out the activities described in subsections (e) and 
     (f).
       ``(b) Definitions.--
       ``(1) Eligible partnership.--
       ``(A) In general.--In this part, the term `eligible 
     partnership' means an entity that shall include--
       ``(i) a partner institution;
       ``(ii) a school of arts and sciences;
       ``(iii) a high-need local educational agency and a school 
     or a consortium of schools served by the agency; and
       ``(iv) at least 1 individual or entity described in 
     subparagraph (B).
       ``(B) Additional individuals and entities.--In this part, 
     the term `eligible partnership' means an entity that shall 
     include at least 1 of the following:
       ``(i) A Governor.
       ``(ii) A State educational agency.
       ``(iii) A State board of education.
       ``(iv) A State agency for higher education.
       ``(v) A school or department within the partner institution 
     focusing on education, psychology, human development, or a 
     department with comparable expertise in the disciplines of 
     teaching, learning, and child and adolescent development.
       ``(vi) An institution of higher education or a department 
     within such institution, not described in subparagraph (A).
       ``(vii) A public charter school.
       ``(viii) A public or private elementary school or secondary 
     school.
       ``(ix) A public or private nonprofit educational 
     organization.
       ``(x) A business.
       ``(xi) A science-, mathematics-, or technology-oriented 
     entity.
       ``(xii) An early childhood education program.
       ``(xiii) A teacher organization.
       ``(xiv) An educational service agency.
       ``(xv) A consortium of local educational agencies.
       ``(xvi) A nonprofit telecommunications entity.
       ``(2) Partner institution.--In this section, the term 
     `partner institution' means an institution of higher 
     education, which may include a 2-year institution of higher 
     education offering a dual program with a 4-year institution 
     of higher education, that has a teacher preparation program--
       ``(A) whose graduates exhibit strong performance on State-
     determined qualifying assessments for new teachers through--
       ``(i) demonstrating that 80 percent or more of the 
     graduates of the program who intend to enter the field of 
     teaching have passed all of the applicable State 
     qualification assessments for new teachers, which shall 
     include an assessment of each prospective teacher's subject 
     matter knowledge in the content area in which the teacher 
     intends to teach; or
       ``(ii) being ranked among the highest-performing teacher 
     preparation programs in the State as determined by the 
     State--

       ``(I) using criteria consistent with the requirements for 
     the State report card under section 206(b); and
       ``(II) using the State report card on teacher preparation 
     required under section 206(b), after the first publication of 
     such report card and for every year thereafter; or

       ``(B) that requires all the students of the program to meet 
     high academic standards and participate in intensive clinical 
     experience, and--
       ``(i) in the case of secondary school candidates, to 
     successfully complete--

       ``(I) a major or its equivalent in coursework in the 
     academic subject area in which the candidate intends to 
     teach; or
       ``(II) a related major in the academic subject area in 
     which the candidate intends to teach;

       ``(ii) in the case of elementary school candidates, to 
     successfully complete--

       ``(I) an academic major or its equivalent in coursework in 
     the arts and sciences; or
       ``(II) a major in elementary education with a significant 
     amount of coursework in the arts and sciences; and

       ``(iii) in the case of early childhood educators, to become 
     fully competent and meet degree requirements, as established 
     by the State.
       ``(c) Application.--Each eligible partnership desiring a 
     grant under this section shall submit an application to the 
     Secretary at such time, in such manner, and accompanied by 
     such information as the Secretary may require. Each such 
     application shall contain--
       ``(1) a needs assessment of all the partners with respect 
     to the preparation, induction, and professional development 
     of early childhood educators, general and special education 
     teachers, and principals;
       ``(2) a description of the extent to which the teacher 
     preparation program of the eligible partnership prepares new 
     teachers with effective teaching skills;
       ``(3) a description of how the eligible partnership will 
     coordinate with other teacher preparation or professional 
     development programs, including those funded under the 
     Elementary and Secondary Education Act of 1965 and the 
     Individuals with Disabilities Education Act, and how the 
     activities of the eligible partnership will be consistent 
     with State, local, and other education reform activities that 
     promote student achievement;
       ``(4) a resource assessment that describes the resources 
     available to the eligible partnership, the intended use of 
     the grant funds (including a description of how the grant 
     funds will be fairly distributed), and the commitment of the 
     resources of the eligible partnership to the activities 
     assisted under this part, including financial support, 
     faculty participation, time commitments, and

[[Page 26762]]

     continuation of the activities when the grant period ends;
       ``(5) a description of--
       ``(A) how the eligible partnership will meet the purposes 
     of this part;
       ``(B) how the eligible partnership will carry out the 
     activities required under subsection (e) and any permissible 
     activities under subsection (f);
       ``(C) the eligible partnership's evaluation plan pursuant 
     to section 205(b);
       ``(D) how the eligible partnership will align the teacher 
     preparation program with the challenging student academic 
     achievement standards, State early learning standards for 
     early childhood education programs (where applicable), and 
     challenging academic content standards, established by the 
     State in which the partnership is located;
       ``(E) how faculty of the teacher preparation program at the 
     partner institution will serve, over the period of the grant, 
     with highly qualified teachers in the classrooms of the high-
     need local educational agency included in the eligible 
     partnership;
       ``(F) how the eligible partnership will ensure that 
     teachers, principals, and superintendents in all schools 
     (including private schools, as appropriate) located in the 
     geographic areas served by an eligible partnership under this 
     section are provided information about the activities carried 
     out with funds under this section, including through 
     electronic means;
       ``(G) how the eligible partnership will design, implement, 
     or enhance the clinical program component, including 
     promoting close supervision of student teachers by faculty of 
     the teacher preparation program and mentor teachers while in 
     the program and during the student teachers' initial years of 
     teaching if hired by schools included in the eligible 
     partnership;
       ``(H) how the eligible partnership will develop or enhance 
     an induction program that includes high-quality professional 
     development to support new teachers during the teachers' 
     initial years of teaching that includes teacher mentoring and 
     collaborating with teachers in the same grade, department, or 
     field; and
       ``(I) how the eligible partnership will collect, analyze, 
     use, and disseminate data on the retention of all teachers in 
     schools located in the geographic areas served by the 
     eligible partnership to evaluate the effectiveness of its 
     teacher support system; and
       ``(6) an assurance that the eligible partnership will carry 
     out each of the activities described in paragraph (5).
       ``(d) Consultation.--
       ``(1) In general.--Members of an eligible partnership that 
     receives a grant under this section shall engage in regular 
     consultation throughout the development and implementation of 
     programs and activities under this section.
       ``(2) Regular communication.--To ensure timely and 
     meaningful consultation, regular communication shall occur 
     among all members of the eligible partnership, including the 
     high-need local educational agency. Such communication shall 
     continue throughout the implementation of the grant and the 
     assessment of programs and activities under this section.
       ``(3) Written consent.--The Secretary may approve changes 
     in grant activities only if a written consent signed by all 
     members of the eligible partnership is submitted to the 
     Secretary.
       ``(e) Required Uses of Funds.--An eligible partnership that 
     receives a grant under this section shall use the grant funds 
     to carry out each of the following activities:
       ``(1) Reforms.--Ensuring that each teacher preparation 
     program and each early childhood educator preparation 
     program, where applicable, of the eligible partnership that 
     is assisted under this section addresses the needs identified 
     in the needs assessment of the partnership and is preparing 
     current or prospective teachers to be highly qualified, and, 
     where applicable, early childhood educators to be fully 
     competent, to understand scientifically based research and 
     its applicability, and to use technology effectively, 
     including use of instructional techniques to improve student 
     academic achievement, and in the case of early childhood 
     educators, techniques to improve children's cognitive, 
     social, emotional, and physical development, by assisting 
     such programs--
       ``(A) in retraining faculty;
       ``(B) in designing (or redesigning) teacher preparation 
     programs so that such programs--
       ``(i) are based on rigorous academic content and 
     scientifically based research (including scientifically based 
     reading research), and aligned with challenging State 
     academic content standards, as required under section 
     1111(b)(1) of the Elementary and Secondary Education Act of 
     1965, and for early childhood educators, aligned with State 
     early learning standards;
       ``(ii) promote effective teaching skills;
       ``(iii) promote understanding of effective instructional 
     strategies for students with special needs, including 
     students with disabilities, students who are limited English 
     proficient, students who are gifted and talented, and 
     children in early childhood education programs; and
       ``(iv) promote high-quality mathematics, science, and 
     foreign language instruction, where applicable;
       ``(C) in ensuring collaboration with departments, programs, 
     or units outside of the teacher preparation program in all 
     academic content areas to ensure a successful combination of 
     training in both teaching and such content; and
       ``(D) in developing high-quality, rigorous clinical 
     experiences, lasting not less than 1 term, through 
     dissemination of best practices, technical assistance, or 
     other relevant activities.
       ``(2) Clinical experience and interaction.--Improving 
     sustained and high-quality preservice clinical experiences, 
     including--
       ``(A) providing teacher mentoring; and
       ``(B) substantially increasing interaction between faculty 
     at institutions of higher education and new and experienced 
     teachers, principals, and other administrators at elementary 
     schools or secondary schools, and providing support, 
     including preparation time and release time, for such 
     interaction.
       ``(3) Support programs for new teachers.--Creating a 
     program to support new teachers during the initial years of 
     teaching (for not less than 1 year and not more than 3 
     years). Such program shall promote effective teaching skills 
     and may include the following components:
       ``(A) Development of skills in educational interventions 
     based on scientifically based research.
       ``(B) Development of knowledge of scientifically based 
     research on teaching and learning.
       ``(C) Inclusion of faculty who model the integration of 
     research and practice in the classroom.
       ``(D) Opportunities for--
       ``(i) high-quality teacher mentoring; and
       ``(ii) additional professional development, dissemination 
     of evidence-based research on educational practices, and 
     professional development activities.
       ``(E) Interdisciplinary collaboration among exemplary 
     teachers, faculty, researchers, and other staff who prepare 
     new teachers in the learning process and the assessment of 
     learning.
       ``(f) Allowable Uses of Funds.--An eligible partnership 
     that receives a grant under this section may use the grant 
     funds to carry out any of the following activities that 
     address the needs identified in the needs assessment:
       ``(1) Alternatives to traditional preparation for teaching 
     and state certification or licensure.--The activity described 
     in section 202(e)(1).
       ``(2) Dissemination and coordination.--Broadly 
     disseminating information on effective practices used by the 
     eligible partnership, and coordinating with the recruitment 
     and training activities of the Governor, State board of 
     education, State agency for higher education, State agency 
     responsible for early childhood education, and State 
     educational agency, as appropriate.
       ``(3) Innovative programs.--Developing innovative programs 
     designed to provide graduates of programs funded under this 
     title with opportunities to continue their education through 
     supports and opportunities to improve instructional practices 
     in the initial years of teaching, including the following:
       ``(A) Internships.--
       ``(i) Teacher preparation enhancement internship.--
     Developing a 1-year paid internship program for students who 
     have completed an initial teacher preparation program, or 
     alternative routes to State certification or licensure 
     program, to enable such students to develop the skills and 
     experience necessary for success in teaching, including 
     providing intensive clinical training and combining in-
     service instruction in teacher methods and assessments with 
     classroom observations, experiences, and practices. Such 
     interns shall have a reduced teaching load and a mentor for 
     assistance in the classroom.
       ``(ii) Mid-career professional internships.--Developing a 
     1-year paid internship program for mid-career professionals 
     from other occupations, former military personnel, and recent 
     college graduates from fields other than teacher preparation 
     with records of academic distinction to enable such 
     individuals to develop the skills and experience necessary 
     for success in teaching, including providing intensive 
     clinical training and combining in-service instruction in 
     teacher methods and assessments with classroom observations, 
     experiences, and practices. Such interns shall have a reduced 
     teaching load and a mentor for assistance in the classroom.
       ``(B) Residency programs for new teachers.--Supporting 
     teachers in a residency program that provides an induction 
     period for all new general education and special education 
     teachers that includes--
       ``(i) a forum for information sharing among prospective 
     teachers, teachers, principals, administrators, and 
     participating faculty in the partner institution; and
       ``(ii) the application of scientifically based research on 
     teaching and learning generated by entities such as the 
     Institute of Education Sciences, and the National Research 
     Council of the National Academies.
       ``(C) Pathways for paraprofessionals to enter teaching.--
     Creating intensive programs to provide the coursework and 
     clinical experiences needed by highly qualified 
     paraprofessionals, as defined in section 2102 of

[[Page 26763]]

     the Elementary and Secondary Education Act of 1965, to 
     qualify for State teacher certification or licensure to 
     become highly qualified teachers.
       ``(4) Managerial and leadership skills.--Developing and 
     implementing proven mechanisms to provide principals and 
     superintendents with effective managerial, leadership, 
     curricula, and instructional skills that result in increased 
     student academic achievement.
       ``(5) Teacher scholarships and support.--Providing--
       ``(A) scholarships to help students, such as individuals 
     who have been accepted by, or who are enrolled in, a program 
     of undergraduate education at an institution of higher 
     education, pay the costs of tuition, room, board, and other 
     expenses of completing a teacher preparation program, if--
       ``(i) the Secretary establishes such requirements as the 
     Secretary determines necessary to ensure that recipients of 
     scholarships under this paragraph who complete teacher 
     preparation programs--

       ``(I) subsequently teach in a high-need local educational 
     agency for a period of time equivalent to the period of time 
     for which the recipient received the scholarship assistance, 
     plus an additional 1 year; or
       ``(II) repay the amount of the scholarship if the recipient 
     does not teach as described in subclause (I); and

       ``(ii) the eligible partnership provides an assurance that 
     the eligible partnership will recruit minority students to 
     become highly qualified teachers;
       ``(B) support services, if needed, to enable scholarship 
     recipients to complete postsecondary education programs, or 
     to transition from a career outside of the field of education 
     into a teaching career; and
       ``(C) follow-up services for former scholarship recipients 
     during the recipients' initial years of teaching.
       ``(6) Coordination with community colleges.--
       ``(A) Teacher preparation programs.--Coordinating with 2-
     year institutions of higher education to implement teacher 
     preparation programs, including through distance learning, 
     for the purposes of allowing prospective teachers--
       ``(i) to obtain a bachelor's degree and State certification 
     or licensure; and
       ``(ii) to become highly qualified teachers.
       ``(B) Professional development.--Coordinating with 2-year 
     institutions of higher education to provide professional 
     development that--
       ``(i) improves the academic content knowledge of teachers 
     in the academic subject areas in which the teachers are 
     certified or licensed to teach, or in which the teachers are 
     working toward certification or licensure to teach; and
       ``(ii) promotes effective teaching skills.
       ``(7) Clinical experience in science, mathematics, and 
     technology.--Creating opportunities for clinical experience 
     and training for teachers and prospective teachers through 
     participation with professionals in business, research, and 
     work environments in areas relating to science, mathematics, 
     and technology, including opportunities for using laboratory 
     equipment.
       ``(8) Professional developmentCreating opportunities for 
     enhanced and ongoing professional development for experienced 
     general education and special education teachers, early 
     childhood educators, principals, administrators, and faculty.
       ``(9) Technology.--The activity described in section 
     202(e)(9).
       ``(10) Areas of instructional shortage.--Increasing the 
     number of--
       ``(A) teachers in the classroom providing instruction in 
     high-need academic subject areas (such as reading, 
     mathematics, science, and foreign language, including less 
     commonly taught languages), and high-need areas (such as 
     special education, language instruction educational programs 
     for limited English proficient students, and early childhood 
     education);
       ``(B) special education faculty dedicated to preparing 
     highly qualified special education teachers at institutions 
     of higher education; and
       ``(C) faculty at institutions of higher education with 
     expertise in instruction of students who are limited English 
     proficient.
       ``(11) Improving instruction.--Improving instruction by--
       ``(A) improving understanding and instruction in core 
     academic subjects and other, specialized courses, such as 
     geography, American history and government, and world 
     history; and
       ``(B) creating externships for teachers and prospective 
     teachers for field experience and training through 
     participation in business, research, and work environments in 
     high-need academic subject areas (such as reading, 
     mathematics, science, and foreign language, including less 
     commonly taught languages) and high-need areas (such as 
     special education, language instruction educational programs 
     for limited English proficient students, and early childhood 
     education).
       ``(12) Graduate programs.--Developing, in collaboration 
     with departments, programs, or units of both academic content 
     and teacher education within a partner institution, master's 
     degree programs that meet the demonstrated needs of teachers 
     in the high-need local educational agency participating in 
     the eligible partnership for content expertise and teaching 
     skills.
       ``(13) Literacy teacher training.--Establishing and 
     implementing a program that strengthens content knowledge and 
     teaching skills of secondary school teachers in literacy 
     that--
       ``(A) provides teacher training and stipends for literacy 
     coaches who train classroom teachers to implement literacy 
     programs;
       ``(B) develops or redesigns rigorous research-based 
     curricula that are aligned with challenging State academic 
     content standards, as required under section 1111(b)(1) of 
     the Elementary and Secondary Education Act of 1965, and with 
     postsecondary standards for reading and writing;
       ``(C) provides training and stipends for teachers to tutor 
     students with intense individualized reading, writing, and 
     subject matter instruction during or beyond the school day;
       ``(D) provides opportunities for teachers to plan and 
     assess instruction with other teachers, school leaders, and 
     faculty at institutions of higher education; and
       ``(E) establishes an evaluation and accountability plan for 
     activities conducted under this paragraph to measure the 
     impact of such activities.
       ``(g) Construction.--Nothing in this section shall be 
     construed to prohibit an eligible partnership from using 
     grant funds to coordinate with the activities of eligible 
     partnerships in other States or on a regional basis through 
     Governors, State boards of education, State educational 
     agencies, State agencies responsible for early childhood 
     education, local educational agencies, or State agencies for 
     higher education.
       ``(h) Supplement, Not Supplant.--Funds made available under 
     this section shall be used to supplement, and not supplant, 
     other Federal, State, and local funds that would otherwise be 
     expended to carry out activities under this section.

     ``SEC. 204. ADMINISTRATIVE PROVISIONS.

       ``(a) Duration; Number of Awards; Payments.--
       ``(1) Duration.--
       ``(A) Eligible states.--Grants awarded to eligible States 
     under this part shall be awarded for a period not to exceed 3 
     years.
       ``(B) Eligible partnerships.--Grants awarded to eligible 
     partnerships under this part shall be awarded for a period of 
     5 years.
       ``(2) Number of awards.--An eligible partnership may not 
     receive more than 1 grant during a 5-year period. Nothing in 
     this title shall be construed to prohibit an individual 
     member, that can demonstrate need, of an eligible partnership 
     that receives a grant under this title from entering into 
     another eligible partnership consisting of new members and 
     receiving a grant with such other eligible partnership before 
     the 5-year period described in the preceding sentence 
     applicable to the eligible partnership with which the 
     individual member has first partnered has expired.
       ``(3) Payments.--The Secretary shall make annual payments 
     of grant funds awarded under this part.
       ``(b) Peer Review.--
       ``(1) Panel.--The Secretary shall provide the applications 
     submitted under this part to a peer review panel for 
     evaluation. With respect to each application, the peer review 
     panel shall initially recommend the application for funding 
     or for disapproval.
       ``(2) Priority.--In recommending applications to the 
     Secretary for funding under this part, the panel shall--
       ``(A) with respect to grants under section 202, give 
     priority to eligible States--
       ``(i) that have innovative reforms to hold institutions of 
     higher education with teacher preparation programs 
     accountable for preparing teachers to become highly qualified 
     and have effective teaching skills;
       ``(ii) that have innovative efforts aimed at reducing the 
     shortage of highly qualified general and special education 
     teachers, including in low-income urban and rural areas and 
     in high-need academic subject areas (such as reading, 
     mathematics, science, and foreign language, including less 
     commonly taught languages); and
       ``(iii) whose awards promote an equitable geographic 
     distribution of grants among rural and urban areas; and
       ``(B) with respect to grants under section 203, give 
     priority--
       ``(i) to applications from broad-based eligible 
     partnerships that involve businesses and community 
     organizations; and
       ``(ii) to eligible partnerships so that the awards promote 
     an equitable geographic distribution of grants among rural 
     and urban areas.
       ``(3) Secretarial selection.--The Secretary shall 
     determine, based on the peer review process, which 
     applications shall receive funding and the amounts of the 
     grants. In determining grant amounts, the Secretary shall 
     take into account the total amount of funds available for all 
     grants under this part and the types of activities proposed 
     to be carried out.
       ``(c) Matching Requirements.--
       ``(1) State grants.--Each eligible State receiving a grant 
     under section 202 shall provide, from non-Federal sources, an 
     amount equal to 50 percent of the amount of the grant (in 
     cash or in kind) to carry out the activities supported by the 
     grant.

[[Page 26764]]

       ``(2) Partnership grants.--Each eligible partnership 
     receiving a grant under section 203 shall provide, from non-
     Federal sources (in cash or in kind), an amount equal to 25 
     percent of the amount of the grant for the first year of the 
     grant, 35 percent of the amount of the grant for the second 
     year of the grant, and 50 percent of the amount of the grant 
     for each succeeding year of the grant.
       ``(d) Limitation on Administrative Expenses.--An eligible 
     State or eligible partnership that receives a grant under 
     this part may use not more than 2 percent of the grant funds 
     for purposes of administering the grant.
       ``(e) Additional Activities.--The Secretary shall use funds 
     repaid pursuant to section 202(e)(4)(A)(i)(II) or section 
     203(f)(5)(A)(i)(II) to carry out additional activities under 
     section 202 or 203, respectively.

     ``SEC. 205. ACCOUNTABILITY AND EVALUATION.

       ``(a) State Grant Accountability Report.--An eligible State 
     that receives a grant under section 202 shall submit an 
     annual accountability report to the Secretary and the 
     authorizing committees. Such report shall include a 
     description of the degree to which the eligible State, in 
     using funds provided under such section, has made progress in 
     meeting the purposes of this part and substantial progress in 
     meeting the following goals, as applicable:
       ``(1) Student academic achievement.--Increasing student 
     academic achievement for all students as defined by the 
     eligible State.
       ``(2) Raising standards.--Raising the State academic 
     standards required to enter the teaching profession as a 
     highly qualified teacher, and where applicable, as a fully 
     competent early childhood educator.
       ``(3) Initial certification or licensure.--Improving the 
     pass rates and scaled scores for initial State teacher 
     certification or licensure, or increasing the numbers of 
     qualified individuals being certified or licensed as teachers 
     through alternative routes to State certification or 
     licensure programs.
       ``(4) Percentage of highly qualified teachers.--Providing 
     data on the progress of the State towards meeting the highly 
     qualified teacher requirements under section 1119(a)(2) of 
     the Elementary and Secondary Education Act of 1965.
       ``(5) Decreasing teacher shortages.--Decreasing shortages 
     of--
       ``(A) highly qualified teachers in--
       ``(i) low-income urban and rural areas;
       ``(ii) high-need academic subject areas (such as reading, 
     mathematics, science, and foreign language, including less 
     commonly taught languages);
       ``(iii) special education; and
       ``(iv) high-need areas (such as special education, language 
     instruction educational programs for limited English 
     proficient students, and early childhood education); and
       ``(B) fully competent early childhood educators.
       ``(6) Increasing opportunities for professional 
     development.--Increasing opportunities for enhanced and 
     ongoing professional development that--
       ``(A) improves the academic content knowledge of teachers 
     in the academic subject areas in which the teachers are 
     certified or licensed to teach or in which the teachers are 
     working toward certification or licensure to teach; and
       ``(B) promotes effective teaching skills.
       ``(b) Eligible Partnership Evaluation.--Each eligible 
     partnership submitting an application for a grant under 
     section 203 shall establish and include in such application, 
     an evaluation plan that includes strong performance 
     objectives. The plan shall include objectives and measures 
     for increasing--
       ``(1) student achievement for all students as measured by 
     the eligible partnership;
       ``(2) teacher retention in the first 3 years of a teacher's 
     career;
       ``(3) improvement in the pass rates and scaled scores for 
     initial State certification or licensure of teachers;
       ``(4) the percentage of highly qualified teachers hired by 
     the high-need local educational agency participating in the 
     eligible partnership; and
       ``(5) the percentage of--
       ``(A) highly qualified teachers among underrepresented 
     groups, in high-need academic subject areas (such as reading, 
     mathematics, science, and foreign language, including less 
     commonly taught languages), in high-need areas (such as 
     special education, language instruction educational programs 
     for limited English proficient students, and early childhood 
     education), and in high-need schools;
       ``(B) elementary school, middle school, and secondary 
     school classes taught by teachers who are highly qualified;
       ``(C) early childhood education program classes taught by 
     providers who are fully competent; and
       ``(D) highly qualified special education teachers.
       ``(c) Revocation of Grant.--
       ``(1) Eligible states.--If the Secretary determines that an 
     eligible State is not making substantial progress in meeting 
     the purposes, goals, objectives, and measures, as 
     appropriate, by the end of the second year of a grant under 
     this part, then the grant payment shall not be made for the 
     third year of the grant.
       ``(2) Eligible partnerships.--If the Secretary determines 
     that an eligible partnership is not making substantial 
     progress in meeting the purposes, goals, objectives, and 
     measures, as appropriate, by the end of the third year of a 
     grant under this part, then the grant payments shall not be 
     made for any succeeding year of the grant.
       ``(d) Evaluation and Dissemination.--The Secretary shall 
     evaluate the activities funded under this part and report the 
     Secretary's findings regarding the activities to the 
     authorizing committees. The Secretary shall broadly 
     disseminate--
       ``(1) successful practices developed by eligible States and 
     eligible partnerships under this part; and
       ``(2) information regarding such practices that were found 
     to be ineffective.

     ``SEC. 206. ACCOUNTABILITY FOR PROGRAMS THAT PREPARE 
                   TEACHERS.

       ``(a) Institutional and Program Report Cards on the Quality 
     of Teacher Preparation.--
       ``(1) Report card.--Each institution of higher education 
     that conducts a traditional teacher preparation program or 
     alternative routes to State certification or licensure 
     program and that enrolls students receiving Federal 
     assistance under this Act shall report annually to the State 
     and the general public, in a uniform and comprehensible 
     manner that conforms with the definitions and methods 
     established by the Secretary, both for traditional teacher 
     preparation programs and alternative routes to State 
     certification or licensure programs, the following 
     information:
       ``(A) Pass rates and scaled scores.--For the most recent 
     year for which the information is available for those 
     students who took the assessments and are enrolled in the 
     traditional teacher preparation program or alternative routes 
     to State certification or licensure program, and for those 
     who have taken the assessments and have completed the 
     traditional teacher preparation program or alternative routes 
     to State certification or licensure program during the 2-year 
     period preceding such year, for each of the assessments used 
     for teacher certification or licensure by the State in which 
     the program is located--
       ``(i) the percentage of students who have completed 100 
     percent of the nonclinical coursework and taken the 
     assessment who pass such assessment;
       ``(ii) the percentage of all such students who passed each 
     such assessment;
       ``(iii) the percentage of students taking an assessment who 
     completed the teacher preparation program after enrolling in 
     the program, which shall be made available widely and 
     publicly by the State;
       ``(iv) the average scaled score for all students who took 
     each such assessment;
       ``(v) a comparison of the program's pass rates with the 
     average pass rates for programs in the State; and
       ``(vi) a comparison of the program's average scaled scores 
     with the average scaled scores for programs in the State.
       ``(B) Program information.--The criteria for admission into 
     the program, the number of students in the program 
     (disaggregated by race and gender), the average number of 
     hours of supervised clinical experience required for those in 
     the program, the number of full-time equivalent faculty and 
     students in the supervised clinical experience, and the total 
     number of students who have been certified or licensed as 
     teachers, disaggregated by subject and area of certification 
     or licensure.
       ``(C) Statement.--In States that require approval or 
     accreditation of teacher preparation programs, a statement of 
     whether the institution's program is so approved or 
     accredited, and by whom.
       ``(D) Designation as low-performing.--Whether the program 
     has been designated as low-performing by the State under 
     section 207(a).
       ``(E) Use of technology.--A description of the activities 
     that prepare teachers to effectively integrate technology 
     into curricula and instruction and effectively use technology 
     to collect, manage, and analyze data in order to improve 
     teaching, learning, and decision making for the purpose of 
     increasing student academic achievement.
       ``(2) Report.--Each eligible partnership receiving a grant 
     under section 203 shall report annually on the progress of 
     the eligible partnership toward meeting the purposes of this 
     part and the objectives and measures described in section 
     205(b).
       ``(3) Fines.--The Secretary may impose a fine not to exceed 
     $25,000 on an institution of higher education for failure to 
     provide the information described in this subsection in a 
     timely or accurate manner.
       ``(4) Special rule.--In the case of an institution of 
     higher education that conducts a traditional teacher 
     preparation program or alternative routes to State 
     certification or licensure program and has fewer than 10 
     scores reported on any single initial teacher certification 
     or licensure assessment during an academic year, the 
     institution shall collect and publish information, as 
     required under paragraph (1)(A), with respect to an average 
     pass rate and scaled score on each State certification or 
     licensure assessment taken over a 3-year period.
       ``(b) State Report Card on the Quality of Teacher 
     Preparation.--

[[Page 26765]]

       ``(1) In general.--Each State that receives funds under 
     this Act shall provide to the Secretary, annually, in a 
     uniform and comprehensible manner that conforms with the 
     definitions and methods established by the Secretary, a State 
     report card on the quality of teacher preparation in the 
     State, both for traditional teacher preparation programs and 
     for alternative routes to State certification or licensure 
     programs, which shall include not less than the following:
       ``(A) A description of reliability and validity of the 
     teacher certification and licensure assessments, and any 
     other certification and licensure requirements, used by the 
     State.
       ``(B) The standards and criteria that prospective teachers 
     must meet in order to attain initial teacher certification or 
     licensure and to be certified or licensed to teach particular 
     academic subject areas or in particular grades within the 
     State.
       ``(C) A description of how the assessments and requirements 
     described in subparagraph (A) are aligned with the State's 
     challenging academic content standards required under section 
     1111(b)(1) of the Elementary and Secondary Education Act of 
     1965 and State early learning standards for early childhood 
     education programs.
       ``(D) For each of the assessments used by the State for 
     teacher certification or licensure--
       ``(i) for each institution of higher education located in 
     the State and each entity located in the State that offers an 
     alternative route for teacher certification or licensure, the 
     percentage of students at such institution or entity who have 
     completed 100 percent of the nonclinical coursework and taken 
     the assessment who pass such assessment;
       ``(ii) the percentage of all such students at all such 
     institutions taking the assessment who pass such assessment; 
     and
       ``(iii) the percentage of students taking an assessment who 
     completed the teacher preparation program after enrolling in 
     the program, which shall be made available widely and 
     publicly by the State.
       ``(E) A description of alternative routes to State 
     certification or licensure in the State (including any such 
     routes operated by entities that are not institutions of 
     higher education), if any, including, for each of the 
     assessments used by the State for teacher certification or 
     licensure--
       ``(i) the percentage of individuals participating in such 
     routes, or who have completed such routes during the 2-year 
     period preceding the date of the determination, who passed 
     each such assessment; and
       ``(ii) the average scaled score of individuals 
     participating in such routes, or who have completed such 
     routes during the period preceding the date of the 
     determination, who took each such assessment.
       ``(F) A description of the State's criteria for assessing 
     the performance of teacher preparation programs within 
     institutions of higher education in the State. Such criteria 
     shall include indicators of the academic content knowledge 
     and teaching skills of students enrolled in such programs.
       ``(G) For each teacher preparation program in the State, 
     the criteria for admission into the program, the number of 
     students in the program, disaggregated by race and gender 
     (except that such disaggregation shall not be required in a 
     case in which the number of students in a category is 
     insufficient to yield statistically reliable information or 
     the results would reveal personally identifiable information 
     about an individual student), the average number of hours of 
     supervised clinical experience required for those in the 
     program, and the number of full-time equivalent faculty, 
     adjunct faculty, and students in supervised clinical 
     experience.
       ``(H) For the State as a whole, and for each teacher 
     preparation program in the State, the number of teachers 
     prepared, in the aggregate and reported separately by--
       ``(i) area of certification or licensure;
       ``(ii) academic major; and
       ``(iii) subject area for which the teacher has been 
     prepared to teach.
       ``(I) Using the data generated under subparagraphs (G) and 
     (H), a description of the extent to which teacher preparation 
     programs are helping to address shortages of highly qualified 
     teachers, by area of certification or licensure, subject, and 
     specialty, in the State's public schools, including those 
     areas described in section 205(a)(5).
       ``(J) A description of the activities that prepare teachers 
     to effectively integrate technology into curricula and 
     instruction and effectively use technology to collect, 
     manage, and analyze data in order to improve teaching, 
     learning, and decision making for the purpose of increasing 
     student academic achievement.
       ``(2) Prohibition against creating a national list.--The 
     Secretary shall not create a national list or ranking of 
     States, institutions, or schools using the scaled scores 
     provided under this subsection.
       ``(c) Report of the Secretary on the Quality of Teacher 
     Preparation.--
       ``(1) Report card.--The Secretary shall provide to 
     Congress, and publish and make widely available, a report 
     card on teacher qualifications and preparation in the United 
     States, including all the information reported in 
     subparagraphs (A) through (J) of subsection (b)(1). Such 
     report shall identify States for which eligible States and 
     eligible partnerships received a grant under this part. Such 
     report shall be so provided, published, and made available 
     annually.
       ``(2) Report to congress.--The Secretary shall prepare and 
     submit a report to Congress that contains the following:
       ``(A) A comparison of States' efforts to improve the 
     quality of the current and future teaching force.
       ``(B) A comparison of eligible partnerships' efforts to 
     improve the quality of the current and future teaching force.
       ``(C) The national mean and median scaled scores and pass 
     rate on any standardized test that is used in more than 1 
     State for teacher certification or licensure.
       ``(3) Special rule.--In the case of a teacher preparation 
     program with fewer than 10 scores reported on any single 
     initial teacher certification or licensure assessment during 
     an academic year, the Secretary shall collect and publish 
     information, and make publicly available, with respect to an 
     average pass rate and scaled score on each State 
     certification or licensure assessment taken over a 3-year 
     period.
       ``(d) Coordination.--The Secretary, to the extent 
     practicable, shall coordinate the information collected and 
     published under this part among States for individuals who 
     took State teacher certification or licensure assessments in 
     a State other than the State in which the individual received 
     the individual's most recent degree.

     ``SEC. 207. STATE FUNCTIONS.

       ``(a) State Assessment.--In order to receive funds under 
     this Act, a State shall have in place a procedure to identify 
     and assist, through the provision of technical assistance, 
     low-performing programs of teacher preparation. Such State 
     shall provide the Secretary an annual list of such low-
     performing teacher preparation programs that includes an 
     identification of those programs at risk of being placed on 
     such list. Such levels of performance shall be determined 
     solely by the State and may include criteria based on 
     information collected pursuant to this part. Such assessment 
     shall be described in the report under section 206(b).
       ``(b) Termination of Eligibility.--Any program of teacher 
     preparation from which the State has withdrawn the State's 
     approval, or terminated the State's financial support, due to 
     the low performance of the program based upon the State 
     assessment described in subsection (a)--
       ``(1) shall be ineligible for any funding for professional 
     development activities awarded by the Department;
       ``(2) shall not be permitted to accept or enroll any 
     student that receives aid under title IV in the institution's 
     teacher preparation program; and
       ``(3) shall provide transitional support, including 
     remedial services if necessary, for students enrolled at the 
     institution at the time of termination of financial support 
     or withdrawal of approval.
       ``(c) Negotiated Rulemaking.--If the Secretary develops any 
     regulations implementing subsection (b)(2), the Secretary 
     shall submit such proposed regulations to a negotiated 
     rulemaking process, which shall include representatives of 
     States, institutions of higher education, and educational and 
     student organizations.
       ``(d) Application of the Requirements.--The requirements of 
     this section shall apply to both traditional teacher 
     preparation programs and alternative routes to State 
     certification and licensure programs.

     ``SEC. 208. GENERAL PROVISIONS.

       ``(a) Methods.--In complying with sections 206 and 207, the 
     Secretary shall ensure that States and institutions of higher 
     education use fair and equitable methods in reporting and 
     that the reporting methods do not allow identification of 
     individuals.
       ``(b) Special Rule.--For each State that does not use 
     content assessments as a means of ensuring that all teachers 
     teaching in core academic subjects within the State are 
     highly qualified not later than the end of the 2005-2006 
     school year, as required under section 1119 of the Elementary 
     and Secondary Education Act of 1965, and that each person 
     employed as a special education teacher in the State who 
     teaches elementary school, middle school, or secondary school 
     is highly qualified by such deadline, as required under 
     section 612(a)(14)(C) of the Individuals with Disabilities 
     Education Act,--
       ``(1) the Secretary shall, to the extent practicable, 
     collect data comparable to the data required under this part 
     from States, local educational agencies, institutions of 
     higher education, or other entities that administer such 
     assessments to teachers or prospective teachers; and
       ``(2) notwithstanding any other provision of this part, the 
     Secretary shall use such data to carry out requirements of 
     this part related to assessments, pass rates, and scaled 
     scores.
       ``(c) Limitations.--
       ``(1) Federal control prohibited.--Nothing in this title 
     shall be construed to permit, allow, encourage, or authorize 
     any Federal control over any aspect of any private, 
     religious, or home school, whether or not a home school is 
     treated as a private school or home school under State law. 
     This section shall not be construed to prohibit private, 
     religious, or home schools from participation in programs or 
     services under this title.

[[Page 26766]]

       ``(2) No change in state control encouraged or required.--
     Nothing in this title shall be construed to encourage or 
     require any change in a State's treatment of any private, 
     religious, or home school, whether or not a home school is 
     treated as a private school or home school under State law.
       ``(3) National system of teacher certification or licensure 
     prohibited.--Nothing in this title shall be construed to 
     permit, allow, encourage, or authorize the Secretary to 
     establish or support any national system of teacher 
     certification or licensure.
       ``(d) Release of Information to Teacher Preparation 
     Programs.--
       ``(1) In general.--For the purpose of improving teacher 
     preparation programs, a State educational agency shall 
     provide to a teacher preparation program, upon the request of 
     the teacher preparation program, any and all pertinent 
     education-related information that--
       ``(A) may enable the teacher preparation program to 
     evaluate the effectiveness of the program's graduates or the 
     program itself; and
       ``(B) is possessed, controlled, or accessible by the State 
     educational agency.
       ``(2) Content of information.--The information described in 
     paragraph (1)--
       ``(A) shall include an identification of specific 
     individuals who graduated from the teacher preparation 
     program to enable the teacher preparation program to evaluate 
     the information provided to the program from the State 
     educational agency with the program's own data about the 
     specific courses taken by, and field experiences of, the 
     individual graduates; and
       ``(B) may include--
       ``(i) kindergarten through grade 12 academic achievement 
     and demographic data, without revealing personally 
     identifiable information about an individual student, for 
     students who have been taught by graduates of the teacher 
     preparation program; and
       ``(ii) teacher effectiveness evaluations for teachers who 
     graduated from the teacher preparation program.

     ``SEC. 209. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) In General.--There are authorized to be appropriated 
     to carry out this part such sums as may be necessary for 
     fiscal year 2006 and each of the 5 succeeding fiscal years, 
     of which--
       ``(1) 50 percent shall be available for each fiscal year to 
     award grants under section 202; and
       ``(2) 50 percent shall be available for each fiscal year to 
     award grants under section 203.
       ``(b) Special Rule.--If the Secretary determines that there 
     is an insufficient number of meritorious applications for 
     grants under section 202 or 203 to justify awarding the full 
     amount described in paragraph (1) or (2) of subsection (a), 
     respectively, the Secretary may, after funding the 
     meritorious applications, use the remaining funds for grants 
     under the other such section.''.

                      CHAPTER 4--INSTITUTIONAL AID

     SEC. 7341. PROGRAM PURPOSE.

       Section 311 (20 U.S.C. 1057) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1), by striking ``351'' and inserting 
     ``391''; and
       (B) in paragraph (3)(F), by inserting ``, including 
     services that will assist in the education of special 
     populations'' before the period; and
       (2) in subsection (c)--
       (A) in paragraph (6), by inserting ``, including 
     innovative, customized, remedial education and English 
     language instruction courses designed to help retain students 
     and move the students rapidly into core courses and through 
     program completion'' before the period;
       (B) by redesignating paragraphs (7) through (12) as 
     paragraphs (8) through (13), respectively;
       (C) by inserting after paragraph (6) the following:
       ``(7) Education or counseling services designed to improve 
     the financial literacy and economic literacy of students or 
     the students' parents.''; and
       (D) in the matter preceding subparagraph (A) of paragraph 
     (13) (as redesignated by subparagraph (B)), by striking 
     ``subsection (c)'' and inserting ``subsection (b) and section 
     391''.

     SEC. 7342. DEFINITIONS; ELIGIBILITY.

       Section 312 (20 U.S.C. 1058) is amended--
       (1) in subsection (b)(1)(A), by striking ``subsection (c) 
     of this section'' and inserting ``subsection (d)''; and
       (2) in subsection (d)(2), by striking ``subdivision'' and 
     inserting ``paragraph''.

     SEC. 7343. AMERICAN INDIAN TRIBALLY CONTROLLED COLLEGES AND 
                   UNIVERSITIES.

       Section 316 (20 U.S.C. 1059c) is amended--
       (1) by striking subsection (b)(3) and inserting the 
     following:
       ``(3) Tribal college or university.--The term `Tribal 
     College or University' means an institution that--
       ``(A) qualifies for funding under the Tribally Controlled 
     College or University Assistance Act of 1978 (25 U.S.C. 1801 
     et seq.) or the Navajo Community College Assistance Act of 
     1978 (25 U.S.C. 640a note); or
       ``(B) is cited in section 532 of the Equity in Educational 
     Land-Grant Status Act of 1994 (7 U.S.C. 301 note).'';
       (2) in subsection (c)(2)--
       (A) in subparagraph (B), by inserting before the semicolon 
     at the end the following: ``and the acquisition of real 
     property adjacent to the campus of the institution'';
       (B) by redesignating subparagraphs (G), (H), (I), (J), (K), 
     and (L) as subparagraphs (H), (I), (J), (K), (L), and (N), 
     respectively;
       (C) by inserting after subparagraph (F) the following:
       ``(G) education or counseling services designed to improve 
     the financial literacy and economic literacy of students or 
     parents of students;'';
       (D) in subparagraph (L) (as redesignated by subparagraph 
     (B)), by striking ``and'' after the semicolon;
       (E) by inserting after subparagraph (L) (as redesignated by 
     subparagraph (B)) the following:
       ``(M) developing or improving facilities for Internet use 
     or other distance learning academic instruction capabilities; 
     and''; and
       (F) in subparagraph (N) (as redesignated by subparagraph 
     (B)), by striking ``subparagraphs (A) through (K)'' and 
     inserting ``subparagraphs (A) through (M)''; and
       (3) by striking subsection (d) and inserting the following:
       ``(d) Application, Plan, and Allocation.--
       ``(1) Institutional eligibility.--To be eligible to receive 
     assistance under this section, a Tribal College or University 
     shall be an eligible institution under section 312(b).
       ``(2) Application.--
       ``(A) In general.--A Tribal College or University desiring 
     to receive assistance under this section shall submit an 
     application to the Secretary at such time, and in such 
     manner, as the Secretary may reasonably require.
       ``(B) Streamlined process.--The Secretary shall establish 
     application requirements in such a manner as to simplify and 
     streamline the process for applying for grants.
       ``(3) Allocations to institutions.--
       ``(A) Construction grants.--
       ``(i) In general.--Of the amount appropriated to carry out 
     this section for any fiscal year, the Secretary may reserve 
     30 percent for the purpose of awarding 1-year grants of not 
     less than $1,000,000 to address construction, maintenance, 
     and renovation needs at eligible institutions.
       ``(ii) Preference.--In providing grants under clause (i), 
     the Secretary shall give preference to eligible institutions 
     that have not yet received an award under this section.
       ``(B) Allotment of remaining funds.--
       ``(i) In general.--Except as provided in clause (ii), the 
     Secretary shall distribute the remaining funds appropriated 
     for any fiscal year to each eligible institution as follows:

       ``(I) 60 percent of the remaining appropriated funds shall 
     be distributed among the eligible Tribal Colleges and 
     Universities on a pro rata basis, based on the respective 
     Indian student counts (as defined in section 2(a) of the 
     Tribally Controlled College or University Assistance Act of 
     1978 (25 U.S.C. 1801(a)) of the Tribal Colleges and 
     Universities; and
       ``(II) the remaining 40 percent shall be distributed in 
     equal shares to the eligible Tribal Colleges and 
     Universities.

       ``(ii) Minimum grant.--The amount distributed to a Tribal 
     College or University under clause (i) shall not be less than 
     $500,000.
       ``(4) Special rules.--
       ``(A) Concurrent funding.--For the purposes of this part, 
     no Tribal College or University that is eligible for and 
     receives funds under this section shall concurrently receive 
     funds under other provisions of this part or part B.
       ``(B) Exemption.--Section 313(d) shall not apply to 
     institutions that are eligible to receive funds under this 
     section.''.

     SEC. 7344. ALASKA NATIVE AND NATIVE HAWAIIAN-SERVING 
                   INSTITUTIONS.

       Section 317(c)(2) (20 U.S.C. 1059d(c)(2)) is amended--
       (1) in subparagraph (G), by striking ``and'' after the 
     semicolon;
       (2) in subparagraph (H), by striking the period and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(I) education or counseling services designed to improve 
     the financial literacy and economic literacy of students or 
     the students' parents.''.

     SEC. 7345. NATIVE AMERICAN-SERVING, NONTRIBAL INSTITUTIONS.

       (a) Grant Program Authorized.--Part A of title III (20 
     U.S.C. 1057 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 318. NATIVE AMERICAN-SERVING, NONTRIBAL INSTITUTIONS.

       ``(a) Program Authorized.--The Secretary shall provide 
     grants and related assistance to Native American-serving, 
     nontribal institutions to enable such institutions to improve 
     and expand their capacity to serve Native Americans.
       ``(b) Definitions.--In this section:
       ``(1) Native american.--The term `Native American' means an 
     individual who is of a tribe, people, or culture that is 
     indigenous to the United States.
       ``(2) Native american-serving, nontribal institution.--The 
     term `Native American-serving, nontribal institution' means 
     an institution of higher education that, at the time of 
     application--
       ``(A) has an enrollment of undergraduate students that is 
     not less than 10 percent Native American students; and

[[Page 26767]]

       ``(B) is not a Tribal College or University (as defined in 
     section 316).
       ``(c) Authorized Activities.--
       ``(1) Types of activities authorized.--Grants awarded under 
     this section shall be used by Native American-serving, 
     nontribal institutions to assist such institutions to plan, 
     develop, undertake, and carry out activities to improve and 
     expand such institutions' capacity to serve Native Americans.
       ``(2) Examples of authorized activities.--Such programs may 
     include--
       ``(A) the purchase, rental, or lease of scientific or 
     laboratory equipment for educational purposes, including 
     instructional and research purposes;
       ``(B) renovation and improvement in classroom, library, 
     laboratory, and other instructional facilities;
       ``(C) support of faculty exchanges, and faculty development 
     and faculty fellowships to assist faculty in attaining 
     advanced degrees in the faculty's field of instruction;
       ``(D) curriculum development and academic instruction;
       ``(E) the purchase of library books, periodicals, 
     microfilm, and other educational materials;
       ``(F) funds and administrative management, and acquisition 
     of equipment for use in strengthening funds management;
       ``(G) the joint use of facilities such as laboratories and 
     libraries; and
       ``(H) academic tutoring and counseling programs and student 
     support services.
       ``(d) Application Process.--
       ``(1) Institutional eligibility.--A Native American-
     serving, nontribal institution desiring to receive assistance 
     under this section shall submit to the Secretary such 
     enrollment data as may be necessary to demonstrate that the 
     institution is a Native American-serving, nontribal 
     institution, along with such other information and data as 
     the Secretary may by regulation require.
       ``(2) Applications.--
       ``(A) Permission to submit applications.--Any institution 
     that is determined by the Secretary to be a Native American-
     serving, nontribal institution may submit an application for 
     assistance under this section to the Secretary.
       ``(B) Simplified and streamlined format.--The Secretary 
     shall, to the extent possible, prescribe a simplified and 
     streamlined format for applications under this section that 
     takes into account the limited number of institutions that 
     are eligible for assistance under this section.
       ``(C) Content.--An application submitted under subparagraph 
     (A) shall include--
       ``(i) a 5-year plan for improving the assistance provided 
     by the Native American-serving, nontribal institution to 
     Native Americans; and
       ``(ii) such other information and assurances as the 
     Secretary may require.
       ``(3) Special rules.--
       ``(A) Eligibility.--No Native American-serving, nontribal 
     institution that receives funds under this section shall 
     concurrently receive funds under other provisions of this 
     part or part B.
       ``(B) Exemption.--Section 313(d) shall not apply to 
     institutions that are eligible to receive funds under this 
     section.
       ``(C) Distribution.--In awarding grants under this section, 
     the Secretary shall, to the extent possible and consistent 
     with the competitive process under which such grants are 
     awarded, ensure maximum and equitable distribution among all 
     eligible institutions.''.
       (b) Authorization of Appropriations.--Section 399 (20 
     U.S.C. 1068h) is amended by adding at the end the following:
       ``(c) Minimum Grant Amount.--The minimum amount of a grant 
     under this title shall be $200,000.''.

     SEC. 7346. PART B DEFINITIONS.

       Section 322(4) (20 U.S.C. 1061(4)) is amended by inserting 
     ``, in consultation with the Commissioner for Education 
     Statistics'' before ``and the Commissioner''.

     SEC. 7347. GRANTS TO INSTITUTIONS.

       Section 323(a) (20 U.S.C. 1062(a)) is amended--
       (1) in the matter preceding paragraph (1), by striking 
     ``360(a)(2)'' and inserting ``399(a)(2)'';
       (2) by redesignating paragraphs (7) through (12) as 
     paragraphs (8) through (13), respectively; and
       (3) by inserting after paragraph (6) the following:
       ``(7) Education or counseling services designed to improve 
     the financial literacy and economic literacy of students or 
     the students' parents.''.

     SEC. 7348. ALLOTMENTS TO INSTITUTIONS.

       Section 324 (20 U.S.C. 1063) is amended by adding at the 
     end the following:
       ``(h) Special Rule on Eligibility.--Notwithstanding any 
     other provision of this section, a part B institution shall 
     not receive an allotment under this section unless the part B 
     institution provides, on an annual basis, data indicating 
     that the part B institution--
       ``(1) enrolled Federal Pell Grant recipients in the 
     preceding academic year;
       ``(2) in the preceding academic year, has graduated 
     students from a program of academic study that is licensed or 
     accredited by a nationally recognized accrediting agency or 
     association recognized by the Secretary pursuant to part H of 
     title IV where appropriate; and
       ``(3) where appropriate, has graduated students who, within 
     the past 5 years, enrolled in graduate or professional 
     school.''.

     SEC. 7349. PROFESSIONAL OR GRADUATE INSTITUTIONS.

       Section 326 (20 U.S.C. 1063b) is amended--
       (1) in subsection (c)--
       (A) in paragraph (2), by inserting ``, and for the 
     acquisition and development of real property that is adjacent 
     to the campus for such construction, maintenance, renovation, 
     or improvement'' after ``services'';
       (B) by redesignating paragraphs (5) through (7) as 
     paragraphs (7) through (9), respectively;
       (C) by inserting after paragraph (4) the following:
       ``(5) tutoring, counseling, and student service programs 
     designed to improve academic success;
       ``(6) education or counseling services designed to improve 
     the financial literacy and economic literacy of students or 
     the students' parents;'';
       (D) in paragraph (7) (as redesignated by subparagraph (B)), 
     by striking ``establish or improve'' and inserting 
     ``establishing or improving'';
       (E) in paragraph (8) (as redesignated by subparagraph 
     (B))--
       (i) by striking ``assist'' and inserting ``assisting''; and
       (ii) by striking ``and'' after the semicolon;
       (F) in paragraph (9) (as redesignated by subparagraph (B)), 
     by striking the period and inserting ``; and''; and
       (G) by adding at the end the following:
       ``(10) other activities proposed in the application 
     submitted under subsection (d) that--
       ``(A) contribute to carrying out the purposes of this part; 
     and
       ``(B) are approved by the Secretary as part of the review 
     and acceptance of such application.'';
       (2) in subsection (e)--
       (A) in paragraph (1)--
       (i) by inserting a colon after ``the following'';
       (ii) in subparagraph (Q), by striking ``and'' at the end;
       (iii) in subparagraph (R), by striking the period and 
     inserting a semicolon; and
       (iv) by adding at the end the following:
       ``(S) Alabama State University qualified graduate program;
       ``(T) Coppin State University qualified graduate program; 
     and
       ``(U) Prairie View A & M University qualified graduate 
     program.'';
       (B) in paragraph (2), by inserting ``in law or'' after 
     ``instruction''; and
       (C) in paragraph (3)--
       (i) by striking ``1998'' and inserting ``2006''; and
       (ii) by striking ``(Q) and (R)'' and inserting ``(S), (T), 
     and (U)'';
       (3) in subsection (f)--
       (A) in paragraph (1), by striking ``(P)'' and inserting 
     ``(R)''; and
       (B) in paragraph (3)--
       (i) by striking subparagraphs (A) and (B) and inserting the 
     following:
       ``(A) The amount of non-Federal funds for the fiscal year 
     for which the determination is made that the institution or 
     program listed in subsection (e)--
       ``(i) allocates from institutional resources;
       ``(ii) secures from non-Federal sources, including amounts 
     appropriated by the State and amounts from the private 
     sector; and
       ``(iii) will utilize to match Federal funds awarded for the 
     fiscal year for which the determination is made under this 
     section to the institution or program.
       ``(B) The number of students enrolled in the qualified 
     graduate programs of the eligible institution or program, for 
     which the institution or program received and allocated 
     funding under this section in the preceding year.'';
       (ii) in subparagraph (C), by striking ``(or the equivalent) 
     enrolled in the eligible professional or graduate school'' 
     and all that follows through the period and inserting 
     ``enrolled in the qualified programs or institutions listed 
     in paragraph (1).'';
       (iii) in subparagraph (D)--

       (I) by striking ``students'' and inserting ``Black American 
     students or minority students''; and
       (II) by striking ``institution'' and inserting 
     ``institution or program''; and

       (iv) by striking subparagraph (E) and inserting the 
     following:
       ``(E) The percentage that the total number of Black 
     American students and minority students who receive their 
     first professional, master's, or doctoral degrees from the 
     institution or program in the academic year preceding the 
     academic year for which the determination is made, represents 
     of the total number of Black American students and minority 
     students in the United States who receive their first 
     professional, master's, or doctoral degrees in the 
     professions or disciplines related to the course of study at 
     such institution or program, respectively, in the preceding 
     academic year.''; and
       (4) in subsection (g), by striking ``1998'' and inserting 
     ``2006''.

     SEC. 7350. AUTHORIZATION OF APPROPRIATIONS.

       Subsection (a) of section 399 (20 U.S.C. 1068h) is amended 
     to read as follows:
       ``(a) Authorizations.--
       ``(1) Part a.--(A) There are authorized to be appropriated 
     to carry out part A (other

[[Page 26768]]

     than section 316) such sums as may be necessary for fiscal 
     year 2006 and each of the 5 succeeding fiscal years.
       ``(B) There are authorized to be appropriated to carry out 
     section 316 such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.
       ``(C) There are authorized to be appropriated to carry out 
     section 317 such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.
       ``(D) There are authorized to be appropriated to carry out 
     section 318 such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.
       ``(2) Part b.--(A) There are authorized to be appropriated 
     to carry out part B (other than section 326) such sums as may 
     be necessary for fiscal year 2006 and each of the 5 
     succeeding fiscal years.
       ``(B) There are authorized to be appropriated to carry out 
     section 326 such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.
       ``(3) Part c.--There are authorized to be appropriated to 
     carry out part C such sums as may be necessary for fiscal 
     year 2006 and each of the 5 succeeding fiscal years.
       ``(4) Part d.--(A) There are authorized to be appropriated 
     to carry out part D (other than section 345(7), but including 
     section 347) such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.
       ``(B) There are authorized to be appropriated to carry out 
     section 345(7) such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.
       ``(5) Part e.--There are authorized to be appropriated to 
     carry out part E such sums as may be necessary for fiscal 
     year 2006 and each of the 5 succeeding fiscal years.''.

     SEC. 7351. TECHNICAL CORRECTIONS.

       Title III (20 U.S.C. 1051 et seq.) is further amended--
       (1) in section 342(5)(C) (20 U.S.C. 1066a(5)(C)), by 
     striking ``,,'' and inserting ``,'';
       (2) in section 343(e) (20 U.S.C. 1066b(e)), by inserting 
     ``Sale of Qualified Bonds.--'' before ``Notwithstanding'';
       (3) in the matter preceding clause (i) of section 365(9)(A) 
     (20 U.S.C. 1067k(9)(A)), by striking ``support'' and 
     inserting ``supports'';
       (4) in section 391(b)(7)(E) (20 U.S.C. 1068(b)(7)(E)), by 
     striking ``subparagraph (E)'' and inserting ``subparagraph 
     (D)'';
       (5) in the matter preceding subparagraph (A) of section 
     392(b)(2) (20 U.S.C. 1068a(b)(2)), by striking ``eligible 
     institutions under part A institutions'' and inserting 
     ``eligible institutions under part A''; and
       (6) in the matter preceding paragraph (1) of section 396 
     (20 U.S.C. 1068e), by striking ``360'' and inserting ``399''.

                     CHAPTER 5--STUDENT ASSISTANCE

   Subchapter A--Grants to Students in Attendance at Institutions of 
                            Higher Education

     SEC. 7361. FEDERAL PELL GRANTS.

       Section 401 (20 U.S.C. 1070a) is amended--
       (1) in subsection (a)(1)--
       (A) in the first sentence, by striking ``2004'' and 
     inserting ``2012''; and
       (B) in the second sentence, by striking ``,,'' and 
     inserting ``,'';
       (2) in subsection (b)--
       (A) by striking paragraph (2)(A) and inserting the 
     following:
       ``(2)(A) the amount of the Federal Pell Grant for a student 
     eligible under this part shall be--
       ``(i) $5,100 for academic year 2006-2007;
       ``(ii) $5,400 for academic year 2007-2008;
       ``(iii) $5,700 for academic year 2008-2009;
       ``(iv) $6,000 for academic year 2009-2010; and
       ``(v) $6,300 for academic year 2010-2011,
     less an amount equal to the amount determined to be the 
     expected family contribution with respect to that student for 
     that year.'';
       (B) by striking paragraph (3);
       (C) by redesignating paragraphs (4) through (8) as 
     paragraphs (3) through (7), respectively;
       (D) in paragraph (4) (as redesignated by subparagraph (C)), 
     by striking ``$400, except'' and all that follows through the 
     period and inserting ``10 percent of the maximum basic grant 
     level specified in the appropriate Appropriation Act for such 
     academic year, except that a student who is eligible for a 
     Federal Pell Grant in an amount that is equal to or greater 
     than 5 percent of such level but less than 10 percent of such 
     level shall be awarded a Federal Pell grant in the amount of 
     10 percent of such level.''; and
       (E) by striking paragraph (5) (as redesignated by 
     subparagraph (C)) and inserting the following:
       ``(5) In the case of a student who is enrolled, on at least 
     a half-time basis and for a period of more than 1 academic 
     year in a 2-year or 4-year program of instruction for which 
     an institution of higher education awards an associate or 
     baccalaureate degree, the Secretary shall allow such student 
     to receive not more than 2 Federal Pell Grants during a 
     single award year to permit such student to accelerate the 
     student's progress toward a degree by attending additional 
     sessions. In the case of a student receiving more than 1 
     Federal Pell Grant in a single award year, the total amount 
     of Federal Pell Grants awarded to such student for the award 
     year may exceed the maximum basic grant level specified in 
     the appropriate Appropriation Act for such award year.''; and
       (3) in subsection (c), by adding at the end the following:
       ``(5) The period of time during which a student may receive 
     Federal Pell Grants shall not exceed 18 semesters, or an 
     equivalent period of time as determined by the Secretary 
     pursuant to regulations, which period shall--
       ``(A) be determined without regard to whether the student 
     is enrolled on a full-time basis during any portion of the 
     period of time; and
       ``(B) include any period of time for which the student 
     received a Federal Pell Grant prior to the date of enactment 
     of the Higher Education Amendments of 2005.''.

     SEC. 7362. FEDERAL TRIO PROGRAMS.

       (a) Program Authority; Authorization of Appropriations.--
     Section 402A (20 U.S.C. 1070a-11) is amended--
       (1) in subsection (b)--
       (A) in paragraph (2)--
       (i) in the matter preceding subparagraph (A), by striking 
     ``4'' and inserting ``5'';
       (ii) by striking subparagraph (A); and
       (iii) by redesignating subparagraphs (B) and (C) as 
     subparagraphs (A) and (B), respectively; and
       (B) by striking paragraph (3) and inserting the following:
       ``(3) Minimum grants.--Unless the institution or agency 
     requests a smaller amount, an individual grant authorized 
     under this chapter shall be awarded in an amount that is not 
     less than $200,000, except that an individual grant 
     authorized under section 402G shall be awarded in an amount 
     that is not less than $170,000.'';
       (2) in subsection (c)--
       (A) in paragraph (2), by striking ``service delivery'' and 
     inserting ``high quality service delivery, as determined 
     under subsection (f),'';
       (B) in paragraph (3)(B), by striking ``is not required to'' 
     and inserting ``shall not''; and
       (C) in paragraph (5), by striking ``campuses'' and 
     inserting ``different campuses'';
       (3) in subsection (e), by striking ``(g)(2)'' each place 
     the term occurs and inserting ``(h)(4)'';
       (4) by redesignating subsections (f) and (g) as subsections 
     (g) and (h), respectively;
       (5) by inserting after subsection (e) the following:
       ``(f) Outcome Criteria.--
       ``(1) In general.--The Secretary, by regulation, shall 
     establish outcome criteria for measuring, annually and for 
     longer periods, the quality and effectiveness of programs 
     authorized under this chapter.
       ``(2) Use for prior experience determination.--The outcome 
     criteria under paragraph (1) shall be used to evaluate the 
     programs provided by a recipient of a grant under this 
     chapter, and the Secretary shall determine an eligible 
     entity's prior experience of high quality service delivery, 
     as required in subsection (c)(2), based on the outcome 
     criteria.
       ``(3) Consideration of relevant data.--The outcome criteria 
     under this subsection shall take into account data pertaining 
     to secondary school completion, postsecondary education 
     enrollment, and postsecondary education completion for low-
     income students, first generation college students, and 
     individuals with disabilities, in the schools and 
     institutions of higher education served by the program to be 
     evaluated.
       ``(4) Contents of outcome criteria.--The outcome criteria 
     shall include the following:
       ``(A) For programs authorized under section 402B, whether 
     the eligible entity met or exceeded the entity's objectives 
     established in the entity's application for such program 
     regarding--
       ``(i) the delivery of service to a total number of students 
     served by the program;
       ``(ii) the continued secondary school enrollment of such 
     students;
       ``(iii) the graduation of such students from secondary 
     school; and
       ``(iv) the enrollment of such students in an institution of 
     higher education.
       ``(B) For programs authorized under section 402C, whether 
     the eligible entity met or exceeded its objectives for such 
     program regarding--
       ``(i) the delivery of service to a total number of students 
     served by the program, as agreed upon by the entity and the 
     Secretary for the period;
       ``(ii) such students' school performance, as measured by 
     the grade point average, or its equivalent;
       ``(iii) such students' academic performance, as measured by 
     standardized tests, including tests required by the students' 
     State;
       ``(iv) the retention in, and graduation from, secondary 
     school of such students; and
       ``(v) the enrollment of such students in an institution of 
     higher education.
       ``(C) For programs authorized under section 402D--
       ``(i) whether the eligible entity met or exceeded the 
     entity's objectives regarding the retention in postsecondary 
     education of the students served by the program;
       ``(ii)(I) in the case of an entity that is an institution 
     of higher education offering a baccalaureate degree, the 
     extent to which the entity met or exceeded the entity's 
     objectives regarding such students' completion of the degree 
     programs in which such students were enrolled; or
       ``(II) in the case of an entity that is an institution of 
     higher education that does not

[[Page 26769]]

     offer a baccalaureate degree, the extent to which the entity 
     met or exceeded the entity's objectives regarding--

       ``(aa) the completion of a degree or certificate by such 
     students; and
       ``(bb) the transfer of such students to institutions of 
     higher education that offer baccalaureate degrees;

       ``(iii) whether the entity met or exceeded the entity's 
     objectives regarding the delivery of service to a total 
     number of students, as agreed upon by the entity and the 
     Secretary for the period; and
       ``(iv) whether the applicant met or exceeded the entity's 
     objectives regarding such students remaining in good academic 
     standing.
       ``(D) For programs authorized under section 402E, whether 
     the entity met or exceeded the entity's objectives for such 
     program regarding--
       ``(i) the delivery of service to a total number of 
     students, as agreed upon by the entity and the Secretary for 
     the period;
       ``(ii) the provision of appropriate scholarly and research 
     activities for the students served by the program;
       ``(iii) the acceptance and enrollment of such students in 
     graduate programs; and
       ``(iv) the attainment of doctoral degrees by former program 
     participants.
       ``(E) For programs authorized under section 402F, whether 
     the entity met or exceeded the entity's objectives for such 
     program regarding--
       ``(i) the enrollment of students without a secondary school 
     diploma or its recognized equivalent, who were served by the 
     program, in programs leading to such diploma or equivalent;
       ``(ii) the enrollment of secondary school graduates who 
     were served by the program in programs of postsecondary 
     education;
       ``(iii) the delivery of service to a total number of 
     students, as agreed upon by the entity and the Secretary for 
     the period; and
       ``(iv) the provision of assistance to students served by 
     the program in completing financial aid applications and 
     college admission applications.'';
       (6) in subsection (g) (as redesignated by paragraph (4))--
       (A) in the first sentence, by striking ``$700,000,000 for 
     fiscal year 1999'' and all that follows through the period 
     and inserting ``such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.''; and
       (B) by striking the fourth sentence; and
       (7) in subsection (h) (as redesignated by paragraph (4))--
       (A) by redesignating paragraphs (1) through (4) as 
     paragraphs (3) through (6), respectively;
       (B) by inserting before paragraph (3) (as redesignated by 
     subparagraph (A)) the following:
       ``(1) Different campus.--The term `different campus' means 
     a site of an institution of higher education that--
       ``(A) is geographically apart from the main campus of the 
     institution;
       ``(B) is permanent in nature; and
       ``(C) offers courses in educational programs leading to a 
     degree, certificate, or other recognized educational 
     credential.
       ``(2) Different population.--The term `different 
     population' means a group of individuals, with respect to 
     whom an eligible entity desires to serve through an 
     application for a grant under this chapter, that--
       ``(A) is separate and distinct from any other population 
     that the entity has applied for a grant under this chapter to 
     serve; or
       ``(B) while sharing some of the same needs as another 
     population that the eligible entity has applied for a grant 
     under this chapter to serve, has distinct needs for 
     specialized services.'';
       (C) in paragraph (5) (as redesignated by subparagraph 
     (A))--
       (i) in subparagraph (A), by striking ``or'' after the 
     semicolon;
       (ii) in subparagraph (B), by striking the period at the end 
     and inserting ``; or''; and
       (iii) by adding at the end the following:
       ``(C) was a member of a reserve component of the Armed 
     Forces called to active duty for a period of more than 180 
     days.''; and
       (D) in paragraph (6), by striking ``subparagraph (A) or (B) 
     of paragraph (3)'' and inserting ``subparagraph (A), (B), or 
     (C) of paragraph (5)''.
       (b) Talent Search.--Section 402B (20 U.S.C. 1070a-12) is 
     amended--
       (1) in subsection (a)--
       (A) in paragraph (1), by striking ``to identify qualified 
     youths with potential for education at the postsecondary 
     level and to encourage such youths'' and inserting ``to 
     encourage eligible youths'';
       (B) in paragraph (2), by inserting ``, and facilitate the 
     application for,'' after ``the availability of''; and
       (C) in paragraph (3), by striking ``, but who have the 
     ability to complete such programs, to reenter'' and inserting 
     ``to enter or reenter, and complete'';
       (2) by redesignating subsection (c) as subsection (d);
       (3) by striking subsection (b) and inserting the following:
       ``(b) Required Services.--Any project assisted under this 
     section shall provide--
       ``(1) academic tutoring, or connections to high quality 
     academic tutoring services, to enable students to complete 
     secondary or postsecondary courses, which may include 
     instruction in reading, writing, study skills, mathematics, 
     science, and other subjects;
       ``(2) advice and assistance in secondary course selection 
     and, if applicable, initial postsecondary course selection;
       ``(3) assistance in preparing for college entrance 
     examinations and completing college admission applications;
       ``(4)(A) information on both the full range of Federal 
     student financial aid programs (including Federal Pell Grant 
     awards and loan forgiveness) and resources for locating 
     public and private scholarships; and
       ``(B) assistance in completing financial aid applications, 
     including the Free Application for Federal Student Aid 
     described in section 483(a);
       ``(5) guidance on and assistance in--
       ``(A) secondary school reentry;
       ``(B) alternative education programs for secondary school 
     dropouts that lead to the receipt of a regular secondary 
     school diploma;
       ``(C) entry into general educational development (GED) 
     programs; or
       ``(D) postsecondary education; and
       ``(6) education or counseling services designed to improve 
     the financial literacy and economic literacy of students or 
     their parents, including financial planning for postsecondary 
     education.
       ``(c) Permissible Services.--Any project assisted under 
     this section may provide services such as--
       ``(1) personal and career counseling or activities;
       ``(2) information and activities designed to acquaint 
     youths with the range of career options available to the 
     youths;
       ``(3) exposure to the campuses of institutions of higher 
     education, as well as cultural events, academic programs, and 
     other sites or activities not usually available to 
     disadvantaged youth;
       ``(4) workshops and counseling for families of students 
     served;
       ``(5) mentoring programs involving elementary or secondary 
     school teachers or counselors, faculty members at 
     institutions of higher education, students, or any 
     combination of such persons; and
       ``(6) programs and activities as described in subsection 
     (b) or paragraphs (1) through (5) of this subsection that are 
     specially designed for students who are limited English 
     proficient, students with disabilities, students who are 
     homeless children and youths (as such term is defined in 
     section 725 of the McKinney-Vento Homeless Assistance Act (42 
     U.S.C. 11434a)), or students who are in foster care or are 
     aging out of the foster care system.''; and
       (4) in the matter preceding paragraph (1) of subsection (d) 
     (as redesignated by paragraph (2)), by striking ``talent 
     search projects under this chapter'' and inserting ``projects 
     under this section''.
       (c) Upward Bound.--Section 402C (20 U.S.C. 1070a-13) is 
     amended--
       (1) by striking subsection (b) and inserting the following:
       ``(b) Required Services.--Any project assisted under this 
     section shall provide--
       ``(1) academic tutoring to enable students to complete 
     secondary or postsecondary courses, which may include 
     instruction in reading, writing, study skills, mathematics, 
     science, and other subjects;
       ``(2) advice and assistance in secondary and postsecondary 
     course selection;
       ``(3) assistance in preparing for college entrance 
     examinations and completing college admission applications;
       ``(4)(A) information on both the full range of Federal 
     student financial aid programs (including Federal Pell Grant 
     awards and loan forgiveness) and resources for locating 
     public and private scholarships; and
       ``(B) assistance in completing financial aid applications, 
     including the Free Application for Federal Student Aid 
     described in section 483(a);
       ``(5) guidance on and assistance in--
       ``(A) secondary school reentry;
       ``(B) alternative education programs for secondary school 
     dropouts that lead to the receipt of a regular secondary 
     school diploma;
       ``(C) entry into general educational development (GED) 
     programs; or
       ``(D) postsecondary education; and
       ``(6) education or counseling services designed to improve 
     the financial literacy and economic literacy of students, 
     including financial planning for postsecondary education.'';
       (2) in subsection (c)--
       (A) in the subsection heading, by striking ``Required 
     Services'' and inserting ``Additional Required Services for 
     Multiple-Year Grant Recipients''; and
       (B) by striking ``upward bound project assisted under this 
     chapter'' and inserting ``project assisted under this 
     section'';
       (3) by redesignating subsections (d) and (e) as subsections 
     (e) and (f), respectively;
       (4) by inserting after subsection (c) the following:
       ``(d) Permissible Services.--Any project assisted under 
     this section may provide such services as--
       ``(1) exposure to cultural events, academic programs, and 
     other activities not usually available to disadvantaged 
     youth;
       ``(2) information, activities and instruction designed to 
     acquaint youths participating in

[[Page 26770]]

     the project with the range of career options available to the 
     youths;
       ``(3) on-campus residential programs;
       ``(4) mentoring programs involving elementary school or 
     secondary school teachers or counselors, faculty members at 
     institutions of higher education, students, or any 
     combination of such persons;
       ``(5) work-study positions where youth participating in the 
     project are exposed to careers requiring a postsecondary 
     degree;
       ``(6) special services to enable veterans to make the 
     transition to postsecondary education; and
       ``(7) programs and activities as described in subsection 
     (b), subsection (c), or paragraphs (1) through (6) of this 
     subsection that are specially designed for students who are 
     limited English proficient, students with disabilities, 
     students who are homeless children and youths (as such term 
     is defined in section 725 of the McKinney-Vento Homeless 
     Assistance Act (42 U.S.C. 11434a)), or students who are in 
     foster care or are aging out of the foster care system.'';
       (5) in the matter preceding paragraph (1) of subsection (e) 
     (as redesignated by paragraph (3)), by striking ``upward 
     bound projects under this chapter'' and inserting ``projects 
     under this section''; and
       (6) in subsection (f) (as redesignated by paragraph (3))--
       (A) by striking ``during June, July, and August'' each 
     place the term occurs and inserting ``during the summer 
     school recess, for a period not to exceed 3 months''; and
       (B) by striking ``(b)(10)'' and inserting ``(d)(5)''.
       (d) Student Support Services.--Section 402D (20 U.S.C. 
     1070a-14) is amended--
       (1) in subsection (a)--
       (A) in paragraph (2), by striking ``and'' after the 
     semicolon;
       (B) by striking paragraph (3) and inserting the following:
       ``(3) to foster an institutional climate supportive of the 
     success of low-income and first generation college students, 
     students with disabilities, students who are limited English 
     proficient, students who are homeless children and youths (as 
     such term is defined in section 725 of the McKinney-Vento 
     Homeless Assistance Act (42 U.S.C. 11434a)), and students who 
     are in foster care or are aging out of the foster care 
     system.''; and
       (C) by adding at the end the following:
       ``(4) to improve the financial literacy and economic 
     literacy of students, including--
       ``(A) basic personal income, household money management, 
     and financial planning skills; and
       ``(B) basic economic decisionmaking skills.'';
       (2) by redesignating subsections (c) and (d) as subsections 
     (d) and (e);
       (3) by striking subsection (b) and inserting the following:
       ``(b) Required Services.--A project assisted under this 
     section shall provide--
       ``(1) academic tutoring to enable students to complete 
     postsecondary courses, which may include instruction in 
     reading, writing, study skills, mathematics, science, and 
     other subjects;
       ``(2) advice and assistance in postsecondary course 
     selection;
       ``(3)(A) information on both the full range of Federal 
     student financial aid programs (including Federal Pell Grant 
     awards and loan forgiveness) and resources for locating 
     public and private scholarships; and
       ``(B) assistance in completing financial aid applications, 
     including the Free Application for Federal Student Aid 
     described in section 483(a);
       ``(4) education or counseling services designed to improve 
     the financial literacy and economic literacy of students, 
     including financial planning for postsecondary education;
       ``(5) activities designed to assist students participating 
     in the project in securing college admission and financial 
     assistance for enrollment in graduate and professional 
     programs; and
       ``(6) activities designed to assist students enrolled in 2-
     year institutions of higher education in securing admission 
     and financial assistance for enrollment in a 4-year program 
     of postsecondary education.
       ``(c) Permissible Services.--A project assisted under this 
     section may provide services such as--
       ``(1) consistent, individualized personal, career, and 
     academic counseling, provided by assigned counselors;
       ``(2) information, activities, and instruction designed to 
     acquaint youths participating in the project with the range 
     of career options available to the students;
       ``(3) exposure to cultural events and academic programs not 
     usually available to disadvantaged students;
       ``(4) activities designed to acquaint students 
     participating in the project with the range of career options 
     available to the students;
       ``(5) mentoring programs involving faculty or upper class 
     students, or a combination thereof;
       ``(6) securing temporary housing during breaks in the 
     academic year for students who are homeless children and 
     youths (as such term is defined in section 725 of the 
     McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a)) or 
     were formerly homeless children and youths and students who 
     are in foster care or are aging out of the foster care 
     system; and
       ``(7) programs and activities as described in subsection 
     (b) or paragraphs (1) through (5) of this subsection that are 
     specially designed for students who are limited English 
     proficient, students with disabilities, students who are 
     homeless children and youths (as such term is defined in 
     section 725 of the McKinney-Vento Homeless Assistance Act (42 
     U.S.C. 11434a)) or were formerly homeless children and 
     youths, or students who are in foster care or are aging out 
     of the foster care system.'';
       (4) in subsection (d)(1) (as redesignated by paragraph 
     (2)), by striking ``subsection (b)'' and inserting 
     ``subsection (c)''; and
       (5) in the matter preceding paragraph (1) of subsection (e) 
     (as redesignated by paragraph (2)), by striking ``student 
     support services projects under this chapter'' and inserting 
     ``projects under this section''.
       (e) Postbaccalaureate Achievement Program Authority.--
     Section 402E (20 U.S.C. 1070a-15) is amended--
       (1) in subsection (b)--
       (A) in the subsection heading, by inserting ``Required'' 
     before ``Services'';
       (B) in the matter preceding paragraph (1), by striking ``A 
     postbaccalaureate achievement project assisted under this 
     section may provide services such as--'' and inserting ``A 
     project assisted under this section shall provide--'';
       (C) in paragraph (5), by inserting ``and'' after the 
     semicolon;
       (D) in paragraph (6), by striking the semicolon and 
     inserting a period; and
       (E) by striking paragraphs (7) and (8);
       (2) by redesignating subsections (c) through (f) as 
     subsections (d) through (g), respectively;
       (3) by inserting after subsection (b) the following:
       ``(c) Permissible Services.--A project assisted under this 
     section may provide services such as--
       ``(1) education or counseling services designed to improve 
     the financial literacy and economic literacy of students or 
     their parents, including financial planning for postsecondary 
     education;
       ``(2) mentoring programs involving faculty members at 
     institutions of higher education, students, or any 
     combination of such persons; and
       ``(3) exposure to cultural events and academic programs not 
     usually available to disadvantaged students.'';
       (4) in the matter preceding paragraph (1) of subsection (d) 
     (as redesignated by paragraph (2)), by striking 
     ``postbaccalaureate achievement'';
       (5) in the matter preceding paragraph (1) of subsection (f) 
     (as redesignated by paragraph (2)), by striking 
     ``postbaccalaureate achievement project'' and inserting 
     ``project under this section''; and
       (6) in subsection (g) (as redesignated by paragraph (2))--
       (A) by striking ``402A(f)'' and inserting ``402A(g)''; and
       (B) by striking ``1993 through 1997'' and inserting ``2006 
     through 2010''.
       (f) Educational Opportunity Centers.--Section 402F (20 
     U.S.C. 1070a-16) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1), by striking ``and'' after the 
     semicolon;
       (B) in paragraph (2), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(3) to improve the financial literacy and economic 
     literacy of students, including--
       ``(A) basic personal income, household money management, 
     and financial planning skills; and
       ``(B) basic economic decisionmaking skills.''; and
       (2) in subsection (b)--
       (A) by redesignating paragraphs (5) through (10) as 
     paragraphs (6) through (11), respectively;
       (B) by inserting after paragraph (4) the following:
       ``(5) education or counseling services designed to improve 
     the financial literacy and economic literacy of students;'';
       (C) by striking paragraph (7) (as redesignated by 
     subparagraph (A)) and inserting the following:
       ``(7) individualized personal, career, and academic 
     counseling;''; and
       (D) by striking paragraph (11) (as redesignated by 
     subparagraph (A)) and inserting the following:
       ``(11) programs and activities as described in paragraphs 
     (1) through (10) that are specially designed for students who 
     are limited English proficient, students with disabilities, 
     or students who are homeless children and youths (as such 
     term is defined in section 725 of the McKinney-Vento Homeless 
     Assistance Act (42 U.S.C. 11434a)), or programs and 
     activities for students who are in foster care or are aging 
     out of the foster care system.''.
       (g) Staff Development Activities.--Section 402G(b)(3) (20 
     U.S.C. 1070a-17(b)(3)) is amended by inserting ``, including 
     strategies for recruiting and serving students who are 
     homeless children and youths (as such term is defined in 
     section 725 of the McKinney-Vento Homeless Assistance Act (42 
     U.S.C. 11434a)) and students who are in foster care

[[Page 26771]]

     or are aging out of the foster care system'' before the 
     period at the end.
       (h) Reports, Evaluations, and Grants for Project 
     Improvement and Dissemination.--Section 402H (20 U.S.C. 
     1070a-18) is amended--
       (1) by striking the section heading and inserting 
     ``REPORTS, EVALUATIONS, AND GRANTS FOR PROJECT IMPROVEMENT 
     AND DISSEMINATION.'';
       (2) by redesignating subsections (a) through (c) as 
     subsections (b) through (d), respectively; and
       (3) by inserting before subsection (b) (as redesignated by 
     paragraph (2)) the following:
       ``(a) Report to Congress.--At least once every 2-year 
     period, the Secretary shall prepare and submit to Congress a 
     report on the outcomes achieved by the programs authorized 
     under this chapter. Such report shall include a statement for 
     the preceding fiscal year specifying--
       ``(1) the number of grants awarded during each fiscal year, 
     and the number of individuals served by the programs carried 
     out under such grants;
       ``(2) the number of entities that received grants during 
     the fiscal year, including the number of entities that--
       ``(A) received a grant to carry out a program under this 
     chapter for the fiscal year; and
       ``(B) had not received funding for that particular program 
     during the previous grant cycle;
       ``(3) a comparison of the number and percentage of grant 
     awards made to entities described in paragraph (2), with the 
     number of such entities funded through discretionary grant 
     competitions conducted by the Secretary under this chapter in 
     the 3 grant cycles preceding the fiscal year;
       ``(4) information on the number of individuals served in 
     each program authorized under this chapter; and
       ``(5) information on the outcomes achieved by each program 
     authorized under this chapter, including the outcome criteria 
     described in section 402A(f) for each program.''.

     SEC. 7363. GAINING EARLY AWARENESS AND READINESS FOR 
                   UNDERGRADUATE PROGRAMS.

       (a) Early Intervention and College Awareness Program 
     Authorized.--Section 404A (20 U.S.C. 1070a-21) is amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) Program Authorized.--The Secretary is authorized, in 
     accordance with the requirements of this chapter, to 
     establish a program that encourages eligible entities to 
     provide support to eligible low-income students to assist the 
     students in obtaining a secondary school diploma (or its 
     recognized equivalent) and to prepare for and succeed in 
     postsecondary education, by providing--
       ``(1) financial assistance, academic support, additional 
     counseling, mentoring, outreach, and supportive services to 
     middle school and secondary school students to reduce--
       ``(A) the risk of such students dropping out of school; or
       ``(B) the need for remedial education for such students at 
     the postsecondary level; and
       ``(2) information to students and their parents about the 
     advantages of obtaining a postsecondary education and the 
     college financing options for the students and their 
     parents.'';
       (2) by striking subsection (b)(2)(A) and inserting the 
     following:
       ``(A) give priority to eligible entities that have a prior, 
     demonstrated commitment to early intervention leading to 
     college access through collaboration and replication of 
     successful strategies;''; and
       (3) by striking subsection (c)(2) and inserting the 
     following:
       ``(2) a partnership--
       ``(A) consisting of--
       ``(i) 1 or more local educational agencies; and
       ``(ii) 1 or more degree granting institutions of higher 
     education; and
       ``(B) which may include not less than 2 other community 
     organizations or entities, such as businesses, professional 
     organizations, State agencies, institutions or agencies 
     sponsoring programs authorized under subpart 4, or other 
     public or private agencies or organizations.''.
       (b) Requirements.--Section 404B (20 U.S.C. 1070a-22) is 
     amended--
       (1) by striking subsection (a) and inserting the 
     following:--
       ``(a) Funding Rules.--
       ``(1) Distribution.--In awarding grants from the amount 
     appropriated under section 404G for a fiscal year, the 
     Secretary shall take into consideration--
       ``(A) the geographic distribution of such awards; and
       ``(B) the distribution of such awards between urban and 
     rural applicants.
       ``(2) Special rule.--The Secretary shall annually 
     reevaluate the distribution of funds described in paragraph 
     (1) based on number, quality, and promise of the 
     applications.'';
       (2) by striking subsections (b), (e), and (f);
       (3) by redesignating subsections (c), (d), and (g) as 
     subsections (b), (c), and (d), respectively; and
       (4) by adding at the end the following:
       ``(e) Supplement, Not Supplant.--Grant funds awarded under 
     this chapter shall be used to supplement, and not supplant, 
     other Federal, State, and local funds that would otherwise be 
     expended to carry out activities assisted under this 
     chapter.''.
       (c) Application.--Section 404C (20 U.S.C. 1070a-23) is 
     amended--
       (1) in the section heading, by striking ``ELIGIBLE ENTITY 
     PLANS'' and inserting ``APPLICATIONS'';
       (2) in subsection (a)--
       (A) in the subsection heading, by striking ``Plan'' and 
     inserting ``Application'';
       (B) in paragraph (1)--
       (i) by striking ``a plan'' and inserting ``an 
     application''; and
       (ii) by striking the second sentence; and
       (C) by striking paragraph (2) and inserting the following:
       ``(2) Contents.--Each application submitted pursuant to 
     paragraph (1) shall be in such form, contain or be 
     accompanied by such information or assurances, and be 
     submitted at such time as the Secretary may require. Each 
     such application shall, at a minimum--
       ``(A) describe the activities for which assistance under 
     this chapter is sought, including how the eligible entity 
     will carry out the required activities described in section 
     404D(a);
       ``(B) describe how the eligible agency will meet the 
     requirements of section 404E;
       ``(C) provide assurances that adequate administrative and 
     support staff will be responsible for coordinating the 
     activities described in section 404D;
       ``(D) ensure that activities assisted under this chapter 
     will not displace an employee or eliminate a position at a 
     school assisted under this chapter, including a partial 
     displacement such as a reduction in hours, wages or 
     employment benefits;
       ``(E) describe, in the case of an eligible entity described 
     in section 404A(c)(2), how the eligible entity will define 
     the cohorts of the students served by the eligible entity 
     pursuant to section 404B(d), and how the eligible entity will 
     serve the cohort through grade 12, including--
       ``(i) how vacancies in the program under this chapter will 
     be filled; and
       ``(ii) how the eligible entity will serve students 
     attending different secondary schools;
       ``(F) describe how the eligible entity will coordinate 
     programs with other existing Federal, State, or local 
     programs to avoid duplication and maximize the number of 
     students served;
       ``(G) provide such additional assurances as the Secretary 
     determines necessary to ensure compliance with the 
     requirements of this chapter; and
       ``(H) provide information about the activities that will be 
     carried out by the eligible entity to support systemic 
     changes from which future cohorts of students will 
     benefit.'';
       (3) in the matter preceding subparagraph (A) of subsection 
     (b)(1)--
       (A) by striking ``a plan'' and inserting ``an 
     application''; and
       (B) by striking ``such plan'' and inserting ``such 
     application''; and
       (4) in subsection (c)(1), by striking the semicolon at the 
     end and inserting ``including--
       ``(A) the amount contributed to a student scholarship fund 
     established under section 404E; and
       ``(B) the amount of the costs of administering the 
     scholarship program under section 404E;''.
       (d) Activities.--Section 404D (20 U.S.C. 1070a-24) is 
     amended to read as follows:

     ``SEC. 404D. ACTIVITIES.

       ``(a) Required Activities.--Each eligible entity receiving 
     a grant under this chapter shall carry out the following:
       ``(1) Provide information regarding financial aid for 
     postsecondary education to participating students in the 
     cohort described in subsection 404B(d)(1)(A).
       ``(2) Encourage student enrollment in rigorous and 
     challenging curricula and coursework, in order to reduce the 
     need for remedial coursework at the postsecondary level.
       ``(3) Support activities designed to improve the number of 
     participating students who--
       ``(A) obtain a secondary school diploma; and
       ``(B) complete applications for and enroll in a program of 
     postsecondary education.
       ``(4) In the case of an eligible entity described in 
     section 404A(c)(1), provide for the scholarships described in 
     section 404E.
       ``(b) Optional Activities for States and Partnerships.--An 
     eligible entity that receives a grant under this chapter may 
     use grant funds to carry out 1 or more of the following 
     activities:
       ``(1) Providing tutoring and supporting mentors, including 
     adults or former participants of a program under this 
     chapter, for eligible students.
       ``(2) Conducting outreach activities to recruit priority 
     students described in subsection (d) to participate in 
     program activities.
       ``(3) Providing supportive services to eligible students.
       ``(4) Supporting the development or implementation of 
     rigorous academic curricula, which may include college 
     preparatory, Advanced Placement, or International 
     Baccalaureate programs, and providing participating students 
     access to rigorous core

[[Page 26772]]

     courses that reflect challenging State academic standards.
       ``(5) Supporting dual or concurrent enrollment programs 
     between the secondary school and institution of higher 
     education partners of an eligible entity described in section 
     404A(c)(2), and other activities that support participating 
     students in--
       ``(A) meeting challenging academic standards;
       ``(B) successfully applying for postsecondary education;
       ``(C) successfully applying for student financial aid; and
       ``(D) developing graduation and career plans.
       ``(6) Providing support for scholarships described in 
     section 404E.
       ``(7) Introducing eligible students to institutions of 
     higher education, through trips and school-based sessions.
       ``(8) Providing an intensive extended school day, school 
     year, or summer program that offers--
       ``(A) additional academic classes; or
       ``(B) assistance with college admission applications.
       ``(9) Providing other activities designed to ensure 
     secondary school completion and postsecondary education 
     enrollment of at-risk children, such as--
       ``(A) the identification of at-risk children;
       ``(B) after-school and summer tutoring;
       ``(C) assistance to at-risk children in obtaining summer 
     jobs;
       ``(D) academic counseling;
       ``(E) volunteer and parent involvement;
       ``(F) encouraging former or current participants of a 
     program under this chapter to serve as peer counselors;
       ``(G) skills assessments;
       ``(H) personal counseling;
       ``(I) family counseling and home visits;
       ``(J) staff development; and
       ``(K) programs and activities described in this subsection 
     that are specially designed for students who are limited 
     English proficient.
       ``(10) Enabling eligible students to enroll in Advanced 
     Placement or International Baccalaureate courses, or college 
     entrance examination preparation courses.
       ``(11) Providing services to eligible students in the 
     participating cohort described in section 404B(d)(1)(A), 
     through the first year of attendance at an institution of 
     higher education.
       ``(c) Additional Optional Activities for States.--In 
     addition to the required activities described in subsection 
     (a) and the optional activities described in subsection (b), 
     an eligible entity described in section 404A(c)(1) receiving 
     funds under this chapter may use grant funds to carry out 1 
     or more of the following activities:
       ``(1) Providing technical assistance to--
       ``(A) middle schools or secondary schools that are located 
     within the State; or
       ``(B) partnerships described in section 404A(c)(2) that are 
     located within the State.
       ``(2) Providing professional development opportunities to 
     individuals working with eligible cohorts of students 
     described in section 404B(d)(1)(A).
       ``(3) Providing strategies and activities that align 
     efforts in the State to prepare eligible students for 
     attending and succeeding in postsecondary education, which 
     may include the development of graduation and career plans.
       ``(4) Disseminating information on the use of 
     scientifically based research and best practices to improve 
     services for eligible students.
       ``(5)(A) Disseminating information on effective coursework 
     and support services that assist students in obtaining the 
     goals described in subparagraph (B)(ii).
       ``(B) Identifying and disseminating information on best 
     practices with respect to--
       ``(i) increasing parental involvement; and
       ``(ii) preparing students, including students with 
     disabilities and students who are limited English proficient, 
     to succeed academically in, and prepare financially for, 
     postsecondary education.
       ``(6) Working to align State academic standards and 
     curricula with the expectations of postsecondary institutions 
     and employers.
       ``(7) Developing alternatives to traditional secondary 
     school that give students a head start on attaining a 
     recognized postsecondary credential (including an industry 
     certificate, an apprenticeship, or an associate's or a 
     bachelor's degree), including school designs that give 
     students early exposure to college-level courses and 
     experiences and allow students to earn transferable college 
     credits or an associate's degree at the same time as a 
     secondary school diploma.
       ``(8) Creating community college programs for drop-outs 
     that are personalized drop-out recovery programs that allow 
     drop-outs to complete a regular secondary school diploma and 
     begin college-level work.
       ``(d) Priority Students.--For eligible entities not using a 
     cohort approach, the eligible entity shall treat as priority 
     students any student in middle or secondary school who is 
     eligible--
       ``(1) to be counted under section 1124(c) of the Elementary 
     and Secondary Education Act of 1965;
       ``(2) for free or reduced price meals under the Richard B. 
     Russell National School Lunch Act;
       ``(3) for assistance under a State program funded under 
     part A or E of title IV of the Social Security Act (42 U.S.C. 
     601 et seq., 670 et seq.); or
       ``(4) for assistance under subtitle B of title VII of the 
     McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et 
     seq.).
       ``(e) Allowable Providers.--In the case of eligible 
     entities described in section 404A(c)(1), the activities 
     required by this section may be provided by service providers 
     such as community-based organizations, schools, institutions 
     of higher education, public and private agencies, nonprofit 
     and philanthropic organizations, businesses, institutions and 
     agencies sponsoring programs authorized under subpart 4, and 
     other organizations the State determines appropriate.''.
       (e) Scholarship Component.--Section 404E (20 U.S.C. 1070a-
     25) is amended--
       (1) by striking subsections (e) and (f);
       (2) by redesignating subsections (b), (c), and (d) as 
     subsections (d), (f), and (g), respectively;
       (3) by inserting after subsection (a) the following:
       ``(b) Limitation.--
       ``(1) In general.--Subject to paragraph (2), each eligible 
     entity described in section 404A(c)(1) that receives a grant 
     under this chapter shall use not less than 25 percent and not 
     more than 50 percent of the grant funds for activities 
     described in section 404D(c), with the remainder of such 
     funds to be used for a scholarship program under this 
     section.
       ``(2) Exception.--Notwithstanding paragraph (1), the 
     Secretary may allow an eligible entity to use more than 50 
     percent of grant funds received under this chapter for such 
     activities, if the eligible entity demonstrates that the 
     eligible entity has another means of providing the students 
     with the financial assistance described in this section and 
     describes such means in the application submitted under 
     section 404C.
       ``(c) Notification of Eligibility.--Each eligible entity 
     providing scholarships under this section shall provide 
     information on the eligibility requirements for the 
     scholarships to all participating students upon the students' 
     entry into the programs assisted under this chapter.'';
       (4) in subsection (d) (as redesignated by paragraph (2)), 
     by striking ``the lesser of'' and all that follows through 
     the period at the end of paragraph (2) and inserting ``the 
     minimum Federal Pell Grant award under section 401 for such 
     award year.'';
       (5) by inserting after subsection (d) (as redesignated by 
     paragraph (2) and amended by paragraph (4)) the following:
       ``(e) Portability of Assistance.--
       ``(1) In general.--Each eligible entity described in 
     section 404A(c)(1) that receives a grant under this chapter 
     shall create or organize a trust for each cohort described in 
     section 404B(d)(1)(A) for which the grant is sought in the 
     application submitted by the entity, which trust shall be an 
     amount that is not less than the minimum scholarship amount 
     described in subsection (d), multiplied by the number of 
     students participating in the cohort.
       ``(2) Requirement for portability.--Funds contributed to 
     the trust for a cohort shall be available to a student in the 
     cohort when the student has--
       ``(A) completed a secondary school diploma, its recognized 
     equivalent, or other recognized alternative standard for 
     individuals with disabilities; and
       ``(B) enrolled in an institution of higher education.
       ``(3) Qualified educational expenses.--Funds available to 
     an eligible student from a trust may be used for--
       ``(A) tuition, fees, books, supplies, and equipment 
     required for the enrollment or attendance of the eligible 
     student at an institution of higher education; and
       ``(B) in the case of an eligible student with special 
     needs, expenses for special needs services which are incurred 
     in connection with such enrollment or attendance.
       ``(4) Return of funds.--
       ``(A) Redistribution.--
       ``(i) In general.--Trust funds that are not used by an 
     eligible student within 6 years of the student's scheduled 
     completion of secondary school may be redistributed by the 
     eligible entity to other eligible students.
       ``(ii) Return of excess to the secretary.--If, after 
     meeting the requirements of paragraph (1) and, if applicable, 
     redistributing excess funds in accordance with clause (i), an 
     eligible entity has funds remaining, the eligible entity 
     shall return excess funds to the Secretary for distribution 
     to other grantees under this chapter.
       ``(B) Nonparticipating entity.--Notwithstanding 
     subparagraph (A), in the case of an eligible entity described 
     in section 404A(c)(1)(A) that does not receive assistance 
     under this subpart for 6 fiscal years, the eligible entity 
     shall return any trust funds not awarded or obligated to 
     eligible students to the Secretary for distribution to other 
     grantees under this chapter.''; and
       (6) in subsection (g) (as redesignated by paragraph (2))--
       (A) in paragraph (2), by striking ``1993'' and inserting 
     ``2000''; and

[[Page 26773]]

       (B) in paragraph (4), by striking ``early intervention 
     component required under section 404D'' and inserting 
     ``activities required under section 404D(a)''.
       (f) Repeal of 21st Century Scholar Certificates.--Chapter 2 
     of subpart 2 of part A of title IV (20 U.S.C. 1070a-21 et 
     seq.) is further amended--
       (1) by striking section 404F; and
       (2) by redesignating sections 404G and 404H as sections 
     404F and 404G, respectively.
       (g) Authorization of Appropriations.--Section 404G (as 
     redesignated by subsection (f)) (20 U.S.C. 1070a-28) is 
     amended by striking ``$200,000,000 for fiscal year 1999'' and 
     all that follows through the period and inserting ``such sums 
     as may be necessary for fiscal year 2006 and each of the 5 
     succeeding fiscal years.''.
       (h) Conforming Amendments.--Chapter 2 of subpart 2 of part 
     A of title IV (20 U.S.C. 1070a-21 et seq.) is further 
     amended--
       (1) in section 404A(b)(1), by striking ``404H'' and 
     inserting ``404G'';
       (2) in section 404B(a)(1), by striking ``404H'' and 
     inserting ``404G''; and
       (3) in section 404F(c) (as redesignated by subsection 
     (f)(2)), by striking ``404H'' and inserting ``404G''.

     SEC. 7364. ACADEMIC ACHIEVEMENT INCENTIVE SCHOLARSHIPS.

       Chapter 3 of subpart 2 of part A of title IV (20 U.S.C. 
     1070a-31 et seq.) is repealed.

     SEC. 7365. FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY 
                   GRANTS.

       (a) Appropriations Authorized.--Section 413A(b)(1) (20 
     U.S.C. 1070b(b)(1)) is amended by striking ``$675,000,000 for 
     fiscal year 1999'' and all that follows through the period 
     and inserting ``such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.''.
       (b) Allocation of Funds.--
       (1) Allocation of funds.--Section 413D (20 U.S.C. 1070b-3) 
     is amended--
       (A) by striking subsection (a)(4); and
       (B) in subsection (c)(3)(D), by striking ``$450'' and 
     inserting ``$600''.
       (2) Technical correction.--Section 413D(a)(1) (20 U.S.C. 
     1070b-3(a)(1)) is amended by striking ``such institution'' 
     and all that follows through the period and inserting ``such 
     institution received under subsections (a) and (b) of this 
     section for fiscal year 1999 (as such subsections were in 
     effect with respect to allocations for such fiscal year).''.

     SEC. 7366. LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP 
                   PROGRAM.

       (a) Appropriations Authorized.--Section 415A(b)(1) (20 
     U.S.C. 1070c(b)(1)) is amended to read as follows:
       ``(1) In general.--There are authorized to be appropriated 
     to carry out this subpart such sums as may be necessary for 
     fiscal year 2006 and each of the 5 succeeding fiscal 
     years.''.
       (b) Applications.--Section 415C(b) (20 U.S.C. 1070c-2(b)) 
     is amended--
       (1) in the matter preceding subparagraph (A) of paragraph 
     (2), by striking ``not in excess of $5,000 per academic 
     year'' and inserting ``not to exceed the lesser of $12,500 or 
     the student's cost of attendance per academic year''; and
       (2) by striking paragraph (10) and inserting the following:
       ``(10) provides notification to eligible students that such 
     grants are--
       ``(A) Leveraging Educational Assistance Partnership grants; 
     and
       ``(B) funded by the Federal Government, the State, and 
     other contributing partners.''.
       (c) Grants for Access and Persistence.--Section 415E (20 
     U.S.C. 1070c-3a) is amended to read as follows:

     ``SEC. 415E. GRANTS FOR ACCESS AND PERSISTENCE.

       ``(a) Purpose.--It is the purpose of this section to expand 
     college access and increase college persistence by making 
     allotments to States to enable the States to--
       ``(1) expand and enhance partnerships with institutions of 
     higher education, early information and intervention, 
     mentoring, or outreach programs, private corporations, 
     philanthropic organizations, and other interested parties in 
     order to--
       ``(A) carry out activities under this section; and
       ``(B) provide coordination and cohesion among Federal, 
     State, and local governmental and private efforts that 
     provide financial assistance to help low-income students 
     attend an institution of higher education;
       ``(2) provide need-based grants for access and persistence 
     to eligible low-income students;
       ``(3) provide early notification to low-income students of 
     the students' eligibility for financial aid; and
       ``(4) encourage increased participation in early 
     information and intervention, mentoring, or outreach 
     programs.
       ``(b) Allotments to States.--
       ``(1) In general.--
       ``(A) Authorization.--From sums reserved under section 
     415A(b)(2) for each fiscal year, the Secretary shall make an 
     allotment to each State that submits an application for an 
     allotment in accordance with subsection (c) to enable the 
     State to pay the Federal share, as described in paragraph 
     (2), of the cost of carrying out the activities under 
     subsection (d).
       ``(B) Determination of allotment.--In making allotments 
     under subparagraph (A), the Secretary shall consider the 
     following:
       ``(i) Continuation of award.--If a State continues to meet 
     the specifications established in such State's application 
     under subsection (c), the Secretary shall make an allotment 
     to such State that is not less than the allotment made to 
     such State for the previous fiscal year.
       ``(ii) Priority.--The Secretary shall give priority in 
     making allotments to States that meet the requirements 
     described in paragraph (2)(A)(ii).
       ``(2) Federal share.--
       ``(A) In general.--The Federal share under this section 
     shall be determined in accordance with the following:
       ``(i) If a State applies for an allotment under this 
     section in partnership with--

       ``(I) any number of degree granting institutions of higher 
     education in the State whose combined full-time enrollment 
     represents less than a majority of all students attending 
     institutions of higher education in the State; and
       ``(II)(aa) philanthropic organizations that are located in, 
     or that provide funding in, the State; or
       ``(bb) private corporations that are located in, or that do 
     business in, the State,

     then the Federal share of the cost of carrying out the 
     activities under subsection (d) shall be equal to 50 percent.
       ``(ii) If a State applies for an allotment under this 
     section in partnership with--

       ``(I) any number of degree granting institutions of higher 
     education in the State whose combined full-time enrollment 
     represents a majority of all students attending institutions 
     of higher education in the State; and
       ``(II)(aa) philanthropic organizations that are located in, 
     or that provide funding in, the State; or
       ``(bb) private corporations that are located in, or that do 
     business in, the State,

     then the Federal share of the cost of carrying out the 
     activities under subsection (d) shall be equal to 57 percent.
       ``(B) Non-federal share.--
       ``(i) In general.--The non-Federal share under this section 
     may be provided in cash or in kind, fully evaluated and in 
     accordance with this subparagraph.
       ``(ii) In kind contribution.--For the purpose of 
     calculating the non-Federal share under this section, an in 
     kind contribution is a non-cash award that has monetary 
     value, such as provision of room and board and transportation 
     passes, and that helps a student meet the cost of attendance.
       ``(iii) Effect on need analysis.--For the purpose of 
     calculating a student's need in accordance with part F of 
     this title, an in-kind contribution described in clause (ii) 
     shall not be considered an asset or income.
       ``(c) Application for Allotment.--
       ``(1) In general.--
       ``(A) Submission.--A State that desires to receive an 
     allotment under this section on behalf of a partnership 
     described in paragraph (3) shall submit an application to the 
     Secretary at such time, in such manner, and containing such 
     information as the Secretary may require.
       ``(B) Content.--An application submitted under subparagraph 
     (A) shall include the following:
       ``(i) A description of the State's plan for using the 
     allotted funds.
       ``(ii) Assurances that the State will provide the non-
     Federal share from State, institutional, philanthropic, or 
     private funds, of not less than the required share of the 
     cost of carrying out the activities under subsection (d), as 
     determined under subsection (b), in accordance with the 
     following:

       ``(I) The State shall specify the methods by which non-
     Federal share funds will be paid and include provisions 
     designed to ensure that funds provided under this section 
     will be used to supplement, and not supplant, Federal and 
     non-Federal funds available for carrying out the activities 
     under this title.
       ``(II) A State that uses non-Federal funds to create or 
     expand existing partnerships with nonprofit organizations or 
     community-based organizations in which such organizations 
     match State funds for student scholarships, may apply such 
     matching funds from such organizations toward fulfilling the 
     State's non-Federal share obligation under this clause.

       ``(iii) Assurances that early information and intervention, 
     mentoring, or outreach programs exist within the State or 
     that there is a plan to make such programs widely available.
       ``(iv) A description of the organizational structure that 
     the State has in place to administer the activities under 
     subsection (d), including a description of the system the 
     State will use to track the participation of students who 
     receive grants under this section to degree completion.
       ``(v) Assurances that the State has a method in place, such 
     as acceptance of the automatic zero expected family 
     contribution determination described in section 479, to 
     identify eligible low-income students and award State grant 
     aid to such students.
       ``(vi) Assurances that the State will provide notification 
     to eligible low-income students that grants under this 
     section are--

       ``(I) Leveraging Educational Assistance Partnership Grants; 
     and
       ``(II) funded by the Federal Government, the State, and 
     other contributing partners.

[[Page 26774]]

       ``(2) State agency.--The State agency that submits an 
     application for a State under section 415C(a) shall be the 
     same State agency that submits an application under paragraph 
     (1) for such State.
       ``(3) Partnership.--In applying for an allotment under this 
     section, the State agency shall apply for the allotment in 
     partnership with--
       ``(A) not less than 1 public and 1 private degree granting 
     institution of higher education that are located in the 
     State, if applicable;
       ``(B) new or existing early information and intervention, 
     mentoring, or outreach programs located in the State; and
       ``(C) not less than 1--
       ``(i) philanthropic organization located in, or that 
     provides funding in, the State; or
       ``(ii) private corporation located in, or that does 
     business in, the State.
       ``(4) Roles of partners.--
       ``(A) State agency.--A State agency that is in a 
     partnership receiving an allotment under this section--
       ``(i) shall--

       ``(I) serve as the primary administrative unit for the 
     partnership;
       ``(II) provide or coordinate non-Federal share funds, and 
     coordinate activities among partners;
       ``(III) encourage each institution of higher education in 
     the State to participate in the partnership;
       ``(IV) make determinations and early notifications of 
     assistance as described under subsection (d)(2); and
       ``(V) annually report to the Secretary on the partnership's 
     progress in meeting the purpose of this section; and

       ``(ii) may provide early information and intervention, 
     mentoring, or outreach programs.
       ``(B) Degree granting institutions of higher education.--A 
     degree granting institution of higher education that is in a 
     partnership receiving an allotment under this section--
       ``(i) shall--

       ``(I) recruit and admit participating qualified students 
     and provide such additional institutional grant aid to 
     participating students as agreed to with the State agency;
       ``(II) provide support services to students who receive 
     grants for access and persistence under this section and are 
     enrolled at such institution; and
       ``(III) assist the State in the identification of eligible 
     students and the dissemination of early notifications of 
     assistance as agreed to with the State agency; and

       ``(ii) may provide funding for early information and 
     intervention, mentoring, or outreach programs or provide such 
     services directly.
       ``(C) Programs.--An early information and intervention, 
     mentoring, or outreach program that is in a partnership 
     receiving an allotment under this section shall provide 
     direct services, support, and information to participating 
     students.
       ``(D) Philanthropic organization or private corporation.--A 
     philanthropic organization or private corporation that is in 
     a partnership receiving an allotment under this section shall 
     provide funds for grants for access and persistence for 
     participating students, or provide funds or support for early 
     information and intervention, mentoring, or outreach 
     programs.
       ``(d) Authorized Activities.--
       ``(1) In general.--
       ``(A) Establishment of partnership.--Each State receiving 
     an allotment under this section shall use the funds to 
     establish a partnership to award grants for access and 
     persistence to eligible low-income students in order to 
     increase the amount of financial assistance such students 
     receive under this subpart for undergraduate education 
     expenses.
       ``(B) Amount of grants.--
       ``(i) Partnerships with institutions serving less than a 
     majority of students in the state.--

       ``(I) In general.--In the case where a State receiving an 
     allotment under this section is in a partnership described in 
     subsection (b)(2)(A)(i), the amount of a grant for access and 
     persistence awarded by such State shall be not less than the 
     amount that is equal to the average undergraduate tuition and 
     mandatory fees at 4-year public institutions of higher 
     education in the State where the student resides (less any 
     other Federal or State sponsored grant amount, work study 
     amount, and scholarship amount received by the student), and 
     such amount shall be used toward the cost of attendance at an 
     institution of higher education located in the State.
       ``(II) Cost of attendance.--A State that has a program, 
     apart from the partnership under this section, of providing 
     eligible low-income students with grants that are equal to 
     the average undergraduate tuition and mandatory fees at 4-
     year public institutions of higher education in the State, 
     may increase the amount of grants for access and persistence 
     awarded by such State up to an amount that is equal to the 
     average cost of attendance at 4-year public institutions of 
     higher education in the State (less any other Federal or 
     State sponsored grant amount, work study amount, and 
     scholarship amount received by the student).

       ``(ii) Partnerships with institutions serving the majority 
     of students in the state.--In the case where a State 
     receiving an allotment under this section is in a partnership 
     described in subsection (b)(2)(A)(ii), the amount of a grant 
     for access and persistence awarded by such State shall be not 
     more than an amount that is equal to the average cost of 
     attendance at 4-year public institutions of higher education 
     in the State where the student resides (less any other 
     Federal or State sponsored grant amount, college work study 
     amount, and scholarship amount received by the student), and 
     such amount shall be used by the student to attend an 
     institution of higher education located in the State.
       ``(C) Special rules.--
       ``(i) Partnership institutions.--A State receiving an 
     allotment under this section may restrict the use of grants 
     for access and persistence under this section by awarding the 
     grants only to students attending institutions of higher 
     education that are participating in the partnership.
       ``(ii) Out-of-State institutions.--If a State provides 
     grants through another program under this subpart to students 
     attending institutions of higher education located in another 
     State, such agreement may also apply to grants awarded under 
     this section.
       ``(2) Early notification.--
       ``(A) In general.--Each State receiving an allotment under 
     this section shall annually notify low-income students, such 
     as students who are eligible to receive a free lunch under 
     the school lunch program established under the Richard B. 
     Russell National School Lunch Act, in grade 7 through grade 
     12 in the State, of the students' potential eligibility for 
     student financial assistance, including a grant for access 
     and persistence, to attend an institution of higher 
     education.
       ``(B) Content of notice.--The notification under 
     subparagraph (A)--
       ``(i) shall include--

       ``(I) information about early information and intervention, 
     mentoring, or outreach programs available to the student;
       ``(II) information that a student's candidacy for a grant 
     for access and persistence is enhanced through participation 
     in an early information and intervention, mentoring, or 
     outreach program;
       ``(III) an explanation that student and family eligibility 
     and participation in other Federal means-tested programs may 
     indicate eligibility for a grant for access and persistence 
     and other student aid programs;
       ``(IV) a nonbinding estimation of the total amount of 
     financial aid a low-income student with a similar income 
     level may expect to receive, including an estimation of the 
     amount of a grant for access and persistence and an 
     estimation of the amount of grants, loans, and all other 
     available types of aid from the major Federal and State 
     financial aid programs;
       ``(V) an explanation that in order to be eligible for a 
     grant for access and persistence, at a minimum, a student 
     shall--

       ``(aa) meet the requirement under paragraph (3);
       ``(bb) graduate from secondary school; and
       ``(cc) enroll at an institution of higher education that is 
     a partner in the partnership or qualifies under subsection 
     (d)(1)(C)(ii);

       ``(VI) information on any additional requirements (such as 
     a student pledge detailing student responsibilities) that the 
     State may impose for receipt of a grant for access and 
     persistence under this section; and
       ``(VII) instructions on how to apply for a grant for access 
     and persistence and an explanation that a student is required 
     to file a Free Application for Federal Student Aid authorized 
     under section 483(a) to be eligible for such grant and 
     assistance from other Federal and State financial aid 
     programs; and

       ``(ii) may include a disclaimer that grant awards for 
     access and persistence are contingent upon--

       ``(I) a determination of the student's financial 
     eligibility at the time of the student's enrollment at an 
     institution of higher education that is a partner in the 
     partnership or qualifies under subsection (d)(1)(C)(ii);
       ``(II) annual Federal and State appropriations; and
       ``(III) other aid received by the student at the time of 
     the student's enrollment at such institution of higher 
     education.

       ``(3) Eligibility.--In determining which students are 
     eligible to receive grants for access and persistence, the 
     State shall ensure that each such student meets not less than 
     1 of the following:
       ``(A) Meets not less than 2 of the following criteria, with 
     priority given to students meeting all of the following 
     criteria:
       ``(i) Has an expected family contribution equal to zero (as 
     described in section 479) or a comparable alternative based 
     upon the State's approved criteria in section 415C(b)(4).
       ``(ii) Has qualified for a free lunch, or at the State's 
     discretion a reduced price lunch, under the school lunch 
     program established under the Richard B. Russell National 
     School Lunch Act.
       ``(iii) Qualifies for the State's maximum undergraduate 
     award, as authorized under section 415C(b).
       ``(iv) Is participating in, or has participated in, a 
     Federal, State, institutional, or community early information 
     and intervention, mentoring, or outreach program, as 
     recognized by the State agency administering activities under 
     this section.

[[Page 26775]]

       ``(B) Is receiving, or has received, a grant for access and 
     persistence under this section, in accordance with paragraph 
     (5).
       ``(4) Grant award.--Once a student, including those 
     students who have received early notification under paragraph 
     (2) from the State, applies for admission to an institution 
     that is a partner in the partnership, files a Free 
     Application for Federal Student Aid and any related existing 
     State form, and is determined eligible by the State under 
     paragraph (3), the State shall--
       ``(A) issue the student a preliminary award certificate for 
     a grant for access and persistence with tentative award 
     amounts; and
       ``(B) inform the student that payment of the grant for 
     access and persistence award amounts is subject to 
     certification of enrollment and award eligibility by the 
     institution of higher education.
       ``(5) Duration of award.--An eligible student that receives 
     a grant for access and persistence under this section shall 
     receive such grant award for each year of such student's 
     undergraduate education in which the student remains eligible 
     for assistance under this title, including pursuant to 
     section 484(c), and remains financially eligible as 
     determined by the State, except that the State may impose 
     reasonable time limits to degree completion.
       ``(e) Use of Funds for Administrative Costs Prohibited.--A 
     State that receives an allotment under this section shall not 
     use any of the allotted funds to pay administrative costs 
     associated with any of the authorized activities described in 
     subsection (d).
       ``(f) Statutory and Regulatory Relief for Institutions of 
     Higher Education.--The Secretary may grant, upon the request 
     of an institution of higher education that is in a 
     partnership described in subsection (b)(2)(A)(ii) and that 
     receives an allotment under this section, a waiver for such 
     institution from statutory or regulatory requirements that 
     inhibit the ability of the institution to successfully and 
     efficiently participate in the activities of the partnership.
       ``(g) Applicability Rule.--The provisions of this subpart 
     which are not inconsistent with this section shall apply to 
     the program authorized by this section.
       ``(h) Maintenance of Effort Requirement.--Each State 
     receiving an allotment under this section for a fiscal year 
     shall provide the Secretary with an assurance that the 
     aggregate amount expended per student or the aggregate 
     expenditures by the State, from funds derived from non-
     Federal sources, for the authorized activities described in 
     subsection (d) for the preceding fiscal year were not less 
     than the amount expended per student or the aggregate 
     expenditure by the State for the activities for the second 
     preceding fiscal year.
       ``(i) Special Rule.--Notwithstanding subsection (h), for 
     purposes of determining a State's share of the cost of the 
     authorized activities described in subsection (d), the State 
     shall consider only those expenditures from non-Federal 
     sources that exceed the State's total expenditures for need-
     based grants, scholarships, and work-study assistance for 
     fiscal year 1999 (including any such assistance provided 
     under this subpart).
       ``(j) Continuation and Transition.--For the 2-year period 
     that begins on the date of enactment of the Higher Education 
     Amendments of 2005, the Secretary shall continue to award 
     grants under section 415E of the Higher Education Act of 1965 
     as such section existed on the day before the date of 
     enactment of such Act to States that choose to apply for 
     grants under such predecessor section.
       ``(k) Reports.--Not later than 3 years after the date of 
     enactment of the Higher Education Amendments of 2005 and 
     annually thereafter, the Secretary shall submit a report 
     describing the activities and the impact of the partnerships 
     under this section to the authorizing committees.''.

     SEC. 7367. SPECIAL PROGRAMS FOR STUDENTS WHOSE FAMILIES ARE 
                   ENGAGED IN MIGRANT AND SEASONAL FARMWORK.

       Section 418A (20 U.S.C. 1070d-2) is amended--
       (1) in subsection (a), by adding ``(including providing 
     outreach and technical assistance)'' after ``maintain and 
     expand'';
       (2) in subsection (b)--
       (A) in paragraph (1)(B)(i), by striking ``parents'' and 
     inserting ``immediate family'';
       (B) in paragraph (3)(B), by inserting ``(including 
     preparation for college entrance examinations)'' after 
     ``college program'';
       (C) in paragraph (5), by striking ``weekly'';
       (D) in paragraph (7), by striking ``and'' after the 
     semicolon;
       (E) in paragraph (8), by striking the period at the end and 
     inserting ``; and''; and
       (F) by adding at the end the following:
       ``(9) other activities to improve persistence and retention 
     in postsecondary education.'';
       (3) in subsection (c)--
       (A) in paragraph (1)--
       (i) in subparagraph (B)--

       (I) in the matter preceding clause (i), by inserting ``to 
     improve placement, persistence, and retention in 
     postsecondary education'' after ``services''; and
       (II) in clause (i), by striking ``and career'' and 
     inserting ``career, and economic education or personal 
     finance'';

       (ii) in subparagraph (E), by striking ``and'' after the 
     semicolon;
       (iii) by redesignating subparagraph (F) as subparagraph 
     (G); and
       (iv) by inserting after subparagraph (E) the following:
       ``(F) internships; and''; and
       (B) in paragraph (2)--
       (i) in subparagraph (A), by striking ``and'' after the 
     semicolon;
       (ii) in subparagraph (B), by striking the period at the end 
     and inserting ``, and coordinating such services, assistance, 
     and aid with other non-program services, assistance, and aid, 
     including services, assistance, and aid provided by 
     community-based organizations, which may include mentoring 
     and guidance; and''; and
       (iii) by adding at the end the following:
       ``(C) for students attending 2-year institutions of higher 
     education, encouraging the students to transfer to 4-year 
     institutions of higher education, where appropriate, and 
     monitoring the rate of transfer of such students.'';
       (4) in subsection (e), by striking ``section 402A(c)(1)'' 
     and inserting ``section 402A(c)(2)'';
       (5) in subsection (f)--
       (A) in paragraph (1), by striking ``$150,000'' and 
     inserting ``$180,000''; and
       (B) in paragraph (2), by striking ``$150,000'' and 
     inserting ``$180,000''; and
       (6) in subsection (h)--
       (A) in paragraph (1), by striking ``$15,000,000 for fiscal 
     year 1999'' and all that follows through the period and 
     inserting ``such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.''; and
       (B) in paragraph (2), by striking ``$5,000,000 for fiscal 
     year 1999'' and all that follows through the period and 
     inserting ``such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.''.

     SEC. 7368. ROBERT C. BYRD HONORS SCHOLARSHIP PROGRAM.

       (a) Eligibility of Scholars.--Section 419F(a) (20 U.S.C. 
     1070d-36(a)) is amended by inserting ``(or a home school, 
     whether treated as a home school or a private school under 
     State law)'' after ``private or public secondary school''.
       (b) Authorization of Appropriations.--Section 419K (20 
     U.S.C. 1070d-41) is amended by striking ``$45,000,000 for 
     fiscal year 1999'' and all that follows through the period 
     and inserting ``such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.''.

     SEC. 7369. CHILD CARE ACCESS MEANS PARENTS IN SCHOOL.

       (a) Minimum Grant.--Section 419N(b)(2)(B) (20 U.S.C. 
     1070e(b)(2)(B)) is amended--
       (1) by striking ``A grant'' and inserting the following:
       ``(i) In general.--Except as provided in clause (ii), a 
     grant''; and
       (2) by adding at the end the following:
       ``(ii) Increase trigger.--For any fiscal year for which the 
     amount appropriated under the authority of subsection (g) is 
     equal to or greater than $20,000,000, a grant under this 
     section shall be awarded in an amount that is not less than 
     $30,000.''.
       (b) Definition of Low-Income Student.--Paragraph (7) of 
     section 419N(b) (20 U.S.C. 1070e(b)) is amended to read as 
     follows:
       ``(7) Definition of low-income student.--For the purpose of 
     this section, the term `low-income student' means a student 
     who--
       ``(A) is eligible to receive a Federal Pell Grant for the 
     fiscal year for which the determination is made; or
       ``(B) would otherwise be eligible to receive a Federal Pell 
     Grant for the fiscal year for which the determination is 
     made, except that the student fails to meet the requirements 
     of--
       ``(i) section 401(c)(1) because the student is enrolled in 
     a graduate or first professional course of study; or
       ``(ii) section 484(a)(5) because the student is in the 
     United States for a temporary purpose.''.
       (c) Authorization of Appropriations.--Section 419N(g) (20 
     U.S.C. 1070e(g)) is amended by striking ``$45,000,000 for 
     fiscal year 1999'' and all that follows through the period 
     and inserting ``such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.''.

     SEC. 7370. LEARNING ANYTIME ANYWHERE PARTNERSHIPS.

       Subpart 8 of part A of title IV (20 U.S.C. 1070f et seq.) 
     is repealed.

          Subchapter B--Federal Family Education Loan Program

     SEC. 7381. EXTENSION OF AUTHORITIES.

       (a) Federal Insurance Limitations.--Section 424(a) (20 
     U.S.C. 1074(a)) is amended--
       (1) by striking ``2004'' and inserting ``2012''; and
       (2) by striking ``2008'' and inserting ``2016''.
       (b) Guaranteed Loans.--Section 428(a)(5) (20 U.S.C. 
     1078(a)(5)) is amended--
       (1) by striking ``2004'' and inserting ``2012''; and
       (2) by striking ``2008'' and inserting ``2016''.
       (3) Consolidation loans.--Section 428C(e) (20 U.S.C. 1078-
     3(e)) is amended by striking ``2004'' and inserting ``2012''.

     SEC. 7382. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST COSTS.

       Section 428 (20 U.S.C. 1078) is amended--
       (1) in subsection (b)(1)--
       (A) in subparagraph (N)--
       (i) in clause (i), by striking ``or'' after the semicolon; 
     and

[[Page 26776]]

       (ii) by striking clause (ii) and inserting the following:
       ``(ii) in the case of a student who is studying outside the 
     United States in a program of study abroad that is approved 
     for credit by the home institution at which such student is 
     enrolled, and only after verification of the student's 
     enrollment by the lender or guaranty agency, are, at the 
     request of the student, disbursed directly to the student by 
     the means described in clause (i), unless such student 
     requests that the check be endorsed, or the funds transfer be 
     authorized, pursuant to an authorized power-of-attorney; or
       ``(iii) in the case of a student who is studying outside 
     the United States in a program of study at an eligible 
     foreign institution, are, at the request of the foreign 
     institution, disbursed directly to the student, only after 
     verification of the student's enrollment by the lender or 
     guaranty agency by the means described in clause (i);''; and
       (B) in subparagraph (Y)(i)(III), by inserting ``, except 
     that, if requested by an institution of higher education, the 
     lender shall confirm such status through use of the National 
     Student Loan Data System'' before the semicolon; and
       (2) in subsection (c)(2)(H)(i), by striking ``preclaims'' 
     and inserting ``default aversion''.

     SEC. 7383. FEDERAL CONSOLIDATION LOANS.

       Section 428C(b)(1) (20 U.S.C. 1078-3(b)(1)) is amended--
       (1) in subparagraph (E), by striking ``and'' after the 
     semicolon;
       (2) by redesignating subparagraph (F) as subparagraph (G); 
     and
       (3) by inserting after subparagraph (E) the following:
       ``(F) that the lender will disclose, in a clear and 
     conspicuous manner, to borrowers who consolidate loans made 
     under part E of this title--
       ``(i) that once the borrower adds the borrower's Federal 
     Perkins Loan to a Federal Consolidation Loan, the borrower 
     will lose all interest-free periods that would have been 
     available, such as those periods when no interest accrues on 
     the Federal Perkins Loan while the borrower is enrolled in 
     school at least half-time, during the grace period, and 
     during periods when the borrower's student loan repayments 
     are deferred;
       ``(ii) that the borrower will no longer be eligible for 
     loan forgiveness of Federal Perkins Loans under any provision 
     of section 465; and
       ``(iii) the occupations described in section 465(a)(2), 
     individually and in detail, for which the borrower will lose 
     eligibility for Federal Perkins Loan forgiveness; and''.

     SEC. 7384. DEFAULT REDUCTION PROGRAM.

       Section 428F (20 U.S.C. 1078-6) is amended by adding at the 
     end the following:
       ``(c) Financial and Economic Literacy.--Where appropriate 
     as determined by the institution of higher education in which 
     a borrower is enrolled, each program described in subsection 
     (b) shall include making available financial and economic 
     education materials for the borrower, including making the 
     materials available before, during, or after rehabilitation 
     of a loan.''.

     SEC. 7385. REQUIREMENTS FOR DISBURSEMENT OF STUDENT LOANS.

       Section 428G(e) (20 U.S.C. 1078-7(e)) is amended by 
     striking ``, made to a student to cover the cost of 
     attendance at an eligible institution outside the United 
     States''.

     SEC. 7386. REPORTS TO CREDIT BUREAUS AND INSTITUTIONS OF 
                   HIGHER EDUCATION.

       Section 430A(a) (20 U.S.C. 1080a(a)) is amended--
       (1) in the first sentence, by striking ``with credit bureau 
     organizations'' and inserting ``with each consumer reporting 
     agency that compiles and maintains files on consumers on a 
     nationwide basis (as defined in section 603(p) of the Fair 
     Credit Reporting Act (15 U.S.C. 1681a(p))'';
       (2) by redesignating paragraphs (1), (2), and (3) as 
     paragraphs (2), (4), and (5), respectively;
       (3) by inserting before paragraph (2) (as redesignated by 
     paragraph (2)), the following:
       ``(1) the type of loan made, insured, or guaranteed under 
     this title;'';
       (4) by inserting after paragraph (2) (as redesignated by 
     paragraph (2)), the following:
       ``(3) information concerning the repayment status of the 
     loan, which information shall be included in the file of the 
     borrower, except that nothing in this subsection shall be 
     construed to affect any otherwise applicable provision of the 
     Fair Credit Reporting Act (15 U.S.C. 1681 et seq.)'';
       (5) in paragraph (4) (as redesignated by paragraph (2)), by 
     striking ``and'' after the semicolon;
       (6) in paragraph (5) (as redesignated by paragraph (2)), by 
     striking the period and inserting ``; and''; and
       (7) by adding at the end the following:
       ``(6) any other information required to be reported by 
     Federal law.''.

     SEC. 7387. COMMON FORMS AND FORMATS.

       Section 432(m)(1)(D)(i) (20 U.S.C. 1082(m)(1)(D)(i)) is 
     amended by adding at the end the following: ``Unless 
     otherwise notified by the Secretary, each institution of 
     higher education that participates in the program under this 
     part or part D may use a master promissory note for loans 
     under this part and part D.''.

     SEC. 7388. STUDENT LOAN INFORMATION BY ELIGIBLE BORROWERS.

       Section 433 (20 U.S.C. 1083) is amended by adding at the 
     end the following:
       ``(f) Borrower Information and Privacy.--Each entity 
     participating in a program under this part that is subject to 
     subtitle A of title V of the Gramm-Leach-Bliley Act (15 
     U.S.C. 6801 et seq.) shall only use, release, disclose, sell, 
     transfer, or give student information, including the name, 
     address, social security number, or amount borrowed by a 
     borrower or a borrower's parent, in accordance with the 
     provisions of such subtitle.
       ``(g) Loan Benefit Disclosures.--
       ``(1) In general.--Each eligible lender, holder, or 
     servicer of a loan made, insured, or guaranteed under this 
     part shall provide the borrower with information on the loan 
     benefit repayment options the lender, holder, or servicer 
     offer, including information on reductions in interest 
     rates--
       ``(A) by repaying the loan by automatic payroll or checking 
     account deduction;
       ``(B) by completing a program of on-time repayment; and
       ``(C) under any other interest rate reduction program.
       ``(2) Information.--Such borrower information shall 
     include--
       ``(A) any limitations on such options;
       ``(B) explicit information on the reasons a borrower may 
     lose eligibility for such an option;
       ``(C) examples of the impact the interest rate reductions 
     will have on a borrower's time for repayment and amount of 
     repayment;
       ``(D) upon the request of the borrower, the effect the 
     reductions in interest rates will have with respect to the 
     borrower's payoff amount and time for repayment; and
       ``(E) information on borrower recertification 
     requirements.''.

     SEC. 7389. CONSUMER EDUCATION INFORMATION.

       Part B of title IV (20 U.S.C. 1071 et seq.) is amended by 
     inserting after section 433 (20 U.S.C. 1083) the following:

     ``SEC. 433A. CONSUMER EDUCATION INFORMATION.

       ``Each guaranty agency participating in a program under 
     this part working with the institutions of higher education 
     served by such guaranty agency (or in the case of an 
     institution of higher education that provides loans 
     exclusively through part D, the institution working with a 
     guaranty agency or with the Secretary) shall develop and make 
     available a quality educational program and materials to 
     provide training for students in budgeting and financial 
     management, including debt management and other aspects of 
     financial literacy, such as the cost of using very high 
     interest loans to pay for postsecondary education, 
     particularly as budgeting and financial management relates to 
     student loan programs authorized by this title. Nothing in 
     this section shall be construed to prohibit a guaranty agency 
     from using an existing program or existing materials to meet 
     the requirement of this section. The activities described in 
     this section shall be considered default reduction activities 
     for the purposes of section 422.''.

     SEC. 7390. DEFINITION OF ELIGIBLE LENDER.

       Section 435(d)(2) (20 U.S.C. 1085(d)(2)) is amended by 
     striking subparagraph (F) and inserting the following:
       ``(F) shall use the proceeds from special allowance 
     payments, interest payments from borrowers, proceeds from the 
     sale of a loan made, insured, or guaranteed under this part, 
     and all other proceeds related to such a loan that are 
     furnished to the eligible institution or any entity 
     affiliated (directly or indirectly) with the eligible 
     institution, for need based grant programs, except that such 
     payments and proceeds may be used for reasonable 
     reimbursement for direct administrative expenses;''.

     SEC. 7390A. REPAYMENT BY THE SECRETARY OF LOANS OF BANKRUPT, 
                   DECEASED, OR DISABLED BORROWERS; TREATMENT OF 
                   BORROWERS ATTENDING SCHOOLS THAT FAIL TO 
                   PROVIDE A REFUND, ATTENDING CLOSED SCHOOLS, OR 
                   FALSELY CERTIFIED AS ELIGIBLE TO BORROW.

       Section 437 (20 U.S.C. 1087) is amended--
       (1) in the section heading, by striking ``CLOSED SCHOOLS OR 
     FALSELY CERTIFIED AS ELIGIBLE TO BORROW'' and inserting 
     ``SCHOOLS THAT FAIL TO PROVIDE A REFUND, ATTENDING CLOSED 
     SCHOOLS, OR FALSELY CERTIFIED AS ELIGIBLE TO BORROW''; and
       (2) in the first sentence of subsection (c)(1), by 
     inserting ``or was falsely certified as a result of a crime 
     of identity theft'' after ``falsely certified by the eligible 
     institution''.

               Subchapter C--Federal Work-Study Programs

     SEC. 7391. AUTHORIZATION OF APPROPRIATIONS.

       Section 441(b) (42 U.S.C. 2751(b)) is amended by striking 
     ``$1,000,000 for fiscal year 1999'' and all that follows 
     through the period and inserting ``such sums as may be 
     necessary for fiscal year 2006 and each of the 5 succeeding 
     fiscal years.''.

     SEC. 7392. ALLOWANCE FOR BOOKS AND SUPPLIES.

       Section 442(c)(4)(D) (42 U.S.C. 2752(c)(4)(D)) is amended 
     by striking ``$450'' and inserting ``$600''.

     SEC. 7393. GRANTS FOR FEDERAL WORK-STUDY PROGRAMS.

       Section 443(b)(2) (42 U.S.C. 2753(b)(2)) is amended--

[[Page 26777]]

       (1) by striking subparagraph (A);
       (2) by redesignating subparagraphs (B) and (C) as 
     subparagraphs (A) and (B), respectively; and
       (3) in subparagraph (A) (as redesignated by paragraph (2)), 
     by striking ``this subparagraph if'' and all that follows 
     through ``institution;'' and inserting ``this subparagraph 
     if--
       ``(i) the Secretary determines that enforcing this 
     subparagraph would cause hardship for students at the 
     institution; or
       ``(ii) the institution certifies to the Secretary that 15 
     percent or more of its total full-time enrollment 
     participates in community service activities described in 
     section 441(c) or tutoring and literacy activities described 
     in subsection (d) of this section;''.

     SEC. 7394. JOB LOCATION AND DEVELOPMENT PROGRAMS.

       Section 446(a)(1) (42 U.S.C. 2756(a)(1)) is amended by 
     striking ``$50,000'' and inserting ``$75,000''.

     SEC. 7395. WORK COLLEGES.

       Section 448 (42 U.S.C. 2756b) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1), by striking ``under subsection (f)'' 
     and inserting ``for this section under section 441(b)''; and
       (B) in paragraph (2)--
       (i) in the matter preceding subparagraph (A), by striking 
     ``pursuant to subsection (f)'' and inserting ``for this 
     section under section 441(b)'';
       (ii) by redesignating subparagraphs (C) through (F) as 
     subparagraphs (D) through (G), respectively; and
       (iii) by inserting after subparagraph (B) the following:
       ``(C) support existing and new model student volunteer 
     community service projects associated with local institutions 
     of higher education, such as operating drop-in resource 
     centers that are staffed by students and that link people in 
     need with the resources and opportunities necessary to become 
     self-sufficient;'';
       (2) in subsection (c), by striking ``by subsection (f) to 
     use funds under subsection (b)(1)'' and inserting ``for this 
     section under section 441(b) or to use funds under subsection 
     (b)(1),''; and
       (4) by striking subsection (f).

       Subchapter D--William D. Ford Federal Direct Loan Program

     SEC. 7401. FUNDS FOR ADMINISTRATIVE EXPENSES.

       Section 458 (20 U.S.C. 1087h) is amended--
       (1) in subsection (a)(1), in the matter following 
     subparagraph (B), by striking ``$617,000,000'' and all that 
     follows through the period and inserting ``$904,000,000 in 
     fiscal year 2006, $943,000,000 in fiscal year 2007, 
     $983,000,000 in fiscal year 2008, $1,023,000,000 in fiscal 
     year 2009, $1,064,000,000 in fiscal year 2010, and 
     $1,106,000,000 in fiscal year 2011.''; and
       (2) in subsection (c)(1), by striking subparagraphs (A) 
     through (E) and inserting the following:
       ``(A) for fiscal year 2006, shall not exceed $271,000,000;
       ``(B) for fiscal year 2007, shall not exceed $293,000,000;
       ``(C) for fiscal year 2008, shall not exceed $315,000,000;
       ``(D) for fiscal year 2009, shall not exceed $336,000,000;
       ``(E) for fiscal year 2010, shall not exceed $356,000,000; 
     and
       ``(F) for fiscal year 2011, shall not exceed 
     $378,000,000.''.

                  Subchapter E--Federal Perkins Loans

     SEC. 7411. PROGRAM AUTHORITY.

       Section 461(b) (20 U.S.C. 1087aa(b)) is amended--
       (1) in paragraph (1), by striking ``$250,000,000 for fiscal 
     year 1999'' and all that follows through the period and 
     inserting ``such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.''; and
       (2) in paragraph (2),--
       (A) by striking ``fiscal year 2003'' and inserting ``fiscal 
     year 2012''; and
       (B) by striking ``October 1, 2003'' and inserting ``October 
     1, 2012''.

     SEC. 7412. TERMS OF LOANS.

       Section 464 (20 U.S.C. 1087dd) is amended--
       (1) in subsection (b)(1), by striking ``for an additional 
     loan under this part'' and inserting ``for additional aid 
     under this title''; and
       (2) in subsection (e), by striking ``written''.

     SEC. 7413. CANCELLATION OF LOANS FOR CERTAIN PUBLIC SERVICE.

       Section 465(a) (20 U.S.C. 1087ee(a)) is amended--
       (1) in paragraph ( 2)--
       (A) in subparagraph (B), by striking ``Head Start Act 
     which'' and inserting ``Head Start Act, or in a 
     prekindergarten or child care program that is licensed or 
     regulated by the State, that'';
       (B) in subparagraph (H), by striking ``or'' after the 
     semicolon;
       (C) in subparagraph (I), by striking the period and 
     inserting a semicolon; and
       (D) by inserting before the matter following subparagraph 
     (I) (as amended by subparagraph (C)) the following:
       ``(J) as a full-time faculty member at a Tribal College or 
     University, as that term is defined in section 316;
       ``(K) as a librarian, if the librarian has a master's 
     degree in library science and is employed in--
       ``(i) an elementary school or secondary school that is 
     eligible for assistance under title I of the Elementary and 
     Secondary Education Act of 1965; or
       ``(ii) a public library that serves a geographic area that 
     contains 1 or more schools eligible for assistance under 
     title I of the Elementary and Secondary Education Act of 
     1965; or
       ``(L) as a full-time speech language therapist, if the 
     therapist has a master's degree and is working exclusively 
     with schools that are eligible for assistance under title I 
     of the Elementary and Secondary Education Act of 1965.''; and
       (2) in paragraph (3)(A)(i), by striking ``or (I)'' and 
     inserting ``(I), (J), (K), or (L)''.

     SEC. 7414. FEDERAL CAPITAL CONTRIBUTION RECOVERY.

       Section 466 (20 U.S.C. 1087ff) is amended--
       (1) in subsection (a)--
       (A) by striking ``2003'' each place it appears and 
     inserting ``2011''; and
       (B) by striking ``2004'' and inserting ``2012''; and
       (2) in subsection (c), by striking ``2004'' and inserting 
     ``2012''.

                      Subchapter F--Need Analysis

     SEC. 7421. COST OF ATTENDANCE.

       Section 472 (20 U.S.C. 1087ll) is amended--
       (1) by striking paragraph (4) and inserting the following:
       ``(4) for less than half-time students (as determined by 
     the institution), tuition and fees and an allowance for 
     only--
       ``(A) books, supplies, and transportation (as determined by 
     the institution);
       ``(B) dependent care expenses (determined in accordance 
     with paragraph (8)); and
       ``(C) room and board costs (determined in accordance with 
     paragraph (3)), except that a student may receive an 
     allowance for such costs under this subparagraph for not more 
     than 3 semesters or the equivalent, of which not more than 2 
     semesters or the equivalent may be consecutive;'';
       (2) in paragraph (11), by striking ``and'' after the 
     semicolon;
       (3) in paragraph (12), by striking the period and inserting 
     ``; and''; and
       (4) by adding at the end the following:
       ``(13) at the option of the institution, for a student in a 
     program requiring professional licensure or certification, 
     the one time cost of obtaining the first professional 
     credentials (as determined by the institution).''.

     SEC. 7422. DISCRETION OF STUDENT FINANCIAL AID 
                   ADMINISTRATORS.

       The third sentence of section 479A(a) (20 U.S.C. 1087tt(a)) 
     is amended--
       (1) by inserting ``or an independent student'' after 
     ``family member''; and
       (2) by inserting ``a change in housing status that results 
     in homelessness,'' after ``under section 487,''.

     SEC. 7423. DEFINITIONS.

       (a) Definitions.--Section 480 (20 U.S.C. 1087vv) is 
     amended--
       (1) in subsection (f)--
       (A) in paragraph (1), by inserting ``qualified education 
     benefits (except as provided in paragraph (3)),'' after ``tax 
     shelters,''; and
       (B) by adding at the end the following:
       ``(3) A qualified education benefit shall not be considered 
     an asset of a student for purposes of section 475.
       ``(4) In determining the value of assets in a determination 
     of need under this title (other than for subpart 4 of part 
     A), the value of a qualified education benefit shall be--
       ``(A) the refund value of any tuition credits or 
     certificates purchased under a qualified education benefit; 
     and
       ``(B) in the case of a program in which contributions are 
     made to an account that is established for the purpose of 
     meeting the qualified higher education expenses of the 
     designated beneficiary of the account, the current balance of 
     such account.
       ``(5) In this subsection:
       ``(A) Qualified education benefit.--The term `qualified 
     education benefit' means--
       ``(i) a qualified tuition program (as defined in section 
     529(b)(1)(A) of the Internal Revenue Code of 1986) or other 
     prepaid tuition plan offered by a State; and
       ``(ii) a Coverdell education savings account (as defined in 
     section 530(b)(1) of the Internal Revenue Code of 1986).
       ``(B) Qualified higher education expenses.--The term 
     `qualified higher education expenses' has the meaning given 
     the term in section 529(e) of the Internal Revenue Code of 
     1986.''; and
       (2) in subsection (j)--
       (A) in the subsection heading, by striking ``; Tuition 
     Prepayment Plans'';
       (B) by striking paragraph (2);
       (C) by redesignating paragraph (3) as paragraph (2); and
       (D) by inserting after paragraph (2) (as redesignated by 
     subparagraph (C)) the following paragraph:
       ``(3) Notwithstanding paragraph (1) and section 472, 
     assistance not received under this title may be excluded from 
     both estimated financial assistance and cost of attendance, 
     if that assistance is designated by the State providing that 
     assistance to offset a specific component of the cost of 
     attendance. If that assistance is excluded from estimated 
     financial assistance or cost of attendance, that assistance 
     shall be excluded from both calculations.''.

[[Page 26778]]

       (3) in subsection (d)--
       (A) in paragraph (2), by striking ``is an orphan or ward of 
     the court'' and inserting ``is an orphan, in foster care, or 
     ward of the court or was in foster care'';
       (B) in paragraph (6), by striking ``or'' after the 
     semicolon;
       (C) by redesignating paragraph (7) as paragraph (8); and
       (D) by inserting after paragraph (6) the following:
       ``(7) has been verified as both a homeless child or youth 
     and an unaccompanied youth, as such terms are defined in 
     section 725 of the McKinney-Vento Homeless Assistance Act (42 
     U.S.C. 11434a), during the school year in which the 
     application for financial assistance is submitted, by--
       ``(A) a local educational agency liaison for homeless 
     children and youths, as designated under section 
     722(g)(1)(J)(ii) of the McKinney-Vento Homeless Assistance 
     Act (42 U.S.C. 11432(g)(1)(J)(ii));
       ``(B) a director of a homeless shelter, transitional 
     shelter, or independent living program; or
       ``(C) a financial aid administrator; or''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to determinations of need under part 
     F of title IV for academic years beginning on or after July 
     1, 2006.

    Subchapter G--General Provisions Relating to Student Assistance

     SEC. 7431. DEFINITIONS.

       Section 481 (20 U.S.C. 1088) is amended--
       (1) in the second sentence of subsection (a)(2), by 
     inserting ``and that measures program length in credit hours 
     or clock hours'' after ``baccalaureate degree''; and
       (2) in subsection (b), by adding at the end the following:
       ``(3) For purposes of this title, the term `eligible 
     program' includes an instructional program that utilizes 
     direct assessment of student learning or recognizes the 
     direct assessment of student learning by others, if such 
     assessment is consistent with the accreditation of the 
     institution or program utilizing the results of the 
     assessment, in lieu of credit hours or clock hours as the 
     measure of student learning. In the case of a program being 
     determined eligible for the first time under this paragraph, 
     such determination shall be made by the Secretary before such 
     program is considered to be an eligible program.''.

     SEC. 7432. COMPLIANCE CALENDAR.

       Section 482 (20 U.S.C. 1089) is amended by adding at the 
     end the following:
       ``(a) Compliance Calendar.--Prior to the beginning of each 
     award year, the Secretary shall provide to institutions of 
     higher education a list of all the reports and disclosures 
     required under this Act. The list shall include--
       ``(1) the date each report or disclosure is required to be 
     completed and to be submitted, made available, or 
     disseminated;
       ``(2) the required recipients of each report or disclosure;
       ``(3) any required method for transmittal or dissemination 
     of each report or disclosure;
       ``(4) a description of the content of each report or 
     disclosure sufficient to allow the institution to identify 
     the appropriate individuals to be assigned the responsibility 
     for such report or disclosure;
       ``(5) references to the statutory authority, applicable 
     regulations, and current guidance issued by the Secretary 
     regarding each report or disclosure; and
       ``(6) any other information which is pertinent to the 
     content or distribution of the report or disclosure.''.

     SEC. 7433. FORMS AND REGULATIONS.

       Section 483 (20 U.S.C. 1090) is amended--
       (1) by striking subsections (a) and (b), and inserting the 
     following:
       ``(a) Common Financial Aid Form Development and 
     Processing.--
       ``(1) In general.--The Secretary, in cooperation with 
     representatives of agencies and organizations involved in 
     student financial assistance, shall produce, distribute, and 
     process free of charge common financial reporting forms as 
     described in this subsection to be used to determine the need 
     and eligibility of a student for financial assistance under 
     parts A through E of this title (other than under subpart 4 
     of part A). The forms shall be made available to applicants 
     in both paper and electronic formats and shall be referred to 
     (except as otherwise provided in this subsection) as the 
     `Free Application for Federal Student Aid', or `FAFSA'.
       ``(2) Paper format.--
       ``(A) In general.--Subject to subparagraph (C), the 
     Secretary shall produce, distribute, and process common forms 
     in paper format to meet the requirements of paragraph (1). 
     The Secretary shall develop a common paper form for 
     applicants who do not meet the requirements of or do not wish 
     to use the process described in subparagraph (B).
       ``(B) EZ fafsa.--
       ``(i) In general.--The Secretary shall develop and use a 
     simplified paper application form, to be known as the `EZ 
     FAFSA', to be used for applicants meeting the requirements 
     under section 479(c).
       ``(ii) Reduced data requirements.--The EZ FAFSA shall 
     permit an applicant to submit for purposes of determining 
     financial need and eligibility, only the data elements 
     required to make a determination of student eligibility and 
     whether the applicant meets the requirements of section 
     479(c).
       ``(iii) State data.--The Secretary shall include on the EZ 
     FAFSA such data items as may be necessary to award State 
     financial assistance, as provided under paragraph (5), except 
     the Secretary shall not include a State's data if that State 
     does not permit its applicants for State assistance to use 
     the EZ FAFSA.
       ``(iv) Free availability and processing.--The provisions of 
     paragraph (6) shall apply to the EZ FAFSA, and the data 
     collected by means of the EZ FAFSA shall be available to 
     institutions of higher education, guaranty agencies, and 
     States in accordance with paragraph (9).
       ``(v) Testing.--The Secretary shall conduct appropriate 
     field testing on the EZ FAFSA.
       ``(C) Phasing out the full paper form for students who do 
     not meet the requirements of the ez fafsa.--
       ``(i) In general.--The Secretary shall make all efforts to 
     encourage all applicants to utilize the electronic forms 
     described in paragraph (3).
       ``(ii) Phaseout of full paper fafsa.--Not later than 5 
     years after the date of enactment of the Higher Education 
     Amendments of 2005, to the extent practicable, the Secretary 
     shall phase out the printing of the long paper form created 
     under subparagraph (A) and used by applicants who do not meet 
     the requirements of the EZ FAFSA described in subparagraph 
     (B).
       ``(iii) Availability of full paper fafsa.--

       ``(I) In general.--Both prior to and after the phaseout 
     described in clause (ii), the Secretary shall maintain on the 
     Internet printable versions of the paper forms described in 
     subparagraphs (A) and (B).
       ``(II) Accessibility.--The printable versions described in 
     subclause (I) shall be made easily accessible and 
     downloadable to students on the same Web site used to provide 
     students with the common electronic forms described in 
     paragraph (3).
       ``(III) Submission of forms.--The Secretary shall conduct a 
     study to determine the feasibility of using downloaded forms 
     to ensure sufficient quality to meet the processing 
     requirements of this section. Following the completion of the 
     study, the Secretary shall enable, to the extent practicable, 
     students to submit a form described in this clause that is 
     downloaded from the Internet and printed, in order to meet 
     the filing requirements of this section and to receive 
     financial assistance under this title.

       ``(iv) Use of savings.--

       ``(I) In general.--The Secretary shall utilize any realized 
     savings accrued by phasing out the full paper FAFSA and 
     moving more applicants to the common electronic forms, to 
     improve access to the electronic forms for applicants meeting 
     the requirements of section 479(c).
       ``(II) Report.--The Secretary shall report annually to the 
     authorizing committees on--

       ``(aa) the steps taken to improve access to the common 
     electronic forms for applicants meeting the requirements of 
     section 479(c); and
       ``(bb) the phaseout of the long common paper form described 
     in subparagraph (A).
       ``(3) Electronic format.--
       ``(A) In general.--The Secretary shall produce, distribute, 
     and process common forms in electronic format and make such 
     forms available through a broadly accessible website to meet 
     the requirements of paragraph (1). The Secretary shall 
     develop common electronic forms for applicants who do not 
     meet the requirements of subparagraph (B). The Secretary 
     shall include on the common electronic forms space for 
     information that needs to be submitted from the applicant to 
     be eligible for State financial assistance, as provided under 
     paragraph (5), except the Secretary shall not require 
     applicants to complete data required by any State other than 
     the applicant's State of residence. The Secretary shall use 
     all available technology to ensure that a student using a 
     common electronic form answers only the minimum number of 
     questions necessary.
       ``(B) Simplified electronic applications.--
       ``(i) In general.--The Secretary shall develop and use a 
     simplified electronic application form to be used by 
     applicants meeting the requirements of section 479(c) and an 
     additional, separate simplified electronic application form 
     to be used by applicants meeting the requirements under 
     section 479(b).
       ``(ii) Reduced data requirements.--The simplified 
     electronic application forms shall permit an applicant to 
     submit for purposes of determining financial need and 
     eligibility, only the data elements required to make a 
     determination of student eligibility and whether the 
     applicant meets the requirements of subsection (b) or (c) of 
     section 479.
       ``(iii) State data.--The Secretary shall include on the 
     simplified electronic application forms such data items as 
     may be necessary to award State financial assistance, as 
     provided under paragraph (5), except the Secretary shall not 
     require applicants to complete data required by any State 
     other than the applicant's State of residence and shall not 
     include a State's data if such State does not permit its 
     applicants for State assistance to use the simplified 
     electronic application form described in this subparagraph.
       ``(iv) Free availability and processing.--The provisions of 
     paragraph (6) shall apply to

[[Page 26779]]

     the simplified electronic application forms, and the data 
     collected by means of the simplified electronic application 
     forms shall be available to institutions of higher education, 
     guaranty agencies, and States in accordance with paragraph 
     (9).
       ``(v) Testing.--The Secretary shall conduct appropriate 
     field testing on the forms developed under this subparagraph.
       ``(C) Use of forms.--Nothing in this subsection shall be 
     construed to prohibit the use of the forms developed by the 
     Secretary pursuant to this paragraph by an eligible 
     institution, eligible lender, a guaranty agency, a State 
     grant agency, a private computer software provider, a 
     consortium of such entities, or such other entity as the 
     Secretary may designate. Data collected by the forms shall be 
     used only for the application, award, and administration of 
     aid awarded under this title, State aid, or aid awarded by 
     eligible institutions or such entities as the Secretary may 
     designate. No data collected by such electronic version of 
     the forms shall be used for making final aid awards under 
     this title until such data have been processed by the 
     Secretary or a contractor or designee of the Secretary, 
     except as may be permitted under this title.
       ``(D) Privacy.--The Secretary shall ensure that data 
     collection under this paragraph complies with section 552a of 
     title 5, United States Code, and that any entity using the 
     electronic version of the forms developed by the Secretary 
     pursuant to this paragraph shall maintain reasonable and 
     appropriate administrative, technical, and physical 
     safeguards to ensure the integrity and confidentiality of the 
     information, and to protect against security threats, or 
     unauthorized uses or disclosures of the information provided 
     on the electronic version of the forms.
       ``(E) Signature.--Notwithstanding any other provision of 
     this Act, the Secretary may permit an electronic form under 
     this paragraph to be submitted without a signature, if a 
     signature is subsequently submitted by the applicant or if 
     the applicant uses a personal identification number provided 
     by the Secretary under subparagraph (F).
       ``(F) Personal identification numbers authorized.--The 
     Secretary is authorized to assign to applicants personal 
     identification numbers--
       ``(i) to enable the applicants to use such numbers as a 
     signature for purposes of completing a form under this 
     paragraph; and
       ``(ii) for any purpose determined by the Secretary to 
     enable the Secretary to carry out this title.
       ``(4) Streamlined reapplication process.--
       ``(A) In general.--The Secretary shall develop streamlined 
     reapplication forms and processes, including both paper and 
     electronic reapplication processes, consistent with the 
     requirements of this subsection, for an applicant who applies 
     for financial assistance under this title in the next 
     succeeding academic year subsequent to an academic year in 
     which such applicant applied for financial assistance under 
     this title.
       ``(B) Mechanisms for reapplication.--The Secretary shall 
     develop appropriate mechanisms to support reapplication.
       ``(C) Identification of updated data.--The Secretary shall 
     determine, in cooperation with States, institutions of higher 
     education, and agencies and organizations involved in student 
     financial assistance, the data elements that can be updated 
     from the previous academic year's application.
       ``(D) Reduced data authorized.--Nothing in this title shall 
     be construed as limiting the authority of the Secretary to 
     reduce the number of data elements required of reapplicants.
       ``(E) Zero family contribution.--Applicants determined to 
     have a zero family contribution pursuant to section 479(c) 
     shall not be required to provide any financial data in a 
     replication form, except that which is necessary to determine 
     eligibility under such section.
       ``(5) State requirements.--
       ``(A) In general.--Except as provided in paragraphs 
     (2)(B)(iii), (3)(A), and (3)(B)(iii), the Secretary shall 
     include on the forms developed under this subsection, such 
     State-specific data items as the Secretary determines are 
     necessary to meet State requirements for need-based State 
     aid. Such items shall be selected in consultation with State 
     agencies in order to assist in the awarding of State 
     financial assistance in accordance with the terms of this 
     subsection, except as provided in paragraphs (2)(B)(iii), 
     (3)(A), and (3)(B)(iii). The number of such data items shall 
     not be less than the number included on the form for the 
     2005-2006 award year unless a State notifies the Secretary 
     that the State no longer requires those data items for the 
     distribution of State need-based aid.
       ``(B) Annual review.--The Secretary shall conduct an annual 
     review process to determine which data items the States 
     require to award need-based State aid.
       ``(C) Encourage use of forms.--The Secretary shall 
     encourage States to take such steps as are necessary to 
     encourage the use of simplified application forms, including 
     those described in paragraphs (2)(B) and (3)(B), for 
     applicants who meet the requirements of subsection (b) or (c) 
     of section 479.
       ``(D) Federal register notice.--The Secretary shall 
     publish, on an annual basis, a notice in the Federal Register 
     requiring States to inform the Secretary--
       ``(i) if the State plans to use the FAFSA to collect data 
     to determine eligibility for State need-based financial aid;
       ``(ii) of the State-specific data that the State requires 
     for delivery of State need-based financial aid; and
       ``(iii) if the State agency is unable to permit applicants 
     to utilize the simplified application forms described in 
     paragraph (2)(B) or (3)(B).
       ``(E) State notification to the secretary.--
       ``(i) In general.--Each State agency shall notify the 
     Secretary--

       ``(I) whether the State permits an applicant to file a form 
     described in paragraph (2)(B) or (3)(B) for purposes of 
     determining eligibility for State need-based financial aid; 
     and
       ``(II) of the State-specific data that the State requires 
     for delivery of State need-based financial aid.

       ``(ii) Acceptance of forms.--If a State does not permit an 
     applicant to file a form described in paragraph (2)(B) or 
     (3)(B) for purposes of determining eligibility for State 
     need-based financial aid, then the State shall notify the 
     Secretary if it is not permitted to do so because of State 
     law or agency policy. The notification shall include an 
     acknowledgment that State-specific questions will not be 
     included on a form described in paragraph (2)(B) or (3)(B).
       ``(iii) Lack of notification by the state.--If a State does 
     not notify the Secretary pursuant to clause (i), the 
     Secretary shall--

       ``(I) permit residents of that State to complete simplified 
     application forms under paragraphs (2)(B) and (3)(B); and
       ``(II) not require any resident of such State to complete 
     any data previously required by that State under this 
     section.

       ``(F) Restriction.--The Secretary shall not require 
     applicants to complete any financial or non-financial data 
     that are not required by the applicant's State, except as may 
     be required for applicants who use the paper forms described 
     in subparagraphs (A) and (B) of paragraph (2).
       ``(6) Charges to students and parents for use of forms 
     prohibited.--The common financial reporting forms prescribed 
     by the Secretary under this subsection shall be produced, 
     distributed, and processed by the Secretary, and no parent or 
     student shall be charged a fee by the Secretary, a 
     contractor, a third-party servicer or private software 
     provider, or any other public or private entity for the 
     collection, processing, or delivery of financial aid through 
     the use of such forms. The need and eligibility of a student 
     for financial assistance under parts A through E (other than 
     under subpart 4 of part A) may be determined only by using a 
     form developed by the Secretary pursuant to this subsection. 
     No student may receive financial assistance under parts A 
     through E (other than under subpart 4 of part A), except by 
     use of a form developed by the Secretary pursuant to this 
     subsection. No data collected on a paper or electronic form 
     or other document that the Secretary determines was created 
     to replace a form prescribed under this subsection and 
     therefore violates the integrity of a simplified and free 
     financial aid application process and for which a fee is 
     charged shall be used to complete the form prescribed under 
     this subsection. No person, commercial entity, or other 
     entity shall request, obtain, or utilize an applicant's 
     personal identification number assigned under paragraph 
     (3)(F) for purposes of submitting an application on an 
     applicant's behalf.
       ``(7) Application processing cycle.--The Secretary shall--
       ``(A) enable students to submit forms created under this 
     subsection in order to meet the filing requirements of this 
     section and in order to receive financial assistance from 
     programs under this title; and
       ``(B) enable students to submit forms created under this 
     subsection and initiate the processing of such forms under 
     this subsection, as early as practicable prior to January 1 
     of the student's planned year of enrollment.
       ``(8) Early estimates.--The Secretary shall permit an 
     applicant to complete a form described in this subsection in 
     the years prior to enrollment in order to obtain from the 
     Secretary a nonbinding estimate of the applicant's expected 
     family contribution, as defined in section 473. Such 
     applicant shall be permitted to update information submitted 
     on a form described in this subsection using the process 
     required under paragraph (4).
       ``(9) Distribution of data.--Institutions of higher 
     education, guaranty agencies, and States shall receive, 
     without charge, the data collected by the Secretary using the 
     form developed pursuant to this subsection for the purposes 
     of processing loan applications and determining need and 
     eligibility for institutional and State financial aid awards. 
     Entities designated by institutions of higher education, 
     guaranty agencies, or States to receive such data shall be 
     subject to all the requirements of this section, unless such 
     requirements are waived by the Secretary.

[[Page 26780]]

       ``(10) Third party servicers and private software 
     providers.--To the extent practicable and in a timely manner, 
     the Secretary shall provide, to private organizations and 
     consortia that develop software used by institutions of 
     higher education for the administration of funds under this 
     title, all the necessary specifications that the 
     organizations and consortia must meet for the software the 
     organizations and consortia develop, produce, and distribute 
     (including any diskette, modem, or network communications) 
     which are so used. The specifications shall contain record 
     layouts for required data. The Secretary shall develop in 
     advance of each processing cycle an annual schedule for 
     providing such specifications. The Secretary, to the extent 
     practicable, shall use means of providing such 
     specifications, including conferences and other meetings, 
     outreach, and technical support mechanisms (such as training 
     and printed reference materials). The Secretary shall, from 
     time to time, solicit from such organizations and consortia 
     means of improving the support provided by the Secretary.
       ``(11) Parent's social security number and birth date.--The 
     Secretary is authorized to include on the form developed 
     under this subsection space for the social security number 
     and birth date of parents of dependent students seeking 
     financial assistance under this title.'';
       (2) by redesignating subsections (c) through (e) as 
     subsections (b) through (d), respectively;
       (3) in subsection (c) (as redesignated by paragraph (2)), 
     by striking ``that is authorized'' and all that follows 
     through the period at the end and inserting ``or other 
     appropriate provider of technical assistance and information 
     on postsecondary educational services that is authorized 
     under section 663(a) of the Individuals with Disabilities 
     Education Act. Not later than 2 years after the date of 
     enactment of the Higher Education Amendments of 2005, the 
     Secretary shall test and implement, to the extent 
     practicable, a toll-free telephone based system to permit 
     applicants who meet the requirements of 479(c) to submit an 
     application over such system.''; and
       (4) by striking subsection (d) (as redesignated by 
     paragraph (2)) and inserting the following:
       ``(d) Assistance in Preparation of Financial Aid 
     Application.--
       ``(1) Preparation authorized.--Notwithstanding any 
     provision of this Act, an applicant may use a preparer for 
     consultative or preparation services for the completion of 
     the common financial reporting forms described in subsection 
     (a) if the preparer satisfies the requirements of this 
     subsection.
       ``(2) Preparer identification.--Any common financial 
     reporting form required to be made under this title shall 
     include the name, signature, address or employer's address, 
     social security number or employer identification number, and 
     organizational affiliation of the preparer of such common 
     financial reporting form.
       ``(3) Additional requirements.--A preparer that provides 
     consultative or preparation services pursuant to this 
     subsection shall--
       ``(A) clearly inform individuals upon initial contact 
     (including advertising in clear and conspicuous language on 
     the website of the preparer, including by providing a link 
     directly to the website described in subsection (a)(3), if 
     the preparer provides such services through a website) that 
     the common financial reporting forms that are required to 
     determine eligibility for financial assistance under parts A 
     through E (other than subpart 4 of part A) may be completed 
     for free via paper or electronic forms provided by the 
     Secretary;
       ``(B) refrain from producing or disseminating any form 
     other than the forms produced by the Secretary under 
     subsection (a); and
       ``(C) not charge any fee to any individual seeking such 
     services who meets the requirements of subsection (b) or (c) 
     of section 479.
       ``(4) Special rule.--Nothing in this Act shall be construed 
     to limit preparers of the common financial reporting forms 
     required to be made under this title who meet the 
     requirements of this subsection from collecting source 
     information from a student or parent, including Internal 
     Revenue Service tax forms, in providing consultative and 
     preparation services in completing the forms.''.

     SEC. 7434. STUDENT ELIGIBILITY.

       Section 484 (20 U.S.C. 1091) is amended--
       (1) in subsection (d), by adding at the end the following:
       ``(4) The student shall be determined by the institution of 
     higher education as having the ability to benefit from the 
     education or training offered by the institution of higher 
     education, upon satisfactory completion of 6 credit hours or 
     the equivalent coursework that are applicable toward a degree 
     or certificate offered by the institution of higher 
     education.'';
       (2) by striking subsection (l) and inserting the following:
       ``(l) Courses Offered Through Distance Education.--
       ``(1) Relation to correspondence courses.--
       ``(A) In general.--A student enrolled in a course of 
     instruction at an institution of higher education that is 
     offered principally through distance education and leads to a 
     recognized certificate, or associate, baccalaureate, or 
     graduate degree, conferred by such institution, shall not be 
     considered to be enrolled in correspondence courses.
       ``(B) Exception.--An institution of higher education 
     referred to in subparagraph (A) shall not include an 
     institution or school described in section 3(3)(C) of the 
     Carl D. Perkins Vocational and Technical Education Act of 
     1998.
       ``(2) Restriction or reductions of financial aid.--A 
     student's eligibility to receive grants, loans, or work 
     assistance under this title shall be reduced if a financial 
     aid officer determines under the discretionary authority 
     provided in section 479A that distance education results in a 
     substantially reduced cost of attendance to such student.
       ``(3) Special rule.--For award years prior to the date of 
     enactment of this subsection, the Secretary shall not take 
     any compliance, disallowance, penalty, or other action 
     against a student or an eligible institution when such action 
     arises out of such institution's prior award of student 
     assistance under this title if the institution demonstrates 
     to the satisfaction of the Secretary that its course of 
     instruction would have been in conformance with the 
     requirements of this subsection.
       ``(4) Definition.--In this subsection, the term `distance 
     education' has the meaning given the term in section 102.''; 
     and
       (3) in subsection (r)--
       (A) in the matter preceding the table, by inserting ``of a 
     controlled substance, while such student is enrolled in an 
     institution of higher education and receiving financial 
     assistance under this title,'' after ``the possession'';
       (B) in the column heading of the first table, by inserting 
     ``while the student is enrolled in an institution of higher 
     education and receiving financial assistance under this 
     title'' after ``possession of a controlled substance''; and
       (C) by redesignating paragraph (3) as paragraph (4); and
       (D) by inserting after paragraph (2) the following:
       ``(2) Interaction with fafsa.--The Secretary shall not 
     require a student to provide information regarding the 
     student's possession of a controlled substance on the Free 
     Application for Federal Student Aid described in section 
     483(a).''.

     SEC. 7435. STATUTE OF LIMITATIONS AND STATE COURT JUDGMENTS.

       Section 484A (20 U.S.C. 1091a) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1), by striking ``and'' after the 
     semicolon;
       (B) in paragraph (2), by striking the period and inserting 
     ``; and''; and
       (C) by adding at the end the following:
       ``(3) in collecting any obligation arising from a loan made 
     under part E of this title, an institution of higher 
     education that has an agreement with the Secretary pursuant 
     to section 463(a) shall not be subject to a defense raised by 
     any borrower based on a claim of infancy.''; and
       (2) by adding at the end the following:
       ``(d) Special Rule.--This section shall not apply in the 
     case of a student who is deceased or to a deceased student's 
     estate or the estate of such student's family. If a student 
     is deceased, then the student's estate or the estate of the 
     student's family shall not be required to repay any financial 
     assistance under this title , including interest paid on the 
     student's behalf, collection costs, or other charges 
     specified in this title.''.

     SEC. 7436. INSTITUTIONAL REFUNDS.

       Section 484B (20 U.S.C. 1091B) is amended--
       (1) in subsection (a)--
       (A) in the matter preceding clause (i) of paragraph (2)(A), 
     by striking ``a leave of'' and inserting ``1 or more leaves 
     of''; and
       (B) in paragraph (3)(C)(i), by striking ``grant or loan 
     assistance under this title'' and inserting ``grant 
     assistance under subparts 1 and 3 of part A, or loan 
     assistance under parts B, D, and E,'';
       (2) in subsection (b), by adding at the end the following:
       ``(4) Time frame.--Not later than 45 days after the date of 
     an institution's determination that a student withdrew from 
     the institution, the institution shall--
       ``(A) return the amount required under paragraph (1);
       ``(B) notify the student of the applicable requirements 
     regarding the overpayment of grant and loan assistance and
       ``(C) notify the student of the student's eligibility for 
     post-withdrawal disbursements.'';
       (3) in subsection (c)(2), by striking ``may determine the 
     appropriate withdrawal date.'' and inserting ``may 
     determine--
       (A) the appropriate withdrawal date; and
       ``(B) that the requirements of this section do not apply to 
     the student.''; and
       (4) in subsection (d)(2), by striking ``clock hours--'' and 
     all that follows through the period and inserting ``clock 
     hours scheduled to be completed by the student in that period 
     as of the day the student withdrew.''.

     SEC. 7437. INSTITUTIONAL AND FINANCIAL ASSISTANCE FOR 
                   STUDENTS.

       Section 485 (20 U.S.C. 1092) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1)--
       (i) in subparagraph (N), by striking ``and'' after the 
     semicolon;

[[Page 26781]]

       (ii) in subparagraph (O), by striking the period and 
     inserting a semicolon; and
       (iii) by adding at the end the following:
       ``(P) student body diversity at the institution, including 
     information on the percentage of enrolled, full-time students 
     who are--
       ``(i) male;
       ``(ii) female;
       ``(iii) from a low-income background; and
       ``(iv) a self-identified member of a major racial or ethnic 
     group;
       ``(Q) the placement in employment of, and types of 
     employment obtained by, graduates of the institution's degree 
     or certificate programs, gathered from such sources as alumni 
     surveys, student satisfaction surveys, the National Survey of 
     Student Engagement, the Community College Survey of Student 
     Engagement, State data systems, or other relevant sources; 
     and
       ``(R) the types of graduate and professional education in 
     which graduates of the institution's 4-year degree programs 
     enrolled, gathered from such sources as alumni surveys, 
     student satisfaction surveys, the National Survey of Student 
     Engagement, State data systems, or other relevant sources.'';
       (B) by striking paragraph (4) and inserting the following:
       ``(4) For purposes of this section, institutions may--
       ``(A) exclude from the information disclosed in accordance 
     with subparagraph (L) of paragraph (1) the completion or 
     graduation rates of students who leave school to serve in the 
     Armed Forces, on official church missions, or with a 
     recognized foreign aid service of the Federal Government; or
       ``(B) in cases where the students described in subparagraph 
     (A) represent 20 percent or more of the certificate- or 
     degree-seeking, full-time, undergraduate students at the 
     institution, the institution may recalculate the completion 
     or graduation rates of such students by excluding from the 
     calculation described in paragraph (3) the time period such 
     students were not enrolled due to their service in the Armed 
     Forces, on official church missions, or with a recognized 
     foreign aid service of the Federal Government.''; and
       (C) by adding at the end the following:
       ``(7) The information disclosed under subparagraph (L) of 
     paragraph (1), or reported under subsection (e), shall 
     include information disaggregated by gender, by each major 
     racial and ethnic subgroup, and by low-income background 
     status as measured by Federal Pell Grant eligibility, if the 
     number of students in such subgroup or with such status is 
     sufficient to yield statistically reliable information and 
     reporting would not reveal personally identifiable 
     information about an individual student. If such number is 
     not sufficient for such purposes, then the institution shall 
     note that the institution enrolled too few of such students 
     to so disclose or report with confidence and 
     confidentiality.'';
       (2) in subsection (b), by adding at the end the following:
       ``(3) Each eligible institution shall, during the exit 
     interview required by this subsection, provide to a borrower 
     of a loan made under part B, D, or E a clear and conspicuous 
     notice describing the general effects of using a 
     consolidation loan to discharge the borrower's student loans, 
     including--
       ``(A) the effects of consolidation on total interest to be 
     paid, fees to be paid, and length of repayment;
       ``(B) the effects of consolidation on a borrower's 
     underlying loan benefits, including loan forgiveness, 
     cancellation, and deferment;
       ``(C) the ability for the borrower to prepay the loan, pay 
     on a shorter schedule, and to change repayment plans, and 
     that borrower benefit programs may vary among different loan 
     holders;
       ``(D) the tax benefits for which the borrower may be 
     eligible; and
       ``(E) the consequences of default.'';
       (3) in subsection (d)(2)--
       (A) by inserting ``grant assistance, as well as State'' 
     after ``describing State''; and
       (B) by inserting ``and other means, including through the 
     Internet'' before the period at the end;
       (4) in subsection (e), by striking paragraph (3) and 
     inserting the following:
       ``(3) For purposes of this subsection, institutions may--
       ``(A) exclude from the reporting requirements under 
     paragraphs (1) and (2) the completion or graduation rates of 
     students and student athletes who leave school to serve in 
     the Armed Forces, on official church missions, or with a 
     recognized foreign aid service of the Federal Government; or
       ``(B) in cases where the students described in subparagraph 
     (A) represent 20 percent or more of the certificate- or 
     degree-seeking, full-time, undergraduate students at the 
     institution, the institution may calculate the completion or 
     graduation rates of such students by excluding from the 
     calculations described in paragraph (1) the time period such 
     students were not enrolled due to their service in the Armed 
     Forces, on official church missions, or with a recognized 
     foreign aid service of the Federal Government.'';
       (5) in the matter preceding subparagraph (A) of subsection 
     (f)(1), by inserting ``, other than a foreign institution of 
     higher education,'' after ``under this title''; and
       (6) by adding at the end the following:
       ``(h) Transfer of Credit Policies.--
       ``(1) Disclosure.--Each institution of higher education 
     participating in any program under this title shall publicly 
     disclose in a readable and comprehensible manner the 
     institution's transfer of credit policies which shall include 
     a statement of the institution's current transfer of credit 
     policies that includes, at a minimum--
       ``(A) a statement that transfer of credit shall not be 
     denied solely on the basis of the agency or association that 
     accredited such other institution of higher education, if 
     that agency or association is recognized by the Secretary 
     pursuant to section 496 to be a reliable authority as to the 
     quality of the education or training offered;
       ``(B) a list of institutions of higher education with which 
     the institution has established an articulation agreement; 
     and
       ``(C) the percentage of students at the institution who 
     successfully transfer academic credits, updated on an annual 
     basis.
       ``(2) Rule of construction.--Nothing in this subsection 
     shall be construed to--
       ``(A) authorize an officer or employee of the Department to 
     exercise any direction, supervision, or control over the 
     curriculum, program of instruction, administration, or 
     personnel of any institution of higher education, or over any 
     accrediting agency or association;
       ``(B) limit the application of the General Education 
     Provisions Act; or
       ``(C) create any legally enforceable right on the part of a 
     student to require an institution of higher education to 
     accept a transfer of credit from another institution.''.

     SEC. 7438. NATIONAL STUDENT LOAN DATA SYSTEM.

       Section 485B(a) (20 U.S.C. 1092b(a)) is amended--
       (1) by redesignating paragraphs (6) through (10) as 
     paragraphs (7) through (11), respectively;
       (2) in paragraph (5) (as added by Public Law 101-610), by 
     striking ``effectiveness.'' and inserting ``effectiveness;''; 
     and
       (3) by redesignating paragraph (5) (as added by Public Law 
     101-234) as paragraph (6).

     SEC. 7439. EARLY AWARENESS OF FINANCIAL AID ELIGIBILITY.

       Part G of title IV (20 U.S.C. 1088 et seq.) is amended by 
     inserting after section 485C (20 U.S.C. 1092c) the following:

     ``SEC. 485D. EARLY AWARENESS OF FINANCIAL AID ELIGIBILITY.

       ``(a) In General.--The Secretary shall implement, in 
     cooperation with States, institutions of higher education, 
     secondary schools, middle schools, early intervention and 
     outreach programs under this title, other agencies and 
     organizations involved in student financial assistance and 
     college access, public libraries, community centers, 
     employers, and businesses, a comprehensive system of early 
     financial aid information in order to provide students and 
     families with early information about financial aid and early 
     estimates of such students' eligibility for financial aid 
     from multiple sources. Such system shall include the 
     activities described in subsections (b) and (c).
       ``(b) Communication of Availability of Aid and Aid 
     Eligibility.--
       ``(1) Students who receive benefits.--The Secretary shall--
       ``(A) make special efforts to notify students who receive 
     or are eligible to receive benefits under Federal means-
     tested benefit programs (including the school lunch program 
     established under the Richard B. Russell National School 
     Lunch Act (42 U.S.C. 1751 et seq.), the food stamp program 
     under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), and 
     other such programs as determined by the Secretary) of such 
     students' potential eligibility for a maximum Federal Pell 
     Grant under subpart 1 of part A; and
       ``(B) disseminate such informational materials as the 
     Secretary determines necessary.
       ``(2) Middle school students.--The Secretary, in 
     cooperation with States, institutions of higher education, 
     other organizations involved in college access and student 
     financial aid, middle schools, and programs under this title 
     that serve middle school students, shall make special efforts 
     to notify students and their parents of the availability of 
     financial aid under this title and, in accordance with 
     subsection (c), shall provide nonbinding estimates of grant 
     and loan aid that an individual may be eligible for under 
     this title upon completion of an application form under 
     section 483(a). The Secretary shall ensure that such 
     information is as accurate as possible and that such 
     information is provided in an age-appropriate format using 
     dissemination mechanisms suitable for students in middle 
     school.
       ``(3) Secondary school students.--The Secretary, in 
     cooperation with States, institutions of higher education, 
     other organizations involved in college access and student 
     financial aid, secondary schools, and programs under this 
     title that serve secondary school students, shall make 
     special efforts to notify students in secondary school and 
     their parents, as early as possible but not later than such 
     students' junior year of secondary school, of the 
     availability of financial aid under this title and, in 
     accordance with subsection (c), shall provide nonbinding 
     estimates of the amounts of grant and loan aid that an 
     individual may be eligible for under this title upon 
     completion of an application form under section 483(a). The 
     Secretary shall ensure that such information is as accurate 
     as possible and that such information

[[Page 26782]]

     is provided in an age-appropriate format using dissemination 
     mechanisms suitable for students in secondary school.
       ``(4) Adult learners.--The Secretary, in cooperation with 
     States, institutions of higher education, other organizations 
     involved in college access and student financial aid, 
     employers, workforce investment boards and public libraries, 
     shall make special efforts to provide individuals who would 
     qualify as independent students, as defined in section 
     480(d), with information regarding the availability of 
     financial aid under this title and, in accordance with 
     subsection (c), with nonbinding estimates of the amounts of 
     grant and loan aid that an individual may be eligible for 
     under this title upon completion of an application form under 
     section 483(a). The Secretary shall ensure that such 
     information--
       ``(A) is as accurate as possible;
       ``(B) includes specific information regarding the 
     availability of financial aid for students qualified as 
     independent students, as defined in section 480(d); and
       ``(C) uses dissemination mechanisms suitable for adult 
     learners.
       ``(5) Public awareness campaign.--Not later than 2 years 
     after the date of enactment of the Higher Education 
     Amendments of 2005, the Secretary, in coordination with 
     States, institutions of higher education, early intervention 
     and outreach programs under this title, other agencies and 
     organizations involved in student financial aid, local 
     educational agencies, public libraries, community centers, 
     businesses, employers, employment services, workforce 
     investment boards, and movie theaters, shall implement a 
     public awareness campaign in order to increase national 
     awareness regarding the availability of financial aid under 
     this title. The public awareness campaign shall disseminate 
     accurate information regarding the availability of financial 
     aid under this title and shall be implemented, to the extent 
     practicable, using a variety of media, including print, 
     television, radio and the Internet. The Secretary shall 
     design and implement the public awareness campaign based upon 
     relevant independent research and the information and 
     dissemination strategies found most effective in implementing 
     paragraphs (1) through (4).
       ``(c) Availability of Nonbinding Estimates of Federal 
     Financial Aid Eligibility.--
       ``(1) In general.--The Secretary, in cooperation with 
     States, institutions of higher education, and other agencies 
     and organizations involved in student financial aid, shall 
     provide, via a printed form and the Internet or other 
     electronic means, the capability for individuals to determine 
     easily, by entering relevant data, nonbinding estimates of 
     amounts of grant and loan aid an individual may be eligible 
     for under this title upon completion and processing of an 
     application and enrollment in an institution of higher 
     education.
       ``(2) Data elements.--The Secretary, in cooperation with 
     States, institutions of higher education, and other agencies 
     and organizations involved in student financial aid, shall 
     determine the data elements that are necessary to create a 
     simplified form that individuals can use to obtain easily 
     nonbinding estimates of the amounts of grant and loan aid an 
     individual may be eligible for under this title.
       ``(3) Qualification to use simplified application.--The 
     capability provided under this paragraph shall include the 
     capability to determine whether the individual is eligible to 
     submit a simplified application form under paragraph (2)(B) 
     or (3)(B) of section 483(a).''.

     SEC. 7440. COLLEGE ACCESS INITIATIVE.

       Part G of title IV (20 U.S.C. 1088 et seq.) is further 
     amended by inserting after section 485D (as added by section 
     7439) the following:

     ``SEC. 485E. COLLEGE ACCESS INITIATIVE.

       ``(a) State-by-State Information.--The Secretary shall 
     direct each guaranty agency with which the Secretary has an 
     agreement under section 428(c) to provide to the Secretary 
     the information necessary for the development of Internet Web 
     links and access for students and families to a comprehensive 
     listing of the postsecondary education opportunities 
     programs, publications, Internet Web sites, and other 
     services available in the States for which such agency serves 
     as the designated guarantor.
       ``(b) Guaranty Agency Activities.--
       ``(1) Plan and activity required.--Each guaranty agency 
     with which the Secretary has an agreement under section 
     428(c) shall develop a plan, and undertake the activity, 
     necessary to gather the information required under subsection 
     (a) and to make such information available to the public and 
     to the Secretary in a form and manner prescribed by the 
     Secretary.
       ``(2) Activities.--Each guaranty agency shall undertake 
     such activities as are necessary to promote access to 
     postsecondary education for students through providing 
     information on college planning, career preparation, and 
     paying for college. The guaranty agency shall publicize such 
     information and coordinate such activities with other 
     entities that provide or distribute such information in the 
     States for which such guaranty agency serves as the 
     designated guarantor.
       ``(3) Funding.--The activities required by this section may 
     be funded from the guaranty agency's Operating Fund 
     established pursuant to section 422B and to the extent funds 
     remain, from earnings on the restricted account established 
     pursuant to section 422(h)(4).
       ``(4) Rule of construction.--Nothing in this subsection 
     shall require a guaranty agency to duplicate any efforts 
     currently underway that meet the requirements of this 
     subsection.
       ``(c) Access to Information.--
       ``(1) Secretary's responsibility.--The Secretary shall 
     ensure the availability of the information provided, by the 
     guaranty agencies in accordance with this section, to 
     students, parents, and other interested individuals, through 
     Web links or other methods prescribed by the Secretary.
       ``(2) Guaranty agency responsibility.--The guaranty 
     agencies shall ensure that the information required by this 
     section is available without charge in printed format for 
     students and parents requesting such information.
       ``(3) Publicity.--Not later than 270 days after the date of 
     enactment of the Higher Education Amendments Act of 2005, the 
     Secretary and guaranty agencies shall publicize the 
     availability of the information required by this section, 
     with special emphasis on ensuring that populations that are 
     traditionally underrepresented in postsecondary education are 
     made aware of the availability of such information.''.

     SEC. 7441. PROGRAM PARTICIPATION AGREEMENTS.

       Section 487 (20 U.S.C. 1094) is amended--
       (1) in subsection (a)--
       (A) in paragraph (23), by adding at the end the following:
       ``(D) An institution shall be considered in compliance with 
     the requirements of subparagraph (A) for any student to whom 
     the institution electronically transmits a message containing 
     a voter registration form acceptable for use in the State in 
     which the institution is located, or an Internet address 
     where such a form can be downloaded, if such information is 
     in an electronic message devoted solely to voter 
     registration.''; and
       (B) by adding at the end the following:
       ``(24) The institution will, as calculated in accordance 
     with subsection (g)(1), have not less than 10 percent of its 
     revenues from sources other than funds provided under this 
     title, or will be subject to the sanctions described in 
     subsection (g)(2).'';
       (2) in subsection (c)(1)(A)(i), by inserting ``, except 
     that the Secretary may modify the requirements of this clause 
     with regard to an institution outside the United States'' 
     before the semicolon at the end;
       (3) by redesignating subsections (d) and (e) as subsection 
     (e) and (f), respectively;
       (4) by inserting after subsection (c) the following:
       ``(d) Institutional Requirements for Teach-Outs.--
       ``(1) In general.--In the event the Secretary initiates the 
     limitation, suspension, or termination of the participation 
     of an institution of higher education in any program under 
     this title under the authority of subsection (c)(1)(F) or 
     initiates an emergency action for termination under the 
     authority of subsection (c)(1)(G) and its prescribed 
     regulations, the Secretary shall require that institution to 
     prepare a teach-out plan for submission to the institution's 
     accrediting agency or association in compliance with section 
     496(c)(4), the Secretary's regulations on teach-out plans, 
     and the standards of the institution's accrediting agency or 
     association.
       ``(2) Teach-out plan defined.--In this subsection, the term 
     `teach-out plan' means a written plan that provides for the 
     equitable treatment of students if an institution of higher 
     education ceases to operate before all students have 
     completed their program of study, and may include, if 
     required by the institution's accrediting agency or 
     association, an agreement between institutions for such a 
     teach-out plan.''; and
       (5) by adding at the end the following:
       ``(g) Implementation of Nontitle IV Revenue Requirement.--
       ``(1) Calculation.--In carrying out subsection (a)(24), an 
     institution shall use the cash basis of accounting and count 
     the following funds as from sources of funds other than funds 
     provided under this title:
       ``(A) Funds used by students from sources other than funds 
     received under this title to pay tuition, fees, and other 
     institutional charges to the institution, provided the 
     institution can reasonably demonstrate that such funds were 
     used for such purposes.
       ``(B) Funds used by the institution to satisfy matching-
     fund requirements for programs under this title.
       ``(C) Funds used by a student from savings plans for 
     educational expenses established by or on behalf of the 
     student and which qualify for special tax treatment under the 
     Internal Revenue Code of 1986.
       ``(D) Funds paid by a student, or on behalf of a student by 
     a party other than the institution, to the institution for an 
     education or training program that is not eligible for funds 
     under this title, provided that the program is approved or 
     licensed by the appropriate State agency or an accrediting 
     agency recognized by the Secretary.
       ``(E) Funds generated by the institution from institutional 
     activities that are necessary for the education and training 
     of the

[[Page 26783]]

     institution's students, if such activities are--
       ``(i) conducted on campus or at a facility under the 
     control of the institution;
       ``(ii) performed under the supervision of a member of the 
     institution's faculty; and
       ``(iii) required to be performed by all students in a 
     specific educational program at the institution.
       ``(F) Institutional aid, as follows:
       ``(i) In the case of loans made by the institution, only 
     the amount of loan repayments received by the institution 
     during the fiscal year for which the determination is made.
       ``(ii) In the case of scholarships provided by the 
     institution, only those scholarship funds provided by the 
     institution that are--

       ``(I) in the form of monetary aid based upon the academic 
     achievements or financial need of students; and
       ``(II) disbursed during the fiscal year for which the 
     determination is made from an established restricted account 
     and only to the extent that the funds in that account 
     represent designated funds from an outside source or income 
     earned on those funds.

       ``(iii) In the case of tuition discounts, only those 
     tuition discounts based upon the academic achievement or 
     financial need of students.
       ``(2) Sanctions.--
       ``(A) Failure to meet requirement for 1 year.--In addition 
     to such other means of enforcing the requirements of this 
     title as may be available to the Secretary, if an institution 
     fails to meet the requirements of subsection (a)(24) in any 
     year, the Secretary may impose 1 or both of the following 
     sanctions on the institution:
       ``(i) Place the institution on provisional certification in 
     accordance with section 498(h) until the institution 
     demonstrates, to the satisfaction of the Secretary, that it 
     is in compliance with subsection (a)(24).
       ``(ii) Require such other increased monitoring and 
     reporting requirements as the Secretary determines necessary 
     until the institution demonstrates, to the satisfaction of 
     the Secretary, that it is in compliance with subsection 
     (a)(24).
       ``(B) Failure to meet requirement for 2 years.--An 
     institution that fails to meet the requirements of subsection 
     (a)(24) for 2 consecutive years shall be ineligible to 
     participate in the programs authorized under this title.
       ``(3) Public availability of information.--The Secretary 
     shall make publicly available, through the means described in 
     subsection (b) of section 131, any institution that fails to 
     meet the requirements of subsection (a)(24) in any year as an 
     institution that is failing to meet the minimum non-Federal 
     source of revenue requirements of such subsection (a)(24).''.

     SEC. 7442. REGULATORY RELIEF AND IMPROVEMENT.

       Section 487A(b) (20 U.S.C. 1094a(b)) is amended--
       (1) in paragraph (1)-
       (A) by striking ``1998'' and inserting ``2005'' ; and
       (B) by striking ``1999'' and inserting ``2006''; and
       (2) by striking the matter preceding paragraph (2)(A) and 
     inserting the following:
       ``(2) Report.--The Secretary shall review and evaluate the 
     experience of institutions participating as experimental 
     sites and shall, on a biennial basis, submit a report based 
     on the review and evaluation to the authorizing committees. 
     Such report shall include--''; and
       (3) in paragraph (3)--
       (A) in subparagraph (A)--
       (i) by striking ``Upon the submission of the report 
     required by paragraph (2), the'' and inserting ``The''; and
       (ii) by inserting ``periodically'' after ``authorized to'';
       (B) by striking subparagraph (B);
       (C) by redesignating subparagraph (C) as subparagraph (B); 
     and
       (D) in subparagraph (B) (as redesignated by subparagraph 
     (C))--
       (i) by inserting ``, including requirements related to the 
     award process and disbursement of student financial aid (such 
     as innovative delivery systems for modular or compressed 
     courses, or other innovative systems), verification of 
     student financial aid application data, entrance and exit 
     interviews, or other management procedures or processes as 
     determined in the negotiated rulemaking process under section 
     492,'' after ``requirements in this title''; and
       (ii) by inserting ``(other than an award rule related to an 
     experiment in modular or compressed schedules)'' after 
     ``award rules''; and
       (iii) by inserting ``unless the waiver of such provisions 
     is authorized by another provision under this title'' before 
     the period at the end.

     SEC. 7443. TRANSFER OF ALLOTMENTS.

       Section 488 (20 U.S.C. 1095) is amended in the first 
     sentence--
       (1) in paragraph (1), by striking ``and'' after the 
     semicolon;
       (2) in paragraph (2), by striking ``413D.'' and inserting 
     ``413D; and''; and
       (3) by adding at the end ``(3) transfer 25 percent of the 
     institution's allotment under section 413D to the 
     institution's allotment under section 442.''.

     SEC. 7444. WAGE GARNISHMENT REQUIREMENT.

       Section 488A(a)(1) (20 U.S.C. 1095a(a)(1)) is amended by 
     striking ``10 percent'' and inserting ``15 percent''.

     SEC. 7445. PURPOSE OF ADMINISTRATIVE PAYMENTS.

       Section 489(b) (20 U.S.C. 1096(b)) is amended by striking 
     ``offsetting the administrative costs of'' and inserting 
     ``administering''.

     SEC. 7446. ADVISORY COMMITTEE ON STUDENT FINANCIAL 
                   ASSISTANCE.

       Section 491 (20 U.S.C. 1098) is amended--
       (1) in subsection (a)(2)--
       (A) in subparagraph (B), by striking ``and'' after the 
     semicolon;
       (B) in subparagraph (C), by striking the period and 
     inserting a semicolon; and
       (C) by adding at the end the following:
       ``(D) to provide knowledge and understanding of early 
     intervention programs, and to make recommendations that will 
     result in early awareness by low- and moderate-income 
     students and families--
       ``(i) of their eligibility for assistance under this title; 
     and
       ``(ii) to the extent practicable, of their eligibility for 
     other forms of State and institutional need-based student 
     assistance; and
       ``(E) to make recommendations that will expand and improve 
     partnerships among the Federal Government, States, 
     institutions of higher education, and private entities to 
     increase the awareness and the total amount of need-based 
     student assistance available to low- and moderate-income 
     students.'';
       (2) in subsection (c), by adding at the end the following:
       ``(3) The appointment of a member under subparagraph (A) or 
     (B) of paragraph (1) shall be effective upon confirmation of 
     the member by the Senate and publication of such appointment 
     in the Congressional Record.''.
       (3) in subsection (d)(6), by striking ``, but nothing'' and 
     all that follows through ``or analyses'';
       (4) in subsection (j)--
       (A) in paragraph (1)--
       (i) by inserting ``and simplification'' after 
     ``modernization'' each place the term appears; and
       (ii) by striking ``including'' and all that follows through 
     ``Department,''; and
       (B) by striking paragraphs (4) and (5) and inserting the 
     following:
       ``(4) conduct a review and analysis of regulations in 
     accordance with subsection (l); and
       ``(5) conduct a study in accordance with subsection (m).'';
       (5) in subsection (k), by striking ``2004'' and inserting 
     ``2010''; and
       (6) by adding at the end the following:
       ``(l) Review and Analysis of Regulations.--
       ``(1) Recommendations.--The Advisory Committee shall make 
     recommendations to the Secretary and Congress for 
     consideration of future legislative action regarding 
     redundant or outdated regulations under this title, 
     consistent with the Secretary's requirements under section 
     498B.
       ``(2) Review and analysis of regulations.--The Advisory 
     Committee shall conduct a review and analysis of the 
     regulations issued under this title that are in effect at the 
     time of the review and that apply to the operations or 
     activities of participants in the programs assisted under 
     this title. The review and analysis may include a 
     determination of whether the regulation is duplicative, is no 
     longer necessary, is inconsistent with other Federal 
     requirements, or is overly burdensome. In conducting the 
     review, the Advisory Committee shall pay specific attention 
     to evaluating ways in which regulations under this title 
     affecting institutions of higher education (other than 
     institutions described in section 102(a)(1)(C)), that have 
     received in each of the 2 most recent award years prior to 
     the date of enactment of the Higher Education Amendments of 
     2005 less than $200,000 in funds through this title, may be 
     improved, streamlined, or eliminated.
       ``(3) Consultation.--
       ``(A) In general.--In carrying out the review and analysis 
     under paragraph (2), the Advisory Committee shall consult 
     with the Secretary, relevant representatives of institutions 
     of higher education, and individuals who have expertise and 
     experience with the regulations issued under this title, in 
     accordance with subparagraph (B).
       ``(B) Review panels.--The Advisory Committee shall convene 
     not less than 2 review panels of representatives of the 
     groups involved in student financial assistance programs 
     under this title who have experience and expertise in the 
     regulations issued under this title to review the regulations 
     under this title, and to provide recommendations to the 
     Advisory Committee with respect to the review and analysis 
     under paragraph (2). The panels shall be made up of experts 
     in areas such as the operations of the financial assistance 
     programs, the institutional eligibility requirements for the 
     financial assistance programs, regulations not directly 
     related to the operations or the institutional eligibility 
     requirements of the financial assistance programs, and 
     regulations for dissemination of information to students 
     about the financial assistance programs.
       ``(4) Reports to congress.--The Advisory Committee shall 
     submit, not later than 2 years after the completion of the 
     negotiated rulemaking process required under section 492 
     resulting from the amendments to this Act made by the Higher 
     Education Amendments of 2005, a report to the authorizing 
     committees and the Secretary detailing the

[[Page 26784]]

     expert panels' findings and recommendations with respect to 
     the review and analysis under paragraph (2).
       ``(5) Additional support.--The Secretary and the Inspector 
     General of the Department shall provide such assistance and 
     resources to the Advisory Committee as the Secretary and 
     Inspector General determine are necessary to conduct the 
     review required by this subsection.
       ``(m) Study of Innovative Pathways to Baccalaureate Degree 
     Attainment.--
       ``(1) Study required.--The Advisory Committee shall conduct 
     a study of the feasibility of increasing baccalaureate degree 
     attainment rates by reducing the costs and financial barriers 
     to attaining a baccalaureate degree through innovative 
     programs.
       ``(2) Scope of study.--The Advisory Committee shall examine 
     new and existing programs that promote baccalaureate degree 
     attainment through innovative ways, such as dual or 
     concurrent enrollment programs, changes made to the Federal 
     Pell Grant program, simplification of the needs analysis 
     process, compressed or modular scheduling, articulation 
     agreements, and programs that allow 2-year institutions of 
     higher education to offer baccalaureate degrees.
       ``(3) Required aspects of the study.--In performing the 
     study described in this subsection, the Advisory Committee 
     shall examine the following aspects of such innovative 
     programs:
       ``(A) The impact of such programs on baccalaureate 
     attainment rates.
       ``(B) The degree to which a student's total cost of 
     attaining a baccalaureate degree can be reduced by such 
     programs.
       ``(C) The ways in which low- and moderate-income students 
     can be specifically targeted by such programs.
       ``(D) The ways in which nontraditional students can be 
     specifically targeted by such programs.
       ``(E) The cost-effectiveness for the Federal Government, 
     States, and institutions of higher education to implement 
     such programs.
       ``(4) Consultation.--
       ``(A) In general.--In performing the study described in 
     this subsection the Advisory Committee shall consult with a 
     broad range of interested parties in higher education, 
     including parents, students, appropriate representatives of 
     secondary schools and institutions of higher education, 
     appropriate State administrators, administrators of dual 
     enrollment programs, and appropriate officials from the 
     Department.
       ``(B) Congressional consultation.--The Advisory Committee 
     shall consult on a regular basis with the authorizing 
     committees in carrying out the study required by this 
     section.
       ``(5) Reports to congress.--
       ``(A) Interim report.--The Advisory Committee shall prepare 
     and submit to the authorizing committees and the Secretary 1 
     interim report, not later than 1 year after the date of 
     enactment of the Higher Education Amendments of 2005, 
     describing the progress that has been made in conducting the 
     study required by this subsection and any preliminary 
     findings on the topics identified under paragraph (2).
       ``(B) Final report.--The Advisory Committee shall, not 
     later than 3 years after the date of enactment of the Higher 
     Education Amendments of 2005, prepare and submit to the 
     authorizing committees and the Secretary a final report on 
     the study, including recommendations for legislative, 
     regulatory, and administrative changes based on findings 
     related to the topics identified under paragraph (2).''.

     SEC. 7447. REGIONAL MEETINGS.

       Section 492(a)(1) (20 U.S.C. 1098a(a)(1)) is amended by 
     inserting ``State student grant agencies,'' after 
     ``institutions of higher education,''.

     SEC. 7448. YEAR 2000 REQUIREMENTS AT THE DEPARTMENT.

       (a) Repeal.--Section 493A (20 U.S.C. 1098c) is repealed.
       (b) Redesignation.--Section 493B (20 U.S.C. 1098d) is 
     redesignated as section 493A.

                    Subchapter H--Program Integrity

     SEC. 7451. RECOGNITION OF ACCREDITING AGENCY OR ASSOCIATION.

       Section 496 (200 U.S.C. 1099b) is amended--
       (1) in subsection (a)--
       (A) by striking paragraph (4) and inserting the following:
       ``(4)(A) such agency or association consistently applies 
     and enforces standards that respect the stated mission of the 
     institution of higher education, including religious 
     missions, and that ensure that the courses or programs of 
     instruction, training, or study offered by the institution of 
     higher education, including distance education courses or 
     programs, are of sufficient quality to achieve, for the 
     duration of the accreditation period, the stated objective 
     for which the courses or the programs are offered; and
       ``(B) if such agency or association has or seeks to include 
     within its scope of recognition the evaluation of the quality 
     of institutions or programs offering distance education, such 
     agency or association shall, in addition to meeting the other 
     requirements of this subpart, demonstrate to the Secretary 
     that--
       ``(i) the agency or association's standards effectively 
     address the quality of an institution's distance education in 
     the areas identified in section 496(a)(5), except that the 
     agency or association shall not be required to have separate 
     standards, procedures or policies for the evaluation of 
     distance education institutions or programs in order to meet 
     the requirements of this subparagraph; and
       ``(ii) the agency or association requires an institution 
     that offers distance education to have processes through 
     which the institution establishes that the student who 
     registers in a distance education course or program is the 
     same student who participates, completes and receives the 
     academic credit;'';
       (B) in paragraph (5), by striking subparagraph (A) and 
     inserting the following:
       ``(A) success with respect to student achievement in 
     relation to the institution's mission, including--
       ``(i) consideration of student academic achievement as 
     determined by the institution;
       ``(ii) student retention;
       ``(iii) course and program completion;
       ``(iv) as appropriate, State licensing examinations;
       ``(v) as appropriate, job placement rates or enrollment in 
     graduate or professional programs; and
       ``(vi) as appropriate, other student performance 
     information selected by the institution, particularly that 
     information used by the institution to evaluate or strengthen 
     its programs;'';
       (C) by striking paragraph (6) and inserting the following:
       ``(6) such an agency or association shall establish and 
     apply review procedures throughout the accrediting process, 
     including evaluation and withdrawal proceedings which comply 
     with due process procedures that provide for--
       ``(A) adequate specification of requirements and 
     deficiencies at the institution of higher education or 
     program examined;
       ``(B) an opportunity for a written response by any such 
     institution to be included, prior to final action, in the 
     evaluation and withdrawal proceedings;
       ``(C) upon the written request of an institution, an 
     opportunity for the institution to appeal any adverse action, 
     including denial, withdrawal, suspension, or termination of 
     accreditation, or placement on probation of an institution, 
     at a hearing prior to such action becoming final, before an 
     appeals panel that--
       ``(i) shall not include current members of the agency or 
     association's underlying decision-making body that made the 
     adverse decision; and
       ``(ii) is subject to a conflict of interest policy; and
       ``(D) the right to representation by counsel for such an 
     institution during an appeal of the adverse action;''; and
       (D) by striking paragraph (8) and inserting the following:
       ``(8) such agency or association shall make available to 
     the public and the State licensing or authorizing agency, and 
     submit to the Secretary, a summary of agency or association 
     actions, including--
       ``(A) the award of accreditation or reaccreditation of an 
     institution;
       ``(B) final denial, withdrawal, suspension, or termination 
     of accreditation, or placement on probation of an 
     institution, and any findings made in connection with the 
     action taken, together with the official comments of the 
     affected institution; and
       ``(C) any other adverse action taken with respect to an 
     institution.''; and
       (2) in subsection (c)--
       (A) in paragraph (1), by inserting ``, including those 
     regarding distance education'' after ``their 
     responsibilities'';
       (B) by redesignating paragraphs (2) through (6) as 
     paragraphs (5) through (9);
       (C) by inserting after paragraph (1) (as amended by 
     subparagraph (A)) the following:
       ``(2) ensures that the agency or association's on-site 
     evaluation for accreditation or reaccreditation includes 
     review of the Federally required information the institution 
     or program provides its current and prospective students;
       ``(3) monitors the growth of programs at institutions that 
     are experiencing significant enrollment growth;
       ``(4) requires an institution to submit a teach-out plan 
     for approval to the accrediting agency upon the occurrence of 
     any of the following events:
       ``(A) The Department notifies the accrediting agency of an 
     action against the institution pursuant to section 487(d).
       ``(B) The accrediting agency acts to withdraw, terminate, 
     or suspend the accreditation of an institution.
       ``(C) The institution notifies the accrediting agency that 
     the institution intends to cease operations.'';
       (D) in paragraph (8) (as redesignated by subparagraph (B)), 
     by striking ``and'' after the semicolon;
       (E) in subparagraph (9) (as redesignated by subparagraph 
     (B)), by striking the period and inserting ``; and''; and
       (F) by adding at the end the following:
       ``(10) confirms, as a part of the agency or association's 
     review for accreditation or reaccreditation, that the 
     institution has transfer of credit policies--
       ``(A) that are publicly disclosed;

[[Page 26785]]

       ``(B) that do not deny transfer of credit based solely on 
     the accreditation of the sending institution, if the agency 
     or association accrediting the sending institution is 
     recognized by the Secretary pursuant to this section; and
       ``(C) in which acceptance or denial of transfer of credit 
     is decided according to criteria established in guidelines 
     developed by the institution's admissions committee.''.

     SEC. 7452. ADMINISTRATIVE CAPACITY STANDARD.

       Section 498 (20 U.S.C. 1099c) is amended--
       (1) in subsection (d)(1)(B), by inserting ``and'' after the 
     semicolon; and
       (2) by adding at the end the following:
       ``(k) Treatment of Teach-Outs at Additional Locations.--
       ``(1) In general.--A location of a closed institution of 
     higher education shall be eligible as an additional location 
     of an eligible institution of higher education, as defined 
     pursuant to regulations of the Secretary, for the purposes of 
     a teach-out, if such teach-out has been approved by the 
     institution's accrediting agency.
       ``(2) Special rule.--An institution of higher education 
     that conducts a teach-out through the establishment of an 
     additional location described in paragraph (1) shall be 
     permitted to establish a permanent additional location at a 
     closed institution and shall not be required--
       ``(A) to meet the requirements of sections 102(b)(1)(E) and 
     102(c)(1)(C) for such additional location; or
       ``(B) to assume the liabilities of the closed 
     institution.''.

     SEC. 7453. PROGRAM REVIEW AND DATA.

       Section 498A(b) (20 U.S.C. 1099c-1(b)) is amended--
       (1) in paragraph (4), by striking ``and'' after the 
     semicolon;
       (2) in paragraph (5) by striking the period and inserting a 
     semicolon; and
       (3) by adding at the end the following:
       ``(6) provide to an institution of higher education an 
     adequate opportunity to review and respond to any program 
     review report and relevant materials related to the report 
     before any final program review is reached;
       ``(7) review and take into consideration an institution of 
     higher education's response in any final program review; and
       ``(8) maintain and preserve at all times the 
     confidentiality of any program review report until the 
     requirements of paragraphs (6) and (7) are met, and until a 
     final program review is issued, other than to the extent 
     required to comply with paragraph (5), except that the 
     Secretary shall promptly disclose any and all program review 
     reports to the institution of higher education under 
     review.''.

                   CHAPTER 6--DEVELOPING INSTITUTIONS

     SEC. 7501. DEFINITIONS.

       Section 502(a) (20 U.S.C. 1101a(a)) is amended--
       (1) in paragraph (5)--
       (A) in subparagraph (A), by inserting ``and'' after the 
     semicolon;
       (B) in subparagraph (B), by striking ``; and'' and 
     inserting a period; and
       (C) by striking subparagraph (C); and
       (2) by striking paragraph (7).

     SEC. 7502. AUTHORIZED ACTIVITIES.

       Section 503(b) (20 U.S.C. 1101b(b)) is amended--
       (1) by redesignating paragraphs (6) through (14) as 
     paragraphs (8) through (16), respectively;
       (2) in paragraph (5), by inserting ``, including 
     innovative, customized remedial education and English 
     language instruction courses designed to help retain students 
     and move the students rapidly into core courses and through 
     program completion'' before the period at the end; and
       (3) by inserting after paragraph (5) the following:
       ``(6) Education or counseling services designed to improve 
     the financial literacy and economic literacy of students or 
     the students' parents.
       ``(7) Articulation agreements and student support programs 
     designed to facilitate the transfer from 2-year to 4-year 
     institutions.''.

     SEC. 7503. DURATION OF GRANT.

       Section 504(a) (20 U.S.C. 1101c(a)) is amended to read as 
     follows:
       ``(a) Award Period.--The Secretary may award a grant to a 
     Hispanic-serving institution under this title for 5 years.''.

     SEC. 7504. POSTBACCALAUREATE OPPORTUNITIES FOR HISPANIC 
                   AMERICANS.

       (a) Establishment of Program.--Title V (20 U.S.C. 1101 et 
     seq.) is amended--
       (1) by redesignating part B as part C;
       (2) by redesignating sections 511 through 518 as sections 
     521 through 528, respectively; and
       (3) by inserting after section 505 the following:

   ``PART B--PROMOTING POSTBACCALAUREATE OPPORTUNITIES FOR HISPANIC 
                               AMERICANS

     ``SEC. 511. PROGRAM AUTHORITY AND ELIGIBILITY.

       ``(a) Program Authorized.--Subject to the availability of 
     funds appropriated to carry out this part, the Secretary 
     shall award grants, on a competitive basis, to eligible 
     institutions to enable the eligible institutions to carry out 
     the authorized activities described in section 512.
       ``(b) Eligibility.--For the purposes of this part, an 
     `eligible institution' means an institution of higher 
     education that--
       ``(1) is a Hispanic-serving institution (as defined in 
     section 502); and
       ``(2) offers a postbaccalaureate certificate or degree 
     granting program.

     ``SEC. 512. AUTHORIZED ACTIVITIES.

       ``Grants awarded under this part shall be used for 1 or 
     more of the following activities:
       ``(1) Purchase, rental, or lease of scientific or 
     laboratory equipment for educational purposes, including 
     instructional and research purposes.
       ``(2) Construction, maintenance, renovation, and 
     improvement in classroom, library, laboratory, and other 
     instructional facilities, including purchase or rental of 
     telecommunications technology equipment or services.
       ``(3) Purchase of library books, periodicals, technical and 
     other scientific journals, microfilm, microfiche, and other 
     educational materials, including telecommunications program 
     materials.
       ``(4) Support for needy postbaccalaureate students, 
     including outreach, academic support services, mentoring, 
     scholarships, fellowships, and other financial assistance, to 
     permit the enrollment of such students in postbaccalaureate 
     certificate and degree granting programs.
       ``(5) Support of faculty exchanges, faculty development, 
     faculty research, curriculum development, and academic 
     instruction.
       ``(6) Creating or improving facilities for Internet or 
     other distance learning academic instruction capabilities, 
     including purchase or rental of telecommunications technology 
     equipment or services.
       ``(7) Collaboration with other institutions of higher 
     education to expand postbaccalaureate certificate and degree 
     offerings.
       ``(8) Other activities proposed in the application 
     submitted pursuant to section 513 that are approved by the 
     Secretary as part of the review and acceptance of such 
     application.

     ``SEC. 513. APPLICATION AND DURATION.

       ``(a) Application.--Any eligible institution may apply for 
     a grant under this part by submitting an application to the 
     Secretary at such time and in such manner as the Secretary 
     may require. Such application shall demonstrate how the grant 
     funds will be used to improve postbaccalaureate education 
     opportunities for Hispanic and low-income students and will 
     lead to such students' greater financial independence.
       ``(b) Duration.--Grants under this part shall be awarded 
     for a period not to exceed 5 years.
       ``(c) Limitation.--The Secretary may not award more than 1 
     grant under this part in any fiscal year to any Hispanic-
     serving institution.''.

     SEC. 7505. APPLICATIONS.

       Section 521(b)(1)(A) (as redesignated by section 
     7504(a)(2)) (20 U.S.C. 1103(b)(1)(A)) is amended by striking 
     ``subsection (b)'' and inserting ``subsection (c)''.

     SEC. 7506. COOPERATIVE ARRANGEMENTS.

       Section 524(a) (as redesignated by section 7504(a)(2)) (20 
     U.S.C. 1103c(a)) is amended by striking ``section 503'' and 
     inserting ``sections 503 and 512''.

     SEC. 7507. AUTHORIZATION OF APPROPRIATIONS.

       Section 528(a) (as redesignated by section 7504(a)(2)) (20 
     U.S.C. 1103g(a)) is amended--
       (1) by inserting ``part A of'' after ``carry out'';
       (2) by striking ``$62,500,000 for fiscal year 1999'' and 
     all that follows through the period and inserting ``such sums 
     as may be necessary for fiscal year 2006 and each of the 5 
     succeeding fiscal years.'';
       (3) by striking ``(a) Authorizations.--There are'' and 
     inserting the following:
       ``(a) Authorizations.--
       ``(1) Part a.--There are''; and
       (4) by adding at the end the following:
       ``(2) Part b.--There are authorized to be appropriated to 
     carry out part B of this title such sums as may be necessary 
     for fiscal year 2006 and each of the 5 succeeding fiscal 
     years.''.

              CHAPTER 7--INTERNATIONAL EDUCATION PROGRAMS

     SEC. 7601. FINDINGS.

       Section 601 (20 U.S.C. 1121) is amended--
       (1) in the section heading, by striking ``AND PURPOSES'' 
     and inserting ``; PURPOSES; CONSULTATION; SURVEY''
       (2) in subsection (a)(3), by striking ``post-Cold War'';
       (3) in subsection (b)(1)(D), by inserting ``, including 
     through linkages with overseas institutions'' before the 
     semicolon; and
       (4) by adding at the end the following:
       ``(c) Consultation.--The Secretary shall, prior to 
     requesting applications for funding under this title during 
     each grant cycle, consult with and receive recommendations 
     regarding national need for expertise in foreign languages 
     and world regions from the head official, or a designee of 
     such head official, of the National Security Council, the 
     Department of Homeland Security, the Department of Defense, 
     the Department of State, the Federal Bureau of Investigation, 
     the Department of Labor, and the Department of Commerce, the 
     Director of National Intelligence, and other relevant 
     agencies. These entities shall provide information to

[[Page 26786]]

     the Secretary regarding how the entities utilize expertise 
     and resources provided by grantees under this title. The 
     Secretary shall take into account such recommendations and 
     information when requesting applications for funding under 
     this title, and shall make available to applicants a list of 
     areas identified as areas of national need.
       ``(d) Survey.--The Secretary shall assist grantees in 
     developing a survey to administer to students who have 
     participated in programs under this title to determine 
     postparticipation placement. All grantees, where applicable, 
     shall administer such survey not less often than annually and 
     report such data to the Secretary.''.

     SEC. 7602. GRADUATE AND UNDERGRADUATE LANGUAGE AND AREA 
                   CENTERS AND PROGRAMS.

       Section 602 (20 U.S.C. 1122) is amended--
       (1) in subsection (a)--
       (A) in paragraph (2)--
       (i) in subparagraph (G), by striking ``and'' after the 
     semicolon;
       (ii) in subparagraph (H), by striking the period and 
     inserting ``; and''; and
       (iii) by adding at the end the following:
       ``(I) support for instructors of the less commonly taught 
     languages.''; and
       (B) in paragraph (4)--
       (i) by redesignating subparagraphs (C) through (E) as 
     subparagraphs (D) through (F), respectively;
       (ii) by inserting after subparagraph (B) the following:
       ``(C) Programs of linkage or outreach between or among--
       ``(i) foreign language, area studies, or other 
     international fields; and
       ``(ii) State educational agencies or local educational 
     agencies.''; and
       (iii) in subparagraph (F) (as redesignated by clause (i)), 
     by striking ``and (D)'' and inserting ``(D), and (E)'';
       (2) in subsection (b)--
       (A) in the subsection heading, by striking ``Graduate''; 
     and
       (B) by striking paragraph (2) and inserting the following:
       ``(2) Eligible students.--A student receiving a stipend 
     described in paragraph (1) shall be engaged--
       ``(A) in an instructional program with stated performance 
     goals for functional foreign language use or in a program 
     developing such performance goals, in combination with area 
     studies, international studies, or the international aspects 
     of a professional studies program; and
       ``(B)(i) in the case of an undergraduate student, in the 
     intermediate or advanced study of a less commonly taught 
     language; or
       ``(ii) in the case of a graduate student, in graduate study 
     in connection with a program described in subparagraph (A), 
     including--
       ``(I) predissertation level study;
       ``(II) preparation for dissertation research;
       ``(III) dissertation research abroad; or
       ``(IV) dissertation writing.'';
       (3) by striking subsection (d) and inserting the following:
       ``(d) Allowances.--
       ``(1) Graduate level recipients.--A stipend awarded to a 
     graduate level recipient may include allowances for 
     dependents and for travel for research and study in the 
     United States and abroad.
       ``(2) Undergraduate level recipients.--A stipend awarded to 
     an undergraduate level recipient may include an allowance for 
     educational programs in the United States or educational 
     programs abroad that--
       ``(A) are closely linked to the overall goals of the 
     recipient's course of study; and
       ``(B) have the purpose of promoting foreign language 
     fluency and knowledge of foreign cultures.''; and
       (4) by adding at the end the following:
       ``(e) Application.--Each institution or combination of 
     institutions desiring a grant under this section shall submit 
     an application to the Secretary at such time, in such manner, 
     and accompanied by such information and assurances as the 
     Secretary may require. Each application shall include an 
     explanation of how the activities funded by the grant will 
     reflect diverse perspectives and a wide range of views and 
     generate debate on world regions and international affairs. 
     Each application shall also describe how the applicant will 
     address disputes regarding whether activities funded under 
     the application reflect diverse perspectives and a wide range 
     of views. Each application shall also include a description 
     of how the applicant will encourage government service in 
     areas of national need as identified by the Secretary.''.

     SEC. 7603. UNDERGRADUATE INTERNATIONAL STUDIES AND FOREIGN 
                   LANGUAGE PROGRAMS.

       Section 604 (20 U.S.C. 1124) is amended--
       (1) in subsection (a)--
       (A) in paragraph (2)--
       (i) by redesignating subparagraphs (I) through (M) as 
     subparagraphs (J) through (N), respectively; and
       (ii) by inserting after subparagraph (H) the following:
       ``(I) providing subgrants to undergraduate students for 
     educational programs abroad that--
       ``(i) are closely linked to the overall goals of the 
     program for which the grant is awarded; and
       ``(ii) have the purpose of promoting foreign language 
     fluency and knowledge of foreign cultures;''; and
       (B) in paragraph (7)--
       (i) in subparagraph (C), by striking ``and'' after the 
     semicolon;
       (ii) in subparagraph (D), by striking the period at the end 
     and inserting a semicolon; and
       (iii) by adding at the end the following:
       ``(E) an explanation of how the activities funded by the 
     grant will reflect diverse perspectives and a wide range of 
     views and generate debate on world regions and international 
     affairs, where applicable;
       ``(F) a description of how the applicant will address 
     disputes regarding whether the activities funded under the 
     application reflect diverse perspectives and a wide range of 
     views; and
       ``(G) a description of how the applicant will encourage 
     government service in areas of national need as identified by 
     the Secretary.''; and
       (2) in subsection (c)--
       (A) by striking ``Funding Support.--The Secretary'' and 
     inserting ``Funding Rules.--
       ``(1) The secretary.--The Secretary'';
       (B) by striking ``10'' and inserting ``20''; and
       (C) by adding at the end the following:
       ``(2) Grantees.--Of the total amount of grant funds awarded 
     to a grantee under this section, the grantee may use not more 
     than 10 percent of such funds for the activity described in 
     subsection (a)(2)(I).''.

     SEC. 7604. RESEARCH; STUDIES.

       Section 605(a) (20 U.S.C. 1125(a)) is amended--
       (1) in paragraph (8), by striking ``and'' after the 
     semicolon;
       (2) in paragraph (9), by striking the period and inserting 
     a semicolon; and
       (3) by adding at the end the following:
       ``(10) evaluation of the extent to which programs assisted 
     under this title reflect diverse perspectives and a wide 
     range of views and generate debate on world regions and 
     international affairs;
       ``(11) the systematic collection, analysis, and 
     dissemination of data that contribute to achieving the 
     purposes of this part; and
       ``(12) support for programs or activities to make data 
     collected, analyzed, or disseminated under this section 
     publicly available and easy to understand.''.

     SEC. 7605. TECHNOLOGICAL INNOVATION AND COOPERATION FOR 
                   FOREIGN INFORMATION ACCESS.

       Section 606 (20 U.S.C. 1126) is amended--
       (1) in subsection (a)--
       (A) by striking ``new electronic technologies'' and insert 
     ``electronic technologies'';
       (B) by inserting ``from foreign sources'' after 
     ``disseminate information'';
       (C) by striking ``Authority.--The Secretary'' and insert 
     ``Authority.--
       ``(1) In general.--The Secretary''; and
       (D) by adding at the end the following:
       ``(2) Partnerships with not-for-profit educational 
     organizations.--The Secretary may award grants under this 
     section to carry out the activities authorized under this 
     section to the following:
       ``(A) An institution of higher education.
       ``(B) A public or nonprofit private library.
       ``(C) A consortium of an institution of higher education 
     and 1 or more of the following:
       ``(i) Another institution of higher education.
       ``(ii) A library.
       ``(iii) A not-for-profit educational organization.'';
       (2) in subsection (b)--
       (A) in paragraph (1), by striking ``to facilitate access 
     to'' and inserting ``to acquire, facilitate access to,'';
       (B) in paragraph (2), by inserting ``or standards for'' 
     after ``means of'';
       (C) in paragraph (6), by striking ``and'' after the 
     semicolon;
       (D) in paragraph (7), by striking the period and inserting 
     a semicolon; and
       (E) by adding at the end the following:
       ``(8) to establish linkages to facilitate carrying out the 
     activities described in this subsection between--
       ``(A) the institutions of higher education, libraries, and 
     consortia receiving grants under this section; and
       ``(B) institutions of higher education, not-for-profit 
     educational organizations, and libraries overseas; and
       ``(9) to carry out other activities that the Secretary 
     determines are consistent with the purpose of the grants or 
     contracts awarded under this section.''; and
       (3) in subsection (c), by striking ``institution or 
     consortium'' and inserting ``institution of higher education, 
     library, or consortium''.

     SEC. 7606. SELECTION OF CERTAIN GRANT RECIPIENTS.

       Section 607 (20 U.S.C. 1127) is amended--
       (1) in subsection (a), by striking ``evaluates the 
     applications for comprehensive and undergraduate language and 
     area centers and programs.'' and inserting ``evaluates--
       ``(1) the applications for comprehensive foreign language 
     and area or international studies centers and programs; and
       ``(2) the applications for undergraduate foreign language 
     and area or international studies centers and programs.''; 
     and

[[Page 26787]]

       (2) in subsection (b), by adding at the end the following: 
     ``The Secretary shall also consider an applicant's record of 
     sending students into public service and an applicant's 
     stated efforts to increase the number of students that go 
     into public service.''.

     SEC. 7607. AMERICAN OVERSEAS RESEARCH CENTERS.

       Section 609 (20 U.S.C. 1128a) is amended by adding at the 
     end the following:
       ``(e) Application.--Each center desiring a grant under this 
     section shall submit an application to the Secretary at such 
     time, in such manner, and accompanied by such information and 
     assurances as the Secretary may require. Each application 
     shall include how the activities funded by the grant will 
     reflect diverse perspectives and a wide range of views and 
     generate debate on world regions and international affairs, 
     where applicable. Each application shall also describe how 
     the applicant will address disputes regarding whether the 
     activities funded under the application reflect diverse 
     perspectives and a wide range of views.''.

     SEC. 7608. AUTHORIZATION OF APPROPRIATIONS FOR INTERNATIONAL 
                   AND FOREIGN LANGUAGE STUDIES.

       Section 610 (20 U.S.C. 1128b) is amended by striking 
     ``$80,000,000 for fiscal year 1999'' and all that follows 
     through the period and inserting ``such sums as may be 
     necessary for fiscal year 2006 and each of the 5 succeeding 
     fiscal years.''.

     SEC. 7609. CENTERS FOR INTERNATIONAL BUSINESS EDUCATION.

       Section 612(f) (20 U.S.C. 1130-1(f)) is amended--
       (1) in paragraph (3), by striking ``and'' after the 
     semicolon;
       (2) in paragraph (4), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(5) assurances that activities funded by the grant will 
     reflect diverse perspectives and a wide range of views and 
     generate debate on world regions and international affairs, 
     where applicable.''.

     SEC. 7610. EDUCATION AND TRAINING PROGRAMS.

       Section 613(c) (20 U.S.C. 1130a(c)) is amended by adding at 
     the end the following: ``Each such application shall include 
     an assurance that, where applicable, the activities funded by 
     the grant will reflect diverse perspectives and a wide range 
     of views on world regions and international affairs.''.

     SEC. 7611. AUTHORIZATION OF APPROPRIATIONS FOR BUSINESS AND 
                   INTERNATIONAL EDUCATION PROGRAMS.

       Section 614 (20 U.S.C. 1130b) is amended--
       (1) in subsection (a), by striking ``$11,000,000 for fiscal 
     year 1999'' and all that follows through ``fiscal years'' and 
     inserting ``such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years''; and
       (2) in subsection (b), by striking ``$7,000,000 for fiscal 
     year 1999'' and all that follows through ``fiscal years,'' 
     and inserting ``such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years''.

     SEC. 7612. MINORITY FOREIGN SERVICE PROFESSIONAL DEVELOPMENT 
                   PROGRAM.

       Section 621 (20 U.S.C. 1131) is amended--
       (1) in subsection (c), by adding at the end the following: 
     ``Each application shall include a description of how the 
     activities funded by the grant will reflect diverse 
     perspectives and a wide range of views on world regions and 
     international affairs, where applicable.''; and
       (2) in subsection (e)--
       (A) by striking ``Match Required.--The eligible'' and 
     inserting ``Matching Funds.--
       ``(1) In general.--Subject to paragraph (2), the 
     eligible''; and
       (B) by adding at the end the following:
       ``(2) Waiver.--The Secretary may waive the requirement of 
     paragraph (1) for an eligible recipient if the Secretary 
     determines such waiver is appropriate.''.

     SEC. 7613. INSTITUTIONAL DEVELOPMENT.

       Section 622 (20 U.S.C. 1131-1) is amended--
       (1) in subsection (a)--
       (A) by striking ``Tribally Controlled Colleges or 
     Universities'' and inserting ``tribally controlled colleges 
     or universities''; and
       (B) by striking ``international affairs programs.'' and 
     inserting ``international affairs, international business, 
     and foreign language study programs, including the teaching 
     of foreign languages, at such colleges, universities, and 
     institutions, respectively, through increased collaboration 
     with institutions of higher education that receive funding 
     under this title.''; and
       (2) in subsection (c)--
       (A) by striking paragraphs (1) and (3); and
       (B) by redesignating paragraphs (2) and (4) as paragraphs 
     (1) and (2), respectively.

     SEC. 7614. STUDY ABROAD PROGRAM.

       Section 623(a) (20 U.S.C. 1131a(a)) is amended--
       (1) by striking ``as defined in section 322 of this Act''; 
     and
       (2) by striking ``tribally controlled Indian community 
     colleges as defined in the Tribally Controlled Community 
     College Assistance Act of 1978'' and inserting ``tribally 
     controlled colleges or universities''.

     SEC. 7615. ADVANCED DEGREE IN INTERNATIONAL RELATIONS.

       Section 624 (20 U.S.C. 1131b) is amended--
       (1) in the section heading, by striking ``MASTERS'' and 
     inserting ``ADVANCED'';
       (2) in the first sentence, by inserting ``, and in 
     exceptional circumstances, a doctoral degree,'' after 
     ``masters degree'';
       (3) in the second sentence, by striking ``masters degree'' 
     and inserting ``advanced degree''; and
       (4) in the fourth sentence, by striking ``United States'' 
     and inserting ``United States.''.

     SEC. 7616. INTERNSHIPS.

       Section 625 (20 U.S.C. 1131c) is amended--
       (1) in subsection (a)--
       (A) by striking ``as defined in section 322 of this Act'';
       (B) by striking ``tribally controlled Indian community 
     colleges as defined in the Tribally Controlled Community 
     College Assistance Act of 1978'' and inserting ``tribally 
     controlled colleges or universities'';
       (C) by striking ``an international'' and inserting 
     ``international,''; and
       (D) by striking ``the United States Information Agency'' 
     and inserting ``the Department of State''; and
       (2) in subsection (c)(1)--
       (A) in subparagraph (E), by inserting ``and'' after the 
     semicolon;
       (B) in subparagraph (F), by striking ``; and'' and 
     inserting a period; and
       (C) by striking subparagraph (G).

     SEC. 7617. FINANCIAL ASSISTANCE.

       Part C of title VI (20 U.S.C. 1131 et seq.) is further 
     amended--
       (1) by redesignating sections 626, 627, and 628 as sections 
     627, 628, and 629, respectively; and
       (2) by inserting after section 625 the following:

     ``SEC. 626. FINANCIAL ASSISTANCE.

       ``(a) Authority.--The Institute may provide financial 
     assistance, in the form of summer stipends described in 
     subsection (b) and Ralph Bunche scholarship assistance 
     described in subsection (c), to needy students to facilitate 
     the participation of the students in the Institute's programs 
     under this part.
       ``(b) Summer Stipends.--
       ``(1) Requirements.--A student receiving a summer stipend 
     under this section shall use such stipend to defray the 
     student's cost of participation in a summer institute program 
     funded under this part, including the costs of travel, 
     living, and educational expenses necessary for the student's 
     participation in such program.
       ``(2) Amount.--A summer stipend awarded to a student under 
     this section shall not exceed $3,000 per summer.
       ``(c) Ralph Bunche Scholarship.--
       ``(1) Requirements.--A student receiving a Ralph Bunche 
     scholarship under this section--
       ``(A) shall be a full-time student at an institution of 
     higher education who is accepted into a program funded under 
     this part; and
       ``(B) shall use such scholarship to pay costs related to 
     the cost of attendance, as defined in section 472, at the 
     institution of higher education in which the student is 
     enrolled.
       ``(2) Amount and duration.--A Ralph Bunche scholarship 
     awarded to a student under this section shall not exceed 
     $5,000 per academic year.''.

     SEC. 7618. REPORT.

       Section 627 (as redesignated by section 7617(1)) (20 U.S.C. 
     1131d) is amended by striking ``annually'' and inserting 
     ``biennially''.

     SEC. 7619. GIFTS AND DONATIONS.

       Section 628 (as redesignated by section 7617(1)) (20 U.S.C. 
     1131e) is amended by striking ``annual report described in 
     section 626'' and inserting ``biennial report described in 
     section 627''.

     SEC. 7620. AUTHORIZATION OF APPROPRIATIONS FOR THE INSTITUTE 
                   FOR INTERNATIONAL PUBLIC POLICY.

       Section 629 (as redesignated by section 7617(1)) (20 U.S.C. 
     1131f) is amended by striking ``$10,000,000 for fiscal year 
     1999'' and all that follows through the period and inserting 
     ``such sums as may be necessary for fiscal year 2006 and each 
     of the 5 succeeding fiscal years.''.

     SEC. 7621. DEFINITIONS.

       Section 631 (20 U.S.C. 1132) is amended--
       (1) by redesignating paragraphs (2), (3), (4), (5), (6), 
     (7), (8), and (9), as paragraphs (8), (5), (9), (2), (11), 
     (3), (7), and (4), respectively;
       (2) in paragraph (2), as redesignated by paragraph (1), by 
     striking ``comprehensive language and area center'' and 
     inserting ``comprehensive foreign language and area or 
     international studies center'';
       (3) in paragraph (11), as redesignated by paragraph (1), by 
     striking ``undergraduate language and area center'' and 
     inserting ``undergraduate foreign language and area or 
     international studies center'';
       (4) in paragraph (3), as redesignated by paragraph (1), by 
     striking the first occurrence of the term ``critical 
     languages'' and inserting ``critical foreign languages'';
       (5) in paragraph (7), as redesignated by paragraph (1), by 
     striking ``and'' after the semicolon;
       (6) in paragraph (4), as redesignated by paragraph (1), by 
     striking the period at the end and inserting a semicolon;
       (7) by inserting after paragraph (5), as redesignated by 
     paragraph (1), the following:
       ``(6) the term `historically Black college and university' 
     has the meaning given the term `part B institution' in 
     section 322;''; and
       (8) by inserting after paragraph (9), as redesignated by 
     paragraph (1), the following:
       ``(10) the term `tribally controlled college or university' 
     has the meaning given the

[[Page 26788]]

     term in section 2 of the Tribally Controlled College or 
     University Assistance Act of 1978 (25 U.S.C. 1801); and''.

     SEC. 7622. ASSESSMENT AND ENFORCEMENT.

       Part D of title VI (20 U.S.C. 1132) is amended by adding at 
     the end the following:

     ``SEC. 632. ASSESSMENT; ENFORCEMENT; RULE OF CONSTRUCTION.

       ``(a) In General.--The Secretary is authorized to assess 
     and ensure compliance with all the conditions and terms of 
     grants provided under this title. If a complaint regarding 
     activities funded under this title is not resolved under the 
     process outlined in the relevant grantee's application, and 
     such complaint is filed with the Department, the Secretary 
     shall be notified, and is authorized, when circumstances 
     warrant, to immediately suspend future funding for the grant 
     pending resolution of such dispute. Such resolution shall not 
     exceed 60 days. The Secretary shall take the outcomes of such 
     complaints into account when determining the renewal of 
     grants.
       ``(b) Rule of Construction.--Nothing in this title shall be 
     construed to authorize the Secretary to mandate, direct, or 
     control an institution of higher education's specific 
     instructional content, curriculum, or program of instruction.

     ``SEC. 633. EVALUATION, OUTREACH, AND INFORMATION.

       ``The Secretary may use not more than 1 percent of the 
     funds made available under this title to carry out program 
     evaluation, national outreach, and information dissemination 
     activities relating to the programs authorized under this 
     title.''.

       CHAPTER 8--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

     SEC. 7701. PURPOSE.

       Section 700(1)(B)(i) (20 U.S.C. 1133(1)(B)(i)) is amended 
     by inserting ``, including those areas critical to United 
     States national and homeland security needs such as 
     mathematics, science, and engineering'' before the semicolon 
     at the end.

     SEC. 7702. ALLOCATION OF JACOB K. JAVITS FELLOWSHIPS.

       Section 702(a)(1) (20 U.S.C. 1134a(a)(1)) is amended to 
     read as follows:
       ``(1) Appointment.--
       ``(A) In general.--The Secretary shall appoint a Jacob K. 
     Javits Fellows Program Fellowship Board (referred to in this 
     subpart as the `Board') consisting of 9 individuals 
     representative of both public and private institutions of 
     higher education who are especially qualified to serve on the 
     Board.
       ``(B) Qualifications.--In making appointments under 
     subparagraph (A), the Secretary shall--
       ``(i) give due consideration to the appointment of 
     individuals who are highly respected in the academic 
     community;
       ``(ii) assure that individuals appointed to the Board are 
     broadly representative of a range of disciplines in graduate 
     education in arts, humanities, and social sciences;
       ``(iii) appoint members to represent the various geographic 
     regions of the United States; and
       ``(iv) include representatives from minority institutions, 
     as defined in section 365.''.

     SEC. 7703. STIPENDS.

       Section 703(a) (20 U.S.C. 1134b(a)) is amended by striking 
     ``graduate fellowships'' and inserting ``Graduate Research 
     Fellowship Program''.

     SEC. 7704. AUTHORIZATION OF APPROPRIATIONS FOR THE JACOB K. 
                   JAVITS FELLOWSHIP PROGRAM.

       Section 705 (20 U.S.C. 1134d) is amended by striking 
     ``$30,000,000 for fiscal year 1999'' and all that follows 
     through the period and inserting ``such sums as may be 
     necessary for fiscal year 2006 and each of the 5 succeeding 
     fiscal years to carry out this subpart.''.

     SEC. 7705. INSTITUTIONAL ELIGIBILITY UNDER THE GRADUATE 
                   ASSISTANCE IN AREAS OF NATIONAL NEED PROGRAM.

       Section 712(b) (20 U.S.C. 1135a(b)) is amended to read as 
     follows:
       ``(b) Designation of Areas of National Need.--After 
     consultation with appropriate Federal and nonprofit agencies 
     and organizations, including the National Science Foundation, 
     the Department of Defense, the Department of Homeland 
     Security, the National Academy of Sciences, and the Bureau of 
     Labor Statistics, the Secretary shall designate areas of 
     national need. In making such designations, the Secretary 
     shall take into consideration--
       ``(1) the extent to which the interest in the area is 
     compelling;
       ``(2) the extent to which other Federal programs support 
     postbaccalaureate study in the area concerned;
       ``(3) an assessment of how the program may achieve the most 
     significant impact with available resources; and
       ``(4) an assessment of current and future professional 
     workforce needs of the United States.''.

     SEC. 7706. AWARDS TO GRADUATE STUDENTS.

       Section 714 (20 U.S.C. 1135c) is amended--
       (1) in subsection (b)--
       (A) by striking ``1999-2000'' and inserting ``2006-2007''; 
     and
       (B) by striking ``graduate fellowships'' and inserting 
     ``Graduate Research Fellowship Program''; and
       (2) in subsection (c)--
       (A) by striking ``716(a)'' and inserting ``715(a)''; and
       (B) by striking ``714(b)(2)'' and inserting ``713(b)(2)''.

     SEC. 7707. ADDITIONAL ASSISTANCE FOR COST OF EDUCATION.

       Section 715(a)(1) (20 U.S.C. 1135d(a)(1)) is amended--
       (1) by striking ``1999-2000'' and inserting ``2006-2007''; 
     and
       (2) by striking ``1998-1999'' and inserting ``2005-2006''.

     SEC. 7708. AUTHORIZATION OF APPROPRIATIONS FOR THE GRADUATE 
                   ASSISTANCE IN AREAS OF NATIONAL NEED PROGRAM.

       Section 716 (20 U.S.C. 1135e) is amended by striking 
     ``$35,000,000 for fiscal year 1999'' and all that follows 
     through the period and inserting ``such sums as may be 
     necessary for fiscal year 2006 and each of the 5 succeeding 
     fiscal years to carry out this subpart.''.

     SEC. 7709. AUTHORIZATION OF APPROPRIATIONS FOR THE THURGOOD 
                   MARSHALL LEGAL EDUCATIONAL OPPORTUNITY PROGRAM.

       Section 721(h) (20 U.S.C. 1136(h)) is amended by striking 
     ``$5,000,000 for fiscal year 1999'' and all that follows 
     through the period and inserting ``such sums as may be 
     necessary for fiscal year 2006 and each of the 5 succeeding 
     fiscal years.''.

     SEC. 7710. FUND FOR THE IMPROVEMENT OF POSTSECONDARY 
                   EDUCATION.

       Section 741(a) (20 U.S.C. 1138(a)) is amended--
       (1) by striking paragraph (3) and inserting the following:
       ``(3) the establishment and continuation of institutions, 
     programs, consortia, collaborations, and other joint efforts 
     based on the technology of communications, including those 
     efforts that utilize distance education and technological 
     advancements to educate and train postsecondary students 
     (including health professionals serving medically underserved 
     populations);'';
       (2) in paragraph (7), by striking ``and'' after the 
     semicolon;
       (3) in paragraph (8), by striking the period at the end and 
     inserting a semicolon; and
       (4) by adding at the end the following:
       ``(9) the introduction of reforms in remedial education, 
     including English language instruction, to customize remedial 
     courses to student goals and help students progress rapidly 
     from remedial courses into core courses and through program 
     completion;
       ``(10) the creation of consortia that join diverse 
     institutions of higher education for the purpose of 
     integrating curricular and co-curricular interdisciplinary 
     study; and
       ``(11) providing support and assistance to programs 
     implementing integrated education reform services in order to 
     improve secondary school graduation and college attendance 
     and completion rates for disadvantaged students.''.

     SEC. 7711. SPECIAL PROJECTS.

       Section 744(c) (20 U.S.C. 1138c) is amended to read as 
     follows:
       ``(c) Areas of National Need.--Areas of national need shall 
     include, at a minimum, the following:
       ``(1) Institutional restructuring to improve learning and 
     promote productivity, efficiency, quality improvement, and 
     cost and price control.
       ``(2) Improvements in academic instruction and student 
     learning, including efforts designed to assess the learning 
     gains made by postsecondary students.
       ``(3) Articulation between 2- and 4-year institutions of 
     higher education, including developing innovative methods for 
     ensuring the successful transfer of students from 2- to 4-
     year institutions of higher education.
       ``(4) Development, evaluation and dissemination of model 
     programs, including model core curricula that--
       ``(A) provide students with a broad and integrated 
     knowledge base;
       ``(B) include, at a minimum, broad survey courses in 
     English literature, American and world history, American 
     political institutions, economics, philosophy, college-level 
     mathematics, and the natural sciences; and
       ``(C) include sufficient study of a foreign language to 
     lead to reading and writing competency in the foreign 
     language.
       ``(5) International cooperation and student exchanges among 
     postsecondary educational institutions.''.

     SEC. 7712. AUTHORIZATION OF APPROPRIATIONS FOR THE FUND FOR 
                   THE IMPROVEMENT OF POSTSECONDARY EDUCATION.

       Section 745 (20 U.S.C. 1138d) is amended by striking 
     ``$30,000,000 for fiscal year 1999'' and all that follows 
     through the period and inserting ``such sums as may be 
     necessary for fiscal year 2006 and each of the 5 succeeding 
     fiscal years.''.

     SEC. 7713. REPEAL OF THE URBAN COMMUNITY SERVICE PROGRAM.

       Part C of title VII (20 U.S.C. 1139 et seq.) is repealed.

     SEC. 7714. GRANTS AUTHORIZED FOR DEMONSTRATION PROJECTS TO 
                   ENSURE STUDENTS WITH DISABILITIES RECEIVE A 
                   QUALITY HIGHER EDUCATION.

       Section 762 (20 U.S.C. 1140a) is amended--
       (1) in subsection (b)--
       (A) in paragraph (2)--
       (i) in subparagraph (A), by striking ``to teach students 
     with disabilities'' and inserting ``to teach and meet the 
     academic and

[[Page 26789]]

     programmatic needs of students with disabilities in order to 
     improve retention and completion of postsecondary 
     education'';
       (ii) by redesignating subparagraphs (B) and (C) as 
     subparagraphs (C) and (F), respectively;
       (iii) by inserting after subparagraph (A) the following:
       ``(B) Effective transition practices.--The development of 
     innovative and effective teaching methods and strategies to 
     ensure the successful transition of students with 
     disabilities from secondary school to postsecondary 
     education.'';
       (iv) in subparagraph (C), as redesignated by clause (ii), 
     by striking the period at the end and inserting ``, including 
     data on the postsecondary education of and impact on 
     subsequent employment of students with disabilities. Such 
     research, information, and data shall be made publicly 
     available and accessible.'';
       (v) by inserting after subparagraph (C), as redesignated by 
     clause (ii), the following:
       ``(D) Distance learning.--The development of innovative and 
     effective teaching methods and strategies to provide faculty 
     and administrators with the ability to provide accessible 
     distance education programs or classes that would enhance 
     access of students with disabilities to higher education, 
     including the use of accessible curriculum and electronic 
     communication for instruction and advisement.
       ``(E) Disability career pathways.--Training and providing 
     support to secondary and postsecondary staff to encourage 
     interest in, enhance awareness and understanding of, provide 
     educational opportunities in, teach practical skills related 
     to, and offer work-based opportunities in, disability related 
     fields, among students, including students with disabilities. 
     Such training and support may include developing means to 
     offer students credit-bearing, college-level coursework, and 
     career and educational counseling.''; and
       (vi) by adding at the end the following:
       ``(G) Accessibility of education.--Making postsecondary 
     education more accessible to students with disabilities 
     through curriculum development.''; and
       (B) in paragraph (3), by striking ``subparagraphs (A) 
     through (C)'' and inserting ``subparagraphs (A) through 
     (G)''; and
       (2) by adding at the end the following:
       ``(d) Report.--The Secretary shall prepare and disseminate 
     a report reviewing the activities of the demonstration 
     projects authorized under this part and providing guidance 
     and recommendations on how successful projects can be 
     replicated.''.

     SEC. 7715. APPLICATIONS FOR DEMONSTRATION PROJECTS TO ENSURE 
                   STUDENTS WITH DISABILITIES RECEIVE A QUALITY 
                   HIGHER EDUCATION.

       Section 763 (20 U.S.C. 1140b) is amended--
       (1) by striking paragraph (1) and inserting the following:
       ``(1) a description of how such institution plans to 
     address the activities allowed under this part;'';
       (2) in paragraph (2), by striking ``and'' after the 
     semicolon;
       (3) in paragraph (3), by striking the period at the end and 
     inserting ``; and''; and
       (4) by adding at the end the following:
       ``(4) a description of the extent to which the institution 
     will work to replicate the research based and best practices 
     of institutions of higher education with demonstrated success 
     in serving students with disabilities.''.

     SEC. 7716. AUTHORIZATION OF APPROPRIATIONS FOR THE 
                   DEMONSTRATION PROJECTS TO ENSURE STUDENTS WITH 
                   DISABILITIES RECEIVE A QUALITY HIGHER 
                   EDUCATION.

       Section 765 (20 U.S.C. 1140d) is amended by striking 
     ``$10,000,000 for fiscal year 1999'' and all that follows 
     through the period and inserting ``such sums as may be 
     necessary for fiscal year 2006 and each of the 5 succeeding 
     fiscal years.''.

                        CHAPTER 9--MISCELLANEOUS

     SEC. 7801. MISCELLANEOUS.

       The Act (20 U.S.C. 1001 et seq.) is amended by adding at 
     the end the following:
                      ``TITLE VIII--MISCELLANEOUS

           ``PART A--MATHEMATICS AND SCIENCE SCHOLARS PROGRAM

     ``SEC. 811. MATHEMATICS AND SCIENCE SCHOLARS PROGRAM.

       ``(a) Program Authorized.--The Secretary is authorized to 
     award grants to States, on a competitive basis, to enable the 
     States to award eligible students, who complete a rigorous 
     secondary school curriculum in mathematics and science, 
     scholarships for undergraduate study.
       ``(b) Eligible Students.--A student is eligible for a 
     scholarship under this section if the student is a full-time 
     undergraduate student in the student's first and second year 
     of study who has completed a rigorous secondary school 
     curriculum in mathematics and science.
       ``(c) Rigorous Curriculum.--Each participating State shall 
     determine the requirements for a rigorous secondary school 
     curriculum in mathematics and science described in subsection 
     (b).
       ``(d) Priority for Scholarships.--The Governor of a State 
     may set a priority for awarding scholarships under this 
     section for particular eligible students, such as students 
     attending schools in high-need areas, students who are from 
     groups underrepresented in the fields of mathematics, 
     science, and engineering, students served by local 
     educational agencies that do not meet or exceed State 
     standards in mathematics and science, or students with 
     regional or geographic needs as determined appropriate by the 
     Governor.
       ``(e) Amount and Duration of Scholarship.--The Secretary 
     shall award a grant under this section--
       ``(1) in an amount that does not exceed $1,000; and
       ``(2) for not more than 2 years of undergraduate study.
       ``(f) Matching Requirement.--In order to receive a grant 
     under this section, a State shall provide matching funds for 
     the scholarships awarded under this section in an amount 
     equal to 50 percent of the Federal funds received.
       ``(g) Authorization.--There are authorized to be 
     appropriated to carry out this section such sums as may be 
     necessary for fiscal year 2006 and each of the 5 succeeding 
     fiscal years.

              ``PART B--POSTSECONDARY EDUCATION ASSESSMENT

            ``SEC. 821. POSTSECONDARY EDUCATION ASSESSMENT.

       ``(a) Contract for Assessment.--The Secretary shall enter 
     into a contract, with an independent, bipartisan organization 
     with specific expertise in public administration and 
     financial management, to carry out an independent assessment 
     of the cost factors associated with the cost of tuition at 
     institutions of higher education.
       ``(b) Timeframe.--The Secretary shall enter into the 
     contract described in subsection (a) not later than 90 days 
     after the date of enactment of the Higher Education 
     Amendments of 2005.
       ``(c) Matters Assessed.--The assessment described in 
     subsection (a) shall--
       ``(1) examine the key elements driving the cost factors 
     associated with the cost of tuition at institutions of higher 
     education during academic year 2000 and succeeding academic 
     years;
       ``(2) identify and evaluate measures being used to control 
     postsecondary education costs;
       ``(3) identify and evaluate effective measures that may be 
     utilized to control postsecondary education costs in the 
     future; and
       ``(4) identify systemic approaches to monitor future 
     postsecondary education cost trends and postsecondary 
     education cost control mechanisms.

 ``PART C--JOB SKILL TRAINING IN HIGH-GROWTH OCCUPATIONS OR INDUSTRIES

     ``SEC. 831. JOB SKILL TRAINING IN HIGH-GROWTH OCCUPATIONS OR 
                   INDUSTRIES.

       ``(a) Grants Authorized.--The Secretary is authorized to 
     award grants, on a competitive basis, to eligible 
     partnerships to enable the eligible partnerships to provide 
     relevant job skill training in high-growth industries or 
     occupations.
       ``(b) Definitions.--In this section:
       ``(1) Eligible partnership.--The term `eligible 
     partnership' means a partnership--
       ``(A) between an institution of higher education and a 
     local board (as such term is defined in section 101 of the 
     Workforce Investment Act of 1998); or
       ``(B) if an institution of higher education is located 
     within a State that does not operate local boards, between 
     the institution of higher education and a State board (as 
     such term is defined in section 101 of the Workforce 
     Investment Act of 1998).
       ``(2) Nontraditional student.--The term `nontraditional 
     student' means a student who--
       ``(A) is independent, as defined in section 480(d);
       ``(B) attends an institution of higher education--
       ``(i) on less than a full-time basis;
       ``(ii) via evening, weekend, modular, or compressed 
     courses; or
       ``(iii) via distance learning methods; or
       ``(C) has delayed enrollment at an institution of higher 
     education.
       ``(3) Institution of higher education.--The term 
     `institution of higher education' means an institution of 
     higher education, as defined in section 101(b), that offers a 
     1- or 2-year program of study leading to a degree or 
     certificate.
       ``(c) Application.--
       ``(1) In general.--Each eligible partnership that desires a 
     grant under this section shall submit an application to the 
     Secretary at such time, in such manner, and accompanied by 
     such additional information as the Secretary may require.
       ``(2) Contents.--Each application submitted under paragraph 
     (1) shall include a description of--
       ``(A) how the eligible partnership, through the institution 
     of higher education, will provide relevant job skill training 
     for students to enter high-growth occupations or industries;
       ``(B) local high-growth occupations or industries; and
       ``(C) the need for qualified workers to meet the local 
     demand of high-growth occupations or industries.
       ``(d) Award Basis.--In awarding grants under this section, 
     the Secretary shall--

[[Page 26790]]

       ``(1) ensure an equitable distribution of grant funds under 
     this section among urban and rural areas of the United 
     States; and
       ``(2) take into consideration the capability of the 
     institution of higher education--
       ``(A) to offer relevant, high quality instruction and job 
     skill training for students entering a high-growth occupation 
     or industry;
       ``(B) to involve the local business community and to place 
     graduates in the community in employment in high-growth 
     occupations or industries;
       ``(C) to provide secondary students with dual-enrollment or 
     concurrent enrollment options;
       ``(D) to serve nontraditional or low-income students, or 
     adult or displaced workers; and
       ``(E) to serve students from rural or remote communities.
       ``(e) Use of Funds.--Grant funds provided under this 
     section may be used--
       ``(1) to expand or create academic programs or programs of 
     training that provide relevant job skill training for high-
     growth occupations or industries;
       ``(2) to purchase equipment which will facilitate the 
     development of academic programs or programs of training that 
     provide training for high-growth occupations or industries;
       ``(3) to support outreach efforts that enable students to 
     attend institutions of higher education with academic 
     programs or programs of training focused on high-growth 
     occupations or industries;
       ``(4) to expand or create programs for distance, evening, 
     weekend, modular, or compressed learning opportunities that 
     provide relevant job skill training in high-growth 
     occupations or industries;
       ``(5) to build partnerships with local businesses in high-
     growth occupations or industries;
       ``(6) to support curriculum development related to 
     entrepreneurial training; and
       ``(7) for other uses that the Secretary determines to be 
     consistent with the intent of this section.
       ``(f) Requirements.--
       ``(1) Fiscal agent.--For the purpose of this section, the 
     institution of higher education in an eligible partnership 
     shall serve as the fiscal agent and grant recipient for the 
     eligible partnership.
       ``(2) Duration.--The Secretary shall award grants under 
     this section for periods that may not exceed 5 years.
       ``(3) Supplement, not supplant.--Funds made available under 
     this section shall be used to supplement and not supplant 
     other Federal, State, and local funds available to the 
     eligible partnership for carrying out the activities 
     described in subsection (e).
       ``(g) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this part such 
     sums as may be necessary for fiscal year 2006 and each of the 
     5 succeeding fiscal years.

   ``PART D--GRANT PROGRAM TO INCREASE STUDENT RETENTION AND PROMOTE 
                        ARTICULATION AGREEMENTS

     ``SEC. 841. GRANT PROGRAM TO INCREASE STUDENT RETENTION AND 
                   PROMOTE ARTICULATION AGREEMENTS.

       ``(a) Authorization of Program.--The Secretary shall award 
     grants, on a competitive basis, to eligible institutions to 
     enable the institutions to--
       ``(1) focus on increasing traditional and nontraditional 
     student retention at such institutions; and
       ``(2) promote articulation agreements among different 
     institutions that will increase the likelihood of progression 
     of students at such institutions to baccalaureate degrees.
       ``(b) Definition of Eligible Institution.--In this section, 
     the term `eligible institution' means an institution of 
     higher education (as defined in section 101(a)) where not 
     less than 40 percent of such institution's student body 
     receives financial aid under subpart 1 of part A of title IV.
       ``(c) Application.--An eligible institution that desires a 
     grant under this section shall submit an application to the 
     Secretary at such time, in such manner, and containing such 
     information as the Secretary may require, including the 
     number of students proposed to be served and a description of 
     the services that will be provided.
       ``(d) Mandatory Activities.--An eligible institution that 
     receives a grant under this section shall use the grant funds 
     to carry out each of the following:
       ``(1) Offering counseling and advisement services to help 
     students adapt to postsecondary education and select 
     appropriate coursework.
       ``(2) Making mentors available to students who are at risk 
     for not completing a degree.
       ``(3) Providing detailed assistance to students who request 
     help in understanding--
       ``(A) the options for financing their education, including 
     information on grants, loans, and loan repayment programs;
       ``(B) the process of applying for financial assistance;
       ``(C) the outcome of their financial assistance 
     application; and
       ``(D) any unanticipated problems related to financing their 
     education that arise.
       ``(4) Offering tutoring to students at risk of dropping out 
     of school with any course or subject.
       ``(5) Designing and implementing innovative ways to improve 
     retention in and completion of courses, such as enrolling 
     students in cohorts, providing counseling, or creating bridge 
     programs that customize courses to the needs of special 
     population students.
       ``(6) Conducting outreach activities so that all students 
     know that these services are available and are aware of how 
     to access the services.
       ``(7) Creating articulation agreements to promote smooth 
     transition from two year to four year programs.
       ``(8) Making services listed in paragraphs (1) through (5) 
     available in students' native languages, if it is not 
     English, if the percentage of students needing translation 
     services in a specific language exceeds 5 percent.
       ``(e) Permissible Activities.--An eligible institution that 
     receives a grant under this section may use grant funds to 
     carry out any of the following activities:
       ``(1) Designing innovative course schedules to meet the 
     needs of working adults, such as online, modular, compressed, 
     or other alternative methods.
       ``(2) Offering childcare during the hours when students 
     have class or are studying.
       ``(3) Providing transportation assistance to students that 
     helps such students manage their schedules.
       ``(4) Partnering with local businesses to create flexible 
     work-hour programs so that students can balance work and 
     school.
       ``(5) Offering time management or financial literacy 
     seminars to help students improve their management skills.
       ``(6) Improving professional development to align 
     instruction with innovative program designs.
       ``(7) Any other activities the Secretary believes will 
     promote retention of students attending eligible 
     institutions.
       ``(f) Technical Assistance.--The Secretary may enter into a 
     contract with a private entity to provide such technical 
     assistance to grantees under this section as the Secretary 
     determines appropriate.
       ``(g) Evaluation.--The Secretary shall conduct an 
     evaluation of program impacts under the demonstration 
     program, and shall disseminate to the public the findings 
     from the evaluation and information on best practices.
       ``(h) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this and such sums as may be 
     necessary for fiscal year 2006 and each of the 5 succeeding 
     fiscal years.

                 ``PART E--AMERICAN HISTORY FOR FREEDOM

     ``SEC. 851. AMERICAN HISTORY FOR FREEDOM.

       ``(a) Grants Authorized.--The Secretary is authorized to 
     award 3-year grants, on a competitive basis, to eligible 
     institutions to establish or strengthen postsecondary 
     academic programs or centers that promote and impart 
     knowledge of--
       ``(1) traditional American history;
       ``(2) the history and nature of, and threats to, free 
     institutions; or
       ``(3) the history and achievements of Western civilization.
       ``(b) Definitions.--In this section:
       ``(1) Eligible institution.--The term `eligible 
     institution' means an institution of higher education as 
     defined in section 101.
       ``(2) Free institution.--The term `free institution' means 
     an institution that emerged out of Western civilization, such 
     as democracy, constitutional government, individual rights, 
     market economics, religious freedom and religious tolerance, 
     and freedom of thought and inquiry.
       ``(3) Traditional american history.--The term `traditional 
     American history' means--
       ``(A) the significant constitutional, political, 
     intellectual, economic, and foreign policy trends and issues 
     that have shaped the course of American history; and
       ``(B) the key episodes, turning points, and leading figures 
     involved in the constitutional, political, intellectual, 
     diplomatic, and economic history of the United States.
       ``(c) Application.--
       ``(1) In general.--Each eligible institution that desires a 
     grant under this part shall submit an application to the 
     Secretary at such time, in such manner, and accompanied by 
     such additional information as the Secretary may require.
       ``(2) Contents.--Each application submitted under 
     subsection (a) shall include a description of --
       ``(A) how funds made available under this part will be used 
     for the activities set forth under subsection (e), including 
     how such activities will increase knowledge with respect to 
     traditional American history, free institutions, or Western 
     civilization;
       ``(B) how the eligible institution will ensure that 
     information about the activities funded under this part is 
     widely disseminated pursuant to subsection (e)(1)(B);
       ``(C) any activities to be undertaken pursuant to 
     subsection (e)(2)(A), including identification of entities 
     intended to participate;
       ``(D) how funds made available under this part shall be 
     used to supplement and not supplant non-Federal funds 
     available for the activities described in subsection (e); and
       ``(E) such fiscal controls and accounting procedures as may 
     be necessary to ensure proper disbursement of and accounting 
     for funding made available to the eligible institution under 
     this part.
       ``(d) Award Basis.--In awarding grants under this part, the 
     Secretary shall take

[[Page 26791]]

     into consideration the capability of the eligible institution 
     to--
       ``(1) increase access to quality programming that expands 
     knowledge of traditional American history, free institutions, 
     or Western civilization;
       ``(2) involve personnel with strong expertise in 
     traditional American history, free institutions, or Western 
     civilization; and
       ``(3) sustain the activities funded under this part after 
     the grant has expired.
       ``(e) Use of Funds.--
       ``(1) Required use of funds.--Funds provided under this 
     part shall be used to--
       ``(A) establish or strengthen academic programs or centers 
     focused on traditional American history, free institutions, 
     or Western civilization, which may include--
       ``(i) design and implementation of programs of study, 
     courses, lecture series, seminars, and symposia;
       ``(ii) development, publication, and dissemination of 
     instructional materials;
       ``(iii) research;
       ``(iv) support for faculty teaching in undergraduate and, 
     if applicable, graduate programs;
       ``(v) support for graduate and postgraduate fellowships, if 
     applicable; or
       ``(vi) teacher preparation initiatives that stress content 
     mastery regarding traditional American history, free 
     institutions, or Western civilization; and
       ``(B) conduct outreach activities to ensure that 
     information about the activities funded under this part is 
     widely disseminated--
       ``(i) to undergraduate students (including students 
     enrolled in teacher education programs, if applicable);
       ``(ii) to graduate students (including students enrolled in 
     teacher education programs), if applicable;
       ``(iii) to faculty;
       ``(iv) to local educational agencies; and
       ``(v) within the local community.
       ``(2) Allowable uses of funds.--Funds provided under this 
     part may be used to support--
       ``(A) collaboration with entities such as--
       ``(i) local educational agencies, for the purpose of 
     providing elementary, middle and secondary school teachers an 
     opportunity to enhance their knowledge of traditional 
     American history, free institutions, or Western civilization; 
     and
       ``(ii) nonprofit organizations whose mission is consistent 
     with the purpose of this part, such as academic 
     organizations, museums, and libraries, for assistance in 
     carrying out activities described under subsection (a); and
       ``(B) other activities that meet the purposes of this part.
       ``(f) Authorization of Appropriations.--For the purpose of 
     carrying out this part, there are authorized to be 
     appropriated such sums as may be necessary for fiscal year 
     2006 and each of the 5 succeeding fiscal years.

                      ``PART F--TEACH FOR AMERICA

     ``SEC. 861. TEACH FOR AMERICA.

       ``(a) Definitions.--
       ``(1) In general.--The terms `highly qualified', `local 
     educational agency', and `Secretary' have the meanings given 
     the terms in section 9101 of the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 7801).
       ``(2) Grantee.--The term `grantee' means Teach For America, 
     Inc.
       ``(3) High need.--The term `high need', when used with 
     respect to a local educational agency, means a local 
     educational agency experiencing a shortage of highly 
     qualified teachers.
       ``(b) Grants Authorized.--The Secretary is authorized to 
     award a grant to Teach For America, Inc., the national 
     teacher corps of outstanding recent college graduates who 
     commit to teach for 2 years in underserved communities in the 
     United States, to implement and expand its program of 
     recruiting, selecting, training, and supporting new teachers.
       ``(c) Requirements.--In carrying out the grant program 
     under subsection (b), the Secretary shall enter into an 
     agreement with the grantee under which the grantee agrees to 
     use the grant funds provided under this section--
       ``(1) to provide highly qualified teachers to high need 
     local educational agencies in urban and rural communities;
       ``(2) to pay the cost of recruiting, selecting, training, 
     and supporting new teachers; and
       ``(3) to serve a substantial number and percentage of 
     underserved students.
       ``(d) Authorized Activities.--
       ``(1) In general.--Grant funds provided under this section 
     shall be used by the grantee to carry out each of the 
     following activities:
       ``(A) Recruiting and selecting teachers through a highly 
     selective national process.
       ``(B) Providing preservice training to the teachers through 
     a rigorous summer institute that includes hands-on teaching 
     experience and significant exposure to education coursework 
     and theory.
       ``(C) Placing the teachers in schools and positions 
     designated by partner local educational agencies as high need 
     placements serving underserved students.
       ``(D) Providing ongoing professional development activities 
     for the teachers' first 2 years in the classroom, including 
     regular classroom observations and feedback, and ongoing 
     training and support.
       ``(2) Limitation.--The grantee shall use all grant funds 
     received under this section to support activities related 
     directly to the recruitment, selection, training, and support 
     of teachers as described in subsection (a).
       ``(e) Reports and Evaluations.--
       ``(1) Annual report.--The grantee shall provide to the 
     Secretary an annual report that includes--
       ``(A) data on the number and quality of the teachers 
     provided to local educational agencies through a grant under 
     this section;
       ``(B) an externally conducted analysis of the satisfaction 
     of local educational agencies and principals with the 
     teachers so provided; and
       ``(C) comprehensive data on the background of the teachers 
     chosen, the training the teachers received, the placement 
     sites of the teachers, the professional development of the 
     teachers, and the retention of the teachers.
       ``(2) Study.--
       ``(A) In general.--From funds appropriated under subsection 
     (f), the Secretary shall provide for a study that examines 
     the achievement levels of the students taught by the teachers 
     assisted under this section.
       ``(B) Achievement gains compared.--The study shall compare, 
     within the same schools, the achievement gains made by 
     students taught by teachers who are assisted under this 
     section with the achievement gains made by students taught by 
     teachers who are not assisted under this section.
       ``(3) Requirements.--The Secretary shall provide for such a 
     study not less than once every 3 years, and each such study 
     shall include multiple placement sites and multiple schools 
     within placement sites.
       ``(4) Peer review standards.--Each such study shall meet 
     the peer review standards of the education research 
     community.
       ``(f) Authorization of Appropriations.--
       ``(1) In general.--There are authorized to be appropriated 
     to carry out this section such sums as may be necessary for 
     fiscal year 2006 and each of the 5 succeeding fiscal years.
       ``(2) Limitation.--The grantee shall not use more than 25 
     percent of Federal funds from any source for administrative 
     costs.

               ``PART G--PATSY T. MINK FELLOWSHIP PROGRAM

     ``SEC. 871. PATSY T. MINK FELLOWSHIP PROGRAM.

       ``(a) Purpose.--
       ``(1) In general.--It is the purpose of this section to 
     provide, through eligible institutions, a program of 
     fellowship awards to assist highly qualified minorities and 
     women to acquire the doctoral degree, or highest possible 
     degree available, in academic areas in which such individuals 
     are underrepresented for the purpose of enabling such 
     individuals to enter the higher education professoriate.
       ``(2) Designation.--Each recipient of a fellowship award 
     from an eligible institution receiving a grant under this 
     section shall be known as a `Patsy T. Mink Graduate Fellow'.
       ``(b) Definitions.--In this section, the term `eligible 
     institution' means an institution of higher education, or a 
     consortium of such institutions, that offers a program of 
     postbaccalaureate study leading to a graduate degree.
       ``(c) Program Authorized.--
       ``(1) Grants by secretary.--
       ``(A) In general.--The Secretary shall award grants to 
     eligible institutions to enable such institutions to make 
     fellowship awards to individuals in accordance with the 
     provisions of this section.
       ``(B) Priority consideration.--In awarding grants under 
     this section, the Secretary shall consider the eligible 
     institution's prior experience in producing doctoral degree, 
     or highest possible degree available, holders who are 
     minorities and women, and shall give priority consideration 
     in making grants under this section to those eligible 
     institutions with a demonstrated record of producing 
     minorities and women who have earned such degrees.
       ``(2) Applications.--
       ``(A) In general.--An eligible institution that desires a 
     grant under this section shall submit an application to the 
     Secretary at such time, in such manner, and containing such 
     information as the Secretary may require.
       ``(B) Applications made on behalf.--
       ``(i) In general.--The following entities may submit an 
     application on behalf of an eligible institution:

       ``(I) A graduate school or department of such institution.
       ``(II) A graduate school or department of such institution 
     in collaboration with an undergraduate college or university 
     of such institution.
       ``(III) An organizational unit within such institution that 
     offers a program of postbaccalaureate study leading to a 
     graduate degree, including an interdisciplinary or an 
     interdepartmental program.
       ``(IV) A nonprofit organization with a demonstrated record 
     of helping minorities and women earn postbaccalaureate 
     degrees.

       ``(ii) Nonprofit organizations.--Nothing in this paragraph 
     shall be construed to permit the Secretary to award a grant 
     under this section to an entity other than an eligible 
     institution.
       ``(3) Selection of applications.--In awarding grants under 
     subsection (a), the Secretary shall--

[[Page 26792]]

       ``(A) take into account--
       ``(i) the number and distribution of minority and female 
     faculty nationally;
       ``(ii) the current and projected need for highly trained 
     individuals in all areas of the higher education 
     professoriate; and
       ``(iii) the present and projected need for highly trained 
     individuals in academic career fields in which minorities and 
     women are underrepresented in the higher education 
     professoriate; and
       ``(B) consider the need to prepare a large number of 
     minorities and women generally in academic career fields of 
     high national priority, especially in areas in which such 
     individuals are traditionally underrepresented in college and 
     university faculties, such as mathematics, science, 
     technology, and engineering.
       ``(4) Distribution and amounts of grants.--
       ``(A) Equitable distribution.--In awarding grants under 
     this section, the Secretary shall, to the maximum extent 
     feasible, ensure an equitable geographic distribution of 
     awards and an equitable distribution among public and 
     independent eligible institutions that apply for grants under 
     this section and that demonstrate an ability to achieve the 
     purpose of this section.
       ``(B) Special rule.--To the maximum extent practicable, the 
     Secretary shall use not less than 30 percent of the amount 
     appropriated pursuant to subsection (f) to award grants to 
     eligible institutions that--
       ``(i) are eligible for assistance under title III or title 
     V; or
       ``(ii) have formed a consortium that includes both non-
     minority serving institutions and minority serving 
     institutions.
       ``(C) Allocation.--In awarding grants under this section, 
     the Secretary shall allocate appropriate funds to those 
     eligible institutions whose applications indicate an ability 
     to significantly increase the numbers of minorities and women 
     entering the higher education professoriate and that commit 
     institutional resources to the attainment of the purpose of 
     this section.
       ``(D) Number of fellowship awards.--An eligible institution 
     that receives a grant under this section shall make not less 
     than 15 fellowship awards.
       ``(E) Reallotment.--If the Secretary determines that an 
     eligible institution awarded a grant under this section is 
     unable to use all of the grant funds awarded to the 
     institution, the Secretary shall reallot, on such date during 
     each fiscal year as the Secretary may fix, the unused funds 
     to other eligible institutions that demonstrate that such 
     institutions can use any reallocated grant funds to make 
     fellowship awards to individuals under this section.
       ``(5) Institutional allowance.--
       ``(A) In general.--
       ``(i) Number of allowances.--In awarding grants under this 
     section, the Secretary shall pay to each eligible institution 
     awarded a grant, for each individual awarded a fellowship by 
     such institution under this section, an institutional 
     allowance.
       ``(ii) Amount.--Except as provided in paragraph (3), an 
     institutional allowance shall be in an amount equal to, for 
     academic year 2006-2007 and succeeding academic years, the 
     amount of institutional allowance made to an institution of 
     higher education under section 715 for such academic year.
       ``(B) Use of funds.--Institutional allowances may be 
     expended in the discretion of the eligible institution and 
     may be used to provide, except as prohibited under paragraph 
     (4), academic support and career transition services for 
     individuals awarded fellowships by such institution.
       ``(C) Reduction.--The institutional allowance paid under 
     paragraph (1) shall be reduced by the amount the eligible 
     institution charges and collects from a fellowship recipient 
     for tuition and other expenses as part of the recipient's 
     instructional program.
       ``(D) Use for overhead prohibited.--Funds made available 
     under this section may not be used for general operational 
     overhead of the academic department or institution receiving 
     funds under this section.
       ``(d) Fellowship Recipients.--
       ``(1) Authorization.--An eligible institution that receives 
     a grant under this section shall use the grant funds to make 
     fellowship awards to minorities and women who are enrolled at 
     such institution in a doctoral degree, or highest possible 
     degree available, program and--
       ``(A) intend to pursue a career in instruction at--
       ``(i) an institution of higher education (as the term is 
     defined in section 101);
       ``(ii) an institution of higher education (as the term is 
     defined in section 102(a)(1));
       ``(iii) an institution of higher education outside the 
     United States (as the term is described in section 
     102(a)(2)); or
       ``(iv) a proprietary institution of higher education (as 
     the term is defined in section 102(b)); and
       ``(B) sign an agreement with the Secretary agreeing--
       ``(i) to begin employment at an institution described in 
     paragraph (1) not later than 3 years after receiving the 
     doctoral degree or highest possible degree available, which 
     3-year period may be extended by the Secretary for 
     extraordinary circumstances; and
       ``(ii) to be employed by such institution for 1 year for 
     each year of fellowship assistance received under this 
     section.
       ``(2) Failure to comply.--If an individual who receives a 
     fellowship award under this section fails to comply with the 
     agreement signed pursuant to subsection (a)(2), then the 
     Secretary shall do 1 or both of the following:
       ``(A) Require the individual to repay all or the applicable 
     portion of the total fellowship amount awarded to the 
     individual by converting the balance due to a loan at the 
     interest rate applicable to loans made under part B of title 
     IV.
       ``(B) Impose a fine or penalty in an amount to be 
     determined by the Secretary.
       ``(3) Waiver and modification.--
       ``(A) Regulations.--The Secretary shall promulgate 
     regulations setting forth criteria to be considered in 
     granting a waiver for the service requirement under 
     subsection (a)(2).
       ``(B) Content.--The criteria under paragraph (1) shall 
     include whether compliance with the service requirement by 
     the fellowship recipient would be--
       ``(i) inequitable and represent an extraordinary hardship; 
     or
       ``(ii) deemed impossible because the individual is 
     permanently and totally disabled at the time of the waiver 
     request.
       ``(4) Amount of fellowship awards.--Fellowship awards under 
     this section shall consist of a stipend in an amount equal to 
     the level of support provided to the National Science 
     Foundation graduate fellows, except that such stipend shall 
     be adjusted as necessary so as not to exceed the fellow's 
     tuition and fees or demonstrated need (as determined by the 
     institution of higher education where the graduate student is 
     enrolled), whichever is greater.
       ``(5) Academic progress required.--An individual student 
     shall not be eligible to receive a fellowship award--
       ``(A) except during periods in which such student is 
     enrolled, and such student is maintaining satisfactory 
     academic progress in, and devoting essentially full time to, 
     study or research in the pursuit of the degree for which the 
     fellowship support was awarded; and
       ``(B) if the student is engaged in gainful employment, 
     other than part-time employment in teaching, research, or 
     similar activity determined by the eligible institution to be 
     consistent with and supportive of the student's progress 
     toward the appropriate degree.
       ``(e) Rule of Construction.--Nothing in this section shall 
     be construed to require an eligible institution that receives 
     a grant under this section--
       ``(1) to grant a preference or to differentially treat any 
     applicant for a faculty position as a result of the 
     institution's participation in the program under this 
     section; or
       ``(2) to hire a Patsy T. Mink Fellow who completes this 
     program and seeks employment at such institution.
       ``(f) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section such sums as may 
     be necessary for fiscal year 2006 for each of the 5 
     succeeding fiscal years.

       ``PART H--STUDY ON COLLEGE ENROLLMENT BY SECONDARY SCHOOLS

     ``SEC. 881. STUDY ON COLLEGE ENROLLMENT BY SECONDARY SCHOOLS.

       ``The Secretary shall contract with a not-for-profit 
     organization, with demonstrated expertise in increasing 
     college enrollment rates in low-income communities 
     nationwide, to make publicly available year-to-year college 
     enrollment rate trends by secondary schools, in full 
     compliance with the Family Educational Rights and Privacy Act 
     of 1974 (FERPA).''.

                  CHAPTER 10--AMENDMENTS TO OTHER LAWS

            Subchapter A--Education of the Deaf Act of 1986

     SEC. 7901. LAURENT CLERC NATIONAL DEAF EDUCATION CENTER.

       Section 104 of the Education of the Deaf Act of 1986 (20 
     U.S.C. 4304) is amended--
       (1) by striking the heading and inserting ``laurent clerc 
     national deaf education center'';
       (2) in subsection (a)(1)(A), by inserting ``the Laurent 
     Clerc National Deaf Education Center (referred to in this 
     section as the `Clerc Center') to carry out'' after 
     ``maintain and operate''; and
       (3) in subsection (b)--
       (A) in the matter preceding subparagraph (A) of paragraph 
     (1), by striking ``elementary and secondary education 
     programs'' and inserting ``Clerc Center'';
       (B) in paragraph (2), by striking ``elementary and 
     secondary education programs'' and inserting ``Clerc 
     Center''; and
       (C) by adding at the end the following:
       ``(5) The University, for purposes of the elementary and 
     secondary education programs carried out at the Clerc Center, 
     shall--
       ``(A)(i) select challenging academic content standards, 
     challenging student academic achievement standards, and 
     academic assessments of a State, adopted and implemented, as 
     appropriate, pursuant to paragraphs (1) and (3) of section 
     1111(b) of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 6311(b)(1) and (3)) and approved by the Secretary; 
     and
       ``(ii) implement such standards and assessments for such 
     programs by not later than the beginning of the 2008-2009 
     academic year;

[[Page 26793]]

       ``(B) annually determine whether such programs at the Clerc 
     Center are making adequate yearly progress, as determined 
     according to the definition of adequate yearly progress 
     defined (pursuant to section 1111(b)(2)(C) of such Act (20 
     U.S.C. 6311(b)(2)(C))) by the State that has adopted and 
     implemented the standards and assessments selected under 
     subparagraph (A)(i); and
       ``(C) publicly report the results of the academic 
     assessments implemented under subparagraph (A) and whether 
     the programs at the Clerc Center are making adequate yearly 
     progress, as determined under subparagraph (B).''.

     SEC. 7902. AGREEMENT WITH GALLAUDET UNIVERSITY.

       Section 105(b)(4) of the Education of the Deaf Act of 1986 
     (20 U.S.C. 4305(b)(4)) is amended--
       (1) by striking ``the Act of March 3, 1931 (40 U.S.C. 276a-
     276a-5) commonly referred to as the Davis-Bacon Act'' and 
     inserting ``subchapter IV of chapter 31 of title 40, United 
     States Code, commonly referred to as the Davis-Bacon Act''; 
     and
       (2) by striking ``section 2 of the Act of June 13, 1934 (40 
     U.S.C. 276c)'' and inserting ``section 3145 of title 40, 
     United States Code''.

     SEC. 7903. AGREEMENT FOR THE NATIONAL TECHNICAL INSTITUTE FOR 
                   THE DEAF.

       Section 112 of the Education of the Deaf Act of 1986 (20 
     U.S.C. 4332) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1)--
       (i) in the first sentence--

       (I) by striking ``an institution of higher education'' and 
     inserting ``the Rochester Institute of Technology, Rochester, 
     New York''; and
       (II) by striking ``of a'' and inserting ``of the''; and

       (ii) by striking the second sentence;
       (B) by redesignating paragraph (2) as paragraph (3); and
       (C) by inserting after paragraph (1) the following:
       ``(2) Notwithstanding the requirement under paragraph (1), 
     if the Secretary or the Rochester Institute of Technology 
     terminates the agreement under paragraph (1), the Secretary 
     shall consider proposals from other institutions of higher 
     education and enter into an agreement with 1 of such 
     institutions for the establishment and operation of a 
     National Technical Institution for the Deaf.''; and
       (2) in subsection (b)--
       (A) in paragraph (3), by striking ``Committee on Education 
     and Labor of the House of Representatives and to the 
     Committee on Labor and Human Resources of the Senate'' and 
     inserting ``Committee on Education and the Workforce of the 
     House of Representatives and to the Committee on Health, 
     Education, Labor, and Pensions of the Senate''; and
       (B) in paragraph (5)--
       (i) by striking ``the Act of March 3, 1931 (40 U.S.C. 276a-
     276a-5) commonly referred to as the Davis-Bacon Act'' and 
     inserting ``subchapter IV of chapter 31 of title 40, United 
     States Code, commonly referred to as the Davis-Bacon Act''; 
     and
       (ii) by striking ``section 2 of the Act of June 13, 1934 
     (40 U.S.C. 276c)'' and inserting ``section 3145 of title 40, 
     United States Code''.

     SEC. 7904. CULTURAL EXPERIENCES GRANTS.

       (a) Cultural Experiences Grants.--Title I of the Education 
     of the Deaf Act of 1986 (20 U.S.C. 4301 et seq.) is amended 
     by adding at the end the following:

                        ``PART C--OTHER PROGRAMS

     ``SEC. 121. CULTURAL EXPERIENCES GRANTS.

       ``(a) In General.--The Secretary shall, on a competitive 
     basis, make grants to, and enter into contracts and 
     cooperative agreements with, eligible entities to support the 
     activities described in subsection (b).
       ``(b) Activities.--In carrying out this section, the 
     Secretary shall support activities providing cultural 
     experiences, through appropriate nonprofit organizations with 
     a demonstrated proficiency in providing such activities, 
     that--
       ``(1) enrich the lives of deaf and hard-of-hearing children 
     and adults;
       ``(2) increase public awareness and understanding of 
     deafness and of the artistic and intellectual achievements of 
     deaf and hard-of-hearing persons; or
       ``(3) promote the integration of hearing, deaf, and hard-
     of-hearing persons through shared cultural, educational, and 
     social experiences.
       ``(c) Applications.--An eligible entity that desires to 
     receive a grant, or enter into a contract or cooperative 
     agreement, under this section shall submit an application to 
     the Secretary at such time, in such manner, and containing 
     such information as the Secretary may require.
       ``(d) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section such 
     sums as may be necessary for fiscal year 2006 and each of the 
     5 succeeding fiscal years.''.
       (b) Conforming Amendment.--The title heading of title I of 
     the Education of the Deaf Act of 1986 (20 U.S.C. 4301 et 
     seq.) is amended by adding at the end ``; OTHER PROGRAMS''.

     SEC. 7905. AUDIT.

       Section 203 of the Education of the Deaf Act of 1986 (20 
     U.S.C. 4353) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1), by striking the second sentence and 
     inserting the following: ``The institution of higher 
     education that the Secretary has an agreement with under 
     section 112 shall have an annual independent financial and 
     compliance audit made of NTID programs and activities. The 
     audit shall follow the cycle of the Federal fiscal year.'';
       (B) in paragraph (2), by striking ``sections'' and all that 
     follows through the period and inserting ``sections 102(b), 
     105(b)(4), 112(b)(5), 203(c), 207(b)(2), subsections (c) 
     through (f) of section 207, and subsections (b) and (c) of 
     section 209.''; and
       (C) in paragraph (3), by inserting ``and the Committee on 
     Education and the Workforce of the House of Representatives 
     and the Committee on Health, Education, Labor, and Pensions 
     of the Senate'' after ``Secretary''; and
       (2) in subsection (c)(2)(A), by striking ``Committee on 
     Education and Labor of the House of Representatives and the 
     Committee on Labor and Human Resources of the Senate'' and 
     inserting ``Committee on Education and the Workforce of the 
     House of Representatives and the Committee on Health, 
     Education, Labor, and Pensions of the Senate''.

     SEC. 7906. REPORTS.

       Section 204 of the Education of the Deaf Act of 1986 (20 
     U.S.C. 4354) is amended--
       (1) in the matter preceding paragraph (1), by striking 
     ``Committee on Education and Labor of the House of 
     Representatives and the Committee on Labor and Human 
     Resources of the Senate'' and inserting ``Committee on 
     Education and the Workforce of the House of Representatives 
     and the Committee on Health, Education, Labor, and Pensions 
     of the Senate'';
       (2) in paragraph (1), by striking ``preparatory,'';
       (3) in paragraph (2)(C), by striking ``upon graduation/
     completion'' and inserting ``on the date that is 1 year after 
     the date of graduation or completion''; and
       (4) in paragraph (3)(B), by striking ``of the institution 
     of higher education'' and all that follows through the period 
     and inserting ``of NTID programs and activities.''.

     SEC. 7907. MONITORING, EVALUATION, AND REPORTING.

       Section 205 of the Education of the Deaf Act of 1986 (20 
     U.S.C. 4355) is amended--
       (1) in subsection (b), by striking ``The Secretary, as part 
     of the annual report required under section 426 of the 
     Department of Education Organization Act, shall include a 
     description of'' and inserting ``The Secretary shall annually 
     transmit information to Congress on''; and
       (2) in subsection (c), by striking ``fiscal years 1998 
     through 2003'' and inserting ``fiscal years 2006 through 
     2010''.

     SEC. 7908. LIAISON FOR EDUCATIONAL PROGRAMS.

       Section 206(a) of the Education of the Deaf Act of 1986 (20 
     U.S.C. 4356(a)) is amended by striking ``Not later than 30 
     days after the date of enactment of this Act, the'' and 
     inserting ``The''.

     SEC. 7909. FEDERAL ENDOWMENT PROGRAMS FOR GALLAUDET 
                   UNIVERSITY AND THE NATIONAL TECHNICAL INSTITUTE 
                   FOR THE DEAF.

       Section 207(h) of the Education of the Deaf Act of 1986 (20 
     U.S.C. 4357(h)) is amended by striking ``fiscal years 1998 
     through 2003'' each place it appears and inserting ``fiscal 
     years 2006 through 2010''.

     SEC. 7910. OVERSIGHT AND EFFECT OF AGREEMENTS.

       Section 208(a) of the Education of the Deaf Act of 1986 (20 
     U.S.C. 4359(a)) is amended by striking ``Committee on Labor 
     and Human Resources of the Senate and the Committee on 
     Education and the Workforce of the House of Representatives'' 
     and inserting ``Committee on Education and the Workforce of 
     the House of Representatives and the Committee on Health, 
     Education, Labor, and Pensions of the Senate''.

     SEC. 7911. INTERNATIONAL STUDENTS.

       Section 209 of the Education of the Deaf Act of 1986 (20 
     U.S.C. 4359a) is amended--
       (1) in subsection (a)--
       (A) by striking ``preparatory, undergraduate,'' and 
     inserting ``undergraduate'';
       (B) by striking ``Effective with'' and inserting the 
     following:
       ``(1) In general.--Except as provided in paragraph (2), 
     effective with''; and
       (C) by adding at the end the following:
       ``(2) Distance learning.--International students who 
     participate in distance learning courses that are at NTID or 
     the University and who are residing outside of the United 
     States shall--
       ``(A) not be counted as international students for purposes 
     of the cap on international students under paragraph (1), 
     except that in any school year no United States citizen who 
     applies to participate in distance learning courses that are 
     at the University or NTID shall be denied participation in 
     such courses because of the participation of an international 
     student in such courses; and
       ``(B) not be charged a tuition surcharge, as described in 
     subsection (b).''; and
       (2) by striking subsections (b), (c), and (d), and 
     inserting the following:

[[Page 26794]]

       ``(b) Tuition Surcharge.--Except as provided in subsections 
     (a)(2)(B) and (c), the tuition for postsecondary 
     international students enrolled in the University (including 
     undergraduate and graduate students) or NTID shall include, 
     for academic year 2007-2008 and any succeeding academic year, 
     a surcharge of--
       ``(1) 100 percent for a postsecondary international student 
     from a non-developing country; and
       ``(2) 50 percent for a postsecondary international student 
     from a developing country.
       ``(c) Reduction of Surcharge.--
       ``(1) In general.--Beginning with the academic year 2007-
     2008, the University or NTID may reduce the surcharge--
       ``(A) under subsection (b)(1) to 50 percent if--
       ``(i) a student described under subsection (b)(1) 
     demonstrates need; and
       ``(ii) such student has made a good faith effort to secure 
     aid through such student's government or other sources; and
       ``(B) under subsection (b)(2) to 25 percent if--
       ``(i) a student described under subsection (b)(2) 
     demonstrates need; and
       ``(ii) such student has made a good faith effort to secure 
     aid through such student's government or other sources.
       ``(2) Development of sliding scale.--The University and 
     NTID shall develop a sliding scale model that--
       ``(A) will be used to determine the amount of a tuition 
     surcharge reduction pursuant to paragraph (1); and
       ``(B) shall be approved by the Secretary.
       ``(d) Definition.--In this section, the term `developing 
     country' means a country with a per-capita income of not more 
     than $4,825, measured in 1999 United States dollars, as 
     adjusted by the Secretary to reflect inflation since 1999.''.

     SEC. 7912. RESEARCH PRIORITIES.

       Section 210(b) of the Education of the Deaf Act of 1986 (20 
     U.S.C. 4359b(b)) is amended by striking ``Committee on Labor 
     and Human Resources of the Senate'' and inserting ``Committee 
     on Health, Education, Labor, and Pensions of the Senate''.

     SEC. 7913. AUTHORIZATION OF APPROPRIATIONS.

       Section 212 of the Education of the Deaf Act of 1986 (20 
     U.S.C. 4360a) is amended--
       (1) in subsection (a), in the matter preceding paragraph 
     (1), by striking ``fiscal years 1998 through 2003'' and 
     inserting ``fiscal years 2006 through 2011''; and
       (2) in subsection (b), by striking ``fiscal years 1998 
     through 2003'' and inserting ``fiscal years 2006 through 
     2011''.

           Subchapter B--United States Institute of Peace Act

     SEC. 7921. UNITED STATES INSTITUTE OF PEACE ACT.

       (a) Powers and Duties.--Section 1705(b)(3) of the United 
     States Institute of Peace Act (22 U.S.C. 4604(b)(3)) is 
     amended by striking ``the Arms Control and Disarmament 
     Agency,''.
       (b) Board of Directors.--Section 1706 of the United States 
     Institute of Peace Act (22 U.S.C. 4605) is amended--
       (1) by striking ``(b)(5)'' each place the term appears and 
     inserting ``(b)(4)''; and
       (2) in subsection (e), by adding at the end the following:
       ``(5) The term of a member of the Board shall not commence 
     until the member is confirmed by the Senate and sworn in as a 
     member of the Board.''.
       (c) Funding.--Section 1710 of the United States Institute 
     of Peace Act (22 U.S.C. 4609) is amended by adding at the end 
     the following:
       ``(d) Extension.--Any authorization of appropriations made 
     for the purposes of carrying out this title shall be extended 
     in the same manner as applicable programs are extended under 
     section 422 of the General Education Provisions Act.''.

         Subchapter C--The Higher Education Amendments of 1998

     SEC. 7931. REPEALS.

       The following provisions of title VIII of the Higher 
     Education Amendments of 1998 (Public Law 105-244) are 
     repealed:
       (1) Part A.
       (2) Part C (20 U.S.C. 1070 note).
       (3) Part F (20 U.S.C. 1862 note).
       (4) Part J.
       (5) Section 861.
       (6) Section 863.

     SEC. 7932. GRANTS TO STATES FOR WORKPLACE AND COMMUNITY 
                   TRANSITION TRAINING FOR INCARCERATED YOUTH 
                   OFFENDERS.

       Section 821(b) of the Higher Education Amendment of 1988 is 
     amended by striking ``25'' and inserting ``35''.

                     Subchapter D--Indian Education

                PART I--TRIBAL COLLEGES AND UNIVERSITIES

     SEC. 7941. REAUTHORIZATION OF THE TRIBALLY CONTROLLED COLLEGE 
                   OR UNIVERSITY ASSISTANCE ACT OF 1978.

       (a) Clarification of the Definition of National Indian 
     Organization.--Section 2(a)(6) of the Tribally Controlled 
     College or University Assistance Act of 1978 (25 U.S.C. 
     1801(a)(6)) is amended by striking ``in the field of Indian 
     education'' and inserting ``in the fields of tribally 
     controlled colleges and universities and Indian higher 
     education''.
       (b) Indian Student Count.--Section 2(a) of the Tribally 
     Controlled College or University Assistance Act (25 U.S.C. 
     1801(a)) is amended--
       (1) by redesignating paragraphs (7) and (8) as paragraphs 
     (8) and (9), respectively; and
       (2) by inserting after paragraph (6) the following:
       ``(7) `Indian student' means a student who is--
       ``(A) a member of an Indian tribe; or
       ``(B) a biological child of a member of an Indian tribe, 
     living or deceased;''.
       (c) Continuing Education.--Section 2(b) of the Tribally 
     Controlled College or University Assistance Act (25 U.S.C. 
     1801(b)) is amended by striking paragraph (5) and inserting 
     the following:
       ``(5) Determination of credits.--Eligible credits earned in 
     a continuing education program--
       ``(A) shall be determined as 1 credit for every 10 contact 
     hours in the case of an institution on a quarter system, or 
     15 contact hours in the case of an institution on a semester 
     system, of participation in an organized continuing education 
     experience under responsible sponsorship, capable direction, 
     and qualified instruction, as described in the criteria 
     established by the International Association for Continuing 
     Education and Training; and
       ``(B) shall be limited to 10 percent of the Indian student 
     count of a tribally controlled college or university.''.
       (d) Accreditation Requirement.--Section 103 of the Tribally 
     Controlled College or University Assistance Act (25 U.S.C. 
     1804) is amended--
       (1) in paragraph (2), by striking ``and'' at the end;
       (2) in paragraph (3), by striking the period at the end and 
     inserting ``; and''; and
       (3) by inserting after paragraph (3), the following:
       ``(4)(A) is accredited by a nationally recognized 
     accrediting agency or association determined by the Secretary 
     of Education to be a reliable authority with regard to the 
     quality of training offered; or
       ``(B) is, according to such an agency or association, 
     making reasonable progress toward accreditation.''.
       (e) Technical Assistance Contract Awards.--Section 105 of 
     the Tribally Controlled College or University Assistance Act 
     (25 U.S.C. 1805) is amended in the second sentence by 
     striking ``In the awarding of contracts for technical 
     assistance, preference shall be given'' and inserting ``The 
     Secretary shall direct that contracts for technical 
     assistance be awarded''.
       (f) Title I Reauthorization.--Section 110(a) of the 
     Tribally Controlled College or University Assistance Act of 
     1978 (25 U.S.C. 1810(a)) is amended--
       (1) in paragraphs (1), (2), (3), and (4), by striking 
     ``1999'' and inserting ``2006'';
       (2) in paragraphs (1), (2), and (3), by striking ``4 
     succeeding'' and inserting ``5 succeeding'';
       (3) in paragraph (2), by striking ``$40,000,000'' and 
     inserting ``such sums as may be necessary'';
       (4) in paragraph (3), by striking ``$10,000,000'' and 
     inserting ``such sums as may be necessary''; and
       (5) in paragraph (4), by striking ``succeeding 4'' and 
     inserting ``5 succeeding''.
       (g) Title III Reauthorization.--Section 306(a) of the 
     Tribally Controlled College or University Assistance Act of 
     1978 (25 U.S.C. 1836(a)) is amended--
       (1) by striking ``1999'' and inserting ``2006''; and
       (2) by striking ``4 succeeding'' and inserting ``5 
     succeeding''.
       (h) Title IV Reauthorization.--Section 403 of the Tribal 
     Economic Development and Technology Related Education 
     Assistance Act of 1990 (25 U.S.C. 1852) is amended--
       (1) by striking ``$2,000,000 for fiscal year 1999'' and 
     inserting ``such sums as may be necessary for fiscal year 
     2006''; and
       (2) by striking ``4 succeeding'' and inserting ``5 
     succeeding''.

                    PART II--NAVAJO HIGHER EDUCATION

     SEC. 7945. SHORT TITLE.

       This part may be cited as the ``Navajo Nation Higher 
     Education Act of 2005''.

     SEC. 7946. REAUTHORIZATION OF NAVAJO COMMUNITY COLLEGE ACT.

       (a) Purpose.--Section 2 of the Navajo Community College Act 
     (25 U.S.C. 640a) is amended--
       (1) by striking ``Navajo Tribe of Indians'' and inserting 
     ``Navajo Nation''; and
       (2) by striking ``the Navajo Community College'' and 
     inserting ``Dine College''.
       (b) Grants.--Section 3 of the Navajo Community College Act 
     (25 U.S.C. 640b) is amended--
       (1) in the first sentence--
       (A) by inserting ``the'' before ``Interior'';
       (B) by striking ``Navajo Tribe of Indians'' and inserting 
     ``Navajo Nation''; and
       (C) by striking ``the Navajo Community College'' and 
     inserting ``Dine College''; and
       (2) in the second sentence--
       (A) by striking ``Navajo Tribe'' and inserting ``Navajo 
     Nation''; and
       (B) by striking ``Navajo Indians'' and inserting ``Navajo 
     people''.
       (c) Study of Facilities Needs.--Section 4 of the Navajo 
     Community College Act (25 U.S.C. 640c) is amended--
       (1) in subsection (a)--

[[Page 26795]]

       (A) in the first sentence--
       (i) by striking ``the Navajo Community College'' and 
     inserting ``Dine College''; and
       (ii) by striking ``August 1, 1979'' and inserting ``October 
     31, 2009''; and
       (B) in the second sentence, by striking ``Navajo Tribe'' 
     and inserting ``Navajo Nation'';
       (2) in subsection (b), by striking ``the date of enactment 
     of the Tribally Controlled Community College Assistance Act 
     of 1978'' and inserting ``October 1, 2006''; and
       (3) in subsection (c), in the first sentence, by striking 
     ``the Navajo Community College'' and inserting ``Dine 
     College''.
       (d) Authorization of Appropriations.--Section 5 of the 
     Navajo Community College Act (25 U.S.C. 640c-1) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1), by striking ``$2,000,000'' and all 
     that follows through the end of the paragraph and inserting 
     ``such sums as are necessary for fiscal years 2006 through 
     2011.''; and
       (B) by adding at the end the following:
       ``(3) Sums described in paragraph (2) shall be used to 
     provide grants for construction activities, including the 
     construction of buildings, water and sewer facilities, roads, 
     information technology and telecommunications infrastructure, 
     classrooms, and external structures (such as walkways).'';
       (2) in subsection (b)(1)--
       (A) in the matter preceding subparagraph (A)--
       (i) by striking ``the Navajo Community College'' and 
     inserting ``Dine College''; and
       (ii) by striking ``, for each fiscal year'' and all that 
     follows through ``for--'' and inserting ``such sums as are 
     necessary for fiscal years 2006 through 2011 to pay the cost 
     of--'';
       (B) in subparagraph (A)--
       (i) by striking ``college'' and inserting ``College'';
       (ii) in clauses (i) and (iii), by striking the commas at 
     the ends of the clauses and inserting semicolons; and
       (iii) in clause (ii), by striking ``, and'' at the end and 
     inserting ``; and'';
       (C) in subparagraph (B), by striking the comma at the end 
     and inserting a semicolon;
       (D) in subparagraph (C), by striking ``, and'' at the end 
     and inserting a semicolon;
       (E) in subparagraph (D), by striking the period at the end 
     and inserting ``; and''; and
       (F) by adding at the end the following:
       ``(E) improving and expanding the College, including by 
     providing, for the Navajo people and others in the community 
     of the College--
       ``(i) higher education programs;
       ``(ii) vocational and technical education;
       ``(iii) activities relating to the preservation and 
     protection of the Navajo language, philosophy, and culture;
       ``(iv) employment and training opportunities;
       ``(v) economic development and community outreach; and
       ``(vi) a safe learning, working, and living environment.''; 
     and
       (3) in subsection (c), by striking ``the Navajo Community 
     College'' and inserting ``Dine College''.
       (e) Effect on Other Laws.--Section 6 of the Navajo 
     Community College Act (25 U.S.C. 640c-2) is amended--
       (1) by striking ``the Navajo Community College'' each place 
     it appears and inserting ``Dine College''; and
       (2) in subsection (b), by striking ``college'' and 
     inserting ``College''.
       (f) Payments; Interest.--Section 7 of the Navajo Community 
     College Act (25 U.S.C. 640c-3) is amended by striking ``the 
     Navajo Community College'' each place it appears and 
     inserting ``Dine College''.

                      Subtitle D--Hurricane Relief

     SEC. 7947. FINDINGS.

       Congress finds the following:
       (1) Hurricane Katrina has had a devastating and 
     unprecedented impact on students who attended schools in the 
     disaster areas.
       (2) Due to the devastating effects of Hurricane Katrina, a 
     significant number of students have enrolled in schools 
     outside of the area in which they resided on August 22, 2005, 
     including a significant number of students who enrolled in 
     non-public schools because their parents chose to enroll them 
     in such schools.
       (3) 372,000 students were displaced by Hurricane Katrina. 
     Approximately 700 schools have been damaged or destroyed. 
     Nine States each have more than 1,000 of such displaced 
     students enrolled in their schools. In Texas alone, over 
     45,000 displaced students have enrolled in schools.
       (4) In response to these extraordinary conditions, this 
     subtitle creates a one-time only emergency grant for the 
     2005-2006 school year tailored to the needs and particular 
     circumstances of students displaced by Hurricane Katrina.

     SEC. 7948. IMMEDIATE AID TO RESTART SCHOOL OPERATIONS.

       (a) Purpose.--It is the purpose of this section--
       (1) to provide immediate and direct assistance to local 
     educational agencies in Louisiana, Mississippi, and Alabama 
     that serve an area in which a major disaster has been 
     declared in accordance with section 401 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5170), related to Hurricane Katrina;
       (2) to assist school district administrators and personnel 
     of such agencies who are working to restart operations in 
     elementary schools and secondary schools served by such 
     agencies; and
       (3) to facilitate the re-opening of elementary schools and 
     secondary schools served by such agencies and the re-
     enrollment of students in such schools as soon as possible.
       (b) Payments and Grants Authorized.--From amounts 
     appropriated to carry out this subtitle, the Secretary of 
     Education is authorized to make payments, not later than 
     November 30, 2005, to State educational agencies (as defined 
     in section 9101 of the Elementary and Secondary Education Act 
     of 1965 (20 U.S.C. 7801 et seq.)) in Louisiana, Mississippi, 
     and Alabama to enable such agencies to award grants to local 
     educational agencies serving an area in which a major 
     disaster has been declared in accordance with section 401 of 
     the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act (42 U.S.C. 5170), related to Hurricane 
     Katrina.
       (c) Eligibility and Consideration.--In determining whether 
     to award a grant under this section, or the amount of the 
     grant, the State educational agency shall consider the 
     following:
       (1) The number of school-aged children served by the local 
     educational agency in the academic year preceding the 
     academic year for which the grant is awarded.
       (2) The severity of the impact of Hurricane Katrina on the 
     local educational agency and the extent of the needs in each 
     local educational agency in Louisiana, Mississippi, and 
     Alabama that is in an area in which a major disaster has been 
     declared in accordance with section 401 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5170), related to Hurricane Katrina.
       (d) Applications.--Each local educational agency desiring a 
     grant under this section shall submit an application to the 
     State educational agency at such time, in such manner, and 
     accompanied by such information as the State educational 
     agency may reasonably require to ensure expedited and timely 
     payment to the local educational agency.
       (e) Uses of Funds.--
       (1) In general.--A local educational agency receiving a 
     grant under this section shall use the grant funds for--
       (A) recovery of student and personnel data, and other 
     electronic information;
       (B) replacement of school district information systems, 
     including hardware and software;
       (C) financial operations;
       (D) reasonable transportation costs;
       (E) rental of mobile educational units and leasing of 
     neutral sites or spaces;
       (F) initial replacement of instructional materials and 
     equipment, including textbooks;
       (G) redeveloping instructional plans, including curriculum 
     development;
       (H) initiating and maintaining education and support 
     services; and
       (I) such other activities related to the purpose of this 
     section that are approved by the Secretary.
       (2) Use with other available funds.--A local educational 
     agency receiving a grant under this section may use the grant 
     funds in coordination with other Federal, State, or local 
     funds available for the activities described in paragraph 
     (1).
       (3) Prohibitions.--Grant funds received under this section 
     shall not be used for any of the following:
       (A) Construction or major renovation of schools.
       (B) Payments to school administrators or teachers who are 
     not actively engaged in restarting or re-opening schools.
       (f) Supplement Not Supplant.--
       (1) In general.--Except as provided in paragraph (2), funds 
     made available under this section shall be used to 
     supplement, not supplant, any funds made available through 
     the Federal Emergency Management Agency or through a State.
       (2) Exception.--Paragraph (1) shall not prohibit the 
     provision of Federal assistance under this section to an 
     eligible educational agency that is or may be entitled to 
     receive, from another source, benefits for the same purposes 
     as under this section if--
       (A) such agency has not received such other benefits by the 
     time of application for Federal assistance under this 
     section; and
       (B) such agency agrees to repay all duplicative Federal 
     assistance received to carry out the purposes of this 
     section.

     SEC. 7949. HOLD HARMLESS FOR LOCAL EDUCATIONAL AGENCIES 
                   SERVING MAJOR DISASTER AREAS.

       In the case of a local educational agency that serves an 
     area in which the President has declared that a major 
     disaster exists in accordance with section 401 of the Robert 
     T. Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5170), related to Hurricane Katrina, the amount made 
     available for such local educational agency under each of 
     sections 1124, 1124A, 1125, and 1125A of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6333, 6334, 6335, 
     and 6337) for fiscal year 2006 shall be not less than the 
     amount made available for such local educational agency under 
     each of such sections for fiscal year 2005.

[[Page 26796]]



     SEC. 7950. TEACHER AND PARAPROFESSIONAL RECIPROCITY; DELAY.

       (a) Teacher and Paraprofessional Reciprocity.--
       (1) Teachers.--
       (A) Affected teacher.--In this subsection, the term 
     ``affected teacher'' means a teacher who is displaced due to 
     Hurricane Katrina and relocates to a State that is different 
     from the State in which such teacher resided on August 22, 
     2005.
       (B) In general.--A local educational agency may consider an 
     affected teacher hired by such agency who is not highly 
     qualified in the State in which such agency is located to be 
     highly qualified, for purposes of section 1119 of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6319) and section 612(a)(14) of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1412(a)(14)), for a 
     period not to exceed 1 year, if such teacher was highly 
     qualified, consistent with section 9101(23) of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 7801(23)) and 
     section 602(10) of the Individuals with Disabilities 
     Education Act (20 U.S.C. 1401(10)), on or before August 22, 
     2005, in the State in which such teacher resided on August 
     22, 2005.
       (2) Paraprofessional.--
       (A) Affected paraprofessional.--In this subsection, the 
     term ``affected paraprofessional'' means a paraprofessional 
     who is displaced due to Hurricane Katrina and relocates to a 
     State that is different from the State in which such 
     paraprofessional resided on August 22, 2005.
       (B) In general.--A local educational agency may consider an 
     affected paraprofessional hired by such agency who does not 
     satisfy the requirements of section 1119(c) of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 6319(c)) in 
     the State in which such agency is located to satisfy such 
     requirements, for purposes of such section, for a period not 
     to exceed 1 year, if such paraprofessional satisfied such 
     requirements on or before August 22, 2005, in the State in 
     which such paraprofessional resided on August 22, 2005.
       (b) Delay.--The Secretary of Education may delay, for a 
     period not to exceed 1 year, applicability of the 
     requirements of paragraphs (2) and (3) of section 1119(a) of 
     the Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6319(a)(2) and (3)) and section 612(a)(14)(C) of the 
     Individuals with Disabilities Education Act (20 U.S.C. 
     1412(a)(14)(C)) with respect to the States of Alabama, 
     Louisiana, and Mississippi (and local educational agencies 
     within the jurisdiction of such States), if any such State or 
     local educational agency demonstrates that a failure to 
     comply with such requirements is due to exceptional or 
     uncontrollable circumstances, such as a natural disaster or a 
     precipitous and unforeseen decline in the financial resources 
     of local educational agencies within the State.

     SEC. 7951. ASSISTANCE FOR HOMELESS YOUTH.

       (a) In General.--The Secretary of Education shall provide 
     assistance to local educational agencies serving homeless 
     children and youths displaced by Hurricane Katrina, 
     consistent with section 723 of the McKinney-Vento Homeless 
     Assistance Act (42 U.S.C. 11433), including identification, 
     enrollment assistance, assessment and school placement 
     assistance, transportation, coordination of school services, 
     supplies, referrals for health, mental health, and other 
     needs.
       (b) Exception and Distribution of Funds.--
       (1) Exception.--For purposes of providing assistance under 
     subsection (a), subsections (c) and (e)(1) of section 722 and 
     subsections (b) and (c) of section 723 of the McKinney-Vento 
     Homeless Assistance Act (42 U.S.C. 11432(c) and (e)(1), 
     11433(b) and (c)) shall not apply.
       (2) Disbursement.--The Secretary of Education shall 
     disburse funding provided under subsection (a) to State 
     educational agencies based on demonstrated need, as 
     determined by the Secretary, and such State educational 
     agencies shall distribute funds, that are appropriated under 
     section 7958 and available to carry out this section, to 
     local educational agencies based on demonstrated need, for 
     the purposes of carrying out section 723 of the McKinney-
     Vento Homeless Assistance Act (42 U.S.C. 11433).

     SEC. 7952. TEMPORARY EMERGENCY IMPACT AID FOR DISPLACED 
                   STUDENTS.

       (a) Temporary Emergency Impact Aid Authorized.--
       (1) Aid to state educational agencies.--From amounts 
     appropriated under this subtitle, the Secretary of Education 
     shall provide emergency impact aid to State educational 
     agencies to enable the State educational agencies to make 
     emergency impact aid payments to eligible local educational 
     agencies and eligible BIA-funded schools to enable--
       (A) such eligible local educational agencies and schools to 
     provide for the instruction of displaced students served by 
     such agencies and schools; and
       (B) such eligible local educational agencies to make 
     immediate impact aid payments to accounts established on 
     behalf of displaced students (referred to in this section as 
     ``accounts'') who are attending eligible non-public schools 
     located in the areas served by the eligible local educational 
     agencies.
       (2) Aid to local educational agencies and bia-funded 
     schools.--A State educational agency shall make emergency 
     impact aid payments to eligible local educational agencies 
     and eligible BIA-funded schools in accordance with subsection 
     (d).
       (3) State educational agencies in certain states.--In the 
     case of the States of Louisiana and Mississippi, the State 
     educational agency shall carry out the activities of eligible 
     local educational agencies that are unable to carry out this 
     section, including eligible local educational agencies in 
     such States for which the State exercises the authorities 
     normally exercised by such local educational agencies.
       (b) Definitions.--In this section:
       (1) Displaced student.--The term ``displaced student'' 
     means a student who enrolled in a school (other than the 
     school that the student was enrolled in, or was eligible to 
     be enrolled in, on August 22, 2005) because such student 
     resides or resided on August 22, 2005, in an area for which a 
     major disaster has been declared in accordance with section 
     401 of the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act (42 U.S.C. 5170), related to Hurricane 
     Katrina.
       (2) Eligible local educational agencies.--The term 
     ``eligible local educational agency'' means a local 
     educational agency that serves--
       (A) an elementary school or secondary school (including a 
     charter school) in which there is enrolled a displaced 
     student; or
       (B) an area in which there is located an eligible non-
     public school.
       (3) Eligible non-public school.--The term ``eligible non-
     public school'' means a non-public school that--
       (A) is accredited or licensed or otherwise operates in 
     accordance with State law;
       (B) was in existence on August 22, 2005; and
       (C) serves a displaced student on behalf of whom an 
     application for an account has been made pursuant to 
     subsection (c)(2)(A)(ii).
       (4) Eligible bia-funded school.--In this section, the term 
     ``eligible BIA-funded school'' means a school funded by the 
     Bureau of Indian Affairs in which there is enrolled a 
     displaced student.
       (c) Application.--
       (1) State educational agency.--A State educational agency 
     that desires to receive emergency impact aid under this 
     section shall submit an application to the Secretary of 
     Education at such time, in such manner, and accompanied by 
     such information as the Secretary of Education may reasonably 
     require, including--
       (A) information on the total displaced student child count 
     of the State provided by eligible local educational agencies 
     in the State and eligible BIA-funded schools in the State 
     under paragraph (2);
       (B) a description of the process for the parent or guardian 
     of a displaced student enrolled in a non-public school to 
     indicate to the eligible local educational agency serving the 
     area in which such school is located that the student is 
     enrolled in such school;
       (C) a description of the procedure to be used by an 
     eligible local educational agency in such State to provide 
     payments to accounts;
       (D) a description of the process to be used by an eligible 
     local educational agency in such State to obtain--
       (i) attestations of attendance of eligible displaced 
     students from eligible non-public schools, in order for the 
     local educational agency to provide payments to accounts on 
     behalf of eligible displaced students; and
       (ii) attestations from eligible non-public schools that 
     accounts are used only for the purposes described in 
     subsection (e)(2)(A); and
       (E) the criteria, including family income, used to 
     determine the eligibility for and the amount of assistance 
     under this section provided on behalf of a displaced student 
     attending an eligible non-public school.
       (2) Local educational agencies and bia-funded schools.--An 
     eligible local educational agency or eligible BIA-funded 
     school that desires an emergency impact aid payment under 
     this section shall submit an application to the State 
     educational agency at such time, in such manner, and 
     accompanied by such information as the State educational 
     agency may reasonably require, including documentation 
     submitted quarterly for the 2005-2006 school year that 
     indicates the following:
       (A) In the case of an eligible local educational agency--
       (i) the number of displaced students enrolled in the 
     elementary schools and secondary schools (including charter 
     schools and including the number of displaced students who 
     are served under part B of the Individuals with Disabilities 
     Education Act) served by such agency for such quarter; and
       (ii) the number of displaced students for whom the eligible 
     local educational agency expects to provide payments to 
     accounts under subsection (e)(2) (including the number of 
     displaced students who are served under part B of the 
     Individuals with Disabilities Education Act) for such quarter 
     who meet the following criteria:

       (I) The displaced student enrolled in an eligible non-
     public school prior to the date of enactment of this Act.
       (II) The parent or guardian of the displaced student chose 
     to enroll the student in the eligible non-public school in 
     which the student is enrolled.

[[Page 26797]]

       (III) The parent or guardian of the displaced student 
     submitted an application requesting that the agency make a 
     payment to an account on behalf of the student.
       (IV) The displaced student's tuition and fees (and 
     transportation expenses, if any) for the 2005-2006 school 
     year is waived or reimbursed (by the eligible non-public 
     school) in an amount that is not less than the amount of 
     emergency impact aid payment provided on behalf of such 
     student under this section.

       (B) In the case of an eligible BIA-funded school, the 
     number of displaced students, including the number of 
     displaced students who are served under part B of the 
     Individuals with Disabilities Education Act (20 U.S.C. 1411 
     et seq.), enrolled in such school for such quarter.
       (3) Determination of number of displaced students.--In 
     determining the number of displaced students for a quarter 
     under paragraph (2), an eligible local educational agency or 
     eligible BIA-funded school shall include in such number the 
     number of displaced students served during such quarter prior 
     to the date of enactment of this Act.
       (d) Amount of Emergency Impact Aid.--
       (1) Aid to state educational agencies.--
       (A) In general.--The amount of emergency impact aid 
     received by a State educational agency for the 2005-2006 
     school year shall equal the sum of--
       (i) the product of the number of displaced students (who 
     are not served under part B of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1411 et seq.)), as 
     determined by the eligible local educational agencies and 
     eligible BIA-funded schools in the State under subsection 
     (c)(2), times $6,000; and
       (ii) the product of the number of displaced students who 
     are served under part B of the Individuals with Disabilities 
     Education Act, as determined by the eligible local 
     educational agencies and eligible BIA-funded schools in the 
     State under subsection (c)(2), times $7,500.
       (B) Insufficient funds.--If the amount available under this 
     section to provide emergency impact aid under this subsection 
     is insufficient to pay the full amount that a State 
     educational agency is eligible to receive under this section, 
     the Secretary of Education shall ratably reduce the amount of 
     such emergency impact aid.
       (2) Aid to eligible local educational agencies and eligible 
     bia-funded schools.--
       (A) Quarterly installments.--
       (i) In general.--A State educational agency shall provide 
     emergency impact aid payments under this section on a 
     quarterly basis for the 2005-2006 school year by such dates 
     as determined by the Secretary of Education. Such quarterly 
     installment payments shall be based on the number of 
     displaced students reported under subsection (c)(2) and in 
     the amount determined under clause (ii).
       (ii) Payment amount.--Each quarterly installment payment 
     under clause (i) shall equal 25 percent of the sum of--

       (I) the number of displaced students (who are not served 
     under part B of the Individuals with Disabilities Education 
     Act (20 U.S.C. 1411 et seq.)) reported by the eligible local 
     educational agency or eligible BIA-funded school for such 
     quarter (as determined under subsection (c)(2)) times $6,000; 
     and
       (II) the number of displaced students who are served under 
     part B of the Individuals with Disabilities Education Act (20 
     U.S.C. 1411 et seq.) reported by the eligible local 
     educational agency or eligible BIA-funded school for such 
     quarter (as determined under subsection (c)(2)) times $7,500.

       (iii) Timeline.--The Secretary of Education shall establish 
     a timeline for quarterly reporting on the number of displaced 
     students in order to make the appropriate disbursements in a 
     timely manner.
       (iv) Insufficient funds.--If, for any quarter, the amount 
     available under this section to make payments under this 
     subsection is insufficient to pay the full amount that an 
     eligible local educational agency or eligible BIA-funded 
     school is eligible to receive under this section, the State 
     educational agency shall ratably reduce the amount of such 
     payments.
       (B) Maximum payment to account.--In providing quarterly 
     payments to an account for the 2005-2006 school year on 
     behalf of a displaced student for each quarter that such 
     student is enrolled in a non-public school in the area served 
     by the agency under subsection (e)(2), an eligible local 
     educational agency may provide not more than 4 quarterly 
     payments to such account, and the aggregate amount of such 
     payments shall not exceed the lesser of--
       (i)(I) in the case of a displaced student who is not served 
     under part B of the Individuals with Disabilities Education 
     Act (20 U.S.C. 1411 et seq.), $6,000; or
       (II) in the case of a displaced student who is served under 
     part B of the Individuals with Disabilities Education Act, 
     $7,500; or
       (ii) the cost of tuition and fees (and transportation 
     expenses, if any) at the non-public school for the 2005-2006 
     school year.
       (e) Use of Funds.--
       (1) Displaced students in public schools.--An eligible 
     local educational agency or eligible BIA-funded school 
     receiving emergency impact aid payments under this section 
     shall use the payments to provide instructional opportunities 
     for displaced students who enroll in elementary schools and 
     secondary schools (including charter schools) served by such 
     agency or in such a school, and for other expenses incurred 
     as a result of the agency or school serving displaced 
     students, which uses may include--
       (A) paying the compensation of personnel, including teacher 
     aides, in schools enrolling displaced students;
       (B) identifying and acquiring curricular material, 
     including the costs of providing additional classroom 
     supplies, and mobile educational units and leasing sites or 
     spaces;
       (C) basic instructional services for such students, 
     including tutoring, mentoring, or academic counseling;
       (D) reasonable transportation costs;
       (E) health services (including counseling and mental health 
     services); and
       (F) education and support services.
       (2) Displaced students in non-public schools.--
       (A) In general.--An eligible local educational agency that 
     receives emergency impact aid payments under this section and 
     that serves an area in which there is located an eligible 
     non-public school shall, at the request of the parent or 
     guardian of a displaced student who meets the criteria 
     described in subsection (c)(2)(A)(ii) and who enrolled in a 
     non-public school in an area served by the agency, use such 
     emergency impact aid payment to provide payment on a 
     quarterly basis (but not to exceed the total amount specified 
     in subsection (d)(2)(B) for the 2005-2006 school year) to an 
     account on behalf of such displaced student, which payment 
     shall be used to assist in paying for any of the following:
       (i) Paying the compensation of personnel, including teacher 
     aides, in the non-public school, which funds shall not be 
     used for religious instruction, proselytization, or worship.
       (ii) Identifying and acquiring curricular material, 
     including the costs of providing additional classroom 
     supplies (which shall be secular, neutral, and shall not have 
     a religious component), and mobile educational units and 
     leasing sites or spaces, which shall not be used for 
     religious instruction, proselytization, or worship.
       (iii) Basic instructional services, including tutoring, 
     mentoring, or academic counseling, which services shall be 
     secular and neutral and shall not be used for religious 
     instruction, proselytization, or worship.
       (iv) Reasonable transportation costs.
       (v) Health services (including counseling and mental health 
     services), which services shall be secular and neutral and 
     shall not be used for religious instruction, proselytization, 
     or worship.
       (vi) Education and support services, which services shall 
     be secular and neutral and shall not be used for religious 
     instruction, proselytization, or worship.
       (B) Verification of enrollment.--Before providing a 
     quarterly payment to an account under subparagraph (A), the 
     eligible local educational agency shall verify with the 
     parent or guardian of a displaced student that such displaced 
     student is enrolled in the non-public school.
       (3) Provision of special education and related services.--
       (A) In general.--In the case of a displaced student who is 
     served under part B of the Individuals with Disabilities 
     Education Act (20 U.S.C. 1411 et seq.), any payment made on 
     behalf of such student to an eligible local educational 
     agency or any payment available in an account for such 
     student, shall be used to pay the cost of providing the 
     student with special education and related services 
     consistent with the Individuals with Disabilities Education 
     Act (20 U.S.C. 1400 et seq.).
       (B) Special rule.--
       (i) Retention.--Notwithstanding any other provision of this 
     section, if an eligible local educational agency provides 
     services to a displaced student attending an eligible non-
     public school under section 612(a)(10) of the Individuals 
     with Disabilities Education Act (20 U.S.C. 1412(a)(10)), the 
     eligible local educational agency may retain a portion of the 
     assistance received under this section for such student to 
     pay the cost of providing such services.
       (ii) Determination of portion.--

       (I) Guidelines.--Each State shall issue guidelines that 
     specify the portion of the assistance that an eligible local 
     educational agency in the State may retain under this 
     subparagraph. Each State shall apply such guidelines in a 
     consistent manner throughout the State.
       (II) Determination of portion.--The portion specified in 
     the guidelines shall be based on customary costs of providing 
     services under such section 612(a)(10) for the local 
     educational agency.

       (C) Definitions.--In this paragraph:
       (i) Special education; related services.--The terms 
     ``special education'' and ``related services'' have the 
     meaning given such terms in section 602 of the Individuals 
     with Disabilities Education Act (20 U.S.C. 1401).
       (ii) Individualized education program.--The term 
     ``individualized education program'' has the meaning given 
     the term in section 614(d)(2) of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1414(d)(2)).
       (f) Return of Aid.--

[[Page 26798]]

       (1) Eligible local educational agency or eligible bia-
     funded school.--An eligible local educational agency or 
     eligible BIA-funded school that receives an emergency impact 
     aid payment under this section shall return to the State 
     educational agency any payment provided to the eligible local 
     educational agency or school under this section that the 
     eligible local educational agency or school has not obligated 
     by the end of the 2005-2006 school year in accordance with 
     this section.
       (2) State educational agency.--A State educational agency 
     that receives emergency impact aid under this section, shall 
     return to the Secretary of Education--
       (A) any aid provided to the agency under this section that 
     the agency has not obligated by the end of the 2005-2006 
     school year in accordance with this section; and
       (B) any payment funds returned to the State educational 
     agency under paragraph (1).
       (g) Limitation on Use of Aid and Payments.--Aid and 
     payments provided under this section shall only be used for 
     expenses incurred during the 2005-2006 school year.
       (h) Administrative Expenses.--A State educational agency 
     that receives emergency impact aid under this section may use 
     not more than 1 percent of such aid for administrative 
     expenses. An eligible local educational agency or eligible 
     BIA-funded school that receives emergency impact aid payments 
     under this section may use not more than 2 percent of such 
     payments for administrative expenses.
       (i) Special Funding Rule.--In calculating funding under 
     section 8003 of the Elementary and Secondary Education Act of 
     1965 (20 U.S.C. 7703) for an eligible local educational 
     agency that receives an emergency impact aid payment under 
     this section, the Secretary of Education shall not count 
     displaced students served by such agency for whom an 
     emergency impact aid payment is received under this section, 
     nor shall such students be counted for the purpose of 
     calculating the total number of children in average daily 
     attendance at the schools served by such agency as provided 
     in section 8003(b)(3)(B)(i) of such Act (20 U.S.C. 
     7703(b)(3)(B)(i)).
       (j) Notice of Option of Public School or Non-Public School 
     Enrollment.--Each State receiving emergency impact aid under 
     this section shall provide, to the parent or guardian of each 
     displaced student for whom a payment is made under this 
     section to an account who resides in such State, notification 
     that such parent or guardian has the option of enrolling such 
     student in a public school or a non-public school.
       (k) By-Pass.--If a State educational agency or eligible 
     local educational agency is unable to carry out this section, 
     the Secretary of Education may make such arrangements with 
     the State as the Secretary determines appropriate to carry 
     out this section on behalf of displaced students attending an 
     eligible non-public school in the area served by such agency. 
     For a State in which State law prohibits the State from using 
     Federal funds to directly provide services on behalf of 
     students attending non-public schools and provides that 
     another entity shall provide such services, the Secretary of 
     Education shall make such arrangements with that entity.
       (l) Nondiscrimination.--
       (1) In general.--A school that enrolls a displaced student 
     under this section shall not discriminate against students on 
     the basis of race, color, national origin, religion, 
     disability, or sex.
       (2) Applicability and single sex schools, classes, or 
     activities.--
       (A) In general.--To the extent consistent with title IX of 
     the Education Amendments of 1972 (20 U.S.C. 1681 et seq.), 
     the prohibition of sex discrimination in paragraph (1) shall 
     not apply to a non-public school that is controlled by a 
     religious organization if the application of paragraph (1) 
     would not be consistent with the religious tenets of such 
     organization.
       (B) Single sex schools, classes, or activities.--
     Notwithstanding paragraph (1) and to the extent consistent 
     with title IX of the Education Amendments of 1972, a parent 
     or guardian may choose and a non-public school may offer a 
     single sex school, class, or activity.
       (C) Enrollment.--The prohibition of religious 
     discrimination in paragraph (1) shall not apply with regard 
     to enrollment for a non-public school that is controlled by a 
     religious organization, except in the case of the enrollment 
     of displaced students assisted under this section.
       (3) General provision.--Nothing in this section may be 
     construed to alter or modify the provisions of the 
     Individuals with Disabilities Education Act (20 U.S.C. 1400 
     et seq.), title VI of the Civil Rights Act of 1964 (42 U.S.C. 
     2000d et seq.), title IX of the Education Amendments of 1972 
     (20 U.S.C. 1681 et seq.), and the Rehabilitation Act of 1973 
     (29 U.S.C. 701 et seq.).
       (4) Opt-in.--A displaced student assisted under this 
     section who is enrolled in a non-public school shall not 
     participate in religious worship or religious classes at such 
     school unless such student's parent or guardian chooses to 
     opt-in such student for such religious worship or religious 
     classes.
       (5) Rule of construction.--The amount of any payment (or 
     other form of support provided on behalf of a displaced 
     student) under this section shall not be treated as income of 
     a parent or guardian of the student for purposes of Federal 
     tax laws or for determining eligibility for any other Federal 
     program.
       (m) Treatment of State Aid.--A State shall not take into 
     consideration emergency impact aid payments received under 
     this section by a local educational agency in the State in 
     determining the eligibility of such local educational agency 
     for State aid, or the amount of State aid, with respect to 
     free public education of children.

     SEC. 7953. ORIGINATION FEES FOR STUDENT LOANS.

       (a) Special Allowances.--Notwithstand-
     ing section 438(c)(2) of the Higher Education Act of 1965 (as 
     amended by this Act) (20 U.S.C. 1087-1(c)(2)), subparagraph 
     (A) of section 438(c)(2) of such Act shall be applied by 
     substituting ``2.0 percent'' for ``3.0 percent'' with respect 
     to loans for which the first disbursement of principal is 
     made on or after July 1, 2007.
       (b) Origination Fees for Federal Direct Loans.--
     Notwithstanding subsection (c) of section 455 of
       (3) $1,200,000,000 shall be available to carry out section 
     7956.

     SEC. 7955. SUNSET PROVISION.

       Except as otherwise provided in this subtitle, the 
     provisions of this subtitle shall be effective for the period 
     beginning on the date of enactment of this Act and ending on 
     August 1, 2006.

                 TITLE VIII--COMMITTEE ON THE JUDICIARY

     SEC. 8001. RECAPTURE OF UNUSED VISA NUMBERS.

       (a) Recapture of Unused Employment-Based Immigrant Visas.--
     Section 201(d) of the Immigration and Nationality Act (8 
     U.S.C. 1151(d)) is amended--
       (1) in paragraph (2)(C)--
       (A) by striking ``is the difference'' and inserting ``is 
     the sum of--
       ``(i) the difference''; and
       (B) by striking the period at the end and inserting the 
     following: ``; and
       ``(ii) the lesser of--

       ``(I) the number of immigrant visas that were available in 
     any previous fiscal year to employment-based immigrants (and 
     their family members accompanying or following to join under 
     section 203(d)) and that were not issued for that fiscal year 
     or for any subsequent fiscal year, excluding those immigrant 
     visas reserved for employment-based immigrants for an 
     occupation listed in schedule A of section 656.5 of title 20, 
     Code of Federal Regulations; and
       ``(II) 90,000.''; and

       (2) by adding at the end the following:
       ``(3) Immigrant visas issued on or after October 1, 2004, 
     to spouses and children of employment-based immigrants shall 
     not be counted against the numerical limitation set forth in 
     paragraph (1).''.
       (b) Supplemental Petition Fee.--Section 204(a)(1) of the 
     Immigration and Nationality Act (8 U.S.C. 1154(a)(1)) is 
     amended--
       (1) in subparagraph (E), by adding at the end the 
     following: ``Such petition shall be accompanied by a 
     supplemental petition fee in the amount of $500.''; and
       (2) in subparagraph (F), by adding at the end the 
     following: ``Such petition shall be accompanied by a 
     supplemental petition fee in the amount of $500.''.
       (c) Adjustment of Status.--
       (1) In general.--Section 245(a) of the Immigration and 
     Nationality Act (8 U.S.C. 1255(a)) is amended to read as 
     follows:
       ``(a)(1) The status of an alien who was inspected and 
     admitted or paroled into the United States or the status of 
     any other alien having an approved petition for 
     classification under subparagraph (A)(iii), (A)(iv), (B)(ii), 
     or (B)(iii) of section 204(a)(1) may be adjusted by the 
     Secretary of Homeland Security or the Attorney General, in 
     the discretion of the Secretary or Attorney General, and 
     under such regulations as the Secretary or Attorney General 
     may prescribe, to that of an alien lawfully admitted for 
     permanent residence if--
       ``(A) the alien makes an application for such adjustment;
       ``(B) the alien is eligible to receive an immigrant visa 
     and is admissible to the United States for permanent 
     residence; and
       ``(C) an immigrant visa is immediately available to the 
     alien at the time the application is filed.
       ``(2) If a supplemental petition fee is paid for any 
     petition under subparagraph (E) or (F) of section 204(a)(1), 
     an application under paragraph (1) of this subsection on 
     behalf of an alien beneficiary of such petition (including a 
     spouse or child who is accompanying or following to join the 
     principal beneficiary) may be filed without regard to the 
     limitation set forth in paragraph (1)(C). An application for 
     adjustment of status filed under this paragraph may not be 
     approved until such time as an immigrant visa becomes 
     available.''.
       (2) Pending applications.--An alien on whose behalf a 
     petition was pending under subparagraph (E) or (F) of section 
     204(a)(1) of the Immigration and Nationality Act (8 U.S.C. 
     1154(a)(1)), on the date of enactment of this Act may, upon 
     the payment of the supplemental petition fee set forth in 
     such section, apply for adjustment of status under this 
     subsection without regard to the limitation set forth in 
     section 245(a)(1)(C) of the

[[Page 26799]]

     Immigration and Nationality Act (8 U.S.C. 1255(a)(1)(C)), as 
     amended by paragraph (1).
       (d) Recapture of Unused H-1B Visa Numbers.--Section 214(g) 
     of the Immigration and Nationality Act (8 U.S.C. 1184(g)) is 
     amended--
       (1) by redesignating paragraphs (9) through (11) as 
     paragraphs (10) through (12), respectively; and
       (2) by inserting after paragraph (8) the following:
       ``(9)(A) If the numerical limitation in paragraph (1)(A) 
     for fiscal year 2006 or a subsequent fiscal year has been 
     reached, such numerical limitation shall be supplemented in a 
     number equal to the lesser of--
       ``(i) the cumulative total number of visas that were 
     available in all prior fiscal years subsequent to fiscal year 
     1991, and not issued for each such fiscal year or any 
     subsequent fiscal year; and
       ``(ii) 30,000.
       ``(B) Any petition filed after the numerical limitation set 
     forth in paragraph (1)(A) has been reached for that fiscal 
     year, and seeking an H-1B visa number recaptured under 
     subparagraph (A) of this paragraph, shall be accompanied by 
     an H-1B recapture fee in the amount of $500.''.
       (e) Conforming Amendment.--Section 286(m) of the 
     Immigration and Nationality Act (8 U.S.C. 1356(m)) is amended 
     by inserting ``, including those fees provided for in 
     subparagraphs (E) and (F) of section 204(a)(1) and 
     subsections (c)(15) and (g)(9)(B) of section 214,'' after 
     ``all adjudication fees''.
       (f) Expenditure Limitation.--Amounts collected under 
     subparagraphs (E) and (F) of section 204(a)(1) and 
     subsections (c)(15) and (g)(9)(B) of section 214 of the 
     Immigration and Nationality Act, as amended by this Act, may 
     not be expended unless specifically appropriated by an Act of 
     Congress.

     SEC. 8002. FEES WITH RESPECT TO IMMIGRATION SERVICES FOR 
                   INTRACOMPANY TRANSFEREES.

       Section 214(c) of the Immigration and Nationality Act (8 
     U.S.C. 1184(c)) is amended by adding at the end the 
     following:
       ``(15)(A) The Secretary of State shall impose a fee on an 
     employer when an alien files an application abroad for a visa 
     authorizing initial admission to the United States as a 
     nonimmigrant described in section 101(a)(15)(L) in order to 
     be employed by the employer, if the alien is covered under a 
     blanket petition described in paragraph (2)(A).
       ``(B) The Secretary of Homeland Security shall impose a fee 
     on an employer filing a petition under paragraph (1) 
     initially to grant an alien nonimmigrant status described in 
     section 101(a)(15)(L) or to extend for the first time the 
     stay of an alien having such status.
       ``(C) The amount of the fee imposed under subparagraph (A) 
     or (B) shall be $750.
       ``(D) The fees imposed under subparagraphs (A) and (B) 
     shall only apply to principal aliens and not to spouses or 
     children who are accompanying or following to join such 
     principal aliens.
       ``(E)(i) An employer may not require an alien who is the 
     beneficiary of the visa or petition for which a fee is 
     imposed under this paragraph to reimburse, or otherwise 
     compensate, the employer for part or all of the cost of such 
     fee.
       ``(ii) Section 274A(g)(2) shall apply to a violation of 
     clause (i) in the same manner as it applies to a violation of 
     section 274A(g)(1).''.

     SEC. 8003. JUSTICE PROGRAMS.

       (a) In General.--The Secretary of the Treasury--
       (1) for fiscal year 2006, out of the funds in the Treasury 
     not otherwise appropriated, shall pay to the Attorney 
     General, by December 31, 2005, the amounts listed in 
     subsection (b) that are to be provided for fiscal year 2006; 
     and
       (2) for each subsequent fiscal year provided in subsection 
     (b) out of funds in the Treasury not otherwise appropriated, 
     shall pay to the Attorney General the amounts provided by 
     November 1 of each such fiscal year.
       (b) Amounts Provided.--The amounts referred to in 
     subsection (a), which shall be in addition to funds 
     appropriated for each fiscal year, are--
       (1) $8,000,000 for fiscal year 2006, $17,000,000 for fiscal 
     year 2007, -$15,000,000 for fiscal year 2008, $10,000,000 for 
     fiscal year 2009, and $10,000,000 for fiscal year 2010, to 
     fund the Bulletproof Vest Partnership Program as authorized 
     under section 4 of Public Law 108-372.
       (2) $3,700,000 for fiscal year 2006, $6,300,000 for fiscal 
     year 2007, $5,000,000 for fiscal year 2008, $5,000,000 for 
     fiscal year 2009, and $5,000,000 for fiscal year 2010, to 
     fund DNA Training and Education for Law Enforcement, 
     Correctional Personnel, and Court Officers as authorized by 
     section 303 of Public Law 108-405.
       (3) $8,000,000 for fiscal year 2006, $12,000,000 for fiscal 
     year 2007, $10,000,000 for fiscal year 2008, $10,000,000 for 
     fiscal year 2009, and $10,000,000 for fiscal year 2010, to 
     fund DNA Research and Development as authorized by section 
     305 of Public Law 108-405.
       (4) $500,000 for fiscal year 2006, $500,000 for fiscal year 
     2007, $500,000 for fiscal year 2008, $500,000 for fiscal year 
     2009, and $500,000 for fiscal year 2010, to fund the National 
     Forensic Science Commission as authorized by section 306 of 
     Public Law 108-405.
       (5) $1,000,000 for fiscal year 2006, $1,000,000 for fiscal 
     year 2007, $1,000,000 for fiscal year 2008, $1,000,000 for 
     fiscal year 2009, and $1,000,000 for fiscal year 2010, to 
     fund DNA Identification of Missing Persons as authorized by 
     section 308 of Public Law 108-405.
       (6) $8,000,000 for fiscal year 2006, $27,000,000 for fiscal 
     year 2007, $26,000,000 for fiscal year 2008, $25,000,000 for 
     fiscal year 2009, and $25,000,000 for fiscal year 2010, to 
     fund Capital Litigation Improvement Grants as authorized by 
     sections 421, 422, and 426 of Public Law 108-405.
       (7) $2,500,000 for fiscal year 2006, $3,000,000 for fiscal 
     year 2007, $2,500,000 for fiscal year 2008, $2,500,000 for 
     fiscal year 2009, and $2,500,000 for fiscal year 2010, to 
     fund the Kirk Bloodsworth Post-Conviction DNA Testing Grant 
     Program as authorized by sections 412 and 413 of Public Law 
     108-405.
       (8) $1,000,000 for fiscal year 2006, $1,000,000 for fiscal 
     year 2007, $1,000,000 for fiscal year 2008, $1,000,000 for 
     fiscal year 2009, and $1,000,000 for fiscal year 2010, to 
     fund Increased Resources for Enforcement of Crime Victims 
     Rights, Crime Victims Notification Grants as authorized by 
     section 1404D of the Victims of Crime Act of 1984 (42 U.S.C. 
     10603d).
       (c) Obligation of Funds.--The Attorney General shall--
       (1) receive funds under this section for fiscal years 2006 
     through 2010; and
       (2) accept such funds in the amounts provided which shall 
     be obligated for the purposes stated in this section by March 
     1 of each fiscal year.

     SEC. 8004. COPYRIGHT PROGRAM.

       (a) In General.--The Secretary of the Treasury--
       (1) for fiscal year 2006, out of the funds in the Treasury 
     not otherwise appropriated, shall pay to the Librarian of the 
     Congress, by December 31, 2005, the amounts listed in 
     subsection (b) that are to be provided for fiscal year 2006; 
     and
       (2) for each subsequent fiscal year provided in subsection 
     (b) out of funds in the Treasury not otherwise appropriated 
     shall pay to the Librarian of the Congress the amounts 
     provided by November 1 of each such fiscal year.
       (b) Amounts Provided.--The amounts referred to in 
     subsection (a), which shall be in addition to funds 
     appropriated for each fiscal year, are: $1,300,000 for fiscal 
     year 2006, $1,300,000 for fiscal year 2007, $1,300,000 for 
     fiscal year 2008, $1,300,000 for fiscal year 2009, and 
     $1,300,000 for fiscal year 2010, to fund the Copyright 
     Royalty Judges Program as authorized under section 
     803(e)(1)(B) of title 17, United States Code.
       (c) Obligation of Funds.--The Librarian of the Congress 
     shall--
       (1) receive funds under this section for fiscal years 2006 
     through 2010; and
       (2) accept such funds in the amounts provided which shall 
     be obligated for the purposes stated in this section by March 
     1 of each fiscal year.

                   DIVISION A--AMTRAK REAUTHORIZATION

     SECTION 1. SHORT TITLE.

       This division may be cited as the ``Passenger Rail 
     Investment and Improvement Act of 2005''.

     SEC. 2. AMENDMENT OF TITLE 49, UNITED STATES CODE.

       Except as otherwise specifically provided, whenever in this 
     division an amendment is expressed in terms of an amendment 
     to a section or other provision of law, the reference shall 
     be considered to be made to a section or other provision of 
     title 49, United States Code.

                        TITLE I--AUTHORIZATIONS

     SEC. 101. AUTHORIZATION FOR AMTRAK CAPITAL AND OPERATING 
                   EXPENSES AND STATE CAPITAL GRANTS.

       (a) Operating Grants.--There are authorized to be 
     appropriated to the Secretary of Transportation for the use 
     of Amtrak for operating costs the following amounts:
       (1) For fiscal year 2006, $580,000,000.
       (2) For fiscal year 2007, $590,000,000.
       (3) For fiscal year 2008, $600,000,000.
       (4) For fiscal year 2009, $575,000,000.
       (5) For fiscal year 2010, $535,000,000.
       (6) For fiscal year 2011, $455,000,000.
       (b) Capital Grants.--There are authorized to be 
     appropriated to the Secretary of Transportation for the use 
     of Amtrak for capital projects (as defined in subparagraphs 
     (A) and (B) of section 24401(2) of title 49, United States 
     Code) to bring the Northeast Corridor (as defined in section 
     24102(a)) to a state-of-good-repair, for capital expenses of 
     the national railroad passenger transportation system, and 
     for purposes of making capital grants under section 24402 of 
     that title to States, the following amounts:
       (1) For fiscal year 2006, $813,000,000.
       (2) For fiscal year 2007, $910,000,000.
       (3) For fiscal year 2008, $1,071,000,000.
       (4) For fiscal year 2009, $1,096,000,000.
       (5) For fiscal year 2010, $1,191,000,000.
       (6) For fiscal year 2011, $1,231,000,000.
       (c) Amounts for State Grants.--Out of the amounts 
     authorized under subsection (b), the following percentage 
     shall be available each fiscal year for capital grants to 
     States under section 24402 of title 49, United States Code, 
     to be administered by the Secretary of Transportation:
       (1) 3 percent for fiscal year 2006.
       (2) 11 percent for fiscal year 2007.
       (3) 23 percent for fiscal year 2008.
       (4) 25 percent for fiscal year 2009.
       (5) 31 percent for fiscal year 2010.

[[Page 26800]]

       (6) 33 percent for fiscal year 2011.
       (d) Project Management Oversight.--The Secretary may 
     withhold up to \1/2\ of 1 percent of amounts appropriated 
     pursuant to subsection (b) for the costs of project 
     management oversight of capital projects carried out by 
     Amtrak.

     SEC. 102. AUTHORIZATION FOR THE FEDERAL RAILROAD 
                   ADMINISTRATION.

       There are authorized to be appropriated to the Secretary of 
     Transportation for the use of the Federal Railroad 
     Administration such sums as necessary to implement the 
     provisions required under this division for fiscal years 2006 
     through 2011.

     SEC. 103. REPAYMENT OF LONG-TERM DEBT AND CAPITAL LEASES.

       (a) Amtrak Principal and Interest Payments.--
       (1) Principal on debt service.--There are authorized to be 
     appropriated to the Secretary of Transportation for the use 
     of Amtrak for retirement of principal on loans for capital 
     equipment, or capital leases, not more than the following 
     amounts:
       (A) For fiscal year 2006, $130,200,000.
       (B) For fiscal year 2007, $140,700,000.
       (C) For fiscal year 2008, $156,000,000.
       (D) For fiscal year 2009, $183,800,000.
       (E) For fiscal year 2010, $156,100,000.
       (F) For fiscal year 2011, $193,500,000.
       (2) Interest on debt.--There are authorized to be 
     appropriated to the Secretary of Transportation for the use 
     of Amtrak for the payment of interest on loans for capital 
     equipment, or capital leases, the following amounts:
       (A) For fiscal year 2006, $148,100,000.
       (B) For fiscal year 2007, $141,500,000.
       (C) For fiscal year 2008, $133,800,000.
       (D) For fiscal year 2009, $124,000,000.
       (E) For fiscal year 2010, $113,900,000.
       (F) For fiscal year 2011, $103,800,000.
       (3) Early Buyout Option.--There are authorized to be 
     appropriated to the Secretary of Transportation such sums as 
     may be necessary for the use of Amtrak for the payment of 
     costs associated with early buyout options if the exercise of 
     those options is determined to be advantageous to Amtrak.
       (4) Legal effect of payments under this section.--The 
     payment of principal and interest on secured debt, with the 
     proceeds of grants authorized by this section shall not--
       (A) modify the extent or nature of any indebtedness of the 
     National Railroad Passenger Corporation to the United States 
     in existence of the date of enactment of this Act;
       (B) change the private nature of Amtrak's or its 
     successors' liabilities; or
       (C) imply any Federal guarantee or commitment to amortize 
     Amtrak's outstanding indebtedness.

     SEC. 104. EXCESS RAILROAD RETIREMENT.

       There are authorized to be appropriated to the Secretary of 
     Transportation, beginning with fiscal year 2006, such sums as 
     may be necessary to pay to the Railroad Retirement Account an 
     amount equal to the amount Amtrak must pay under section 3221 
     of the Internal Revenue Code of 1986 in such fiscal years 
     that is more than the amount needed for benefits for 
     individuals who retire from Amtrak and for their 
     beneficiaries. For each fiscal year in which the Secretary 
     makes such a payment, the amounts authorized by section 
     101(a) shall be reduced by an amount equal to such payment.

     SEC. 105. OTHER AUTHORIZATIONS.

       There are authorized to be appropriated to the Secretary of 
     Transportation--
       (1) $5,000,000 for each of fiscal years 2006 through 2011 
     to carry out the rail cooperative research program under 
     section 24910 of title 49, United States Code;
       (2) $5,000,000 for fiscal year 2006, to remain available 
     until expended, for grants to Amtrak and States participating 
     in the Next Generation Corridor Train Equipment Pool 
     Committee established under section 303 of this division for 
     the purpose of designing, developing specifications for, and 
     initiating the procurement of an initial order of 1 or more 
     types of standardized next-generation corridor train 
     equipment and establishing a jointly-owned corporation to 
     manage that equipment; and
       (3) $2,000,000 for fiscal year 2007, for the use of Amtrak 
     in conducting the evaluation required by section 216 of this 
     division.

          TITLE II--AMTRAK REFORM AND OPERATIONAL IMPROVEMENTS

     SEC. 201. NATIONAL RAILROAD PASSENGER TRANSPORTATION SYSTEM 
                   DEFINED.

       (a) In General.--Section 24102 is amended--
       (1) by striking paragraph (2);
       (2) by redesignating paragraphs (3), (4), and (5) as 
     paragraphs (2), (3), and (4), respectively; and
       (3) by inserting after paragraph (4) as so redesignated the 
     following:
       ``(5) `national rail passenger transportation system' 
     means--
       ``(A) the segment of the Northeast Corridor between Boston, 
     Massachusetts and Washington, D.C.;
       ``(B) rail corridors that have been designated by the 
     Secretary of Transportation as high-speed corridors (other 
     than corridors described in subparagraph (A)), but only after 
     they have been improved to permit operation of high-speed 
     service;
       ``(C) long distance routes of more than 750 miles between 
     endpoints operated by Amtrak as of the date of enactment of 
     the Passenger Rail Investment and Improvement Act of 2005; 
     and
       ``(D) short-distance corridors, or routes of not more than 
     750 miles between endpoints, operated by--
       ``(i) Amtrak; or
       ``(ii) another rail carrier that receives funds under 
     chapter 244.''.
       (b) Amtrak Routes With State Funding.--
       (1) In general.--Chapter 247 is amended by inserting after 
     section 24701 the following:

     ``Sec. 24702. Transportation requested by States, 
       authorities, and other persons

       ``(a) Contracts for Transportation.--Amtrak may enter into 
     a contract with a State, a regional or local authority, or 
     another person for Amtrak to operate an intercity rail 
     service or route not included in the national rail passenger 
     transportation system upon such terms as the parties thereto 
     may agree.
       ``(b) Discontinuance.--Upon termination of a contract 
     entered into under this section, or the cessation of 
     financial support under such a contract by either party, 
     Amtrak may discontinue such service or route, notwithstanding 
     any other provision of law.''.
       (2) Conforming amendment.--The chapter analysis for chapter 
     247 is amended by inserting after the item relating to 
     section 24701 the following:

``24702. Transportation requested by States, authorities, and other 
              persons''.
       (c) Amtrak To Continue To Provide Non-High-speed 
     Services.--Nothing in this division is intended to preclude 
     Amtrak from restoring, improving, or developing non-high-
     speed intercity passenger rail service.
       (d) Applicability of Section 24706.--Section 24706 is 
     amended by adding at the end the following:
       ``(c) Applicability.--This section applies to all service 
     over routes provided by Amtrak, notwithstanding any provision 
     of section 24701 of this title or any other provision of this 
     title except section 24702(b).''.

     SEC. 202. AMTRAK BOARD OF DIRECTORS.

       (a) In General.--Section 24302 is amended to read as 
     follows:

     ``Sec. 24302. Board of directors

       ``(a) Composition and Terms.--
       ``(1) The Board of Directors of Amtrak is composed of the 
     following 10 directors, each of whom must be a citizen of the 
     United States:
       ``(A) The Secretary of Transportation.
       ``(B) The President of Amtrak, who shall serve ex officio, 
     as a non-voting member.
       ``(C) 8 individuals appointed by the President of the 
     United States, by and with the advice and consent of the 
     Senate, with general business and financial experience, 
     experience or qualifications in transportation, freight and 
     passenger rail transportation, travel, hospitality, cruise 
     line, and passenger air transportation businesses, or 
     representatives of employees or users of passenger rail 
     transportation or a State government.
       ``(2) In selecting individuals described in paragraph (1) 
     for nominations for appointments to the Board, the President 
     shall consult with the Speaker of the House of 
     Representatives, the Minority Leader of the House of 
     Representatives, the Majority Leader of the Senate, and the 
     Minority Leader of the Senate and try to provide adequate and 
     balanced representation of the major geographic regions of 
     the United States served by Amtrak.
       ``(3) An individual appointed under paragraph (1)(C) of 
     this subsection serves for 5 years or until the individual's 
     successor is appointed and qualified. Not more than 5 
     individuals appointed under paragraph (1)(C) may be members 
     of the same political party.
       ``(4) The Board shall elect a chairman and a vice chairman 
     from among its membership. The vice chairman shall serve as 
     chairman in the absence of the chairman.
       ``(5) The Secretary may be represented at board meetings by 
     the Secretary's designee.
       ``(6) The voting privileges of the President can be changed 
     by a unanimous decision of the Board.
       ``(b) Pay and Expenses.--Each director not employed by the 
     United States Government is entitled to $300 a day when 
     performing Board duties. Each Director is entitled to 
     reimbursement for necessary travel, reasonable secretarial 
     and professional staff support, and subsistence expenses 
     incurred in attending Board meetings.
       ``(c) Vacancies.--A vacancy on the Board is filled in the 
     same way as the original selection, except that an individual 
     appointed by the President of the United States under 
     subsection (a)(1)(C) of this section to fill a vacancy 
     occurring before the end of the term for which the 
     predecessor of that individual was appointed is appointed for 
     the remainder of that term. A vacancy required to be filled 
     by appointment under subsection (a)(1)(C) must be filled not 
     later than 120 days after the vacancy occurs.
       ``(d) Quorum.--A majority of the members serving shall 
     constitute a quorum for doing business.
       ``(e) Bylaws.--The Board may adopt and amend bylaws 
     governing the operation of Amtrak. The bylaws shall be 
     consistent with this part and the articles of 
     incorporation.''.
       (b) Effective Date for Directors' Provision.--The amendment 
     made by subsection (a) shall take effect on January 1, 2006. 
     The members of the Amtrak Board serving on the

[[Page 26801]]

     date of enactment of this Act may continue to serve for the 
     remainder of the term to which they were appointed.

     SEC. 203. ESTABLISHMENT OF IMPROVED FINANCIAL ACCOUNTING 
                   SYSTEM.

       (a) In General.--The Amtrak Board of Directors--
       (1) may employ an independent financial consultant with 
     experience in railroad accounting to assist Amtrak in 
     improving Amtrak's financial accounting and reporting system 
     and practices; and
       (2) shall implement a modern financial accounting and 
     reporting system that will produce accurate and timely 
     financial information in sufficient detail--
       (A) to enable Amtrak to assign revenues and expenses 
     appropriately to each of its lines of business and to each 
     major activity within each line of business activity, 
     including train operations, equipment maintenance, ticketing, 
     and reservations;
       (B) to aggregate expenses and revenues related to 
     infrastructure and distinguish them from expenses and 
     revenues related to rail operations;
       (C) to allow the analysis of ticketing and reservation 
     information on a real-time basis;
       (D) to provide Amtrak cost accounting data; and
       (E) to allow financial analysis by route and service.
       (b) Verification of System; Report.--The Inspector General 
     of the Department of Transportation shall review the 
     accounting system designed and implemented under subsection 
     (a) to ensure that it accomplishes the purposes for which it 
     is intended. The Inspector General shall report his findings 
     and conclusions, together with any recommendations, to the 
     Senate Committee on Commerce, Science, and Transportation and 
     the House of Representatives Committee on Transportation and 
     Infrastructure.

     SEC. 204. DEVELOPMENT OF 5-YEAR FINANCIAL PLAN.

       (a) Development of 5-Year Financial Plan.--The Amtrak Board 
     of Directors shall submit an annual budget and business plan 
     for Amtrak, and a 5-year financial plan for the fiscal year 
     to which that budget and business plan relate and the 
     subsequent 4 years, prepared in accordance with this section, 
     to the Secretary of Transportation and the Inspector General 
     of the Department of Transportation no later than--
       (1) the first day of each fiscal year beginning after the 
     date of enactment of this Act; or
       (2) the date that is 60 days after the date of enactment of 
     an appropriation Act for the fiscal year, if later.
       (b) Contents of 5-Year Financial Plan.--The 5-year 
     financial plan for Amtrak shall include, at a minimum--
       (1) all projected revenues and expenditures for Amtrak, 
     including governmental funding sources;
       (2) projected ridership levels for all Amtrak passenger 
     operations;
       (3) revenue and expenditure forecasts for non-passenger 
     operations;
       (4) capital funding requirements and expenditures necessary 
     to maintain passenger service which will accommodate 
     predicted ridership levels and predicted sources of capital 
     funding;
       (5) operational funding needs, if any, to maintain current 
     and projected levels of passenger service, including state-
     supported routes and predicted funding sources;
       (6) projected capital and operating requirements, 
     ridership, and revenue for any new passenger service 
     operations or service expansions;
       (7) an assessment of the continuing financial stability of 
     Amtrak, as indicated by factors such as the ability of the 
     Federal government to fund capital and operating requirements 
     adequately, Amtrak's ability to efficiently manage its 
     workforce, and Amtrak's ability to effectively provide 
     passenger train service;
       (8) estimates of long-term and short-term debt and 
     associated principle and interest payments (both current and 
     anticipated);
       (9) annual cash flow forecasts;
       (10) a statement describing methods of estimation and 
     significant assumptions;
       (11) specific measures that demonstrate measurable 
     improvement year over year in Amtrak's ability to operate 
     with reduced Federal operating assistance; and
       (12) capital and operating expenditures for anticipated 
     security needs.
       (c) Standards To Promote Financial Stability.--In meeting 
     the requirements of subsection (b), Amtrak shall--
       (1) apply sound budgetary practices, including reducing 
     costs and other expenditures, improving productivity, 
     increasing revenues, or combinations of such practices;
       (2) use the categories specified in the financial 
     accounting and reporting system developed under section 203 
     when preparing its 5-year financial plan; and
       (3) ensure that the plan is consistent with the 
     authorizations of appropriations under title I of this 
     division.
       (d) Assessment by DOT Inspector General.--
       (1) In general.--The Inspector General of the Department of 
     Transportation shall assess the 5-year financial plans 
     prepared by Amtrak under this section to determine whether 
     they meet the requirements of subsection (b), and may suggest 
     revisions to any components thereof that do not meet those 
     requirements.
       (2) Assessment to be furnished to the congress.--The 
     Inspector General shall furnish to the House of 
     Representatives Committee on Appropriations, the Senate 
     Committee on Appropriations, the House of Representatives 
     Committee on Transportation and Infrastructure, and the 
     Senate Committee on Commerce, Science, and Transportation--
       (A) an assessment of the annual budget within 90 days after 
     receiving it from Amtrak; and
       (B) an assessment of the remaining 4 years of the 5-year 
     financial plan within 180 days after receiving it from 
     Amtrak.

     SEC. 205. ESTABLISHMENT OF GRANT PROCESS.

       (a) Grant Requests.--Amtrak shall submit grant requests 
     (including a schedule for the disbursement of funds), 
     consistent with the requirements of this division, to the 
     Secretary of Transportation for funds authorized to be 
     appropriated to the Secretary for the use of Amtrak under 
     sections 101(a) and (b), 103, and 105.
       (b) Procedures for Grant Requests.--The Secretary shall 
     establish substantive and procedural requirements, including 
     schedules, for grant requests under this section not later 
     than 30 days after the date of enactment of this Act and 
     shall transmit copies to the Senate Committee on Commerce, 
     Science, and Transportation and the House of Representatives 
     Committee on Transportation and Infrastructure. As part of 
     those requirements, the Secretary shall require, at a 
     minimum, that Amtrak deposit grant funds, consistent with the 
     appropriated amounts for each area of expenditure in a given 
     fiscal year, in the following 3 accounts:
       (1) The Amtrak Operating account.
       (2) The Amtrak General Capital account.
       (3) The Northeast Corridor Improvement funds account.
     Amtrak may not transfer such funds to another account or 
     expend such funds for any purpose other than the purposes 
     covered by the account in which the funds are deposited 
     without approval by the Secretary.
       (c) Review and Approval.--
       (1) 30-day approval process.--The Secretary shall complete 
     the review of a complete grant request (including the 
     disbursement schedule) and approve or disapprove the request 
     within 30 days after the date on which Amtrak submits the 
     grant request. If the Secretary disapproves the request or 
     determines that the request is incomplete or deficient, the 
     Secretary shall include the reason for disapproval or the 
     incomplete items or deficiencies in the notice to Amtrak.
       (2) 15-day modification period.--Within 15 days after 
     receiving notification from the Secretary under the preceding 
     sentence, Amtrak shall submit a modified request for the 
     Secretary's review.
       (3) Revised requests.--Within 15 days after receiving a 
     modified request from Amtrak, the Secretary shall either 
     approve the modified request, or, if the Secretary finds that 
     the request is still incomplete or deficient, the Secretary 
     shall identify in writing to the Senate Committee on 
     Commerce, Science, and Transportation and the House of 
     Representatives Committee on Transportation and 
     Infrastructure the remaining deficiencies and recommend a 
     process for resolving the outstanding portions of the 
     request.

     SEC. 206. STATE-SUPPORTED ROUTES.

       (a) In General.--Within 2 years after the date of enactment 
     of this Act, the Board of Directors of Amtrak, in 
     consultation with the Secretary of Transportation and the 
     governors of each State and the Mayor of the District of 
     Columbia or groups representing those officials, shall 
     develop and implement a standardized methodology for 
     establishing and allocating the operating and capital costs 
     among the States and Amtrak associated with trains operated 
     on routes described in section 24102(5)(B) or (D) or section 
     24702 that--
       (1) ensures, within 5 years after the date of enactment of 
     this Act, equal treatment in the provision of like services 
     of all States and groups of States (including the District of 
     Columbia); and
       (2) allocates to each route the costs incurred only for the 
     benefit of that route and a proportionate share, based upon 
     factors that reasonably reflect relative use, of costs 
     incurred for the common benefit of more than 1 route.
       (b) Review.--If Amtrak and the States (including the 
     District of Columbia) in which Amtrak operates such routes do 
     not voluntarily adopt and implement the methodology developed 
     under subsection (a) in allocating costs and determining 
     compensation for the provision of service in accordance with 
     the date established therein, the Surface Transportation 
     Board shall determine the appropriate methodology required 
     under subsection (a) for such services in accordance with the 
     procedures and procedural schedule applicable to a proceeding 
     under section 24904(c) of title 49, United States Code, and 
     require the full implementation of this methodology with 
     regards to the provision of such service within 1 year after 
     the Board's determination of the appropriate methodology.
       (c) Use of Chapter 244 Funds.--Funds provided to a State 
     under chapter 244 of title 49,

[[Page 26802]]

     United States Code, may be used, as provided in that chapter, 
     to pay capital costs determined in accordance with this 
     section.

     SEC. 207. INDEPENDENT AUDITOR TO ESTABLISH METHODOLOGIES FOR 
                   AMTRAK ROUTE AND SERVICE PLANNING DECISIONS.

       (a) Methodology Development.--The Federal Railroad 
     Administration shall obtain the services of an independent 
     auditor or consultant to develop and recommend objective 
     methodologies for determining intercity passenger routes and 
     services, including the establishment of new routes, the 
     elimination of existing routes, and the contraction or 
     expansion of services or frequencies over such routes. In 
     developing such methodologies, the auditor or consultant 
     shall consider--
       (1) the current or expected performance and service quality 
     of intercity passenger train operations, including cost 
     recovery, on-time performance and minutes of delay, 
     ridership, on-board services, stations, facilities, 
     equipment, and other services;
       (2) connectivity of a route with other routes;
       (3) the transportation needs of communities and populations 
     that are not well served by other forms of public 
     transportation;
       (4) Amtrak's and other major intercity passenger rail 
     service providers in other countries' methodologies for 
     determining intercity passenger rail routes and services; and
       (5) the views of the States and other interested parties.
       (b) Submittal to Congress.--The auditor or consultant shall 
     submit recommendations developed under subsection (a) to 
     Amtrak, the House of Representatives Committee on 
     Transportation and Infrastructure, and the Senate Committee 
     on Commerce, Science, and Transportation.
       (c) Consideration of Recommendations.--Within 90 days after 
     receiving the recommendations developed under subsection (a) 
     by the independent auditor or consultant, the Amtrak Board 
     shall consider the adoption of those recommendations. The 
     Board shall transmit a report to the Senate Committee on 
     Commerce, Science, and Transportation and the House of 
     Representatives Committee on Transportation and 
     Infrastructure explaining its action in adopting or failing 
     to adopt any of the recommendations.
       (d) Authorization of Appropriations.--There are authorized 
     to be made available to the Secretary of Transportation, out 
     of any amounts authorized by this division to be appropriated 
     for the benefit of Amtrak and not otherwise obligated or 
     expended, such sums as may be necessary to carry out this 
     section.
       (e) Pioneer Route.--Within 2 years after the date of 
     enactment of this Act, Amtrak shall conduct a 1-time 
     evaluation of the Pioneer Route formerly operated by Amtrak 
     to determine, using methodologies adopted under subsection 
     (c), whether a level of passenger demand exists that would 
     warrant consideration of reinstating the entire Pioneer Route 
     service or segments of that service.

     SEC. 208. METRICS AND STANDARDS.

       (a) In General.--Within 180 days after the date of 
     enactment of this Act, the Administrator of the Federal 
     Railroad Administration and Amtrak shall jointly, in 
     consultation with the Surface Transportation Board, rail 
     carriers over whose rail lines Amtrak trains operate, States, 
     Amtrak employees, and groups representing Amtrak passengers, 
     as appropriate, develop new or improve existing metrics and 
     minimum standards for measuring the performance and service 
     quality of intercity passenger train operations, including 
     cost recovery, on-time performance and minutes of delay, 
     ridership, on-board services, stations, facilities, 
     equipment, and other services. Such metrics, at a minimum, 
     shall include the percentage of avoidable and fully allocated 
     operating costs covered by passenger revenues on each route, 
     ridership per train mile operated, measures of on-time 
     performance and delays incurred by intercity passenger trains 
     on the rail lines of each rail carrier and, for long distance 
     routes, measures of connectivity with other routes in all 
     regions currently receiving Amtrak service and the 
     transportation needs of communities and populations that are 
     not well-served by other forms of public transportation. 
     Amtrak shall provide reasonable access to the Federal 
     Railroad Administration in order to enable the Administration 
     to carry out its duty under this section.
       (b) Quarterly Reports.--The Administrator of the Federal 
     Railroad Administration shall collect the necessary data and 
     publish a quarterly report on the performance and service 
     quality of intercity passenger train operations, including 
     cost recovery, ridership, on-time performance and minutes of 
     delay, causes of delay, on-board services, stations, 
     facilities, equipment, and other services.
       (c) Contract with Host Rail Carriers.--To the extent 
     practicable, Amtrak and its host rail carriers shall 
     incorporate the metrics and standards developed under 
     subsection (a) into their access and service agreements.
       (d) Arbitration.--If the development of the metrics and 
     standards is not completed within the 180-day period required 
     by subsection (a), any party involved in the development of 
     those standards may petition the Surface Transportation Board 
     to appoint an arbitrator to assist the parties in resolving 
     their disputes through binding arbitration.

     SEC. 209. PASSENGER TRAIN PERFORMANCE.

       (a) In General.--Section 24308 is amended by adding at the 
     end the following:
       ``(f) Passenger Train Performance and Other Standards.--
       ``(1) Investigation of substandard performance.--If the on-
     time performance of any intercity passenger train averages 
     less than 80 percent for any 2 consecutive calendar quarters, 
     or the service quality of intercity passenger train 
     operations for which minimum standards are established under 
     section 208 of the Passenger Rail Investment and Improvement 
     Act of 2005 fails to meet those standards for 2 consecutive 
     calendar quarters, the Surface Transportation Board shall 
     investigate whether, and to what extent, delays or failure to 
     achieve minimum standards are due to causes that could 
     reasonably be addressed by a rail carrier over the tracks of 
     which the intercity passenger train operates or reasonably 
     addressed by the intercity passenger rail operator. In 
     carrying out such an investigation, the Board shall obtain 
     information from all parties involved and make 
     recommendations regarding reasonable measures to improve the 
     service, quality, and on-time performance of the train.
       ``(2) Problems caused by host rail carrier.--If the Board 
     determines that delays or failures to achieve minimum 
     standards investigated under paragraph (1) are attributable 
     to a rail carrier's failure to provide preference to Amtrak 
     over freight transportation under subsection (c), then the 
     Board shall enforce its recommendations for relief under this 
     section.
       ``(3) Penalties.--
       ``(A) In general.--The Board shall publish a schedule of 
     penalties which will--
       ``(A) fairly reflect the extent to which Amtrak suffers 
     financial loss as a result of host rail carrier delays or 
     failure to achieve minimum standards; and
       ``(B) will adequately deter future actions which may 
     reasonably be expected to be likely to result in delays to 
     Amtrak.
       ``(B) Assessment.--The Board may assess these penalties 
     upon a host rail carrier.
       ``(C) Use.--The Board shall make any amounts received as 
     penalties under this paragraph available to Amtrak or a State 
     contracting with Amtrak, as applicable, for capital or 
     operating expenditures on such routes.''.
       (b) Change of Reference.--Section 24308 is amended--
       (1) by striking ``Interstate Commerce Commission'' in 
     subsection (a)(2)(A) and inserting ``Surface Transportation 
     Board'';
       (2) by striking ``Commission'' each place it appears and 
     inserting ``Board'';
       (3) by striking ``Secretary'' the last 3 places it appears 
     in subsection (c) and each place it appears in subsections 
     (d) and (e) and inserting ``Board''.

     SEC. 210. LONG DISTANCE ROUTES.

       (a) In General.--Chapter 247 is amended by adding at the 
     end thereof the following:

     ``Sec. 24710. Long distance routes

       ``(a) Annual Evaluation.--Using the financial and 
     performance metrics developed under section 208 of the 
     Passenger Rail Investment and Improvement Act of 2005, Amtrak 
     shall--
       ``(1) evaluate annually the financial and operating 
     performance of each long distance passenger rail route 
     operated by Amtrak; and
       ``(2) rank the overall performance of such routes for 2006 
     and identify each long distance passenger rail route operated 
     by Amtrak in 2006 according to its overall performance as 
     belonging to the best performing third of such routes, the 
     second best performing third of such routes, or the worst 
     performing third of such routes.
       ``(b) Performance Improvement Plan.--Amtrak shall develop 
     and publish a performance improvement plan for its long 
     distance passenger rail routes to achieve financial and 
     operating improvements based on the data collected through 
     the application of the financial and performance metrics 
     developed under section 208 of that Act. The plan shall 
     address--
       ``(1) on-time performance;
       ``(2) scheduling, frequency, routes, and stops;
       ``(3) the feasibility of restructuring service into 
     connected corridor service;
       ``(4) performance-related equipment changes and capital 
     improvements;
       ``(5) on-board amenities and service, including food, first 
     class, and sleeping car service;
       ``(6) State or other non-Federal financial contributions;
       ``(7) improving financial performance; and
       ``(8) other aspects of Amtrak's long distance passenger 
     rail routes that affect the financial, competitive, and 
     functional performance of service on Amtrak's long distance 
     passenger rail routes.
       ``(c) Implementation.--Amtrak shall implement the 
     performance improvement plan developed under subsection (b)--
       ``(1) beginning in fiscal year 2007 for those routes 
     identified as being in the worst performing third under 
     subsection (a)(2);

[[Page 26803]]

       ``(2) beginning in fiscal year 2008 for those routes 
     identified as being in the second best performing third under 
     subsection (a)(2); and
       ``(3) beginning in fiscal year 2009 for those routes 
     identified as being in the best performing third under 
     subsection (a)(2).
       ``(d) Enforcement.--The Federal Railroad Administration 
     shall monitor the development, implementation, and outcome of 
     improvement plans under this section. If, for any year, it 
     determines that Amtrak is not making reasonable progress in 
     implementing its performance improvement plan or in achieving 
     the expected outcome of the plan for any calendar year, the 
     Federal Railroad Administration--
       ``(1) shall notify Amtrak, the Inspector General of the 
     Department of Transportation, and appropriate Congressional 
     committees of its determination under this subsection;
       ``(2) shall provide an opportunity for a hearing with 
     respect to that determination; and
       ``(3) may withhold any appropriated funds otherwise 
     available to Amtrak for the operation of a route or routes on 
     which it is not making progress, other than funds made 
     available for passenger safety or security measures.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     247 is amended by inserting after the item relating to 
     section 24709 the following:

``24710. Long distance routes''.

     SEC. 211. ALTERNATE PASSENGER RAIL SERVICE PROGRAM.

       (a) In General.--Chapter 247, as amended by section 209, is 
     amended by adding at the end thereof the following:

     ``Sec. 24711. Alternate passenger rail service program

       ``(a) In General.--Within 1 year after the date of 
     enactment of the Passenger Rail Investment and Improvement 
     Act of 2005, the Federal Railroad Administration shall 
     initiate a rulemaking proceeding to develop a program under 
     which--
       ``(1) a rail carrier or rail carriers that own 
     infrastructure over which Amtrak operates a passenger rail 
     service route described in subparagraph (B), (C), or (D) of 
     section 24102(5) or in section 24702 of title 49, United 
     States Code may petition the Federal Railroad Administration 
     to be considered as a passenger rail service provider over 
     that route in lieu of Amtrak;
       ``(2) the Administration would notify Amtrak within 30 days 
     after receiving a petition under paragraph (1) and establish 
     a deadline by which both the petitioner and Amtrak would be 
     required to submit a bid to provide passenger rail service 
     over the route to which the petition relates;
       ``(3) each bid would describe how the bidder would operate 
     the route, what Amtrak passenger equipment would be needed, 
     if any, what sources of non-Federal funding the bidder would 
     use, including any State subsidy, among other things;
       ``(4) the Administration would make a decision and execute 
     a contract within a specified, limited time after that 
     deadline awarding to the winning bidder--
       ``(A) the right and obligation to provide passenger rail 
     service over that route subject to such performance standards 
     as the Administration may require, consistent with the 
     standards developed under section 208 of this division; and
       ``(B) an operating subsidy--
       ``(i) for the first year at a level not in excess of the 
     level in effect during the fiscal year preceding the fiscal 
     year in which the petition was received, adjusted for 
     inflation;
       ``(ii) for any subsequent years at such level, adjusted for 
     inflation; and
       ``(5) each bid would contain a staffing plan describing the 
     number of employees needed to operate the service, the job 
     assignments and requirements, and the terms of work for 
     prospective and current employees of the bidder for the 
     service outlined in the bid, and such staffing plan would be 
     made available by the winning bidder to the public after the 
     bid award.
       ``(b) Implementation.--
       ``(1) Initial petitions.--Pursuant to any rules or 
     regulations promulgated under subsection (A), the 
     Administration shall establish a deadline for the submission 
     of a petition under subsection (a)--
       ``(A) during fiscal year 2007 for operations commencing in 
     fiscal year 2008; and
       ``(B) during the immediately preceding fiscal year for 
     operations commencing in subsequent fiscal years.
       ``(2) Route limitations.--The Administration may not make 
     the program available with respect to more than 1 Amtrak 
     passenger rail route for operations beginning in fiscal year 
     2008 nor to more than 2 such routes for operations beginning 
     in fiscal year 2010 and subsequent fiscal years.
       ``(c) Performance Standards; Access to Facilities; 
     Employees.--If the Administration awards the right and 
     obligation to provide passenger rail service over a route 
     under the program to a rail carrier or rail carriers--
       ``(1) it shall execute a contract with the rail carrier or 
     rail carriers for rail passenger operations on that route 
     that conditions the operating and subsidy rights upon--
       ``(A) the service provider continuing to provide passenger 
     rail service on the route that is no less frequent, nor over 
     a shorter distance, than Amtrak provided on that route before 
     the award; and
       ``(B) the service provider's compliance with the minimum 
     standards established under section 208 of the Passenger Rail 
     Investment and Improvement Act of 2005 and such additional 
     performance standards as the Administration may establish;
       ``(2) it shall, if the award is made to a rail carrier 
     other than Amtrak, require Amtrak to provide access to its 
     reservation system, stations, and facilities to any rail 
     carrier or rail carriers awarded a contract under this 
     section, in accordance with section 218 of that Act, 
     necessary to carry out the purposes of this section;
       ``(3) the employees of any person used by a rail carrier or 
     rail carriers (as defined in section 10102(5) of this title) 
     in the operation of a route under this section shall be 
     considered an employee of that carrier or carriers and 
     subject to the applicable Federal laws and regulations 
     governing similar crafts or classes of employees of Amtrak, 
     including provisions under section 121 of the Amtrak Reform 
     and Accountability Act of 1997 relating to employees that 
     provide food and beverage service; and
       ``(4) the winning bidder shall provide preference in hiring 
     to qualified Amtrak employees displaced by the award of the 
     bid, consistent with the staffing plan submitted by the 
     bidder.
       ``(d) Cessation of Service.--If a rail carrier or rail 
     carriers awarded a route under this section cease to operate 
     the service or fail to fulfill their obligations under the 
     contract required under subsection (c), the Administrator, in 
     collaboration with the Surface Transportation Board shall 
     take any necessary action consistent with this title to 
     enforce the contract and ensure the continued provision of 
     service, including the installment of an interim service 
     provider and re-bidding the contract to operate the service. 
     The entity providing service shall either be Amtrak or a rail 
     carrier defined in section 24711(a)(1).
       ``(e) Adequate Resources.--Before taking any action allowed 
     under this section, the Secretary shall certify that the 
     Administrator has sufficient resources that are adequate to 
     undertake the program established under this section.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     247, as amended by section 209, is amended by inserting after 
     the item relating to section 24710 the following:

``24711. Alternate passenger rail service program''.

     SEC. 212. EMPLOYEE TRANSITION ASSISTANCE.

       (a) Provision of Financial Incentives.--For Amtrak 
     employees who are adversely affected by the cessation of the 
     operation of a long distance route or any other route under 
     section 24711 of title 49, United States Code, previously 
     operated by Amtrak, the Secretary shall develop a program 
     under which the Secretary may, in the Secretary's discretion, 
     provide grants for financial incentives to be provided to 
     employees of the National Railroad Passenger Corporation who 
     voluntarily terminate their employment with the Corporation 
     and relinquish any legal rights to receive termination-
     related payments under any contractual agreement with the 
     Corporation.
       (b) Conditions for Financial Incentives.--As a condition 
     for receiving financial assistance grants under this section, 
     the Corporation must certify that--
       (1) a reasonable attempt was made to reassign an employee 
     adversely affected under section 24711 of title 49, United 
     States Code, or by the elimination of any route, to other 
     positions within the Corporation in accordance with any 
     contractual agreements;
       (2) the financial assistance results in a net reduction in 
     the total number of employees equal to the number receiving 
     financial incentives;
       (3) the financial assistance results in a net reduction in 
     total employment expense equivalent to the total employment 
     expenses associated with the employees receiving financial 
     incentives; and
       (4) the total number of employees eligible for termination-
     related payments will not be increased without the express 
     written consent of the Secretary.
       (c) Amount of Financial Incentives.--The financial 
     incentives authorized under this section may be no greater 
     than $50,000 per employee.
       (d) Authorization of Appropriations.--There are hereby 
     authorized to be appropriated to the Secretary such sums as 
     may be necessary to make grants to the National Railroad 
     Passenger Corporation to provide financial incentives under 
     subsection (a).
       (e) Termination-Related Payments.--If Amtrak employees 
     adversely affected by the cessation of Amtrak service 
     resulting from the awarding of a grant to an operator other 
     than Amtrak for the operation of a route under section 24711 
     of title 49, United States Code, or any other route, 
     previously operated by Amtrak do not receive financial 
     incentives under subsection (a), then the Secretary shall 
     make grants to the National Railroad Passenger Corporation 
     from funds authorized by section 102 of this division for 
     termination-related payments to employees under existing 
     contractual agreements.

     SEC. 213. NORTHEAST CORRIDOR STATE-OF-GOOD-REPAIR PLAN.

       (a) In General.--Within 6 months after the date of 
     enactment of this Act, the National

[[Page 26804]]

     Railroad Passenger Corporation, in consultation with the 
     Secretary and the States (including the District of Columbia) 
     that make up the Northeast Corridor (as defined in section 
     24102 of title 49, United States Code), shall prepare a 
     capital spending plan for capital projects required to return 
     the Northeast Corridor to a state of good repair by the end 
     of fiscal year 2011, consistent with the funding levels 
     authorized in this division and shall submit the plan to the 
     Secretary.
       (b) Approval by the Secretary.--
       (1) The Corporation shall submit the capital spending plan 
     prepared under this section to the Secretary of 
     Transportation for review and approval pursuant to the 
     procedures developed under section 205 of this division.
       (2) The Secretary of Transportation shall require that the 
     plan be updated at least annually and shall review and 
     approve such updates. During review, the Secretary shall seek 
     comments and review from the commission established under 
     section 24905 of title 49, United States Code, and other 
     Northeast Corridor users regarding the plan.
       (3) The Secretary shall make grants to the Corporation with 
     funds authorized by section 101(b) for Northeast Corridor 
     capital investments contained within the capital spending 
     plan prepared by the Corporation and approved by the 
     Secretary.
       (4) Using the funds authorized by section 101(d), the 
     Secretary shall review Amtrak's capital expenditures funded 
     by this section to ensure that such expenditures are 
     consistent with the capital spending plan and that Amtrak is 
     providing adequate project management oversight and fiscal 
     controls.
       (c) Eligibility of Expenditures.--The Federal share of 
     expenditures for capital improvements under this section may 
     not exceed 100 percent.

     SEC. 214. NORTHEAST CORRIDOR INFRASTRUCTURE AND OPERATIONS 
                   IMPROVEMENTS.

       (a) In General.--Section 24905 is amended to read as 
     follows:

     ``Sec. 24905. Northeast Corridor Infrastructure and 
       Operations Advisory Commission; Safety and Security 
       Committee.

       ``(a) Northeast Corridor Infrastructure and Operations 
     Advisory Commission.--
       ``(1) Within 180 days after the date of enactment of the 
     Passenger Rail Investment and Improvement Act of 2005, the 
     Secretary of Transportation shall establish a Northeast 
     Corridor Infrastructure and Operations Advisory Commission 
     (hereinafter referred to in this section as the `Commission') 
     to promote mutual cooperation and planning pertaining to the 
     rail operations and related activities of the Northeast 
     Corridor. The Commission shall be made up of--
       ``(A) members representing the National Railroad Passenger 
     Corporation;
       ``(B) members representing the Secretary of Transportation 
     and the Federal Railroad Administration;
       ``(C) 1 member from each of the States (including the 
     District of Columbia) that constitute the Northeast Corridor 
     as defined in section 24102, designated by, and serving at 
     the pleasure of, the chief executive officer thereof; and
       ``(D) non-voting representatives of freight railroad 
     carriers using the Northeast Corridor selected by the 
     Secretary.
       ``(2) The Secretary shall ensure that the membership 
     belonging to any of the groups enumerated under subparagraph 
     (1) shall not constitute a majority of the commission's 
     memberships.
       ``(3) The commission shall establish a schedule and 
     location for convening meetings, but shall meet no less than 
     four times per fiscal year, and the commission shall develop 
     rules and procedures to govern the commission's proceedings.
       ``(4) A vacancy in the Commission shall be filled in the 
     manner in which the original appointment was made.
       ``(5) Members shall serve without pay but shall receive 
     travel expenses, including per diem in lieu of subsistence, 
     in accordance with sections 5702 and 5703 of title 5, United 
     States Code.
       ``(6) The Chairman of the Commission shall be elected by 
     the members.
       ``(7) The Commission may appoint and fix the pay of such 
     personnel as it considers appropriate.
       ``(8) Upon request of the Commission, the head of any 
     department or agency of the United States may detail, on a 
     reimbursable basis, any of the personnel of that department 
     or agency to the Commission to assist it in carrying out its 
     duties under this section.
       ``(9) Upon the request of the Commission, the Administrator 
     of General Services shall provide to the Commission, on a 
     reimbursable basis, the administrative support services 
     necessary for the Commission to carry out its 
     responsibilities under this section.
       ``(10) The commission shall consult with other entities as 
     appropriate.
       ``(b) General Recommendations.--The Commission shall 
     develop recommendations concerning Northeast Corridor rail 
     infrastructure and operations including proposals addressing, 
     as appropriate--
       ``(1) short-term and long term capital investment needs 
     beyond the state-of-good-repair under section 213;
       ``(2) future funding requirements for capital improvements 
     and maintenance;
       ``(3) operational improvements of intercity passenger rail, 
     commuter rail, and freight rail services;
       ``(4) opportunities for additional non-rail uses of the 
     Northeast Corridor;
       ``(5) scheduling and dispatching;
       ``(6) safety and security enhancements;
       ``(7) equipment design;
       ``(8) marketing of rail services; and
       ``(9) future capacity requirements.
       ``(c) Access Costs.--
       ``(1) Development of formula.--Within 1 year after 
     verification of Amtrak's new financial accounting system 
     pursuant to section 203(b) of the Passenger Rail Investment 
     and Improvement Act of 2005, the Commission shall--
       ``(A) develop a standardized formula for determining and 
     allocating costs, revenues, and compensation for Northeast 
     Corridor commuter rail passenger transportation, as defined 
     in section 24102 of this title, that use National Railroad 
     Passenger Corporation facilities or services or that provide 
     such facilities or services to the National Railroad 
     Passenger Corporation that ensure that--
       ``(i) there is no cross-subsidization of commuter rail 
     passenger, intercity rail passenger, or freight rail 
     transportation; and
       ``(ii) each service is assigned the costs incurred only for 
     the benefit of that service, and a proportionate share, based 
     upon factors that reasonably reflect relative use, of costs 
     incurred for the common benefit of more than 1 service;
       ``(B) develop a proposed timetable for implementing the 
     formula before the end of the 6th year following the date of 
     enactment of that Act;
       ``(C) transmit the proposed timetable to the Surface 
     Transportation Board; and
       ``(D) at the request of a Commission member, petition the 
     Surface Transportation Board to appoint a mediator to assist 
     the Commission members through non-binding mediation to reach 
     an agreement under this section.
       ``(2) Implementation.--The National Railroad Passenger 
     Corporation and the commuter authorities providing commuter 
     rail passenger transportation on the Northeast Corridor shall 
     implement new agreements for usage of facilities or services 
     based on the formula proposed in paragraph (1) in accordance 
     with the timetable established therein. If the entities fail 
     to implement such new agreements in accordance with the 
     timetable, the Commission shall petition the Surface 
     Transportation Board to determine the appropriate 
     compensation amounts for such services in accordance with 
     section 24904(c) of this title. The Surface Transportation 
     Board shall enforce its determination on the party or parties 
     involved.
       ``(d) Transmission of Recommendations.--The commission 
     shall annually transmit the recommendations developed under 
     subsection (b) and the formula and timetable developed under 
     subsection (c)(1) to the Senate Committee on Commerce, 
     Science, and Transportation and the House of Representatives 
     Committee on Transportation and Infrastructure.
       ``(e) Northeast Corridor Safety and Security Committee.--
       ``(1) In general.--The Secretary shall establish a 
     Northeast Corridor Safety and Security Committee composed of 
     members appointed by the Secretary. The members shall be 
     representatives of--
       ``(A) the Secretary;
       ``(B) Amtrak;
       ``(C) freight carriers operating more than 150,000 train 
     miles a year on the main line of the Northeast Corridor;
       ``(D) commuter agencies;
       ``(E) rail passengers;
       ``(F) rail labor;
       ``(G) the Transportation Security Administration; and
       ``(H) other individuals and organizations the Secretary 
     decides have a significant interest in rail safety or 
     security.
       ``(2) Function; meetings.--The Secretary shall consult with 
     the Committee about safety and security improvements on the 
     Northeast Corridor main line. The Committee shall meet at 
     least once every 2 years to consider safety matters on the 
     main line.
       ``(3) Report.--At the beginning of the first session of 
     each Congress, the Secretary shall submit a report to the 
     Commission and to Congress on the status of efforts to 
     improve safety and security on the Northeast Corridor main 
     line. The report shall include the safety recommendations of 
     the Committee and the comments of the Secretary on those 
     recommendations.''.
       (3) Conforming amendments.--Section 24904(c)(2) is amended 
     by--
       (A) inserting ``commuter rail passenger'' after 
     ``between''; and
       (B) striking ``freight'' in the second sentence.

     SEC. 215. RESTRUCTURING LONG-TERM DEBT AND CAPITAL LEASES.

       (a) In General.--The Secretary of the Treasury, in 
     consultation with the Secretary of Transportation and Amtrak, 
     may make agreements to restructure Amtrak's indebtedness as 
     of the date of enactment of this Act. This authorization 
     expires on January 1, 2007.
       (b) Debt Restructuring.--The Secretary of Treasury, in 
     consultation with the Secretary of the Transportation and 
     Amtrak,

[[Page 26805]]

     shall enter into negotiations with the holders of Amtrak 
     debt, including leases, outstanding on the date of enactment 
     of this Act for the purpose of restructuring (including 
     repayment) and repaying that debt. The Secretary of the 
     Treasury may secure agreements for restructuring or repayment 
     on such terms as the Secretary of the Treasury deems 
     favorable to the interests of the Government.
       (c) Criteria.--In restructuring Amtrak's indebtedness, the 
     Secretary and Amtrak--
       (1) shall take into consideration repayment costs, the term 
     of any loan or loans, and market conditions; and
       (2) shall ensure that the restructuring results in 
     significant savings to Amtrak and the United States 
     Government.
       (d) Payment of Renegotiated Debt.--If the criteria under 
     subsection (c) are met, the Secretary of Treasury shall 
     assume or repay the restructured debt, as appropriate.
       (e) Amtrak Principal and Interest Payments.--
       (1) Principal on debt service.--Unless the Secretary of 
     Treasury makes sufficient payments to creditors under 
     subsection (d) so that Amtrak is required to make no payments 
     to creditors in a fiscal year, the Secretary of 
     Transportation shall use funds authorized by section 
     103(a)(1) for the use of Amtrak for retirement of principal 
     on loans for capital equipment, or capital leases.
       (2) Interest on debt.--Unless the Secretary of Treasury 
     makes sufficient payments to creditors under subsection (d) 
     so that Amtrak is required to make no payments to creditors 
     in a fiscal year, the Secretary of Transportation shall use 
     funds authorized by section 103(a)(2) for the use of Amtrak 
     for the payment of interest on loans for capital equipment, 
     or capital leases.
       (3) Reductions in authorization levels.-- Whenever action 
     taken by the Secretary of the Treasury under subsection (a) 
     results in reductions in amounts of principal or interest 
     that Amtrak must service on existing debt, the corresponding 
     amounts authorized by section 103(a)(1) or (2) shall be 
     reduced accordingly.
       (f) Legal Effect of Payments Under This Section.--The 
     payment of principal and interest on secured debt, other than 
     debt assumed under subsection (d), with the proceeds of 
     grants under subsection (e) shall not--
       (1) modify the extent or nature of any indebtedness of the 
     National Railroad Passenger Corporation to the United States 
     in existence of the date of enactment of this Act;
       (2) change the private nature of Amtrak's or its 
     successors' liabilities; or
       (3) imply any Federal guarantee or commitment to amortize 
     Amtrak's outstanding indebtedness.
       (g) Secretary Approval.--Amtrak may not incur more debt 
     after the date of enactment of this Act without the express 
     advance approval of the Secretary of Transportation.
       (h) Report.--The Secretary of the Treasury shall transmit a 
     report to the Senate Committee on Commerce, Science, and 
     Transportation, the Senate Committee on Appropriations, the 
     House of Representatives Committee on Transportation and 
     Infrastructure, and the House of Representatives Committee on 
     Appropriations by June 1, 2007--
       (1) describing in detail any agreements to restructure the 
     Amtrak debt; and
       (2) providing an estimate of the savings to Amtrak and the 
     United States Government.

     SEC. 216. STUDY OF COMPLIANCE REQUIREMENTS AT EXISTING 
                   INTERCITY RAIL STATIONS.

       Amtrak, in consultation with station owners, shall evaluate 
     the improvements necessary to make all existing stations it 
     serves readily accessible to and usable by individuals with 
     disabilities, as required by section 242(e)(2) of the 
     Americans with Disabilities Act of 1990 (42 U.S.C. 
     12162(e)(2)). The evaluation shall include the estimated cost 
     of the improvements necessary, the identification of the 
     responsible person (as defined in section 241(5) of that Act 
     (42 U.S.C. 12161(5))), and the earliest practicable date when 
     such improvements can be made. Amtrak shall submit the 
     evaluation to the Senate Committee on Commerce, Science, and 
     Transportation, the House of Representatives Committee on 
     Transportation and Infrastructure, and the National Council 
     on Disability by September 30, 2007, along with 
     recommendations for funding the necessary improvements.

     SEC. 217. INCENTIVE PAY.

       The Amtrak Board of Directors is encouraged to develop an 
     incentive pay program for Amtrak management employees.

     SEC. 218. ACCESS TO AMTRAK EQUIPMENT AND SERVICES.

       If a State desires to select or selects an entity other 
     than Amtrak to provide services required for the operation of 
     an intercity passenger train route described in section 
     24102(5)(D) or 24702 of title 49, United States Code, the 
     State may make an agreement with Amtrak to use facilities and 
     equipment of, or have services provided by, Amtrak under 
     terms agreed to by the State and Amtrak to enable the State 
     to utilize an entity other than Amtrak to provide services 
     required for operation of the route. If the parties cannot 
     agree upon terms, and the Surface Transportation Board finds 
     that access to Amtrak's facilities or equipment, or the 
     provision of services by Amtrak, is necessary to carry out 
     this provision and that the operation of Amtrak's other 
     services will not be impaired thereby, the Surface 
     Transportation Board shall, within 120 days after submission 
     of the dispute, issue an order that the facilities and 
     equipment be made available, and that services be provided, 
     by Amtrak, and shall determine reasonable compensation, 
     liability and other terms for use of the facilities and 
     equipment and provision of the services. Compensation shall 
     be determined in accord with the methodology established 
     pursuant to section 206 of this division.

     SEC. 219. GENERAL AMTRAK PROVISIONS.

       (a) Repeal of Self-Sufficiency Requirements.
       (1) Title 49 amendments.--Chapter 241 is amended--
       (A) by striking the last sentence of section 24101(d); and
       (B) by striking the last sentence of section 24104(a).
       (2) Amtrak reform and accountability act amendments.--Title 
     II of the Amtrak Reform and Accountability Act of 1997 (49 
     U.S.C. 24101 nt) is amended by striking sections 204 and 205.
       (3) Common stock redemption date.--Section 415 of the 
     Amtrak Reform and Accountability Act of 1997 (49 U.S.C. 24304 
     nt) is amended by striking subsection (b).
       (b) Lease Arrangements.--Amtrak may obtain services from 
     the Administrator of General Services, and the Administrator 
     may provide services to Amtrak, under section 201(b) and 
     211(b) of the Federal Property and Administrative Service Act 
     of 1949 (40 U.S.C. 481(b) and 491(b)) for each of fiscal 
     years 2006 through 2011.

     SEC. 220. PRIVATE SECTOR FUNDING OF PASSENGER TRAINS.

       Amtrak is encouraged to increase its operation of trains 
     funded by the private sector in order to minimize its need 
     for Federal subsidies. Amtrak shall utilize the provisions of 
     section 24308 of title 49, United States Code, when necessary 
     to obtain access to facilities, train and engine crews, or 
     services of a rail carrier or regional transportation 
     authority that are required to operate such trains.

     SEC. 221. ON-BOARD SERVICE IMPROVEMENTS.

       (a) In General.--Within 1 year after metrics and standards 
     are established under section 208 of this division, Amtrak 
     shall develop and implement a plan to improve on-board 
     service pursuant to the metrics and standards for such 
     service developed under that section.
       (b) Report.--Amtrak shall provide a report to the Senate 
     Committee on Commerce, Science, and Transportation and the 
     House of Representatives Committee on Transportation and 
     Infrastructure on the on-board service improvements 
     proscribed in the plan and the timeline for implementing such 
     improvements.

     SEC. 222. AMTRAK MANAGEMENT ACCOUNTABILITY.

       (a) In General.--Chapter 243 is amended by inserting after 
     section 24309 the following:

     ``Sec. 24310. Management accountability

       ``(a) In General.--Three years after the date of enactment 
     of the Passenger Rail Investment and Improvement Act of 2005, 
     and two years thereafter, the Inspector General of the 
     Department of Transportation shall complete an overall 
     assessment of the progress made by Amtrak management and the 
     Department of Transportation in implementing the provisions 
     of that Act.
       ``(b) Assessment.--The management assessment undertaken by 
     the Inspector General may include a review of--
       ``(1) effectiveness improving annual financial planning;
       ``(2) effectiveness in implementing improved financial 
     accounting;
       ``(3) efforts to implement minimum train performance 
     standards;
       ``(4) progress maximizing revenues and minimizing Federal 
     subsidies; and
       ``(5) any other aspect of Amtrak operations the Inspector 
     General finds appropriate to review.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     243 is amended by inserting after the item relating to 
     section 24309 the following:

``24310. Management accountability''.

               TITLE III--INTERCITY PASSENGER RAIL POLICY

     SEC. 301. CAPITAL ASSISTANCE FOR INTERCITY PASSENGER RAIL 
                   SERVICE.

       (a) In General.--Part C of subtitle V is amended by 
     inserting the following after chapter 243:

   ``CHAPTER 244. INTERCITY PASSENGER RAIL SERVICE CORRIDOR CAPITAL 
                               ASSISTANCE

``Sec.
``24401. Definitions.
``24402. Capital investment grants to support intercity passenger rail 
              service.
``24403. Project management oversight
``24404. Use of capital grants to finance first-dollar liability of 
              grant project.
``24405. Grant conditions.

     ``Sec. 24401. Definitions

       ``In this subchapter:

[[Page 26806]]

       ``(1) Applicant.--The term `applicant' means a State 
     (including the District of Columbia), a group of States, an 
     Interstate Compact, or a public agency established by one or 
     more States and having responsibility for providing intercity 
     passenger rail service.
       ``(2) Capital project.--The term `capital project' means a 
     project or program in a State rail plan developed under 
     chapter 225 of this title for--
       ``(A) acquiring, constructing, improving, or inspecting 
     equipment, track and track structures, or a facility for use 
     in or for the primary benefit of intercity passenger rail 
     service, expenses incidental to the acquisition or 
     construction (including designing, engineering, location 
     surveying, mapping, environmental studies, and acquiring 
     rights-of-way), payments for the capital portions of rail 
     trackage rights agreements, highway-rail grade crossing 
     improvements related to intercity passenger rail service, 
     security, mitigating environmental impacts, communication and 
     signalization improvements, relocation assistance, acquiring 
     replacement housing sites, and acquiring, constructing, 
     relocating, and rehabilitating replacement housing;
       ``(B) rehabilitating, remanufacturing or overhauling rail 
     rolling stock and facilities used primarily in intercity 
     passenger rail service;
       ``(C) costs associated with developing State rail plans; 
     and
       ``(D) the first-dollar liability costs for insurance 
     related to the provision of intercity passenger rail service 
     under section 24404.
       ``(3) Intercity passenger rail service.--The term 
     `intercity passenger rail service' means transportation 
     services with the primary purpose of passenger transportation 
     between towns, cities and metropolitan areas by rail, 
     including high-speed rail, as defined in section 24102 of 
     title 49, United States Code.

     ``Sec. 24402. Capital investment grants to support intercity 
       passenger rail service.

       ``(a) General Authority.--
       ``(1) The Secretary of Transportation may make grants under 
     this section to an applicant to assist in financing the 
     capital costs of facilities and equipment necessary to 
     provide or improve intercity passenger rail transportation.
       ``(2) The Secretary shall require that a grant under this 
     section be subject to the terms, conditions, requirements, 
     and provisions the Secretary decides are necessary or 
     appropriate for the purposes of this section, including 
     requirements for the disposition of net increases in value of 
     real property resulting from the project assisted under this 
     section and shall prescribe procedures and schedules for the 
     awarding of grants under this title, including application 
     and qualification procedures and a record of decision on 
     applicant eligibility. The Secretary shall issue a final rule 
     establishing such procedures not later than 90 days after the 
     date of enactment of the Passenger Rail Investment and 
     Improvement Act of 2005.
       ``(b) Project as Part of State Rail Plan.--
       ``(1) The Secretary may not approve a grant for a project 
     under this section unless the Secretary finds that the 
     project is part of a State rail plan developed under chapter 
     225 of this title, or under the plan required by section 203 
     of the Passenger Rail Investment and Improvement Act of 2005, 
     and that the applicant or recipient has or will have the 
     legal, financial, and technical capacity to carry out the 
     project, satisfactory continuing control over the use of the 
     equipment or facilities, and the capability and willingness 
     to maintain the equipment or facilities.
       ``(2) An applicant shall provide sufficient information 
     upon which the Secretary can make the findings required by 
     this subsection.
       ``(3) If an applicant has not selected the proposed 
     operator of its service competitively, the applicant shall 
     provide written justification to the Secretary showing why 
     the proposed operator is the best, taking into account price 
     and other factors, and that use of the proposed operator will 
     not unnecessarily increase the cost of the project.
       ``(c) Project Selection Criteria.--The Secretary, in 
     selecting the recipients of financial assistance to be 
     provided under subsection (a), shall--
       ``(1) require that each proposed project meet all safety 
     and security requirements that are applicable to the project 
     under law;
       ``(2) give preference to projects with high levels of 
     estimated ridership, increased on-time performance, reduced 
     trip time, additional service frequency to meet anticipated 
     or existing demand, or other significant service enhancements 
     as measured against minimum standards developed under section 
     208 of the Passenger Rail Investment and Improvement Act of 
     2005;
       ``(3) encourage intermodal connectivity through projects 
     that provide direct connections between train stations, 
     airports, bus terminals, subway stations, ferry ports, and 
     other modes of transportation;
       ``(4) ensure that each project is compatible with, and is 
     operated in conformance with--
       ``(A) plans developed pursuant to the requirements of 
     section 135 of title 23, United States Code; and
       ``(B) the national rail plan (if it is available); and
       ``(5) favor the following kinds of projects:
       ``(A) Projects that are expected to have a significant 
     favorable impact on air or highway traffic congestion, 
     capacity, or safety.
       ``(B) Projects that also improve freight or commuter rail 
     operations.
       ``(C) Projects that have significant environmental 
     benefits.
       ``(D) Projects that are--
       ``(i) at a stage of preparation that all pre-commencement 
     compliance with environmental protection requirements has 
     already been completed; and
       ``(ii) ready to be commenced.
       ``(E) Projects with positive economic and employment 
     impacts.
       ``(F) Projects that encourage the use of positive train 
     control technologies.
       ``(G) Projects that have commitments of funding from non-
     Federal Government sources in a total amount that exceeds the 
     minimum amount of the non-Federal contribution required for 
     the project.
       ``(H) Projects that involve donated property interests or 
     services.
       ``(I) Projects that are identified by the Surface 
     Transportation Board as necessary to improve the on time 
     performance and reliability of intercity passenger rail under 
     section 24308(f).
       ``(d) Amtrak Eligibility.--To receive a grant under this 
     section, the National Railroad Passenger Corporation may 
     enter into a cooperative agreement with 1 or more States to 
     carry out 1 or more projects on a State rail plan's ranked 
     list of rail capital projects developed under section 
     22504(a)(5) of this title.
       ``(e) Letters of Intent, Full Funding Grant Agreements, and 
     Early Systems Work Agreements.--
       ``(1)(A) The Secretary may issue a letter of intent to an 
     applicant announcing an intention to obligate, for a major 
     capital project under this section, an amount from future 
     available budget authority specified in law that is not more 
     than the amount stipulated as the financial participation of 
     the Secretary in the project.
       ``(B) At least 30 days before issuing a letter under 
     subparagraph (A) of this paragraph or entering into a full 
     funding grant agreement, the Secretary shall notify in 
     writing the Committee on Transportation and Infrastructure of 
     the House of Representatives and the Committee on Commerce, 
     Science, and Transportation of the Senate and the House and 
     Senate Committees on Appropriations of the proposed letter or 
     agreement. The Secretary shall include with the notification 
     a copy of the proposed letter or agreement as well as the 
     evaluations and ratings for the project.
       ``(C) An obligation or administrative commitment may be 
     made only when amounts are appropriated.
       ``(2)(A) The Secretary may make a full funding grant 
     agreement with an applicant. The agreement shall--
       ``(i) establish the terms of participation by the United 
     States Government in a project under this section;
       ``(ii) establish the maximum amount of Government financial 
     assistance for the project;
       ``(iii) cover the period of time for completing the 
     project, including a period extending beyond the period of an 
     authorization; and
       ``(iv) make timely and efficient management of the project 
     easier according to the law of the United States.
       ``(B) An agreement under this paragraph obligates an amount 
     of available budget authority specified in law and may 
     include a commitment, contingent on amounts to be specified 
     in law in advance for commitments under this paragraph, to 
     obligate an additional amount from future available budget 
     authority specified in law. The agreement shall state that 
     the contingent commitment is not an obligation of the 
     Government and is subject to the availability of 
     appropriations made by Federal law and to Federal laws in 
     force on or enacted after the date of the contingent 
     commitment. Interest and other financing costs of efficiently 
     carrying out a part of the project within a reasonable time 
     are a cost of carrying out the project under a full funding 
     grant agreement, except that eligible costs may not be more 
     than the cost of the most favorable financing terms 
     reasonably available for the project at the time of 
     borrowing. The applicant shall certify, in a way satisfactory 
     to the Secretary, that the applicant has shown reasonable 
     diligence in seeking the most favorable financing terms.
       ``(3)(A) The Secretary may make an early systems work 
     agreement with an applicant if a record of decision under the 
     National Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
     seq.) has been issued on the project and the Secretary finds 
     there is reason to believe--
       ``(i) a full funding grant agreement for the project will 
     be made; and
       ``(ii) the terms of the work agreement will promote 
     ultimate completion of the project more rapidly and at less 
     cost.

[[Page 26807]]

       ``(B) A work agreement under this paragraph obligates an 
     amount of available budget authority specified in law and 
     shall provide for reimbursement of preliminary costs of 
     carrying out the project, including land acquisition, timely 
     procurement of system elements for which specifications are 
     decided, and other activities the Secretary decides are 
     appropriate to make efficient, long-term project management 
     easier. A work agreement shall cover the period of time the 
     Secretary considers appropriate. The period may extend beyond 
     the period of current authorization. Interest and other 
     financing costs of efficiently carrying out the work 
     agreement within a reasonable time are a cost of carrying out 
     the agreement, except that eligible costs may not be more 
     than the cost of the most favorable financing terms 
     reasonably available for the project at the time of 
     borrowing. The applicant shall certify, in a way satisfactory 
     to the Secretary, that the applicant has shown reasonable 
     diligence in seeking the most favorable financing terms. If 
     an applicant does not carry out the project for reasons 
     within the control of the applicant, the applicant shall 
     repay all Government payments made under the work agreement 
     plus reasonable interest and penalty charges the Secretary 
     establishes in the agreement.
       ``(4) The total estimated amount of future obligations of 
     the Government and contingent commitments to incur 
     obligations covered by all outstanding letters of intent, 
     full funding grant agreements, and early systems work 
     agreements may be not more than the amount authorized under 
     section 101(c) of Passenger Rail Investment and Improvement 
     Act of 2005, less an amount the Secretary reasonably 
     estimates is necessary for grants under this section not 
     covered by a letter. The total amount covered by new letters 
     and contingent commitments included in full funding grant 
     agreements and early systems work agreements may be not more 
     than a limitation specified in law.
       ``(f) Federal Share of Net Project Cost.--
       ``(1)(A) Based on engineering studies, studies of economic 
     feasibility, and information on the expected use of equipment 
     or facilities, the Secretary shall estimate the net project 
     cost.
       ``(B) A grant for the project shall not exceed 80 percent 
     of the project net capital cost.
       ``(C) The Secretary shall give priority in allocating 
     future obligations and contingent commitments to incur 
     obligations to grant requests seeking a lower Federal share 
     of the project net capital cost.
       ``(2) Up to an additional 20 percent of the required non-
     Federal funds may be funded from amounts appropriated to or 
     made available to a department or agency of the Federal 
     Government that are eligible to be expended for 
     transportation.
       ``(3) 50 percent of the average amounts expended by a State 
     or group of States (including the District of Columbia) for 
     capital projects to benefit intercity passenger rail service 
     in fiscal years 2003, 2004, and 2005 shall be credited 
     towards the matching requirements for grants awarded under 
     this section. The Secretary may require such information as 
     necessary to verify such expenditures.
       ``(4) 50 percent of the average amounts expended by a State 
     or group of States (including the District of Columbia) in a 
     fiscal year beginning in 2006 for capital projects to benefit 
     intercity passenger rail service or for the operating costs 
     of such service above the average of expenditures made for 
     such service in fiscal years 2003, 2004, and 2005 shall be 
     credited towards the matching requirements for grants awarded 
     under this section. The Secretary may require such 
     information as necessary to verify such expenditures.
       ``(g) Undertaking Projects in Advance.--
       ``(1) The Secretary may pay the Federal share of the net 
     capital project cost to an applicant that carries out any 
     part of a project described in this section according to all 
     applicable procedures and requirements if--
       ``(A) the applicant applies for the payment;
       ``(B) the Secretary approves the payment; and
       ``(C) before carrying out the part of the project, the 
     Secretary approves the plans and specifications for the part 
     in the same way as other projects under this section.
       ``(2) The cost of carrying out part of a project includes 
     the amount of interest earned and payable on bonds issued by 
     the applicant to the extent proceeds of the bonds are 
     expended in carrying out the part. However, the amount of 
     interest under this paragraph may not be more than the most 
     favorable interest terms reasonably available for the project 
     at the time of borrowing. The applicant shall certify, in a 
     manner satisfactory to the Secretary, that the applicant has 
     shown reasonable diligence in seeking the most favorable 
     financial terms.
       ``(3) The Secretary shall consider changes in capital 
     project cost indices when determining the estimated cost 
     under paragraph (2) of this subsection.
       ``(h) 2-Year Availability.--Funds appropriated under this 
     section shall remain available until expended. If any amount 
     provided as a grant under this section is not obligated or 
     expended for the purposes described in subsection (a) within 
     2 years after the date on which the State received the grant, 
     such sums shall be returned to the Secretary for other 
     intercity passenger rail development projects under this 
     section at the discretion of the Secretary.
       ``(i) Public-Private Partnerships.--
       ``(1) In general.--A metropolitan planning organization, 
     State transportation department, or other project sponsor may 
     enter into an agreement with any public, private, or 
     nonprofit entity to cooperatively implement any project 
     funded with a grant under this title.
       ``(2) Forms of participation.--Participation by an entity 
     under paragraph (1) may consist of--
       ``(A) ownership or operation of any land, facility, 
     locomotive, rail car, vehicle, or other physical asset 
     associated with the project;
       ``(B) cost-sharing of any project expense;
       ``(C) carrying out administration, construction management, 
     project management, project operation, or any other 
     management or operational duty associated with the project; 
     and
       ``(D) any other form of participation approved by the 
     Secretary.
       ``(3) Sub-allocation.--A State may allocate funds under 
     this section to any entity described in paragraph (1).
       ``(j) Special Transportation Circumstances.--In carrying 
     out this section, the Secretary shall allocate an appropriate 
     portion of the amounts available under this section to 
     provide grants to States--
       ``(1) in which there is no intercity passenger rail service 
     for the purpose of funding freight rail capital projects that 
     are on a State rail plan developed under chapter 225 of this 
     title that provide public benefits (as defined in chapter 
     225) as determined by the Secretary; or
       ``(2) in which the rail transportation system is not 
     physically connected to rail systems in the continental 
     United States or may not otherwise qualify for a grant under 
     this section due to the unique characteristics of the 
     geography of that State or other relevant considerations, for 
     the purpose of funding transportation-related capital 
     projects.
       ``(k) Small Capital Projects.--The Secretary shall make 
     available $10,000,000 annually from the amounts authorized 
     under section 101(c) of the Passenger Rail Investment and 
     Improvement Act of 2005 beginning in fiscal year 2007 for 
     grants for capital projects eligible under this section not 
     exceeding $2,000,000, including costs eligible under section 
     206(c) of that Act. The Secretary may wave requirements of 
     this section, including state rail plan requirements, as 
     appropriate.

     ``Sec. 24403. Project management oversight

       ``(a) Project Management Plan Requirements.--To receive 
     Federal financial assistance for a major capital project 
     under this subchapter, an applicant must prepare and carry 
     out a project management plan approved by the Secretary of 
     Transportation. The plan shall provide for--
       ``(1) adequate recipient staff organization with well-
     defined reporting relationships, statements of functional 
     responsibilities, job descriptions, and job qualifications;
       ``(2) a budget covering the project management 
     organization, appropriate consultants, property acquisition, 
     utility relocation, systems demonstration staff, audits, and 
     miscellaneous payments the recipient may be prepared to 
     justify;
       ``(3) a construction schedule for the project;
       ``(4) a document control procedure and recordkeeping 
     system;
       ``(5) a change order procedure that includes a documented, 
     systematic approach to handling the construction change 
     orders;
       ``(6) organizational structures, management skills, and 
     staffing levels required throughout the construction phase;
       ``(7) quality control and quality assurance functions, 
     procedures, and responsibilities for construction, system 
     installation, and integration of system components;
       ``(8) material testing policies and procedures;
       ``(9) internal plan implementation and reporting 
     requirements;
       ``(10) criteria and procedures to be used for testing the 
     operational system or its major components;
       ``(11) periodic updates of the plan, especially related to 
     project budget and project schedule, financing, and ridership 
     estimates; and
       ``(12) the recipient's commitment to submit a project 
     budget and project schedule to the Secretary each month.
       ``(b) Secretarial Oversight.--
       ``(1) The Secretary may use no more than 0.5 percent of 
     amounts made available in a fiscal year for capital projects 
     under this subchapter to enter into contracts to oversee the 
     construction of such projects.
       ``(2) The Secretary may use amounts available under 
     paragraph (1) of this subsection to make contracts for 
     safety, procurement, management, and financial compliance 
     reviews and audits of a recipient of amounts under paragraph 
     (1).
       ``(3) The Federal Government shall pay the entire cost of 
     carrying out a contract under this subsection.
       ``(c) Access to Sites and Records.--Each recipient of 
     assistance under this subchapter shall provide the Secretary 
     and a contractor

[[Page 26808]]

     the Secretary chooses under subsection (c) of this section 
     with access to the construction sites and records of the 
     recipient when reasonably necessary.

     ``Sec. 24404. Use of capital grants to finance first-dollar 
       liability of grant project

       ``Notwithstanding the requirements of section 24402 of this 
     subchapter, the Secretary of Transportation may approve the 
     use of capital assistance under this subchapter to fund self-
     insured retention of risk for the first tier of liability 
     insurance coverage for rail passenger service associated with 
     the capital assistance grant, but the coverage may not exceed 
     $20,000,000 per occurrence or $20,000,000 in aggregate per 
     year.

     ``Sec. 24405. Grant conditions

       ``(a) Domestic Buying Preference.--
       ``(1) Requirement.--
       ``(A) In general.--In carrying out a project funded in 
     whole or in part with a grant under this title, the grant 
     recipient shall purchase only--
       ``(i) unmanufactured articles, material, and supplies mined 
     or produced in the United States; or
       ``(ii) manufactured articles, material, and supplies 
     manufactured in the United States substantially from 
     articles, material, and supplies mined, produced, or 
     manufactured in the United States.
       ``(B) De minimis amount.--Subparagraph (1) applies only to 
     a purchase in an total amount that is not less than 
     $1,000,000.
       ``(2) Exemptions.--On application of a recipient, the 
     Secretary may exempt a recipient from the requirements of 
     this subsection if the Secretary decides that, for particular 
     articles, material, or supplies--
       ``(A) such requirements are inconsistent with the public 
     interest;
       ``(B) the cost of imposing the requirements is 
     unreasonable; or
       ``(C) the articles, material, or supplies, or the articles, 
     material, or supplies from which they are manufactured, are 
     not mined, produced, or manufactured in the United States in 
     sufficient and reasonably available commercial quantities and 
     are not of a satisfactory quality.
       ``(3) United States defined.--In this subsection, the term 
     `the United States' means the States, territories, and 
     possessions of the United States and the District of 
     Columbia.
       ``(b) Operators Deemed Rail Carriers and Employers for 
     Certain Purposes.--A person that conducts rail operations 
     over rail infrastructure constructed or improved with funding 
     provided in whole or in part in a grant made under this title 
     shall be considered a rail carrier as defined in section 
     10102(5) of this title for purposes of this title and any 
     other statute that adopts the that definition or in which 
     that definition applies, including--
       ``(1) the Railroad Retirement Act of 1974 (45 U.S.C. 231 et 
     seq.); and
       ``(2) the Railway Labor Act (43 U.S.C. 151 et seq.).
       ``(c) Grant Conditions.--The Secretary shall require as a 
     condition of making any grant under this title for a project 
     that uses rights-of-way owned by a railroad that--
       ``(1) a written agreement exist between the applicant and 
     the railroad regarding such use and ownership, including--
       ``(A) any compensation for such use;
       ``(B) assurances regarding the adequacy of infrastructure 
     capacity to accommodate both existing and future freight and 
     passenger operations; and
       ``(C) an assurance by the railroad that collective 
     bargaining agreements with the railroad's employees 
     (including terms regulating the contracting of work) will 
     remain in full force and effect according to their terms for 
     work performed by the railroad on the railroad transportation 
     corridor;
       ``(D) an assurance that an applicant complies with 
     liability requirements consistent with section 28103 of this 
     title; and
       ``(2) the applicant agrees to comply with--
       ``(A) the standards of section 24312 of this title, as such 
     section was in effect on September 1, 2003, with respect to 
     the project in the same manner that the National Railroad 
     Passenger Corporation is required to comply with those 
     standards for construction work financed under an agreement 
     made under section 24308(a) of this title; and
       ``(B) the protective arrangements established under section 
     504 of the Railroad Revitalization and Regulatory Reform Act 
     of 1976 (45 U.S.C. 836) with respect to employees affected by 
     actions taken in connection with the project to be financed 
     in whole or in part by grants under this subchapter.
       ``(d) Replacement of Existing Intercity Passenger Rail 
     Service.--
       ``(1) Collective bargaining agreement for intercity 
     passenger rail projects.--Any entity providing intercity 
     passenger railroad transportation that begins operations 
     after the date of enactment of this Act on a project funded 
     in whole or in part by grants made under this title and 
     replaces intercity rail passenger service that was provided 
     by Amtrak, unless such service was provided solely by Amtrak 
     to another entity, as of such date shall enter into an 
     agreement with the authorized bargaining agent or agents for 
     adversely affected employees of the predecessor provider 
     that--
       ``(A) gives each such qualified employee of the predecessor 
     provider priority in hiring according to the employee's 
     seniority on the predecessor provider for each position with 
     the replacing entity that is in the employee's craft or class 
     and is available within 3 years after the termination of the 
     service being replaced;
       ``(B) establishes a procedure for notifying such an 
     employee of such positions;
       ``(C) establishes a procedure for such an employee to apply 
     for such positions; and
       ``(D) establishes rates of pay, rules, and working 
     conditions.
       ``(2) Immediate replacement service.--
       ``(A) Negotiations.--If the replacement of preexisting 
     intercity rail passenger service occurs concurrent with or 
     within a reasonable time before the commencement of the 
     replacing entity's rail passenger service, the replacing 
     entity shall give written notice of its plan to replace 
     existing rail passenger service to the authorized collective 
     bargaining agent or agents for the potentially adversely 
     affected employees of the predecessor provider at least 90 
     days before the date on which it plans to commence service. 
     Within 5 days after the date of receipt of such written 
     notice, negotiations between the replacing entity and the 
     collective bargaining agent or agents for the employees of 
     the predecessor provider shall commence for the purpose of 
     reaching agreement with respect to all matters set forth in 
     subparagraphs (A) through (D) of paragraph (1). The 
     negotiations shall continue for 30 days or until an agreement 
     is reached, whichever is sooner. If at the end of 30 days the 
     parties have not entered into an agreement with respect to 
     all such matters, the unresolved issues shall be submitted 
     for arbitration in accordance with the procedure set forth in 
     subparagraph (B).
       ``(B) Arbitration.--If an agreement has not been entered 
     into with respect to all matters set forth in subparagraphs 
     (A) through (D) of paragraph (1) as described in subparagraph 
     (A) of this paragraph, the parties shall select an 
     arbitrator. If the parties are unable to agree upon the 
     selection of such arbitrator within 5 days, either or both 
     parties shall notify the National Mediation Board, which 
     shall provide a list of seven arbitrators with experience in 
     arbitrating rail labor protection disputes. Within 5 days 
     after such notification, the parties shall alternately strike 
     names from the list until only 1 name remains, and that 
     person shall serve as the neutral arbitrator. Within 45 days 
     after selection of the arbitrator, the arbitrator shall 
     conduct a hearing on the dispute and shall render a decision 
     with respect to the unresolved issues among the matters set 
     forth in subparagraphs (A) through (D) of paragraph (1). This 
     decision shall be final, binding, and conclusive upon the 
     parties. The salary and expenses of the arbitrator shall be 
     borne equally by the parties; all other expenses shall be 
     paid by the party incurring them.
       ``(3) Service commencement.--A replacing entity under this 
     subsection shall commence service only after an agreement is 
     entered into with respect to the matters set forth in 
     subparagraphs (A) through (D) of paragraph (1) or the 
     decision of the arbitrator has been rendered.
       ``(4) Subsequent replacement of service.--If the 
     replacement of existing rail passenger service takes place 
     within 3 years after the replacing entity commences intercity 
     passenger rail service, the replacing entity and the 
     collective bargaining agent or agents for the adversely 
     affected employees of the predecessor provider shall enter 
     into an agreement with respect to the matters set forth in 
     subparagraphs (A) through (D) of paragraph (1). If the 
     parties have not entered into an agreement with respect to 
     all such matters within 60 days after the date on which the 
     replacing entity replaces the predecessor provider, the 
     parties shall select an arbitrator using the procedures set 
     forth in paragraph (2)(B), who shall, within 20 days after 
     the commencement of the arbitration, conduct a hearing and 
     decide all unresolved issues. This decision shall be final, 
     binding, and conclusive upon the parties.
       ``(e) Inapplicability to Certain Rail Operations.-- Nothing 
     in this section applies to--
       ``(1) commuter rail passenger transportation (as defined in 
     section 24102(4) of this title) operations of a State or 
     local government authority (as those terms are defined in 
     section 5302(11) and (6), respectively, of this title) 
     eligible to receive financial assistance under section 5307 
     of this title, or to its contractor performing services in 
     connection with commuter rail passenger operations (as so 
     defined);
       ``(2) the Alaska Railroad or its contractors; or
       ``(3) the National Railroad Passenger Corporation's access 
     rights to railroad rights of way and facilities under current 
     law.''.
       (b) Conforming Amendments.--
       (1) The table of chapters for the title is amended by 
     inserting the following after the item relating to chapter 
     243:

``244. Intercity passenger rail service capital assistance.....24401''.

       ``(2) The chapter analysis for subtitle V is amended by 
     inserting the following after the item relating to chapter 
     243:

``244. Intercity passenger rail service capital assistance.....24401''.

[[Page 26809]]



     SEC. 302. STATE RAIL PLANS.

       (a) In General.--Part B of subtitle V is amended by adding 
     at the end the following:

       ``CHAPTER 225. STATE RAIL PLANS AND HIGH PRIORITY PROJECTS

``Sec.
``22501. Definitions
``22502. Authority
``22503. Purposes
``22504. Transparency; coordination; review
``22505. Content
``22506. Review

     ``Sec. 22501. Definitions

       ``In this subchapter:
       ``(1) Private benefit.--
       ``(A) In general.--The term `private benefit'--
       ``(i) means a benefit accrued to a person or private 
     entity, other than the National Railroad Passenger 
     Corporation, that directly improves the economic and 
     competitive condition of that person or entity through 
     improved assets, cost reductions, service improvements, or 
     any other means as defined by the Secretary; and
       ``(ii) shall be determined on a project-by-project basis, 
     based upon an agreement between the parties.
       ``(B) Consultation.--The Secretary may seek the advice of 
     the States and rail carriers in further defining this term.
       ``(2) Public benefit.--
       ``(A) In general.--The term `public benefit'--
       ``(i) means a benefit accrued to the public in the form of 
     enhanced mobility of people or goods, environmental 
     protection or enhancement, congestion mitigation, enhanced 
     trade and economic development, improved air quality or land 
     use, more efficient energy use, enhanced public safety or 
     security, reduction of public expenditures due to improved 
     transportation efficiency or infrastructure preservation, and 
     any other positive community effects as defined by the 
     Secretary; and
       ``(ii) shall be determined on a project-by-project basis, 
     based upon an agreement between the parties.
       ``(B) Consultation.--The Secretary may seek the advice of 
     the States and rail carriers in further defining this term.
       ``(3) State.--The term `State' means any of the 50 States 
     and the District of Columbia.
       ``(4) State rail transportation authority.--The term `State 
     rail transportation authority' means the State agency or 
     official responsible under the direction of the Governor of 
     the State or a State law for preparation, maintenance, 
     coordination, and administration of the State rail plan.''.

     ``Sec. 22502. Authority

       ``(a) In General.--Each State may prepare and maintain a 
     State rail plan in accordance with the provisions of this 
     subchapter.
       ``(b) Requirements.--For the preparation and periodic 
     revision of a State rail plan, a State shall--
       ``(1) establish or designate a State rail transportation 
     authority to prepare, maintain, coordinate, and administer 
     the plan;
       ``(2) establish or designate a State rail plan approval 
     authority to approve the plan;
       ``(3) submit the State's approved plan to the Secretary of 
     Transportation for review; and
       ``(4) revise and resubmit a State-approved plan no less 
     frequently than once every 5 years for reapproval by the 
     Secretary.

     ``Sec. 22503. Purposes

       ``(a) Purposes.--The purposes of a State rail plan are as 
     follows:
       ``(1) To set forth State policy involving freight and 
     passenger rail transportation, including commuter rail 
     operations, in the State.
       ``(2) To establish the period covered by the State rail 
     plan.
       ``(3) To present priorities and strategies to enhance rail 
     service in the State that benefits the public.
       ``(4) To serve as the basis for Federal and State rail 
     investments within the State.
       ``(b) Coordination.--A State rail plan shall be coordinated 
     with other State transportation planning goals and programs 
     and set forth rail transportation's role within the State 
     transportation system.

     ``Sec. 22504. Transparency; coordination; review

       ``(a) Preparation.--A State shall provide adequate and 
     reasonable notice and opportunity for comment and other input 
     to the public, rail carriers, commuter and transit 
     authorities operating in, or affected by rail operations 
     within the State, units of local government, and other 
     interested parties in the preparation and review of its State 
     rail plan.
       ``(b) Intergovernmental Coordination.--A State shall review 
     the freight and passenger rail service activities and 
     initiatives by regional planning agencies, regional 
     transportation authorities, and municipalities within the 
     State, or in the region in which the State is located, while 
     preparing the plan, and shall include any recommendations 
     made by such agencies, authorities, and municipalities as 
     deemed appropriate by the State.

     ``Sec. 22505. Content

       ``(a) In General.--Each State rail plan shall contain the 
     following:
       ``(1) An inventory of the existing overall rail 
     transportation system and rail services and facilities within 
     the State and an analysis of the role of rail transportation 
     within the State's surface transportation system.
       ``(2) A review of all rail lines within the State, 
     including proposed high speed rail corridors and significant 
     rail line segments not currently in service.
       ``(3) A statement of the State's passenger rail service 
     objectives, including minimum service levels, for rail 
     transportation routes in the State.
       ``(4) A general analysis of rail's transportation, 
     economic, and environmental impacts in the State, including 
     congestion mitigation, trade and economic development, air 
     quality, land-use, energy-use, and community impacts.
       ``(5) A long-range rail investment program for current and 
     future freight and passenger infrastructure in the State that 
     meets the requirements of subsection (b).
       ``(6) A statement of public financing issues for rail 
     projects and service in the State, including a list of 
     current and prospective public capital and operating funding 
     resources, public subsidies, State taxation, and other 
     financial policies relating to rail infrastructure 
     development.
       ``(7) An identification of rail infrastructure issues 
     within the State that reflects consultation with all relevant 
     stake holders.
       ``(8) A review of major passenger and freight intermodal 
     rail connections and facilities within the State, including 
     seaports, and prioritized options to maximize service 
     integration and efficiency between rail and other modes of 
     transportation within the State.
       ``(9) A review of publicly funded projects within the State 
     to improve rail transportation safety and security, including 
     all major projects funded under section 130 of title 23.
       ``(10) A performance evaluation of passenger rail services 
     operating in the State, including possible improvements in 
     those services, and a description of strategies to achieve 
     those improvements.
       ``(11) A compilation of studies and reports on high-speed 
     rail corridor development within the State not included in a 
     previous plan under this subchapter, and a plan for funding 
     any recommended development of such corridors in the State.
       ``(12) A statement that the State is in compliance with the 
     requirements of section 22102.
       ``(b) Long-Range Service and Investment Program.--
       ``(1) Program content.--A long-range rail investment 
     program included in a State rail plan under subsection (a)(5) 
     shall include the following matters:
       ``(A) A list of any rail capital projects expected to be 
     undertaken or supported in whole or in part by the State.
       ``(B) A detailed funding plan for those projects.
       ``(2) Project list content.--The list of rail capital 
     projects shall contain--
       ``(A) a description of the anticipated public and private 
     benefits of each such project; and
       ``(B) a statement of the correlation between--
       ``(i) public funding contributions for the projects; and
       ``(ii) the public benefits.
       ``(3) Considerations for project list.--In preparing the 
     list of freight and intercity passenger rail capital 
     projects, a State rail transportation authority should take 
     into consideration the following matters:
       ``(A) Contributions made by non-Federal and non-State 
     sources through user fees, matching funds, or other private 
     capital involvement.
       ``(B) Rail capacity and congestion effects.
       ``(C) Effects on highway, aviation, and maritime capacity, 
     congestion, or safety.
       ``(D) Regional balance.
       ``(E) Environmental impact.
       ``(F) Economic and employment impacts.
       ``(G) Projected ridership and other service measures for 
     passenger rail projects.

     ``Sec. 22506. Review

       The Secretary shall prescribe procedures for States to 
     submit State rail plans for review under this title, 
     including standardized format and data requirements. State 
     rail plans completed before the date of enactment of the 
     Passenger Rail Investment and Improvement Act of 2005 that 
     substantially meet the requirements of this chapter, as 
     determined by the Secretary, shall be deemed by the Secretary 
     to have met the requirements of this chapter''.
       (b) Conforming Amendments.--
       (1) The table of chapters for the title is amended by 
     inserting the following after the item relating to chapter 
     223:

``225. State rail plans........................................22501''.

       ``(2) The chapter analysis for subtitle V is amended by 
     inserting the following after the item relating to chapter 
     223:

``225. State rail plans........................................24401''.

     SEC. 303. NEXT GENERATION CORRIDOR TRAIN EQUIPMENT POOL.

       (a) In General.--Within 180 days after the date of 
     enactment of this Act, Amtrak shall establish a Next 
     Generation Corridor Equipment Pool Committee, comprised of 
     representatives of Amtrak, the Federal Railroad 
     Administration, and interested States. The purpose of the 
     Committee shall be to design,

[[Page 26810]]

     develop specifications for, and procure standardized next-
     generation corridor equipment.
       (b) Functions.--The Committee may--
       (1) determine the number of different types of equipment 
     required, taking into account variations in operational needs 
     and corridor infrastructure;
       (2) establish a pool of equipment to be used on corridor 
     routes funded by participating States; and
       (3) subject to agreements between Amtrak and States, 
     utilize services provided by Amtrak to design, maintain and 
     remanufacture equipment.
       (c) Cooperative Agreements.--Amtrak and States 
     participating in the Committee may enter into agreements for 
     the funding, procurement, remanufacture, ownership and 
     management of corridor equipment, including equipment 
     currently owned or leased by Amtrak and next-generation 
     corridor equipment acquired as a result of the Committee's 
     actions, and may establish a corporation, which may be owned 
     or jointly-owned by Amtrak, participating States or other 
     entities, to perform these functions.
       (d) Funding.--In addition to the authorization provided in 
     section 105 of this division, capital projects to carry out 
     the purposes of this section shall be eligible for grants 
     made pursuant to chapter 244 of title 49, United States Code.

     SEC. 304. FEDERAL RAIL POLICY.

       Section 103 is amended--
       (1) by inserting ``In General.--'' before ``The Federal'' 
     in subsection (a);
       (2) by striking the second and third sentences of 
     subsection (a);
       (3) by inserting ``Administrator.--'' before ``The head'' 
     in subsection (b);
       (4) by redesignating subsections (c), (d), and (e) as 
     subsections (d), (e), and (f), respectively and by inserting 
     after subsection (b) the following:
       ``(c) Safety.--To carry out all railroad safety laws of the 
     United States, the Administration is divided on a 
     geographical basis into at least 8 safety offices. The 
     Secretary of Transportation is responsible for all acts taken 
     under those laws and for ensuring that the laws are uniformly 
     administered and enforced among the safety offices.'';
       (5) by inserting ``Powers and Duties.--'' before ``The'' in 
     subsection (d), as redesignated;
       (6) by striking ``and'' after the semicolon in paragraph 
     (1) of subsection (d), as redesignated;
       (7) by redesignating paragraph (2) of subsection (d), as 
     redesignated, as paragraph (3) and inserting after paragraph 
     (1) the following:
       ``(2) the duties and powers related to railroad policy and 
     development under subsection (e); and'';
       (8) by inserting ``Transfers of Duty.--'' before ``A duty'' 
     in subsection (e), as redesignated;
       (9) by inserting ``Contracts, grants, leases, cooperative 
     agreements, and similar transactions.--'' before ``Subject'' 
     in subsection (f), as redesignated;
       (10) by striking the last sentence in subsection (f), as 
     redesignated; and
       (11) by adding at the end the following:
       ``(g) Additional Duties of the Administrator.--The 
     Administrator shall--
       ``(1) provide assistance to States in developing State rail 
     plans prepared under chapter 225 and review all State rail 
     plans submitted under that section;
       ``(2) develop a long range national rail plan that is 
     consistent with approved State rail plans and the rail needs 
     of the Nation, as determined by the Secretary in order to 
     promote an integrated, cohesive, efficient, and optimized 
     national rail system for the movement of goods and people;
       ``(3) develop a preliminary national rail plan within a 
     year after the date of enactment of the Passenger Rail 
     Investment and Improvement Act of 2005;
       ``(4) develop and enhance partnerships with the freight and 
     passenger railroad industry, States, and the public 
     concerning rail development;
       ``(5) support rail intermodal development and high-speed 
     rail development, including high speed rail planning;
       ``(6) ensure that programs and initiatives developed under 
     this section benefit the public and work toward achieving 
     regional and national transportation goals; and
       ``(7) facilitate and coordinate efforts to assist freight 
     and passenger rail carriers, transit agencies and 
     authorities, municipalities, and States in passenger-freight 
     service integration on shared rights of way by providing 
     neutral assistance at the joint request of affected rail 
     service providers and infrastructure owners relating to 
     operations and capacity analysis, capital requirements, 
     operating costs, and other research and planning related to 
     corridors shared by passenger or commuter rail service and 
     freight rail operations.
       ``(h) Performance Goals and Reports.--
       ``(1) Performance goals.--In conjunction with the 
     objectives established and activities undertaken under 
     section 103(e) of this title, the Administrator shall develop 
     a schedule for achieving specific, measurable performance 
     goals.
       ``(2) Resource needs.--The strategy and annual plans shall 
     include estimates of the funds and staff resources needed to 
     accomplish each goal and the additional duties required under 
     section 103(e).
       ``(3) Submission with president's budget.--Beginning with 
     fiscal year 2007 and each fiscal year thereafter, the 
     Secretary shall submit to Congress, at the same time as the 
     President's budget submission, the Administration's 
     performance goals and schedule developed under paragraph (1), 
     including an assessment of the progress of the Administration 
     toward achieving its performance goals.''.

     SEC. 305. RAIL COOPERATIVE RESEARCH PROGRAM.

       (a) Establishment and content.--Chapter 249 is amended by 
     adding at the end the following:

     ``Sec. 24910. Rail cooperative research program

       ``(a) In General.--The Secretary shall establish and carry 
     out a rail cooperative research program. The program shall--
       ``(1) address, among other matters, intercity rail 
     passenger and freight rail services, including existing rail 
     passenger and freight technologies and speeds, incrementally 
     enhanced rail systems and infrastructure, and new high-speed 
     wheel-on-rail systems and rail security;
       ``(2) address ways to expand the transportation of 
     international trade traffic by rail, enhance the efficiency 
     of intermodal interchange at ports and other intermodal 
     terminals, and increase capacity and availability of rail 
     service for seasonal freight needs;
       ``(3) consider research on the interconnectedness of 
     commuter rail, passenger rail, freight rail, and other rail 
     networks; and
       ``(4) give consideration to regional concerns regarding 
     rail passenger and freight transportation, including meeting 
     research needs common to designated high-speed corridors, 
     long-distance rail services, and regional intercity rail 
     corridors, projects, and entities.
       ``(b) Content.--The program to be carried out under this 
     section shall include research designed--
       ``(1) to identify the unique aspects and attributes of rail 
     passenger and freight service;
       ``(2) to develop more accurate models for evaluating the 
     impact of rail passenger and freight service, including the 
     effects on highway and airport and airway congestion, 
     environmental quality, and energy consumption;
       ``(3) to develop a better understanding of modal choice as 
     it affects rail passenger and freight transportation, 
     including development of better models to predict 
     utilization;
       ``(4) to recommend priorities for technology demonstration 
     and development;
       ``(5) to meet additional priorities as determined by the 
     advisory board established under subsection (c), including 
     any recommendations made by the National Research Council;
       ``(6) to explore improvements in management, financing, and 
     institutional structures;
       ``(7) to address rail capacity constraints that affect 
     passenger and freight rail service through a wide variety of 
     options, ranging from operating improvements to dedicated new 
     infrastructure, taking into account the impact of such 
     options on operations;
       ``(8) to improve maintenance, operations, customer service, 
     or other aspects of intercity rail passenger and freight 
     service;
       ``(9) to recommend objective methodologies for determining 
     intercity passenger rail routes and services, including the 
     establishment of new routes, the elimination of existing 
     routes, and the contraction or expansion of services or 
     frequencies over such routes;
       ``(10) to review the impact of equipment and operational 
     safety standards on the further development of high speed 
     passenger rail operations connected to or integrated with 
     non-high speed freight or passenger rail operations; and
       ``(11) to recommend any legislative or regulatory changes 
     necessary to foster further development and implementation of 
     high speed passenger rail operations while ensuring the 
     safety of such operations that are connected to or integrated 
     with non-high speed freight or passenger rail operations.
       ``(c) Advisory Board.--
       ``(1) Establishment.--In consultation with the heads of 
     appropriate Federal departments and agencies, the Secretary 
     shall establish an advisory board to recommend research, 
     technology, and technology transfer activities related to 
     rail passenger and freight transportation.
       ``(2) Membership.--The advisory board shall include--
       ``(A) representatives of State transportation agencies;
       ``(B) transportation and environmental economists, 
     scientists, and engineers; and
       ``(C) representatives of Amtrak, the Alaska Railroad, 
     freight railroads, transit operating agencies, intercity rail 
     passenger agencies, railway labor organizations, and 
     environmental organizations.
       ``(d) National Academy of Sciences.-- The Secretary may 
     make grants to, and enter into cooperative agreements with, 
     the National Academy of Sciences to carry out such activities 
     relating to the research, technology, and technology transfer 
     activities described in subsection (b) as the Secretary deems 
     appropriate.''.
       (b) Clerical Amendment.--The chapter analysis for chapter 
     249 is amended by adding at the end the following:


[[Page 26811]]


``24910. Rail cooperative research program''.

              TITLE IV--PASSENGER RAIL SECURITY AND SAFETY

     SEC. 401. SYSTEMWIDE AMTRAK SECURITY UPGRADES.

       (a) In General--Subject to subsection (c) the Secretary of 
     Homeland Security, in consultation with the Secretary of 
     Transportation, is authorized to make grants to Amtrak--
       (1) to secure major tunnel access points and ensure tunnel 
     integrity in New York, Baltimore, and Washington, DC;
       (2) to secure Amtrak trains;
       (3) to secure Amtrak stations;
       (4) to obtain a watch list identification system approved 
     by the Secretary;
       (5) to obtain train tracking and interoperable 
     communications systems that are coordinated to the maximum 
     extent possible;
       (6) to hire additional police and security officers, 
     including canine units;
       (7) to expand emergency preparedness efforts; and
       (8) for employee security training.
       (b) Conditions.--The Secretary of Transportation shall 
     disburse funds to Amtrak provided under subsection (a) for 
     projects contained in a systemwide security plan approved by 
     the Secretary of Homeland Security. The plan shall include 
     appropriate measures to address security awareness, emergency 
     response, and passenger evacuation training.
       (c) Equitable Geographic Allocation.--The Secretary shall 
     ensure that, subject to meeting the highest security needs on 
     Amtrak's entire system, stations and facilities located 
     outside of the Northeast Corridor receive an equitable share 
     of the security funds authorized by this section.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Homeland Security to 
     carry out this section--
       (1) $63,500,000 for fiscal year 2006;
       (2) $30,000,000 for fiscal year 2007; and
       (3) $30,000,000 for fiscal year 2008.
     Amounts appropriated pursuant to this subsection shall remain 
     available until expended.

     SEC. 402. FIRE AND LIFE-SAFETY IMPROVEMENTS.

       (a) Life-safety Needs.--The Secretary of Transportation is 
     authorized to make grants to Amtrak for the purpose of making 
     fire and life-safety improvements to Amtrak tunnels on the 
     Northeast Corridor in New York, NY, Baltimore, MD, and 
     Washington, DC.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Transportation for the 
     purposes of carrying out subsection (a) the following 
     amounts:
       (1) For the 6 New York tunnels to provide ventilation, 
     electrical, and fire safety technology upgrades, emergency 
     communication and lighting systems, and emergency access and 
     egress for passengers--
       (A) $190,000,000 for fiscal year 2006;
       (B) $190,000,000 for fiscal year 2007;
       (C) $190,000,000 for fiscal year 2008;
       (2) For the Baltimore & Potomac tunnel and the Union 
     tunnel, together, to provide adequate drainage, ventilation, 
     communication, lighting, and passenger egress upgrades--
       (A) $19,000,000 for fiscal year 2006;
       (B) $19,000,000 for fiscal year 2007;
       (C) $19,000,000 for fiscal year 2008;
       (3) For the Washington, DC, Union Station tunnels to 
     improve ventilation, communication, lighting, and passenger 
     egress upgrades--
       (A) $13,333,000 for fiscal year 2006;
       (B) $13,333,000 for fiscal year 2007;
       (C) $13,333,000 for fiscal year 2008;
       (c) Infrastructure Upgrades.--There are authorized to be 
     appropriated to the Secretary of Transportation for fiscal 
     year 2006 $3,000,000 for the preliminary design of options 
     for a new tunnel on a different alignment to augment the 
     capacity of the existing Baltimore tunnels.
       (d) Availability of Appropriated Funds.--Amounts made 
     available pursuant to this section shall remain available 
     until expended.
       (e) Plans Required.--The Secretary may not make amounts 
     available to Amtrak for obligation or expenditure under 
     subsection (a)--
       (1) until Amtrak has submitted to the Secretary, and the 
     Secretary has approved, an engineering and financial plan for 
     such projects; and
       (2) unless, for each project funded pursuant to this 
     section, the Secretary has approved a project management plan 
     prepared by Amtrak addressing appropriate project budget, 
     construction schedule, recipient staff organization, document 
     control and record keeping, change order procedure, quality 
     control and assurance, periodic plan updates, and periodic 
     status reports.
       (f) Review of Plans.--The Secretary of Transportation shall 
     complete the review of the plans required by paragraphs (1) 
     and (2) of subsection (e) and approve or disapprove the plans 
     within 45 days after the date on which each such plan is 
     submitted by Amtrak. If the Secretary determines that a plan 
     is incomplete or deficient, the Secretary shall notify Amtrak 
     of the incomplete items or deficiencies and Amtrak shall, 
     within 30 days after receiving the Secretary's notification, 
     submit a modified plan for the Secretary's review. Within 15 
     days after receiving additional information on items 
     previously included in the plan, and within 45 days after 
     receiving items newly included in a modified plan, the 
     Secretary shall either approve the modified plan, or, if the 
     Secretary finds the plan is still incomplete or deficient, 
     the Secretary shall identify in writing to the Senate 
     Committee on Commerce, Science, and Transportation and the 
     House of Representatives Committee on Transportation and 
     Infrastructure the portions of the plan the Secretary finds 
     incomplete or deficient, approve all other portions of the 
     plan, obligate the funds associated with those other 
     portions, and execute an agreement with Amtrak within 15 days 
     thereafter on a process for resolving the remaining portions 
     of the plan.
       (g) Financial Contribution From Other Tunnel Users.--The 
     Secretary shall, taking into account the need for the timely 
     completion of all portions of the tunnel projects described 
     in subsection (a)--
       (1) consider the extent to which rail carriers other than 
     Amtrak use or plan to use the tunnels;
       (2) consider the feasibility of seeking a financial 
     contribution from those other rail carriers toward the costs 
     of the projects; and
       (3) obtain financial contributions or commitments from such 
     other rail carriers at levels reflecting the extent of their 
     use or planned use of the tunnels, if feasible.

     SEC. 403. AMTRAK PLAN TO ASSIST FAMILIES OF PASSENGERS 
                   INVOLVED IN RAIL PASSENGER ACCIDENTS.

       (a) In General.--Chapter 243 of title 49, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 24316. Plans to address needs of families of 
       passengers involved in rail passenger accidents

       ``(a) Submission of Plan.--Not later than 6 months after 
     the date of the enactment of the Passenger Rail Investment 
     and Improvement Act of 2005, Amtrak shall submit to the 
     Chairman of the National Transportation Safety Board and the 
     Secretary of Transportation a plan for addressing the needs 
     of the families of passengers involved in any rail passenger 
     accident involving an Amtrak intercity train and resulting in 
     a loss of life.
       ``(b) Contents of Plans.--The plan to be submitted by 
     Amtrak under subsection (a) shall include, at a minimum, the 
     following:
       ``(1) A process by which Amtrak will maintain and provide 
     to the National Transportation Safety Board and the Secretary 
     of Transportation, immediately upon request, a list (which is 
     based on the best available information at the time of the 
     request) of the names of the passengers aboard the train 
     (whether or not such names have been verified), and will 
     periodically update the list. The plan shall include a 
     procedure, with respect to unreserved trains and passengers 
     not holding reservations on other trains, for Amtrak to use 
     reasonable efforts to ascertain the number and names of 
     passengers aboard a train involved in an accident.
       ``(2) A plan for creating and publicizing a reliable, toll-
     free telephone number within 4 hours after such an accident 
     occurs, and for providing staff, to handle calls from the 
     families of the passengers.
       ``(3) A process for notifying the families of the 
     passengers, before providing any public notice of the names 
     of the passengers, by suitably trained individuals.
       ``(4) A process for providing the notice described in 
     paragraph (2) to the family of a passenger as soon as Amtrak 
     has verified that the passenger was aboard the train (whether 
     or not the names of all of the passengers have been 
     verified).
       ``(5) A process by which the family of each passenger will 
     be consulted about the disposition of all remains and 
     personal effects of the passenger within Amtrak's control; 
     that any possession of the passenger within Amtrak's control 
     will be returned to the family unless the possession is 
     needed for the accident investigation or any criminal 
     investigation; and that any unclaimed possession of a 
     passenger within Amtrak's control will be retained by the 
     rail passenger carrier for at least 18 months.
       ``(6) A process by which the treatment of the families of 
     nonrevenue passengers will be the same as the treatment of 
     the families of revenue passengers.
       ``(7) An assurance that Amtrak will provide adequate 
     training to its employees and agents to meet the needs of 
     survivors and family members following an accident.
       ``(c) Use of Information.--The National Transportation 
     Safety Board, the Secretary of Transportation, and Amtrak may 
     not release to any person information on a list obtained 
     under subsection (b)(1) but may provide information on the 
     list about a passenger to the family of the passenger to the 
     extent that the Board or Amtrak considers appropriate.
       ``(d) Limitation on Liability.--Amtrak shall not be liable 
     for damages in any action brought in a Federal or State court 
     arising out of the performance of Amtrak in preparing or 
     providing a passenger list, or in providing information 
     concerning a train reservation, pursuant to a plan submitted 
     by Amtrak under subsection (b), unless such liability was 
     caused by Amtrak's conduct.

[[Page 26812]]

       ``(e) Limitation on Statutory Construction.--Nothing in 
     this section may be construed as limiting the actions that 
     Amtrak may take, or the obligations that Amtrak may have, in 
     providing assistance to the families of passengers involved 
     in a rail passenger accident.
       ``(f) Funding.--There are authorized to be appropriated to 
     the Secretary of Transportation for the use of Amtrak 
     $500,000 for fiscal year 2006 to carry out this section. 
     Amounts made available pursuant to this subsection shall 
     remain available until expended.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     243 of title 49, United States Code, is amended by adding at 
     the end the following:

``24316.  Plan to assist families of passengers involved in rail 
              passenger accidents.''.

     SEC. 404. NORTHERN BORDER RAIL PASSENGER REPORT.

       Within 180 days after the date of enactment of this Act, 
     the Secretary of Transportation, in consultation with the 
     Secretary of Homeland Security, the Assistant Secretary of 
     Homeland Security (Transportation Security Administration), 
     heads of other appropriate Federal departments, and agencies 
     and the National Railroad Passenger Corporation, shall 
     transmit a report to the Senate Committee on Commerce, 
     Science, and Transportation and the House of Representatives 
     Committee on Transportation and Infrastructure that 
     contains--
       (1) a description of the current system for screening 
     passengers and baggage on passenger rail service between the 
     United States and Canada;
       (2) an assessment of the current program to provide 
     preclearance of airline passengers between the United States 
     and Canada as outlined in ``The Agreement on Air Transport 
     Preclearance between the Government of Canada and the 
     Government of the United States of America'', dated January 
     18, 2001;
       (3) an assessment of the current program to provide 
     preclearance of freight railroad traffic between the United 
     States and Canada as outlined in the ``Declaration of 
     Principle for the Improved Security of Rail Shipments by 
     Canadian National Railway and Canadian Pacific Railway from 
     Canada to the United States'', dated April 2, 2003;
       (4) information on progress by the Department of Homeland 
     Security and other Federal agencies towards finalizing a 
     bilateral protocol with Canada that would provide for 
     preclearance of passengers on trains operating between the 
     United States and Canada;
       (5) a description of legislative, regulatory, budgetary, or 
     policy barriers within the United States Government to 
     providing pre-screened passenger lists for rail passengers 
     traveling between the United States and Canada to the 
     Department of Homeland Security;
       (6) a description of the position of the Government of 
     Canada and relevant Canadian agencies with respect to 
     preclearance of such passengers;
       (7) a draft of any changes in existing Federal law 
     necessary to provide for pre-screening of such passengers and 
     providing pre-screened passenger lists to the Department of 
     Homeland Security; and
       (8) an analysis of the feasibility of reinstating United 
     States Customs and Border Patrol rolling inspections onboard 
     international Amtrak trains.

     SEC. 405. PASSENGER, BAGGAGE, AND CARGO SCREENING.

       (a) Requirement for Study and Report.--The Secretary of 
     Homeland Security, in cooperation with the Secretary of 
     Transportation through the Assistant Secretary of Homeland 
     Security (Transportation Security Administration) and other 
     appropriate agencies, shall--
       (1) study the cost and feasibility of requiring security 
     screening for passengers, baggage, and cargo on passenger 
     trains including an analysis of any passenger train screening 
     pilot programs undertaken by the Department of Homeland 
     Security; and
       (2) report the results of the study, together with any 
     recommendations that the Secretary of Homeland Security may 
     have for implementing a rail security screening program to 
     the Senate Committee on Commerce, Science, and Transportation 
     and the House of Representatives Committee on Transportation 
     and Infrastructure within 1 year after the date of enactment 
     of this Act.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Homeland Security 
     $1,000,000 for fiscal year 2006 to carry out this section.

                      Motion Offered by Mr. Nussle

  Mr. NUSSLE. Mr. Speaker, pursuant to House Resolution 560, I offer a 
motion.
  The Clerk read as follows:

       Mr. Nussle moves to strike all after the enacting clause of 
     S. 1932, and insert in lieu thereof the provisions of H.R. 
     4241 as passed by the House.

  The motion was agreed to.
  The Senate bill was ordered to be read a third time, was read the 
third time, and passed, and a motion to reconsider was laid on the 
table.

                          ____________________