[House Report 105-633]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-633
_______________________________________________________________________


 
       CHILD NUTRITION AND WIC REAUTHORIZATION AMENDMENTS OF 1998

                                _______
                                

 July 20, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


   Mr. Goodling, from the Committee on Education and the Workforce, 
                        submitted the following

                              R E P O R T

                             together with

                    ADDITIONAL AND DISSENTING VIEWS

                        [To accompany H.R. 3874]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 3874) to amend the Child Nutrition Act 
of 1966 to make improvements to the special supplemental 
nutrition program for women, infants, and children and to 
extend the authority of that program through fiscal year 2003, 
having considered the same, report favorably thereon with 
amendments and recommend that the bill as amended do pass.
  The amendments are as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Child Nutrition and 
WIC Reauthorization Amendments of 1998''.
  (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Effective date.

          TITLE I--AMENDMENTS TO THE NATIONAL SCHOOL LUNCH ACT

Sec. 101. Provision of commodities.
Sec. 102. Nutritional and other program requirements.
Sec. 103. Special assistance.
Sec. 104. Miscellaneous provisions and definitions.
Sec. 105. Summer food service program for children.
Sec. 106. Commodity distribution program.
Sec. 107. Child and adult care food program.
Sec. 108. Meal supplements for children in afterschool care.
Sec. 109. Universal free breakfast pilot projects.
Sec. 110. Training and technical assistance.
Sec. 111. Compliance and accountability.
Sec. 112. Information clearinghouse.
Sec. 113. Accommodation of the special dietary needs of individuals 
with disabilities.

        TITLE II--AMENDMENTS TO THE CHILD NUTRITION ACT OF 1966

Sec. 201. State administrative expenses.
Sec. 202. Special supplemental nutrition program for women, infants, 
and children.
Sec. 203. Nutrition education and training program.

SEC. 2. EFFECTIVE DATE.

  This Act, and the amendments made by this Act, shall take effect on 
October 1, 1998, or the date of the enactment of this Act, whichever 
occurs later.

          TITLE I--AMENDMENTS TO THE NATIONAL SCHOOL LUNCH ACT

SEC. 101. PROVISION OF COMMODITIES.

  Section 6 of the National School Lunch Act (42 U.S.C. 1755) is 
amended--
          (1) in subsection (b), by striking ``authorized under 
        subsection (c)'' and inserting ``required under subsections (c) 
        and (e)'';
          (2) by striking subsections (c) and (d); and
          (3) by redesignating subsections (e), (f), and (g) as 
        subsections (c), (d), and (e), respectively.

SEC. 102. NUTRITIONAL AND OTHER PROGRAM REQUIREMENTS.

  (a) State or Local Health and Safety Inspections.--Section 9 of the 
National School Lunch Act (42 U.S.C. 1758) is amended by adding at the 
end the following:
  ``(h) If the food service operations of a school participating in the 
school lunch program under this Act or the school breakfast program 
under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773) are 
not required by State or local law to undergo health and safety 
inspections, then the school shall twice during each school year obtain 
State or local health and safety inspections to ensure that meals 
provided under such programs are prepared and served in a healthful and 
safe environment.''.
  (b) Single Permanent Agreements Between State Agencies and School 
Food Authorities; Common Claiming Procedures.--Section 9 of such Act 
(42 U.S.C. 1758), as amended by this Act, is further amended by adding 
at the end the following:
  ``(i)(1) If a single State agency administers the school lunch 
program under this Act, the school breakfast program under section 4 of 
the Child Nutrition Act of 1966 (42 U.S.C. 1773), the summer food 
service program for children under section 13 of this Act, or the child 
and adult care food program under section 17 of this Act, then such 
agency--
          ``(A) shall require each school food authority to submit a 
        single agreement with respect to the operation of such programs 
        by such authority; and
          ``(B) shall require a common claiming procedure with respect 
        to meals and supplements served under such programs.
  ``(2) The agreement described in paragraph (1)(A) shall be a 
permanent agreement that may be amended as necessary.''.

SEC. 103. SPECIAL ASSISTANCE.

  Section 11(a)(3)(B) of the National School Lunch Act (42 U.S.C. 
1759a(a)(3)(B)) is amended in the third sentence by striking ``to the 
nearest one-fourth cent'' and all that follows through ``shall be 
computed''.

SEC. 104. MISCELLANEOUS PROVISIONS AND DEFINITIONS.

  (a) Adjustments to Reimbursement Rates for Certain States and 
Territories.--Section 12(f) of the National School Lunch Act (42 U.S.C. 
1760(f)) is amended--
          (1) by striking ``school breakfasts and lunches'' and 
        inserting ``breakfasts, lunches, suppers, and supplements'';
          (2) by striking ``sections 4 and 11'' and inserting 
        ``sections 4, 11, 13, and 17''; and
          (3) by striking ``lunches and breakfasts'' each place it 
        appears and inserting ``meals''.
  (b) Buy American Requirement.--Section 12 of the National School 
Lunch Act (42 U.S.C. 1760) is amended by adding at the end the 
following:
  ``(n) Buy American Requirement.--
          ``(1) In general.--For purposes of providing meals under the 
        school lunch program under this Act or the school breakfast 
        program under section 4 of the Child Nutrition Act of 1966 (42 
        U.S.C. 1773), the Secretary shall require schools located in 
        the contiguous United States to purchase, to the extent 
        practicable, only food products that are produced in the United 
        States.
          ``(2) Additional requirement.--The requirement of paragraph 
        (1) shall also apply to recipient agencies in Hawaii only with 
        respect to food products that are grown in Hawaii in sufficient 
        quantities to meet the needs of meals provided under the school 
        lunch program under this Act or the school breakfast program 
        under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 
        1773).
          ``(3) Definition.--As used in this subsection, the term `food 
        products that are produced in the United States' means--
                  ``(A) unmanufactured food products that are grown or 
                produced in the United States; and
                  ``(B) manufactured food products that are 
                manufactured in the United States substantially from 
                agricultural products grown or produced in the United 
                States.''.

SEC. 105. SUMMER FOOD SERVICE PROGRAM FOR CHILDREN.

  (a) Definition of Private Nonprofit Organizations.--Section 
13(a)(7)(B) of the National School Lunch Act (42 U.S.C. 1761(a)(7)(B)) 
is amended--
          (1) in clause (i), to read as follows:
          ``(i) operate not more than 25 sites, with not more than 300 
        children being served at any one site (or, with a waiver 
        granted by the State agency under standards developed by the 
        Secretary, not more than 500 children being served at any one 
        site);'';
          (2) by striking clauses (ii) and (iii); and
          (3) by redesignating clauses (iv), (v), (vi), and (vii) as 
        clauses (ii), (iii), (iv), and (v), respectively.
  (b) Offer Versus Serve.--Section 13(f)(7) of such Act (42 U.S.C. 
1761(f)(7)) is amended in the first sentence by striking ``attending a 
site on school premises operated directly by the authority''.
  (c) Food Service Management Companies.--
          (1) Contracting for provision of meals or management of 
        program.--Section 13(l)(1) of such Act (42 U.S.C. 1761(l)(1)) 
        is amended--
                  (A) in the first sentence--
                          (i) by striking ``(other than private 
                        nonprofit organizations eligible under 
                        subsection (a)(7))''; and
                          (ii) by striking ``only with food service 
                        management companies registered with the State 
                        in which they operate'' and inserting ``with 
                        food service management companies''; and
                  (B) by striking the last sentence.
          (2) Registration.--Section 13(l)(2) of such Act (42 U.S.C. 
        1761(l)(2)) is amended--
                  (A) in the first sentence of the matter preceding 
                subparagraph (A), by striking ``shall'' and inserting 
                ``may''; and
                  (B) by striking all after the first sentence.
          (3) Other provisions.--Section 13(l) of such Act (42 U.S.C. 
        1761(l)) is amended--
                  (A) by striking paragraph (3); and
                  (B) by redesignating paragraphs (4) and (5) as 
                paragraphs (3) and (4), respectively.
  (d) Reauthorization of Program.--Section 13(q) of such Act (42 U.S.C. 
1761(q)) is amended by striking ``1998'' and inserting ``2003''.

SEC. 106. COMMODITY DISTRIBUTION PROGRAM.

  Section 14(a) of the National School Lunch Act (42 U.S.C. 1762a(a)) 
is amended in the matter preceding paragraph (1) by striking ``1998'' 
and inserting ``2003''.

SEC. 107. CHILD AND ADULT CARE FOOD PROGRAM.

  (a) Eligibility of Institutions.--Section 17(a)(1) of the National 
School Lunch Act (42 U.S.C. 1766(a)(1)) is amended to read as follows:
          ``(1) an institution (except a school or family or group day 
        care home sponsoring organization) or family or group day care 
        home--
                  ``(A)(i) shall be licensed, or otherwise have 
                approval, by the appropriate Federal, State, or local 
                licensing authority; or
                  ``(ii) shall be in compliance with appropriate 
                procedures for renewing participation in the program, 
                as prescribed by the Secretary, unless the State has 
                information indicating that the institution or family 
                or group day care home's license will not be renewed;
                  ``(B) if Federal, State, or local licensing or 
                approval is not available--
                          ``(i) shall meet any alternate approval 
                        standards established by the appropriate State 
                        or local governmental agency; or
                          ``(ii) shall meet any alternate approval 
                        standards established by the Secretary after 
                        consultation with the Secretary of Health and 
                        Human Services; or
                  ``(C) if the institution provides care to school 
                children outside of school hours and Federal, State, or 
                local licensing or approval is not required for such 
                institution, shall meet State or local health and 
                safety standards; and''.
  (b) Categorical Eligibility for Even Start Program Participants.--
Section 17(c)(6)(B) of such Act (42 U.S.C. 1766(c)(6)(B)) is amended by 
striking ``1997'' and inserting ``2003''.
  (c) Tax Exempt Status of Eligible Institutions; Removal of 
Notification Requirement for Incomplete Applications.--Section 17(d)(1) 
of such Act (42 U.S.C. 1766(d)(1)) is amended--
          (1) by inserting after the third sentence the following: ``An 
        institution moving toward compliance with the requirement for 
        tax exempt status shall be allowed to participate in the 
        program for a period of not more than 6 months unless it can 
        demonstrate to the satisfaction of the State agency that its 
        inability to obtain tax exempt status within the 6-month period 
        is beyond the control of the institution in which case the 
        State agency may grant a single extension not to exceed 90 
        days.''; and
          (2) by striking the last sentence.
  (d) Use of Funds for Audits of Participating Institutions.--Section 
17(i) of such Act (42 U.S.C. 1766(i)) is amended by striking ``2 
percent'' and inserting ``1 percent''.
  (e) Permanent Authorization of Demonstration Project.--Section 17(p) 
of such Act (42 U.S.C. 1766(p)) is amended by striking paragraphs (4) 
and (5).
  (f) Transfer of Homeless Programs.--
          (1) In general.--Section 17 of such Act (42 U.S.C. 1766) is 
        amended by adding at the end the following:
  ``(q) Participation by Emergency Shelters.--
          ``(1) In general.--Except as otherwise provided in this 
        subsection, an emergency shelter shall be eligible to 
        participate in the program authorized under this section in 
        accordance with the terms and conditions applicable to eligible 
        institutions described in subsection (a).
          ``(2) Licensing requirements.--The licensing requirements 
        contained in subsection (a)(1) shall not apply to emergency 
        shelters or sites operated by such shelters under the program.
          ``(3) Additional requirements.--
                  ``(A) Health and safety standards.--An emergency 
                shelter and each site operated by such shelter shall 
                comply with State or local health and safety standards.
                  ``(B) Meal reimbursement.--
                          ``(i) Limitation.--An emergency shelter may 
                        claim reimbursement--
                                  ``(I) only for meals and supplements 
                                served to children who have not 
                                attained the age of 13 and who are 
                                residing at an emergency shelter; and
                                  ``(II) for not more than 3 meals, or 
                                2 meals and a supplement, per child per 
                                day.
                          ``(ii) Rate.--A meal or supplement eligible 
                        for reimbursement shall be reimbursed at the 
                        rate at which free meals and supplements are 
                        reimbursed under subsection (c).
                          ``(iii) No charge.--A meal or supplement 
                        claimed for reimbursement shall be served 
                        without charge.
          ``(4) Definition of emergency shelter.--As used in this 
        subsection, the term `emergency shelter' has the meaning given 
        such term in section 321(2) of the Stewart B. McKinney Homeless 
        Assistance Act (42 U.S.C. 11351(2)).''.
          (2) Conforming amendments.--(A) Section 13(a)(3)(C) of such 
        Act (42 U.S.C. 1761(a)(3)(C)) is amended--
                  (i) in clause (i), by adding ``or'' at the end;
                  (ii) by striking clause (ii); and
                  (iii) by redesignating clause (iii) as clause (ii).
          (B) Section 17B of such Act (42 U.S.C. 1766b) is hereby 
        repealed.
  (g) Participation by ``At Risk'' Child Care Programs.--Section 17 of 
such Act (42 U.S.C. 1766), as amended by this Act, is further amended 
by adding at the end the following:
  ``(r) `At Risk' Child Care.--
          ``(1) In general.--Subject to the conditions in this 
        subsection, institutions that provide care to at risk school 
        children during after-school hours, weekends, or holidays 
        during the regular school year may participate in the program 
        authorized under this section. Unless otherwise specified in 
        this subsection, all other provisions of this section shall 
        apply to these institutions.
          ``(2) At risk school children.--Children ages 12 through 18 
        who live in a geographical area served by a school enrolling 
        elementary students in which at least 50 percent of the total 
        number of children enrolled are certified eligible to receive 
        free or reduced price school meals under this Act or the Child 
        Nutrition Act of 1966 shall be considered at risk.
          ``(3) Supplement reimbursement.--
                  ``(A) Limitation.--Only supplements served to at risk 
                school children during after-school hours, weekends, or 
                holidays during the regular school year may be claimed 
                for reimbursement. Institutions may claim reimbursement 
                for only one supplement per child per day.
                  ``(B) Rate.--Eligible supplements shall be reimbursed 
                at the rate for free supplements under subsection 
                (c)(3).
                  ``(C) No charge.--All supplements claimed for 
                reimbursement shall be served without charge.''.

SEC. 108. MEAL SUPPLEMENTS FOR CHILDREN IN AFTERSCHOOL CARE.

  Section 17A of the National School Lunch Act (42 U.S.C. 1766a) is 
amended--
          (1) in subsection (a)(2)(C) to read as follows:
                  ``(C) operate afterschool programs with an 
                educational or enrichment purpose.''; and
          (2) in subsection (b), by striking ``served to children'' and 
        all that follows and inserting ``served to children who are not 
        more than 18 years of age.''.

SEC. 109. UNIVERSAL FREE BREAKFAST PILOT PROJECTS.

  Section 18(i) of the National School Lunch Act (42 U.S.C. 1769(i)) is 
amended to read as follows:
  ``(i) Universal Free Breakfast Pilot Projects.--
          ``(1) In General.--
                  ``(A) Grants to states.--(i) Subject to the 
                availability of advance appropriations under paragraph 
                (8), the Secretary shall make grants to not more than 5 
                States to conduct pilot projects in elementary schools 
                under school food authorities located in each such 
                State--
                          ``(I) to reduce paperwork;
                          ``(II) to simplify meal counting 
                        requirements; and
                          ``(III) to make changes that will increase 
                        participation in the school breakfast program.
                  ``(ii) The Secretary shall select States to receive 
                grants under clause (i), and make grants to such 
                States, in the first fiscal year for which 
                appropriations are made to carry out this subsection.
                  ``(B) Grants to school food authorities; duration of 
                pilot projects.--(i)(I) A State receiving a grant under 
                subparagraph (A) shall make grants to school food 
                authorities to carry out the pilot projects described 
                in such subparagraph.
                  ``(II) The State shall select school food authorities 
                to receive grants under clause (i), and make grants to 
                such authorities, in the first fiscal year for which 
                the State receives amounts under a grant.
                  ``(ii) A school food authority receiving amounts 
                under a grant to conduct a pilot project described in 
                subparagraph (A) shall conduct such project for the 3-
                year period beginning in the first fiscal year in which 
                the authority receives amounts under a grant from the 
                State.
                  ``(C) Participation limitation.--A school food 
                authority conducting a pilot project under this 
                paragraph shall ensure that some elementary schools 
                under such authority do not participate in the pilot 
                project.
          ``(2) Waiver authority.--
                  ``(A) In general.--Except as provided in subparagraph 
                (B), the Secretary may waive the requirements of this 
                Act and the Child Nutrition Act of 1966 (42 U.S.C. 1771 
                et seq.) relating to counting of meals, applications 
                for eligibility, and related requirements that would 
                preclude the Secretary from making a grant to conduct a 
                pilot project under paragraph (1).
                  ``(B) Non-waivable requirements.--The Secretary may 
                not waive a requirement under subparagraph (A) if the 
                waiver would prevent a program participant, a potential 
                recipient, or a school from receiving all of the 
                benefits and protections of this Act, the Child 
                Nutrition Act of 1966, or a Federal statute or 
                regulation that protects an individual constitutional 
                right or a statutory civil right.
          ``(3) Requirements for participation in pilot.--To be 
        eligible to participate in a pilot project under this 
        subsection--
                  ``(A) a State--
                          ``(i) shall submit an application to the 
                        Secretary at such time and in such manner as 
                        the Secretary shall establish; and
                          ``(ii) shall provide such information 
                        relative to the operation and results of the 
                        pilot as the Secretary may reasonably require; 
                        and
                  ``(B) a school food authority--
                          ``(i) shall agree to serve all breakfasts at 
                        no charge to all children in participating 
                        elementary schools;
                          ``(ii) shall not have a history of violations 
                        of this Act or the Child Nutrition Act of 1966 
                        (42 U.S.C. 1771 et seq.); and
                          ``(iii) shall meet any other requirement that 
                        the Secretary may reasonably require.
          ``(4) Selection of pilot elementary schools.--To the extent 
        practicable, a State shall select school food authorities to 
        participate in the pilot program under this subsection in a 
        manner that will provide for an equitable distribution among 
        the following types of elementary schools:
                  ``(A) Urban and rural elementary schools.
                  ``(B) Elementary schools of varying family income 
                levels.
          ``(5) Reimbursement rates.--A school food authority 
        conducting a pilot project under this subsection shall receive 
        reimbursement for each breakfast served under the pilot in an 
        amount equal to the rate for free breakfasts established under 
        section 4(b)(1)(B) of the Child Nutrition Act of 1966 (42 
        U.S.C. 1773(b)(1)(B)).
          ``(6) Commodity entitlement.--A school food authority 
        conducting a pilot project under this subsection shall receive 
        commodities in the amount of at least 5 cents per breakfast 
        served under the pilot. The value of such commodities shall be 
        deducted from the amount of cash reimbursement described in 
        paragraph (5).
          ``(7) Evaluation of pilot project.--
                  ``(A) In general.--The Secretary, acting through the 
                Administrator of the Food and Nutrition Service, shall 
                conduct an evaluation of the pilot projects in each of 
                the school food authorities selected for participation. 
                Such evaluation shall include--
                          ``(i) a determination of the effect of 
                        participation in the pilot project on the 
                        academic achievement, tardiness and attendance, 
                        and dietary intake of participating children 
                        that is not attributable to changes in 
                        educational policies and practices; and
                          ``(ii) a determination of the effect that 
                        participation by elementary schools in the 
                        pilot projects has on the proportion of 
                        students who eat breakfast.
                  ``(B) Report.--Upon completion of the pilot projects 
                and the evaluation, the Secretary shall submit to the 
                Committee on Education and the Workforce of the House 
                of Representatives and the Committee on Agriculture, 
                Nutrition, and Forestry of the Senate a report 
                containing the evaluation of the pilot required under 
                subparagraph (A).
          ``(8) Authorization of appropriations.--There are authorized 
        to be appropriated such sums as may be necessary to carry out 
        this subsection.''.

SEC. 110. TRAINING AND TECHNICAL ASSISTANCE.

  Section 21(e)(1) of the National School Lunch Act (42 U.S.C. 1769b-
1(e)(1)) is amended by striking ``1998'' and inserting ``2003''.

SEC. 111. COMPLIANCE AND ACCOUNTABILITY.

  Section 22(d) of the National School Lunch Act (42 U.S.C. 1769c(d)) 
is amended by striking ``1996'' and inserting ``2003''.

SEC. 112. INFORMATION CLEARINGHOUSE.

  (a) Authority to Establish and Maintain Clearinghouse.--Section 26(a) 
of the National School Lunch Act (42 U.S.C. 1769g(a)) is amended by 
striking ``shall'' and inserting ``may''.
  (b) Nongovernmental Organization.--Section 26(b) of such Act (42 
U.S.C. 1769g(b)) is amended in the matter preceding paragraph (1) by 
inserting after ``shall be selected on a competitive basis'' the 
following: ``, except that, notwithstanding any other provision of law, 
the Secretary may enter into a contract for the services of any 
organization with which the Secretary has previously entered into a 
contract under this section without such organization competing for 
such new contract, if such organization has performed satisfactorily 
under such prior contract and otherwise meets the criteria established 
in this subsection,''.
  (c) Limitation on Amount Provided Under the Contract.--Section 26 of 
such Act (42 U.S.C. 1769g) is amended--
          (1) by redesignating subsections (c) and (d) as subsections 
        (d) and (e), respectively; and
          (2) by inserting after subsection (b) the following:
  ``(c) Limitation on Amount Provided Under the Contract.--The 
Secretary may provide to the organization described in subsection (b) 
an amount not to exceed $150,000 in each of fiscal years 1999 through 
2003.''.
  (d) Funding.--Section 26(e) of such Act (42 U.S.C. 1769g(e)) (as so 
redesignated) is amended to read as follows:
  ``(e) Funding.--
          ``(1) In general.--There are authorized to be appropriated 
        $150,000 for each of the fiscal years 1999 through 2003 to 
        carry out this section.
          ``(2) Requirement.--No amounts may be provided for the 
        clearinghouse under this section unless specifically provided 
        in appropriations Acts.''.

SEC. 113. ACCOMMODATION OF THE SPECIAL DIETARY NEEDS OF INDIVIDUALS 
                    WITH DISABILITIES.

  Section 27 of the National School Lunch Act (42 U.S.C. 1769h) is 
amended to read as follows:

``SEC. 27. ACCOMMODATION OF THE SPECIAL DIETARY NEEDS OF INDIVIDUALS 
                    WITH DISABILITIES.

  ``(a) In General.--The Secretary may carry out activities to help 
accommodate the special dietary needs of individuals with disabilities 
who are participating in a covered program. Such activities may 
include--
          ``(1) developing and disseminating to State agencies guidance 
        and technical assistance materials;
          ``(2) conducting training of State agencies and eligible 
        entities; and
          ``(3) providing grants to State agencies and eligible 
        entities.
  ``(b) Definitions.--As used in this section:
          ``(1) Individuals with disabilities.--The term `individuals 
        with disabilities' has the meaning given the term `individual 
        with a disability' as defined in section 7(8) of the 
        Rehabilitation Act of 1973 (29 U.S.C. 706(8)).
          ``(2) Covered program.--The term `covered program' means--
                  ``(A) the school lunch program authorized under this 
                Act;
                  ``(B) the school breakfast program authorized under 
                section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 
                1773); and
                  ``(C) any other program authorized under this Act or 
                the Child Nutrition Act of 1966 (except for section 17) 
                that the Secretary determines is appropriate.
          ``(3) Eligible entity.--The term `eligible entity' means a 
        school food authority, institution, or service institution that 
        participates in a covered program.
  ``(c) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary for each of the fiscal years 
1999 through 2003 to carry out this section.''.

        TITLE II--AMENDMENTS TO THE CHILD NUTRITION ACT OF 1966

SEC. 201. STATE ADMINISTRATIVE EXPENSES.

  (a) Reallocation of Amounts.--Section 7(a)(5)(B) of the Child 
Nutrition Act of 1966 (42 U.S.C. 1776(a)(5)(B)) is amended--
          (1) by striking ``(i)'';
          (2) by striking the second sentence and all that follows; and
          (3) by adding at the end the following: ``The Secretary shall 
        then allocate, for purposes of administration costs, any 
        remaining amounts among States that demonstrate a need for such 
        amounts.''.
  (b) Elimination of 10 Percent Transfer Limitation.--Section 7(a)(6) 
of such Act (42 U.S.C. 1776(a)(6)) is amended to read as follows:
  ``(6) Funds available to States under this subsection and under 
section 13(k)(1) of the National School Lunch Act may be used by State 
agencies for the costs of administration of the programs authorized 
under this Act (except for the programs authorized under sections 17 
and 21) and the National School Lunch Act without regard to the basis 
on which such funds were earned and allocated.''.
  (c) Reauthorization of Program.--Section 7(g) of such Act (42 U.S.C. 
1776(g)) is amended by striking ``1998'' and inserting ``2003''.

SEC. 202. SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, 
                    AND CHILDREN.

  (a) Additional Requirements for Applicants.--
          (1) Physical presence requirement.--Section 17(d)(3) of the 
        Child Nutrition Act of 1966 (42 U.S.C. 1786(d)(3)) is amended 
        by adding at the end the following:
  ``(C)(i) Except as provided in clause (ii), each applicant to the 
program shall be physically present at each certification determination 
in order to determine eligibility under the program.
  ``(ii) A local agency may waive the requirement of clause (i)--
          ``(I) if required to do so by requirements under the 
        Americans with Disabilities Act;
          ``(II) with respect to a child who was present at the initial 
        certification visit and who is receiving on-going health care 
        from a provider other than such local agency, if the agency 
        determines that the requirement of clause (i) would present a 
        barrier to participation; or
          ``(III) with respect to a child (aa) who was present at the 
        initial certification visit, (bb) who was present at a 
        certification determination within the 1-year period ending on 
        the date of the certification determination described in clause 
        (i), and (cc) who has one or more parents who work, if the 
        agency determines that the requirement of clause (i) would 
        cause a barrier to participation.''.
          (2) Income documentation requirement.--Section 17(d)(3) of 
        the Child Nutrition Act of 1966 (42 U.S.C. 1786(d)(3)), as 
        amended by paragraph (1), is further amended by adding at the 
        end the following:
  ``(D)(i) Except as provided in clause (ii), in order to be eligible 
for the program, each applicant to the program shall provide--
          ``(I) documentation of household income; or
          ``(II) documentation of participation in a program described 
        in clauses (ii) and (iii) of paragraph (2)(A).
  ``(ii)(I) A State agency may waive the requirement of clause (i)--
          ``(aa) with respect to an applicant for whom the necessary 
        documentation is not available; or
          ``(bb) with respect to an applicant, such as homeless women 
        or children, for whom the agency determines the requirement of 
        clause (i) would present a barrier to participation.
  ``(II) The Secretary shall prescribe regulations to carry out 
division (aa).''.
  (b) Education and Educational Materials Relating to Effects of Drug 
and Alcohol Use.--Section 17(e)(1) of such Act (42 U.S.C. 1786(e)(1)) 
is amended by adding at the end the following: ``A local agency 
participating in the program shall provide education or educational 
materials relating to the effects of drug and alcohol use by a 
pregnant, postpartum, or breastfeeding woman on the developing child of 
the woman.''.
  (c) Distribution of Nutrition Education Materials to State Agencies 
Administering the Commodity Supplemental Food Program.--Section 17(e) 
of such Act (42 U.S.C. 1786(e)) is amended--
          (1) by redesignating paragraphs (4) and (5) as paragraphs (5) 
        and (6), respectively; and
          (2) by inserting after paragraph (3) the following:
  ``(4) The Secretary may provide nutrition education materials, 
including breastfeeding promotion materials, developed with funds 
appropriated to carry out the program under this section in bulk 
quantity to State agencies administering the commodity supplemental 
food program authorized under sections 4(a) and 5 of the Agriculture 
and Consumer Protection Act of 1973 at no cost to that program.''.
  (d) Identification of Recipients Participating at More Than 1 Site.--
Section 17(f) of such Act (42 U.S.C. 1786(f)) is amended by adding at 
the end the following:
  ``(23) Each State agency shall implement a system designed to 
identify recipients who are participating at more than 1 site under the 
program.''.
  (e) Identification of High Risk Vendors; Compliance Investigations.--
          (1) In general.--Section 17(f) of such Act (42 U.S.C. 
        1786(f)), as amended by this Act, is further amended by adding 
        at the end the following:
  ``(24) Each State agency--
          ``(A) shall identify vendors that have a high probability of 
        program abuse; and
          ``(B) shall conduct compliance investigations of such 
        vendors.''.
          (2) Regulations.--Not later than March 1, 1999, the Secretary 
        of Agriculture shall promulgate final regulations to carry out 
        section 17(f)(24) of such Act (42 U.S.C. 1786(f)(24)), as added 
        by paragraph (1).
  (f) Reauthorization of Program.--Section 17(g)(1) of such Act (42 
U.S.C. 1786(g)(1)) is amended in the first sentence by striking ``1995 
through 1998'' and inserting ``1999 through 2003''.
  (g) Purchase of Breast Pumps.--Section 17(h)(1)(C) of such Act (42 
U.S.C. 1786(h)(1)(C)) is amended--
          (1) by striking ``(C)'' and inserting ``(C)(i)''; and
          (2) by adding at the end the following:
  ``(ii)(I) Notwithstanding any other provision of this section, with 
respect to fiscal year 2000 and subsequent fiscal years, a State agency 
may use amounts made available under clause (i) for the purchase of 
breast pumps.
  ``(II) A State agency that exercises the authority of subclause (I) 
shall expend from amounts allocated for nutrition services and 
administration an amount for the purchase of breast pumps that is not 
less than the amount expended for the purchase of breast pumps from 
amounts available for nutrition services and administration for the 
prior fiscal year.''.
  (h) Nutrition Services and Administration.--
          (1) Allocation of amounts.--Section 17(h)(2)(A) of such Act 
        (42 U.S.C. 1786(h)(2)(A)) is amended in the first sentence by 
        striking ``1995 through 1998'' and inserting ``1999 through 
        2003''.
          (2) Level of per participant expenditure.--Section 
        17(h)(2)(B)(ii) of such Act (42 U.S.C. 1786(h)(2)(B)(ii)) is 
        amended by striking ``15 percent'' and inserting ``10 percent 
        (except that the Secretary may establish a higher percentage 
        for small State agencies)''.
  (i) Conversion of Amounts for Food Benefits to Amounts for Nutrition 
Services and Administration.--Section 17(h)(5)(A) of such Act (42 
U.S.C. 1786(h)(5)(A)) is amended in the matter preceding clause (i) by 
striking ``achieves'' and all that follows through ``such State agency 
may'' and inserting ``submits a plan to reduce average food costs per 
participant and to increase participation above the level estimated for 
such State agency, such State agency may, with the approval of the 
Secretary,''.
  (j) Infant Formula Procurement.--Section 17(h)(8)(A) of such Act (42 
U.S.C. 1786(h)(8)(A)) is amended by adding at the end the following:
  ``(iii) A State agency using a competitive bidding system for infant 
formula shall award contracts to the bidder offering the lowest net 
price unless the State agency demonstrates to the satisfaction of the 
Secretary that the weighted average retail price for different brands 
of infant formula in the State does not vary by more than five 
percent.''.
  (k) Infrastructure and Breastfeeding Promotion/Support Activities.--
Section 17(h)(10)(A) of such Act (42 U.S.C. 1786(h)(10)(A)) is amended 
by striking ``For each of fiscal years 1995 through 1998,'' and 
inserting ``For each fiscal year through 2003,''.
  (l) Consideration of Price Levels of Retail Stores for Participation 
in the Program.--
          (1) In general.--Section 17(h) of such Act (42 U.S.C. 
        1786(h)) is amended by adding at the end the following:
  ``(11)(A) For the purpose of promoting efficiency and to contain 
costs under the program, a State agency shall, in selecting a retail 
store for participation in the program, take into consideration the 
prices that the store charges for foods under the program as compared 
to the prices that other stores charge for such foods.
  ``(B) The State agency shall establish procedures to insure that a 
retail store selected for participation in the program does not 
subsequently raise prices to levels that would otherwise make the store 
ineligible for selection in the program.''.
          (2) Regulations.--Not later than March 1, 1999, the Secretary 
        of Agriculture shall promulgate final regulations to carry out 
        section 17(h)(11)(A) of the Child Nutrition Act of 1966 (42 
        U.S.C. 1786(h)(11)(A)), as added by paragraph (1).
  (m) Use of Funds in Preceding and Subsequent Fiscal Years.--
          (1) In general.--Clauses (i) and (ii) of section 17(i)(3)(A) 
        of such Act (42 U.S.C. 1786(i)(3)(A)(i) and (ii)) are amended 
        to read as follows:
          ``(i) not more than 1 percent (except as provided in 
        subparagraph (C)) of the amount of funds allocated to a State 
        agency under this section for supplemental foods for a fiscal 
        year, and not more than 1 percent of the amount of funds 
        allocated to a State agency under this section for nutrition 
        services and administration for a fiscal year, may be expended 
        by the State agency for allowable expenses incurred under this 
        section for supplemental foods and nutrition services and 
        administration, respectively, during the preceding fiscal year; 
        and
          ``(ii)(I) a State agency may expend, from amounts allocated 
        to the agency for nutrition services and administration, an 
        amount equal to not more than 1 percent of the total amount of 
        funds allocated to the agency under this section for a fiscal 
        year for allowable expenses incurred under this section for 
        nutrition services and administration during the subsequent 
        fiscal year; and
          ``(II) with the prior approval of the Secretary, a State 
        agency may expend, from amounts allocated to the agency for 
        nutrition services and administration, an amount equal to not 
        more than one-half of 1 percent of the total amount of funds 
        allocated to the agency under this section for a fiscal year 
        for the development of a management information system, 
        including an electronic benefit transfer system, during the 
        subsequent fiscal year.''.
          (2) Conforming amendments.--Section 17 of such Act (42 U.S.C. 
        1786) is amended--
                  (A) in subsection (h)(10)(A) (as amended by this 
                Act), by inserting after ``nutrition services and 
                administration funds'' the following: ``and food 
                benefit funds''; and
                  (B) in subsection (i)(3)--
                          (i) by striking subparagraphs (C) through 
                        (G); and
                          (ii) by redesignating subparagraph (H) as 
                        subparagraph (C).
  (n) Farmers Market Nutrition Program.--
          (1) Matching fund requirement.--Section 17(m)(3) of such Act 
        (42 U.S.C. 1786(m)(3)) is amended in both the first and second 
        sentences by striking ``total'' each place it appears and 
        inserting ``administrative''.
          (2) Ranking criteria for state plans.--Section 17(m)(6) of 
        such Act (42 U.S.C. 1786(m)(6)) is amended--
                  (A) by striking subparagraph (F); and
                  (B) by redesignating subparagraph (G) as subparagraph 
                (F).
          (3) Reauthorization of Program.--Section 17(m)(9)(A) of such 
        Act (42 U.S.C. 1786(m)(9)(A)) is amended by striking ``1996 
        through 1998'' and inserting ``1999 through 2003''.
  (o) Disqualification of Certain Vendors.--
          (1) In general.--Section 17 of such Act (42 U.S.C. 1786) is 
        amended by adding at the end the following:
  ``(o) Disqualification of Vendors Convicted of Trafficking or Illegal 
Sales.--
          ``(1) In general.--Except as provided in paragraph (5), the 
        State agency shall permanently disqualify a vendor convicted of 
        trafficking in food instruments (including any voucher, draft, 
        check, or access device, including an electronic benefit 
        transfer card or personal identification number, issued in lieu 
        of a food instrument pursuant to the provisions of this 
        section), or selling firearms, ammunition, explosives, or 
        controlled substances (as defined in section 102 of the 
        Controlled Substances Act) in exchange for food instruments.
          ``(2) Notice of disqualification.--The State agency shall 
        provide the vendor with notification of the disqualification 
        and shall make such disqualification effective on the date of 
        receipt of the notice of disqualification.
          ``(3) Prohibition on receipt of lost revenues.--A vendor 
        shall not be entitled to receive any compensation for revenues 
        lost as a result of the disqualification under this subsection.
          ``(4) Hardship exception in lieu of disqualification.--
                  ``(A) In general.--A State agency may permit a vendor 
                that would otherwise be disqualified under paragraph 
                (1) to continue to redeem food instruments or otherwise 
                provide supplemental foods to participants if the State 
                agency determines, in its sole discretion according to 
                criteria established by the Secretary, disqualification 
                of the vendor would cause hardship to participants in 
                the program authorized under this section.
                  ``(B) Civil money penalty.--Whenever a State agency 
                authorizes a vendor that would otherwise be 
                disqualified to redeem food instruments or provide 
                supplemental foods in accordance with subparagraph (A), 
                the State agency shall assess the vendor a civil money 
                penalty in lieu of a disqualification.
                  ``(C) Amount.--The State agency shall determine the 
                amount of the civil penalty according to criteria 
                established by the Secretary.''.
          (2) Regulations.--
                  (A) In general.--Not later than March 1, 1999, the 
                Secretary of Agriculture shall promulgate final 
                regulations to carry out section 17(o) of such Act (42 
                U.S.C. 1786(o)), as added by paragraph (1).
                  (B) Additional requirement.--The final regulations 
                described in subparagraph (A) shall include criteria 
                for determining the amount of civil money penalties in 
                lieu of disqualification and for making hardship 
                determinations under such section.
  (p) Study and Report by Economic Research Service.--Section 17 of 
such Act (42 U.S.C. 1786), as amended by this Act, is further amended 
by adding at the end the following:
  ``(p) Study and Report by Economic Research Service.--
          ``(1) Study.--The Secretary, acting through the Administrator 
        of the Economic Research Service, shall conduct a study on the 
        effect of cost containment practices established by States 
        under the program for the selection of vendors and approved 
        food items (other than infant formula) on the following:
                  ``(A) Program participation.
                  ``(B) Access and availability of prescribed foods.
                  ``(C) Voucher redemption rates and actual food 
                selections by participants.
                  ``(D) Participants on special diets or with specific 
                food allergies.
                  ``(E) Participant use and satisfaction of prescribed 
                foods.
                  ``(F) Achievement of positive health outcomes.
                  ``(G) Program costs.
          ``(2) Report.--Not later than 3 years after the date of the 
        enactment of the Child Nutrition and WIC Reauthorization 
        Amendments of 1998, the Administrator shall submit to the 
        Secretary of Agriculture, the Committee on Education and the 
        Workforce of the House of Representatives, and the Committee on 
        Agriculture, Nutrition, and Forestry of the Senate a report 
        containing the results of the study conducted under paragraph 
        (1).''.
  (q) Collection and Use of Penalties From Vendor and Recipient Fraud 
and Abuse.--Section 17 of such Act (42 U.S.C. 1786), as amended by this 
Act, is further amended by adding at the end the following:
  ``(q) Use of Penalties From Vendor and Recipient Fraud and Abuse.--
Amounts collected from penalties from vendors and recipients relating 
to violations of any provision of this section (including any 
regulation established to carry out this section) for fraud and abuse 
under the program may be used for nutrition services and administration 
and food benefits only for the 1-year period beginning on the date on 
which amounts under the penalty are received.''.
  (r) Maximum Amount of Fine for Certain Violations Under the 
Program.--Section 17 of such Act (42 U.S.C. 1786), as amended by this 
Act, is further amended by adding at the end the following:
  ``(r) Maximum Amount of Fine for Certain Violations Under the 
Program.--The maximum amount of a fine with respect to the 
embezzlement, willful misapplication, stealing, obtaining by fraud, or 
trafficking in food instruments of funds, assets, or property that are 
of a value of $100 or more under the program shall be $25,000.''.
  (s) Criminal Forfeiture.--Section 17 of such Act (42 U.S.C. 1786), as 
amended by this Act, is further amended by adding at the end the 
following:
  ``(s) Criminal Forfeiture.--
          ``(1) In general.--In imposing a sentence on a person 
        convicted of an offense in violation of any provision of this 
        section (or any regulation promulgated under this section), a 
        court shall order, in addition to any other sentence imposed 
        under this section, that the person forfeit to the United 
        States all property described in paragraph (2).
          ``(2) Property subject to forfeiture.--All property, real and 
        personal, used in a transaction or attempted transaction, to 
        commit, or to facilitate the commission of, a violation (other 
        than a misdemeanor) of any provision of this section (or any 
        regulation promulgated under this section), or proceeds 
        traceable to a violation of any provision of this section (or 
        any regulation promulgated under this section), shall be 
        subject to forfeiture to the United States under paragraph (1).
          ``(3) Interest of owner.--No interest in property shall be 
        forfeited under this subsection as the result of any act or 
        omission established by the owner of the interest to have been 
        committed or omitted without the knowledge or consent of the 
        owner.
          ``(4) Proceeds.--The proceeds from any sale of forfeited 
        property and any monies forfeited under this subsection shall 
        be used--
                  ``(A) first, to reimburse the Department of Justice 
                for the costs incurred by the Department to initiate 
                and complete the forfeiture proceeding;
                  ``(B) second, to reimburse the Department of 
                Agriculture Office of Inspector General for any costs 
                the Office incurred in the law enforcement effort 
                resulting in the forfeiture;
                  ``(C) third, to reimburse any Federal or State law 
                enforcement agency for any costs incurred in the law 
                enforcement effort resulting in the forfeiture; and
                  ``(D) fourth, by the State agency to carry out the 
                approval, reauthorization, and compliance 
                investigations of vendors.''.

SEC. 203. NUTRITION EDUCATION AND TRAINING PROGRAM.

  Section 19(i) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(i)) 
is amended--
          (1) by striking paragraphs (1) and (2);
          (2) by redesignating paragraphs (3), (4), and (5) as 
        paragraphs (1), (2), and (3), respectively; and
          (3) in paragraph (1) (as redesignated)--
                  (A) in the paragraph heading, by striking ``1997 
                through 2002'' and inserting ``1999 through 2003''; and
                  (B) by amending subparagraph (A) to read as follows:
                  ``(A) In general.--There are authorized to be 
                appropriated to carry out this section such sums as are 
                necessary for fiscal years 1999 through 2003.''.

  Amend the title so as to read:

    A bill to amend the National School Lunch Act and the Child 
Nutrition Act of 1966 to provide children with increased access 
to food and nutrition assistance, to simplify program 
operations and improve program management, to extend certain 
authorities contained in those Acts through fiscal year 2003, 
and for other purposes.

                            Committee Action

    The Subcommittee on Early Childhood, Youth and Families 
held two hearings in Washington, DC, on child nutrition: March 
10, 1998, and March 17, 1998.
    The March 10, 1998, hearing focused on child nutrition 
programs. The Subcommittee received testimony from Mr. Ed 
Cooney, Deputy Administrator of Special Nutrition Programs, 
Food, Nutrition and Consumer Services, U.S. Department of 
Agriculture, Washington, D.C.; Mr. Bob Robinson, Issue Area 
Director, General Accounting Office, Washington, D.C.; Ms. 
Melinda Turner, Director of Food Services, Owsely County 
Schools, Booneville, Kentucky; Mr. Richard DeBurgh, Director of 
Food Services, Glendale Unified School District, La Crescenta, 
California; Ms. Joyce Holmes Benjamin, Associate 
Superintendent, Oregon Department of Education, Salem, Oregon; 
Ms. Sharon Cox, President, Montgomery County Council of PTAs, 
Montgomery County, Maryland; and Mr. John Murphy, Section 
Chief, North Carolina Department of Public Instruction, 
Raleigh, North Carolina.
    The March 17, 1998, hearing focused on the Special 
Supplemental Nutrition Program for Women, Infants, and Children 
(WIC). The Subcommittee received testimony from Ms. Denise 
Ferris, President, National Association of WIC Directors, 
Charleston, West Virginia; Mr. Robert Robinson, Issue Area 
Director, Government Accounting Office, Washington, D.C.; Ms. 
Darlene Jenkins, WIC Participant and Breastfeeding Counselor, 
Dover, Delaware; Ms. Claire Regan, Senior Director, Scientific 
and Regulatory Affairs, Grocery Manufacturers of America, 
Washington, D.C.; Mr. Robert Greenstein, Executive Director, 
Center on Budget and Policy Priorities, Washington, D.C.; and 
Ms. Betty Touchon, WIC Program Manager, Ukiah, California.

Introduction of the WIC reauthorization amendments of 1998

    On May 14, 1998, Mr. Mike Castle (R-DE) introduced H.R. 
3874, the WIC Reauthorization Amendments of 1998.

Legislative action

    On May 21, 1998, the Subcommittee on Early Childhood, Youth 
and Families favorably ordered reported the bill to the full 
Committee on Education and the Workforce by a voice vote.
    On June 4, 1998, the Committee on Education and the 
Workforce assembled to consider H.R. 3874, the WIC 
Reauthorization Amendments of 1998. H.R. 3874, as amended, was 
favorably reported by the Committee on Education and the 
Workforce by a vote of 36-1.

                                Purpose

    It is the purpose of this legislation to extend and amend 
expiring child nutrition programs and to make improvements in 
Federal child nutrition programs to enhance their effectiveness 
in providing nutrition services to program participants. H.R. 
3874 would primarily accomplish this goal by increasing 
flexibility for State and local providers, expanding nutrition 
services in afterschool care programs in order to reduce 
juvenile crime, drug and alcohol abuse and teen pregnancy and 
reducing program fraud and abuse in the WIC program.

                                Summary

    Title I of H.R. 3874 modifies the National School Lunch 
Act. It extends and modifies the Summer Food Service Program 
and makes modest changes to the Child and Adult Care Food 
Program. The bill also extends the authorization of the 
commodity distribution program and modifies an existing 
demonstration project to provide for a discretionary pilot 
project on universal breakfasts. This pilot project would be 
funded out of discretionary funds specifically provided for in 
Appropriations Acts. This Title also provides additional 
Federal support for access to snacks for youth participating in 
afterschool programs. Finally, Title I would provide additional 
flexibility to States in administering child nutrition 
programs.
    Title II of H.R. 3874 extends and amends the Special 
Supplemental Nutrition Program for Women, Infants and Children 
and State administrative expenses. It contains important 
changes that protect the integrity of the WIC program and 
provides additional flexibility to States in administering the 
program.

                            Committee Views

                               Background

    Child nutrition programs are authorized in two acts--the 
National School Lunch Act (originally enacted in 1946) and the 
Child Nutrition Act (originally enacted in 1966). Four of the 
major child nutrition programs are authorized through fiscal 
year 1998 and would be reauthorized through fiscal year 2003 in 
the Committee's bill. They are the Special Supplemental 
Nutrition Program for Women, Infants, and Children (the WIC 
program), the Summer Food Service program, assistance for State 
administrative expenses, and commodity assistance. The three 
largest entitlement child nutrition programs (the School Lunch 
program, the School Breakfast program and the Child and Adult 
Care Food program) are permanently authorized. The most recent 
child nutrition reauthorization legislation was enacted in 
1994: The Healthy Meals for Healthy Americans Act (P.L. 103-
448).
    Federal involvement with child nutrition originated with 
the donation of surplus commodities to schools in the 1930s. At 
the end of World War II, concern over the number of draftees 
failing their physical examinations due to nutrition related 
deficiencies prompted Congress to enact the National School 
Lunch Act. This Act established the School Lunch Program that 
provided grants to schools to implement and operate lunch 
programs. These grants, coupled with continued commodity 
assistance and a school milk program established in the early 
1950s, formed the extent of Federal support through 1961. 
However, many schools with large proportions of poor children 
could not afford to participate in the School Lunch program. In 
response to this Congress, in 1962, added special assistance 
grants targeted on schools drawing children from low-income 
areas.
    In 1966, Congress further extended Federal support for 
child nutrition with enactment of the Child Nutrition Act, 
citing the successes achieved in the School Lunch program. This 
law established a program for children in pre-school programs 
operated by schools and a pilot School Breakfast program. It 
also authorized funds for food service equipment assistance and 
State administrative expenses. The 1966 Act was quickly 
followed by 1968 amendments authorizing a special food 
assistance program for children without access to meal service 
programs in schools, either because they were too young or in 
summer programs. As with the 1966 law, this program was 
targeted on low-income areas.
    By 1970, Congress had authorized all of the current meal 
service programs and began a series of adjustments to assure 
that meals would be available to all children, particularly 
lower-income children. In 1970, special assistance funding for 
free and reduced-price school meals was extended to meals 
served to needy children in all participating schools, and 
uniform Federal income guidelines were established to determine 
children's eligibility for free and reduced-price meals. 
Throughout the 1940s, 1950s and 1960s, Federal assistance to 
child nutrition programs had been available to States in the 
form of grants allocated by enrollment and student 
participation. However, there was no system of guaranteed 
Federal reimbursements based on the number of meals served.
    This changed in 1972-1973, when Congress established the 
system of ``performance funding'' that exists today--guaranteed 
per-meal reimbursements were established, with higher payments 
for meals served free or at a reduced price. In the remainder 
of the 1970s, Congress increased meal subsidy rates and 
required that they be inflation indexed, established a 
guaranteed minimum level of commodity assistance, made the 
School Breakfast program permanent, and created separate 
programs for summer and child care providers with their own 
guaranteed reimbursement rates. In 1972, the WIC program was 
established as a pilot project, which was expanded to a 
national program in the mid-1970s. However, this period of 
expansion ended in 1980 and no new major child nutrition 
programs have been authorized since that time. Major child 
nutrition amendments in 1980 and 1981 significantly cut back 
Federal subsidy rates, lowered income eligibility standards for 
free and reduced-price meals, and scaled back the Summer Food 
Service and Special Milk programs.
    From 1982 through 1993, Congress gradually added to Federal 
child nutrition support. In six laws, it increased school 
breakfast subsidies and added a program of school breakfast 
start-up and expansion grants (both aimed at raising the number 
of participating schools) and created several small new 
programs and demonstration projects (including programs for 
homeless children, disabled adults in day care, and children in 
after-school programs). These measures also included a number 
of provisions to ease the administrative and paperwork burden 
on schools and other providers, require new dietary standards 
for meals, establish a system to ensure program accountability, 
and encourage cost containment in the WIC program. In the most 
recent major child nutrition legislation, amendments in the 
1996 welfare reform law significantly restructured the way 
assistance is provided to day care homes under the Child and 
Adult Care Food program.
    The primary purpose of this legislation is to extend and 
amend the four major expiring authorizations: WIC, State 
administrative expenses, the Summer Food Service program and 
the commodity assistance program. As reported by the Committee 
on Education and the Workforce, H.R. 3874, the Child Nutrition 
and WIC Reauthorization Amendments of 1998, also continues 
efforts to streamline programs, reduce the paperwork burden on 
local providers, insure program integrity and provide important 
nutrition services to program participants. The provisions in 
this bill were developed in a bipartisan manner and included 
important changes proposed by the nutrition community and the 
U.S. Department of Agriculture in its authorization proposal. 
This bill, H.R. 3666, was introduced by Representative 
Martinez, Ranking Member of the Early Childhood, Youth and 
Families Subcommittee, along with 14 other Members of Congress, 
on behalf of the Administration. The Committee believes these 
changes will improve the effectiveness of Federal child 
nutrition programs in providing vital nutrition services to our 
nation's children. The following text outlines the highlights 
of H.R. 3874 and its changes to our nation's important child 
nutrition programs.

               State Flexibility in Managing WIC Funding

    Since 1989, the Child Nutrition Act has included three 
provisions giving States flexibility in managing their WIC 
funding. The Committee believes that they should be revised to 
give State WIC agencies more flexibility. In addition, the 
House Appropriations Committee has limited the amount of unused 
WIC funding that States may retain and spend in the next fiscal 
year, and the Administration has requested that similar limits 
be placed on States' ability to keep unused WIC dollars. When 
States retain more funding than they actually need to provide 
support to program participants, it reduces the ability of the 
Department of Agriculture to provide such funds to States with 
additional need. The Committee's bill includes limits on 
States' authority to retain unused funding for their own use in 
the next fiscal year.
    Current law allows States to convert Federal dollars 
provided for food to funding for nutrition services and 
administration (NSA) so that full services (food as well as 
nutrition education, breastfeeding promotion services, etc.) 
can be provided to program participants should the number of 
participating individuals be increased because of lower food 
costs. This generally happens when a State lowers its WIC food 
costs through cost containment initiatives (e.g. rebates from 
food suppliers) and can serve more people with its Federal WIC 
allocation.
    This conversion authority is limited. States can convert 
food funding to cover nutrition services and administration 
costs and spend it based on their estimate of the number of new 
participants they will add due to estimated increased savings 
on food costs. However, if after having spent the converted 
funding, they fail (for whatever reason) to add the full number 
of persons they estimated when they converted funding, a 
portion of their spending will be ``disallowed.'' This means 
that State funds will have to make up the difference. As a 
result, States can be discouraged from using the flexibility 
provided by the current conversion authority for fear that they 
will end up with unallowable nutrition services and 
administration costs that must be covered by State dollars. And 
States' reluctance to bear the risk of converting food dollars 
to spending for nutrition services and administration can, in 
effect, mean that they may not be able to take the steps 
necessary to increase their caseloads and use all the Federal 
money provided to them.
    The Committee's bill would grant States more flexibility by 
easing the risk States take if they exercise conversion 
authority. Under the bill, a State securing an increase in cost 
containment savings would, with the Secretary's approval of its 
estimates, be able to convert a portion of any projected 
increase in food cost savings to nutrition services and 
administration funding. States that convert a portion of their 
cost containment savings in food dollars to spending for 
nutrition services and administration would be held harmless if 
the increase in WIC participation that the State anticipated 
did not fully materialize.
    However, the Committee recognizes that accountability for 
this new conversion authority must be ensured. In order to 
prevent this expanded conversion authority from being used to 
substantially shift food money to nutrition services and 
administration spending without increased cost containment 
savings and participation, the Committee's bill also would give 
the Secretary authority to reduce a State's nutrition services 
and administration allocation if its actual nutrition services 
and administration expenditures exceed its per participant 
grant for nutrition services and administration by more than 10 
percent (as opposed to 15 percent in current law).
    The WIC statute presently allows States to retain unused 
food and nutrition services and administration money and spend 
it in the subsequent fiscal year. Under this authority, they 
may retain up to 1 percent of their grant--or up to 3 or 5 
percent when implementing new cost containment measures. 
However, the fiscal year 1998 appropriations act for the WIC 
program effectively limits this authority to 1 percent of 
nutrition services and administration money only.
    The Committee, the Administration, and the Appropriations 
Committee are concerned that the current authority to spend 
money in the next fiscal year is too broad, particularly with 
regard to States' authority to retain and spend unused food 
money rather than return it for reallocation among States so 
that they can serve more women, infants and children. The 
Committee's bill would repeal this authority, thereby 
increasing the amount of money that can be reallocated among 
the States.
    The Committee does, however, recognize that authority to 
spend unused nutrition services and administration money in the 
next year is important so that States continue to have some 
flexibility to manage their WIC funds efficiently. The 
Committee's bill would allow States to spend nutrition services 
and administration funding only up to an amount equal to one 
percent of their total WIC grant. States also would be able to 
spend an additional amount of nutrition services and 
administration funds (equal to one-half percent of their total 
grant) for development of management information and electronic 
benefit transfer systems--with prior approval by the Secretary. 
Current authority to spend as much as 3 percent or 5 percent of 
a State's food grant in the next year would be ended.
    Current law also allows States to use up to 1 percent of 
their WIC food grant to cover food expenditures incurred in the 
prior year. No similar authority exists with regard to 
nutrition services and administration funds. If a State incurs 
unexpected nutrition services and administration costs not 
covered by its grant, the overage must be covered with State 
funds.
    In order to further increase State flexibility, the 
Committee's bill would extend the authority to spend money to 
cover prior year costs by allowing States to spend up to 1 
percent of their nutrition services and administration grant to 
cover unanticipated nutrition services and administration costs 
incurred in the prior year.
    The Committee has also given States the flexibility to use 
food dollars to purchase breast pumps. Studies have 
demonstrated the benefits of breastfeeding to the long term 
health of infants. Currently breast pumps can only be purchased 
using nutrition services and administrative dollars. This 
limits the number of pumps available for breastfeeding women 
participating in the WIC program. For those women who return to 
work after the birth of their child, the lack of a breast pump 
can result in a decision to stop breastfeeding. This 
legislation would allow States to purchase additional breast 
pumps to serve the needs of program participants. However, the 
Committee remains concerned about the excessive use of food 
dollars for this purpose. Therefore, the bill would prevent 
States from using food dollars to purchase breast pumps until 
the State reached the same level of breast pump expenditures 
through nutrition services and administration funds as they had 
in the previous year. The Committee delays the effective date 
of this provision for one year in order to allowStates to 
establish a baseline date on breast pump purchases with nutrition 
services and administrative dollars. This provision will provide States 
with additional flexibility at the same time it continues to focus food 
dollars on the purchase of nutritional supplements for participants.

             Preventing Fraud and Abuse in the WIC Program

    In March, 1998, the Surveys and Investigations Staff of the 
House Committee on Appropriations submitted a critical report 
on the WIC program. The report makes four major points, 
particularly regarding the vulnerability of the WIC program to 
fraud and abuse. It notes that the level of unspent money every 
year is above a reasonable level. It maintains that the full 
range of effective controls on the cost of WIC food package has 
not been implemented in many States. It points out the 
potential for issuance of benefits to ineligible persons, 
especially because of the lack of income documentation 
requirements. Finally, it criticizes the limited extent of 
investigative oversight of WIC vendors and recipients to 
prevent trafficking and other abuses.
    The report's finding as to the level of unspent funds are 
addressed in the Committee bill provisions dealing with 
flexibility for WIC agencies. However, the Committee has 
several concerns related to fraud and abuse in the WIC program. 
The Committee has, therefore, included in H.R. 3874 several 
provisions to ensure that participation in the WIC program is 
limited to those who are truly eligible and to curb fraud and 
abuse:
          The physical presence of all applicants and 
        recipients would be required at each certification and 
        recertification of eligibility, unless waived under 
        certain limited conditions.
          Income documentation would be required, unless waived 
        under certain limited conditions.
          State agencies would be required to implement systems 
        to identify individuals participating at more than one 
        WIC site.
          State agencies would be required to identify high-
        risk vendors and follow up with compliance 
        investigations.
          Vendors convicted of trafficking would be permanently 
        disqualified from participation in the WIC program (or, 
        in some cases, be subject to a monetary fine).
          State agencies would be encouraged to pursue fraud 
        and abuse through a change in rules allowing them to 
        keep and use additional recouped funds.
          The maximum fine for WIC program violations would be 
        more than doubled.
          Those convicted of trafficking or other serious 
        violations would face forfeiture of any property 
        involved in the violation.
          State agencies would be required to take into account 
        the prices charged by vendors when approving them for 
        participation in the program.
    It is important to note that the bill's provisions 
regarding physical presence requirements include specific 
flexibility to deal with the difficulties encountered by 
working parents. Under the bill, local agencies are permitted 
to waive the physical presence requirement for children of 
working parents, if the children were present at initial 
certification, have been recertified at least once in the past 
year, and the requirement would present a barrier to 
participation. This provision will ensure that children are not 
denied WIC benefits due to the inability of their parents, due 
to work constraints, transportation difficulties, and other 
problems, to ensure the physical presence of their children for 
recertification every six months. However, the Committee does 
expect children to be present for recertification at least once 
each year.
    The Committee also recognizes the effectiveness of WIC cost 
containment strategies pursued by State WIC agencies. In 
addition to the changes governing the WIC program noted above, 
the Committee's bill would require a study of cost containment 
practices so that those that are most useful can be identified. 
This study will examine the impact of cost containment 
practices such as State selection of vendors and approved food 
items on program participation, access and availability of 
prescribed foods, voucher redemption rates and actual food 
selections by participants, achievement of positive health 
outcomes and program costs.

                        Miscellaneous WIC Issues

    There are several other WIC issues which are not addressed 
in this legislation but which the Committee believes deserve 
additional attention.
    The Committee recognizes that WIC helps to assure normal 
growth in children, reduced levels of anemia, increased 
immunization rates, improved access to regular health care and 
strengthened diets. WIC blood work testing is currently 
required at certification, which generally does not coincide 
with the usual schedule of well-child pediatric care visits. 
This results in enrollment and recertification delays, 
duplicative testing, and extra physical visits.
    The Committee endorses the Department's current effort to 
conform WIC's blood work requirements to the Centers for 
Disease Control and Prevention's periodicity schedule. The 
Committee expects the final rules on the coordination of blood 
work schedules to be issued by March 1, 1999 and will be 
closely monitoring the Department's progress on these 
regulations.
    The Committee also recognizes the importance of addressing 
the ethnic and cultural eating patterns of WIC participants and 
strongly endorses the Department's current effort to provide 
guidelines to local agencies regarding food substitutions to 
accommodate ethnic and cultural eating patterns. Such 
guidelines should assure that the food substitutions will 
accommodate the supplemental nutritional needs of WIC 
participants. The Committee urges the Department to proceed 
expeditiously to complete its final guidelines regarding this 
matter.

                 State and Local Flexibility Provisions

    This bill includes language to require States, where a 
single State agency administers multiple child nutrition 
programs, to provide a single permanent agreement between the 
State and the school food authority to provide meals under all 
such programs. The bill also requires a single form for school 
food authorities to claim reimbursements for meals served 
through these programs.
    It is the intent of the Committee to simplify and 
streamline local administration of child nutrition programs. 
Under current law, school districts can be required to apply 
separately to provide school breakfasts and lunches, child care 
nutrition and summer food service program meals. This often 
duplicative process is time consuming and inefficient. It is 
the opinion of the Committee that the flexibility provisions 
outlined above will have a significant and positive impact on 
cost savings at the local level.
    Under the Committee bill, State agencies administering 
school meal programs will develop a single agreement for school 
districts to participate in the several programs. This 
agreement will be permanent and subject only to amendment if 
service factors change. For example, a school food authority 
providing meals under the Summer Food Service Program will need 
only to submit updates of service site information each year as 
a continuing sponsor.
    The Committee's amendment would also require the use of a 
single claim form that incorporates sections for claims for all 
meals served. At its simplest, this would mean adding sections 
from each current form to a single form.
    The Committee believes that the consolidated agreements and 
single claim forms provided in the bill allow additional 
flexibility for States and school districts. States may 
consolidate program accountability reviews for schools running 
multiple programs. This will result in savings at the State 
level in that State agency staff will be able to coordinate 
reviews among the programs. States may conduct additional 
reviews as necessary where there is a concern about compliance 
or for new sponsors, as current law provides.
    School districts could operate all programs under the same 
meal pattern requirements. Schools would also have the same 
menu planning options for the Summer Food Service Program that 
school meals enjoy. This simplifies the menu planning process 
and maintains consistency among programs. It also simplifies 
program oversight at the State level.
    The bill also provides States with greater flexibility in 
how they use Federal funds for State administrative expenses. 
Currently there is a 10 percent cap on the amount of funds that 
can be transferred between nutrition programs. The Committee 
removes this cap in order to allow States to move funds where 
they are needed most. The demand for audits, compliance reviews 
and technical assistance change from program to program from 
year to year. Providing States with flexibility to move funds 
to where they are needed most will allow them to operate 
programs more efficiently. The Committee urges States to use 
caution in transferring funds between programs.

                      Summer Food Service Program

    The Summer Food Service Program provides important 
nutrition services to our nation's low-income children. For 
many years, sponsor participation in this program has been 
limited due to past program abuse by certain types of sponsors. 
As a result, some low income areas have been unserved or 
underserved and children do not have access to nutritious 
meals. This legislation modifies current law to encourage 
additional private non-profit organizations to become sponsors 
of summer food service programs.
    In April, 1997, the General Accounting Office (GAO) issued 
a study on the Summer Food Service Program that reported 
substantial problems among program operators. GAO found 
evidence of food waste caused by inadequate storage and 
spoilage, deliberate dumping, poor quality food, adult food 
consumption or offsite consumption by children, improper 
bidding procedures and indications of kickbacks and bribes, 
failure to meet meal pattern requirements, and payments for 
unserved meals. Most of the abuses appeared to involve private, 
nonprofit program operators that served substantial numbers of 
children at many sites and who used private food service 
companies for food delivery.
    As a result of this report, Congress enacted legislation 
that placed restrictions on participation of private, 
nonprofits in 1977. This legislation was intended to improve 
program administration, increase monitoring and tighten program 
requirements. The 1977 amendments placed restrictions on the 
operation of programs that used private food service management 
companies, or vendors for meal service. In 1981, the Omnibus 
Budget Reconciliation Act barred these sponsors from the 
program completely by restricting the sponsorship of summer 
programs to public and private nonprofit school food 
authorities, local municipal or county governments, and public 
and private nonprofit residential summer camps. As a result of 
changes enacted in 1981, program participation dropped by 
approximately 500,000 children--from 1.9 million in 1981 to 1.4 
million in 1982.
    Beginning in 1988, Congress amended the law to allow 
private non-profit summer food program sponsors to participate 
in the program. This was done as part of the Hunger Prevention 
Act of 1988. One provision of this law created a five State 
demonstration project for private, nonprofit summer food 
program sponsors. Their participation, in these five States, 
was limited to low-income areas where public sponsors did not 
operate programs. Additional restrictions were placed on these 
sponsors to insure there were no recurrences of the fraud and 
abuse outlined in the 1977 GAO report. In 1989, Congress 
permitted all States to allow private, nonprofit summer food 
sponsors to participate in the program as long as they met the 
restrictions set forth in the demonstration project.
    Additional restrictions have been lifted over the years in 
recognition of the fact that States are doing a better job of 
overseeing Summer program sponsors and past abuses committed by 
this group of sponsors have not reappeared. The legislation 
reported by the Committee removes the last barriers to full 
participation by these sponsors through the following changes 
to the law:
    Allows private, nonprofit organizations participating in 
the Summer Food Program to operate 25 sites with a maximum 
total of 300 children at each site. Removes the current 
limitation, which prohibits them from serving more than 2500 
children.
    Eliminates the March 1 ``indication of interest'' 
requirement which allows private nonprofit sponsors to 
participate in the Summer Food Program only in an area where 
school or government sponsors have not indicated an interest in 
running a program by March 1. The Committee does, however, 
retain the priority for schools should more than one sponsor 
apply to operate a Summer Food Program.
    Removes the restriction that prevents private nonprofit 
organizations in the Summer Food Program from contracting with 
commercial or nonprofit entities for meal services. Currently 
they can only self-prepare meals or buy them from public 
entities.
    Revises the vendor registration requirement under the 
Summer Food Program. Currently all commercial entities that 
wish to provide meals to sponsors must register with State 
agencies. This provision makes registration allowable, but not 
mandatory.
    It is the intent of the Committee that the removal of these 
barriers will increase access of low income children to 
nutritious meals during the summer months when they are not in 
school. The Committee wants to make it clear that the 
performance of private, nonprofit sponsors will be closely 
monitored once these restrictions have been removed. Should 
past abuses be repeated, the Committee will move swiftly to 
reinstate these barriers.

                        Buy American Provisions

    The Committee bill incorporates language similar to that 
proposed by the U.S. Department of Agriculture which requires 
schools in the contiguous States participating in the National 
School Lunch and School Breakfast Programs to purchase, 
whenever possible, only food products that are produced in the 
United States for those programs. The Committee believes this 
is an important addition to the law in view of health concerns 
that have been raised regarding imported foods.
    Although Hawaii is exempt from ``Buy American'' provisions, 
the bill eliminates this exemption with respect to food 
products that are grown in Hawaii in sufficient quantities to 
meet the needs of meals provided under the school lunch and 
breakfast programs.
    Finally, the bill includes a definition of ``food products 
that are produced in the United States.'' The Committee 
included this definition for a variety of reasons. First, we 
felt it was important to assist local schools in determining 
which products qualify under this new requirement. Second, the 
Committee believes it is important to make sure that ``food 
products that are produced in the United States'' means 
products are produced `substantially' from agricultural 
products grown in the United States. Under the ``Buy America 
Act'' substantially means over 51 percent from American 
products. However, the Department of Agriculture has been using 
a definition of ``food products that are produced in the United 
States'' that includes products which are canned and labeled in 
the United States, but may have 100 percent foreign 
ingredients. By adding this definition, the bill serves both 
the needs of schools that purchase these products and American 
agriculture.

         Improvements to the Child and Adult Care Food Program

    The Committee bill also includes several improvements to 
the Child and Adult Care Food Program.
    First, the Committee has tightened language that permits 
institutions in the Child and Adult Care Food Program moving 
towards tax-exempt status to participate in the program. Under 
current law, such institutions can ``move toward'' tax-exempt 
status for years. The Committee believes institutions seeking 
such status should do so as quickly as possible. As such, 
participation for such institutions is limited to no more than 
six months unless they can demonstrate that failure to get tax-
exempt status is beyond their control.
    Second, the Committee has removed a provision in current 
law that has discouraged schools from operating day care 
programs. Under current law, schools operating day care 
programs were required to meet any Child and Adult Care Food 
Program licensing or approve requirements, or alternative 
approval standards where no State or local licensing or 
approval requirements exist. Since schools are alreadytrusted 
to care for children throughout the school day, the Committee believes 
this extra requirement is unnecessary and burdensome. It has, 
therefore, eliminated this requirement for schools.
    This Committee believes the Child and Adult Care Food 
program provides important nutritional supplements to children 
in child care settings. The Committee wants to point out that 
it will be closely monitoring this program. Recent reports by 
the Inspector General of the U.S. Department of Agriculture 
raise serious concerns regarding program integrity. For 
example, Operation ``Kiddie Care,'' a program operated by the 
Inspector General to determine the extent of fraud in the child 
care program, uncovered significant weaknesses in program 
delivery. During the first phase of their reviews, they found 
11 of 12 sponsors seriously deficient in their delivery of 
services. Out of 43 audits and investigations in 21 States, 
they found 33 sponsors to be so seriously deficient in program 
administration that they will be subject to termination from 
the program if they fail to correct deficiencies. Finally, as 
the result of 26 investigations for program fraud, 10 sponsors 
were terminated from the program. The Committee strongly 
encourages States to step up their efforts to eliminate fraud 
and abuse in this important program, especially by redirecting 
their audit funds to compliance investigations.

                      Afterschool Care Provisions

    The Committee is very concerned about the problem of 
juvenile crime facing our nation. Earlier this year, the 
Committee reported, and the House passed, H.R. 1818, the 
Juvenile Crime Control and Delinquency Prevention Act. This 
legislation focused primarily on the prevention of juvenile 
crime. During Subcommittee hearings on this legislation, it 
became clear that afterschool programs not only prevented 
juvenile crime, they contributed to reduced drug and alcohol 
abuse and prevented teen pregnancy.
    The Committee believes afterschool programs, which operate 
between the end of the school day and the time when parents 
return home from work, provide a quality alternative to 
juveniles with too much time on their hands. The Committee also 
recognizes that children involved in such programs may need a 
snack to hold them over until their evening meal. Therefore, 
the Committee, in an effort to encourage afterschool programs, 
has made several modifications to current law to allow for 
Federal support for the provision of a snack to children 
participating in such programs.
    The first provision would allow for Federal reimbursements 
for a snack for children up to age 18 who are participating in 
afterschool care programs operated by schools. In addition, 
more schools will be able to offer snacks because participation 
in the afterschool snack program will no longer be limited to 
schools that were operating afterschool programs prior to May 
15, 1989. This is a modification of a provision currently 
contained in the School Lunch Act which provides snacks for 
children up through age 12 who are participating in afterschool 
care programs operated by schools prior to May 15, 1989. The 
Committee believes such afterschool care programs need to 
address some of the factors related to youth involvement in 
juvenile activities, such as educational difficulties. As such 
only those programs which have an educational or enrichment 
purpose and which are organized primarily for the purpose of 
providing child care services would qualify under this section.
    The second provision would amend the Child and Adult Care 
Food Program to permit schools and public and non-profit 
organizations operating afterschool programs for at-risk youth 
in low-income areas to be reimbursed for a snack. Such programs 
can also serve youth up through age 18. The Committee believes 
the main purpose of such programs shall be the care and 
supervision of participating youth.

                         Demonstration Projects

    H.R. 3874, as reported by the Committee, makes permanent 
one demonstration project and modifies another.
    Under current law, a demonstration project has been 
operating in Iowa and Kentucky. This project allows for-profit 
child care providers to participate in the Child and Adult Care 
Food Program as long as 25 percent of their children are 
eligible for free and reduced-price meals under the School 
Lunch Program. In other States, only those for-profit child 
care providers with twenty-five percent of their children 
receiving subsidies under Title XX of the Social Security Act 
are eligible to participate in this program. H.R. 3874 makes 
permanent this demonstration project.
    Section 18 of the National School Lunch Act also contains a 
discretionary pilot project to examine the impact of a 
universal lunch and breakfast demonstration project on 
paperwork reduction, reducing application and meal counting 
requirements, and increasing program participation. H.R. 3874 
modifies this provision to focus it on the School Breakfast 
program. The Committee believes that breakfast is an important 
meal for students. There have been studies that suggest eating 
breakfast improves students' academic achievement and classroom 
behavior. Should a majority of Congress decide to expand the 
Federal School Breakfast Program, the Committee believes we 
must examine the effect of this policy. In addition to 
examining the impact of achievement and classroom behavior, the 
Committee expects this pilot project to examine the impact of 
universal breakfast on the dietary intake of participants and 
on over-all program participation. Specifically, the Committee 
will want to know if a universal breakfast program has an 
impact on the number of children who actually eat breakfast as 
opposed to simply encouraging those children who already eat 
breakfast at home to eat at school. In addition, the Committee 
expects the evaluation of the pilot project to take into 
account other factors that could impact any of these areas, 
such as schoolwide educational reforms.
    The Committee expects any school operating a pilot project 
as part of this demonstration program to receive a total 
Federal reimbursement under the schoolbreakfast program in an 
amount equal to the total Federal reimbursement for the school in the 
prior year under such program (adjusted for inflation and fluctuations 
in enrollment). Funds required for the pilot project in excess of such 
reimbursements may be taken from any non-Federal source or from amounts 
specifically provided for this project in appropriations acts. If 
appropriations for the pilot projects are not specifically provided for 
in appropriations Acts, the Committee does not expect the Department of 
Agriculture to conduct, or schools to participate in, such pilot 
projects.
    H.R. 3874, the ``Child Nutrition and WIC Reauthorization 
Amendments of 1998'' as reported by the Committee on Education 
and the Workforce on June 4, 1998.

                      Section-by-Section Analysis

    Section 1 contains the short title and table of contents.
    Section 2 sets forth the effective date of this Act and 
amendments to it, to be October 1, 1998.

          TITLE I--AMENDMENTS TO THE NATIONAL SCHOOL LUNCH ACT

    Section 101 makes technical amendments to Section 6 of the 
Act relating to the provision of commodity assistance.
    Section 102(a) amends Section 9 of the Act to require that 
schools participating in the school lunch or school breakfast 
program and preparing meals on-site obtain, twice during each 
school year, State or local health and safety inspections--if 
they are not required to undergo health and safety inspections 
by State or local law.
    Section 102(b) further amends Section 9 of the Act to 
require that, to the extent that a single State agency 
administers the school lunch program, the school breakfast 
program, the summer food service program, and the child and 
adult care food program in a State, school food authorities 
submit a single agreement with respect to the programs they 
operate and use a common procedure when claiming reimbursement 
for meals and snacks served. The single agreement is to be 
permanent, but is to be amended as necessary.
    Section 103 amends Section 11 of the Act to require that, 
when reimbursement rates are indexed for inflation, all 
resultant rates will be rounded down to the nearest whole cent.
    Section 104(a) amends Section 12(f) of the Act to permit, 
in Alaska and Hawaii, the adjustment of reimbursement rates for 
the summer food service program to take into account differing 
costs.
    Section 104(b) amends Section 12 of the Act to add a new 
subsection (n) containing a ``Buy American'' requirement. The 
new subsection would require schools in the contiguous States 
participating in the school lunch and breakfast programs to 
purchase, to the extent practicable, only food products 
produced in the United States. It also requires that schools in 
Hawaii purchase, to the extent practicable, food products grown 
in Hawaii in sufficient quantities to meet schools' needs.
    Section 105(a) amends Section 13 of the Act to permit 
private nonprofit summer food service program sponsors that 
operate not more than 25 sites, with not more than 300 children 
served at any one site--unless a waiver is granted by the State 
agency under standards developed by the Secretary.
    Section 105(b) amends Section 13 of the Act to permit 
schools operating a summer food service program off school 
grounds to receive reimbursement for meals served when the 
child does not take an item offered as part of the meal.
    Section 105(c) amends Section 13 of the Act to permit 
private nonprofit summer food service program sponsors to 
contact with private vendors, to make registration of private 
vendors in the summer food service program a State option, and 
to remove a requirement that private nonprofit summer food 
service program sponsors may participate only in areas where a 
public entity has not indicated it will run a program by March 
1 of any year.
    Section 105(d) amends Section 13 of the Act to extend the 
appropriations authorization for the summer food service 
program through fiscal year 2003.
    Section 106 amends Section 14 of the Act to extend the 
appropriations authorization for commodity distribution 
assistance through fiscal year 2003.
    Section 107(a) amends section 17 of the Act to allow, in 
those instances in which State or local licensing or approval 
is not required, outside school hours care institutions to 
participate in the child and adult care food program if they 
meet State or local health and safety standards.
    Section 107(b) amends Section 17 of the Act to extend Even 
Start participants' categorical eligibility under the child and 
adult care food program.
    Section 107(c) amends Section 17 of the Act to allow 
private institutions participating in the child and adult care 
food program and moving towards tax-exempt status to 
participate for not more than six months. If they can 
demonstrate that failure to obtain tax-exempt status is beyond 
their control, they may receive a single extension of up to 90 
days. This subsection also removes a requirement that 
institutions applying for the child and adult care food program 
receive a notice of an incomplete application within 15 days.
    Section 107(d) amends Section 17 of the Act to reduce the 
set-aside of money to be granted States for audits under the 
child and adult care food program--from 2% to 1% of program 
dollars.
    Section 107(e) amends Section 17 of the Act to permanently 
authorize a demonstration project--operating in Iowa and 
Kentucky--under which for-profit child care centers are allowed 
to participate in the child and adult care food program if 
their enrollment is at least 25% children eligible for free and 
reduced-price meals.
    Section 107(f) amends Sections 17 and 17B of the Act to add 
a new subsection (q), which would combine all nutrition 
programs for homeless children under the aegis of the child and 
adult care food program.
    Section 107(g) amends Section 17 of the Act to add a new 
subsection (r), which would allow reimbursements under the 
child and adult care food program for snacks served free in 
afterschool programs to at-risk children through age 18 in 
lower-income areas.
    Section 108 amends Section 17A of the Act to allow schools 
to receive reimbursements for snacks served to children through 
age 18 in afterschool programs. Programs would be required to 
have an education or enrichment purpose.
    Section 109 amends Section 18(i) of the Act to remove from 
the demonstration project authorized under subsection (i) 
provisions relating to school lunches and establish a 
discretionary elementary school breakfast demonstration 
project.
    Section 110 amends Section 21 of the Act to extend the 
appropriations authorization for training and technical 
assistance through fiscal year 2003.
    Section 111 amends Section 22 of the Act to extend the 
appropriations authorization for program compliance and 
accountability operations through fiscal year 2003.
    Section 112 amends Section 26 of the Act to extend and make 
discretionary the appropriations authorization for an 
information clearinghouse.
    Section 113 amends Section 27 of the Act to revise 
provisions governing the Secretary in carrying out activities 
to help accommodate the special dietary needs of individuals 
with disabilities and authorizes appropriations for these 
activities.

            TITLE II--AMENDMENTS TO THE CHILD NUTRITION ACT

    Section 201(a) amends Section 7 of the Act to make 
provisions dealing with assistance for State administrative 
expenses consistent with provisions combining nutrition 
programs for homeless children in the child and adult care food 
programs contained in Section 107(f) of the bill.
    Section 201(b) amends Section 7 of the Act to eliminate the 
10% limit on transferring funds provided for State 
administrative expenses among child nutrition programs.
    Section 201(c) amends Section 7 of the Act to extend the 
appropriations authorization for assistance for State 
administrative expenses through fiscal year 2003.
    Section 202(a) amends Section 17 of the Act to require the 
physical presence of each applicant for the WIC program at each 
certification determination and allows local WIC agencies to 
waive the requirement in certain instances when it would create 
a barrier to participation. It also amends Section 17 to 
require program applicants to provide documentation of 
household income or participation in an income-tested program 
and allows State WIC agencies to waive the requirement in 
certain instances where the requirement would present a barrier 
to participation.
    Section 202(b) amends Section 17 of the Act to require WIC 
agencies to provide education or educational materials relating 
to the effects of drug and alcohol abuse by a pregnant, 
postpartum, or breastfeeding woman on the woman's developing 
child.
    Section 202(c) amends Section 17 of the Act to allow the 
distribution of nutrition education materials (including 
breastfeeding promotion materials) developed for the WIC 
program to State agencies administering the commodity 
supplemental food program.
    Section 202(d) amends Section 17 of the Act to require 
State WIC agencies to implement systems designed to identify 
recipients participating at more than one site.
    Section 202(e) amends Section 17 of the Act to require 
State WIC agencies to identify vendors with a high probability 
of program abuse and to monitor these vendors through follow-up 
compliance investigations.
    Section 202(f) amends Section 17 of the Act to extend the 
authorization of appropriations for the WIC program through 
fiscal year 2003.
    Section 202(g) amends Section 17 of the Act to allow State 
agencies to purchase breast pumps, beginning in fiscal year 
2000, with food benefit funds--so long as they do not reduce 
their purchase of breast pumps from nutrition services and 
administration funds.
    Section 202(h)(1) amends Section 17 of the Act to extend 
the authority for the formula allocation of WIC funds by the 
Secretary among the States through fiscal year 2003.
    Section 202(h)(2) amends Section 17 of the Act to allow the 
Secretary to reduce a State's nutrition services and 
administration grant if actual expenditures on nutrition 
services and administration exceed the State's grant for 
nutrition services and administration by more than 10%. An 
exception is allowed for small State agencies.
    Section 202(i) amends Section 17 of the Act to revise 
provisions of law that allow State WIC agencies to convert 
funds provided for food benefits to funds for nutrition 
services and administration. States would be allowed to convert 
funds based on their estimates of increased participation and 
increased cost containment savings--as approved by the 
Secretary--without a penalty if the estimates are not fully 
realized.
    Section 202(j) amends Section 17 of the Act to require that 
State WIC agencies grant infant formula rebate contracts to 
bidders with the lowest net price offer.
    Section 202(k) (as supplemented by Section 202(m)(2)) 
amends Section 17 of the Act to extend, through fiscal year 
2003, the requirement to use up to $10 million of unspent WIC 
funding to support infrastructure and breastfeeding support 
activities.
    Section 202(l) amends Section 17 of the Act to require 
State WIC agencies to consider the prices that stores charge 
for foods provided under the WIC program when selecting 
retailers as approved vendors for the program.
    Section 202(m) amends Section 17 of the Act to allow State 
WIC agencies to use not more than 1 percent of funds provided 
for food and not more than 1 percent of funds provided for 
nutrition services and administration for expenses incurred in 
the preceding fiscal year. This subsection also amends Section 
17 to allow State WIC agencies to retain funds for nutrition 
services and administration and use them in the subsequent 
fiscal year--up to an amount equal to 1 percent of their total 
grant. State agencies also would be allowed to retain nutrition 
services and administration funds--up to an additional one-half 
of 1 percent of their total grant, with the Secretary's 
approval--for use in the subsequent fiscal year to develop 
management information and electronic benefit transfer systems.
    Section 202(n)(1) amends Section 17 of the Act to revise 
the State matching requirements for the WIC farmers' market 
nutrition program. The required match would be 30 percent of 
the administrative portion of the farmers' market nutrition 
program grant--as opposed to 30 percent of the total grant.
    Section 202(n)(2) amends Section 17 of the Act to eliminate 
legislatively stipulated ranking criteria for States' farmers' 
market nutrition program applications.
    Section 202(n)(3) amends Section 17 of the Act to extend 
the appropriations authorization for the WIC farmers' market 
nutrition program through fiscal year 2003.
    Section 202(o) amends Section 17 of the Act to require the 
permanent disqualification of vendors convicted of trafficking 
in WIC food benefits or selling firearms, ammunition, 
explosives, or controlled substances. Civil money penalties 
would be allowed if permanent disqualification would harm WIC 
program recipients.
    Section 202(p) amends Section 17 of the Act to add a new 
subsection (p) that would require the Secretary, through the 
Economic Research Service, to conduct a study on the effect of 
State cost containment practices for the selection of vendors 
on program participation, access to and availability of 
prescribed foods, voucher redemption rates and food selections 
by recipients, participants with special diets or food 
allergies, participant use of and satisfaction with prescribed 
foods, achievement of positive health outcomes, and program 
costs.
    Section 202(q) amends Section 17 of the Act to add a new 
subsection (q) that would allow State WIC agencies to use funds 
collected from penalties and claims against recipients and 
vendors through the one-year period following the date the 
funds are received.
    Section 202(r) amends Section 17 of the Act to add a new 
subsection (r) raise maximum fine for WIC violations from 
$10,000 to $25,000.
    Section 202(s) amends Section 17 of the Act to add a new 
subsection (s) that would provide for forfeiture of property 
involved in serious violation of WIC program rules.
    Section 203 amends Section 17 of the Act to extend the 
appropriations authorization for the nutrition education and 
training program through fiscal year 2003 at such sums as are 
necessary.

                       Explanation of Amendments

    The Amendment in the Nature of a Substitute is explained in 
the body of this report.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. This bill amends and reauthorizes the National School 
Lunch Act and the Child Nutrition Act of 1966. The bill does 
not prevent legislative branch employees from receiving the 
benefits of this legislation.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act requires a statement of whether the provisions of 
the reported bill include unfunded mandates.This bill amends 
and reauthorizes the National School Lunch Act and the Child Nutrition 
Act of 1966. The bill does not contain any unfunded mandates.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 2(l)(3)(A) of rule XI and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the body of this report.

 Statement of Oversight Findings of the Committee on Government Reform 
                             and Oversight

    With respect to the requirement of clause 2(l)(3)(D) of 
rule XI of the Rules of the House of Representatives, the 
Committee has received no report of oversight findings and 
recommendations from the Committee on Government Reform and 
Oversight on the subject of H.R. 3874.

                        Constitutional Authority

    The National School Lunch Act, the Child Nutrition Act of 
1966, and this bill, H.R. 3874, are constitutional under the 
spending clause of the constitution, Article 1, section 8, 
clause 1.

                           Committee Estimate

    Clause 7 of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 3874. However, clause 7(d) of that rule provides that this 
requirement does not apply when the Committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 403 of the Congressional Budget Act.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 2(l)(3)(B) of 
rule XI of the House of Representatives and section 308(a) of 
the Congressional Budget Act of 1974 and with respect to 
requirements of 2(l)(3)(C) of rule XI of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for H.R. 3874 from the Director of the Congressional Budget 
Act:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 23, 1998.
Hon. William F. Goodling,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3874, the Child 
Nutrition and WIC Reauthorization Amendments of 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sheila Dacey.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.R. 3874--Child Nutrition and WIC Reauthorization Amendments of 1998

    Summary: H.R. 3874 would reauthorize child nutrition 
programs and the Special Supplemental Nutrition Program for 
Women, Infants, and Children (WIC). H.R. 3874 would provide 
authorizations of $3.9 billion for fiscal year 1999 and about 
$19.6 billion over the 1999-2003 period, not including 
adjustments for inflation.
    In addition, H.R. 3874 would newly provide reimbursement 
for snacks served to youth in after-school programs in schools 
and low-income areas, lower reimbursement rates for meals 
served free and at a reduced price in schools and child care 
centers, and reduce funding to states for conducting audits of 
nutrition programs in child care centers. Those changes would 
slightly increase direct spending for 1999 but decrease direct 
spending by $68 million over the 1999-2003 period. Enactment of 
the bill also would result in increased revenues, although the 
amount is likely to be insignificant. Because the bill's 
enactment would affect both direct spending and receipts, pay-
as-you-go procedures would apply.
    H.R. 3874 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
The bill would, however, impose new requirements on state and 
local governments that administer child nutrition programs 
totaling $8 million in fiscal 1999 and $202 million for the 
1999-2003 period. Under UMRA, such requirements would not be 
mandates because they are a result of complying with grant 
conditions or because states have the ability to offset their 
costs by amending the programs.
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 3874 is summarized in Table 1. The 
costs of this legislation fall within budget function 600 
(income security).

                          TABLE 1. SUMMARY OF ESTIMATED BUDGETARY EFFECTS OF H.R. 3874                          
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
                                        Without Adjustments for Inflation                                       
                                                                                                                
Authorization under current law:                                                                                
    Estimated authorization level \1\.....................    4,000       82       82       82       82       72
    Estimated outlays.....................................    3,985      354       82       82       82       74
Proposed changes:                                                                                               
    Estimated authorization level \1\.....................  .......    3,936    3,922    3,922    3,922    3,932
    Estimated outlays.....................................  .......    3,650    3,924    3,927    3,927    3,931
Authorizations under H.R. 3874:                                                                                 
    Estimated authorization level \1\.....................    4,000    4,018    4,004    4,004    4,004    4,004
    Estimated outlays.....................................    3,985    4,004    4,006    4,009    4,009    4,005
                                                                                                                
                                         With Adjustments for Inflation                                         
                                                                                                                
Authorizations under current law:                                                                               
    Estimated authorization level \1\.....................    4,000       85       88       90       93       86
    Estimated outlays.....................................    3,985      356       87       89       92       87
Proposed changes:                                                                                               
    Estimated authorization level \1\.....................  .......    4,019    4,096    4,192    4,287    4,399
    Estimated outlays.....................................  .......    3,725    4,092    4,191    4,285    4,392
Authorizations under H.R. 3874:                                                                                 
    Estimated authorization level \1\.....................    4,000    4,104    4,184    4,282    4,380    4,485
    Estimated outlays.....................................    3,985    4,081    4,179    4,280    4,377    4,478
                                                                                                                
                                                 DIRECT SPENDING                                                
                                                                                                                
Baseline spending under current law:                                                                            
    Budget Authority......................................    8,779    9,266    9,786   10,333   10,383   11,464
    Estimated outlays.....................................    8,702    9,176    9,689   10,231   10,789   11,358
Change:                                                                                                         
    Budget authority......................................  .......       -8      -32      -27      -27      -27
    Estimated outlays.....................................  .......        4      -21      -18      -17      -16
Spending under H.R. 3874:                                                                                       
    Budget authority......................................    8,779    9,258    9,754   10,306   10,866   11,437
    Outlays...............................................    8,702    9,180    9,668   10,213   10,772   11,342
                                                                                                                
                                               CHANGES IN REVENUES                                              
                                                                                                                
Estimated revenues........................................  .......    (\2\)    (\2\)    (\2\)    (\2\)    (\2\)
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year.                                                    
\2\ Less than $500,000.                                                                                         

    Basis of estimate: Tables 2 and 3 detail the effects of 
H.R. 3874 on authorizations of appropriations.

          TABLE 2. ESTIMATED EFFECTS OF H.R. 3874 ON APPROPRIATIONS, WITHOUT ADJUSTMENTS FOR INFLATION          
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        Authorizations Under Current Law                                        
                                                                                                                
WIC:                                                                                                            
    Budget authority......................................    3,924  .......  .......  .......  .......  .......
    Estimated outlays.....................................    3,914      273  .......  .......  .......  .......
Economic Research Service:                                                                                      
    Estimated authorization level \1\.....................       72       72       72       72       72       72
    Estimated outlays.....................................       68       72       72       72       72       72
Nutritional Education and Training Program:                                                                     
    Estimated authorization level \1\.....................        4       10       10       10       10        0
    Estimated outlays.....................................        3        9       10       10       10        2
Universal Breakfast Pilot:                                                                                      
    Estimated authorization level.........................  .......  .......  .......  .......  .......  .......
    Estimated outlays.....................................  .......  .......  .......  .......  .......  .......
Total authorizations under current law:                                                                         
    Estimated authorization level \1\.....................    4,000       82       82       82       82       72
    Estimated outlays.....................................    3,985      354       82       82       82       74
                                                                                                                
                                             Changes Under H.R. 3874                                            
                                                                                                                
WIC:                                                                                                            
    Estimated authorization level.........................  .......    3,928    3,928    3,928    3,928    3,928
    Estimated outlays.....................................  .......    3,654    3,928    3,928    3,928    3,928
Economic Research Service:                                                                                      
    Estimated authorization level.........................  .......        2        0        0        0        0
    Estimated outlays.....................................  .......        1  .......        0        0        0
Nutritional Education and Training Program:                                                                     
    Estimated authorization level.........................  .......       -6       -6       -6       -6        4
    Estimated outlays.....................................  .......       -5       -6       -6       -6        3
Universal Breakfast Pilot:                                                                                      
    Estimated authorization level.........................  .......       13  .......  .......  .......  .......
    Estimated outlays.....................................  .......    (\2\)        2        5        5        1
Total changes:                                                                                                  
    Estimated authorization level.........................  .......    3,936    3,922    3,922    3,922    3,932
    Estimated outlays.....................................  .......    3,650    3,924    3,927    3,927    3,931
                                                                                                                
                                       Total Authorization Under H.R. 3874                                      
                                                                                                                
    Estimated authorization level \1\.....................    4,000    4,018    4,004    4,004    4,004    4,004
    Estimated outlays.....................................    3,985    4,004    4,006    4,009    4,009   4,005 
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year.                                                    
\2\ Less than $500,000.                                                                                         


            TABLE 3. ESTIMATED EFFECTS OF H.R. 3874 ON APPROPRIATIONS, WITH ADJUSTMENTS FOR INFLATION           
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        Authorizations Under Current Law                                        
                                                                                                                
WIC:                                                                                                            
    Budget authority......................................    3,924  .......  .......  .......  .......  .......
    Estimated outlays.....................................    3,941      273  .......  .......  .......  .......
Economic Research Service:                                                                                      
    Estimated authorization level.........................       72       75       78       80       83       86
    Estimated outlays.....................................       68       74       77       79       82       85
Nutritional Education and Training Program:                                                                     
    Estimated authorization level.........................        4       10       10       10       10        0
    Estimated outlays.....................................        3        9       10       10       10        2
Universal Breakfast Pilot:                                                                                      
    Estimated authorization level.........................  .......  .......  .......  .......  .......  .......
    Estimated outlays.....................................  .......  .......  .......  .......  .......  .......
Total authorizations under current law :                                                                        
    Estimated authorization level.........................    4,000       85       88       90       93       86
    Estimated outlays.....................................    3,985      356       87       89       92       87
                                                                                                                
                                             Changes Under H.R. 3874                                            
                                                                                                                
WIC:                                                                                                            
    Estimated authorization level.........................  .......    4,010    4,102    4,198    4,293    4,395
    Estimated outlays.....................................  .......    3,729    4,096    4,191    4,286    4,388
Economic Research Service:                                                                                      
    Estimated authorization level.........................  .......        2        0        0        0        0
    Estimated outlays.....................................  .......        1      (1)        0        0        0
Nutritional Education and Training Program:                                                                     
    Estimated authorization level.........................  .......       -6       -6       -6       -6        4
    Estimated outlays.....................................  .......       -5       -6       -6       -6        3
Universal Breakfast Pilot:                                                                                      
    Estimated authorization level.........................  .......       13  .......  .......  .......  .......
    Estimated outlays.....................................  .......      (1)        2        5        5        1
Total changes:                                                                                                  
    Estimated authorization level.........................  .......    4,019    4,096    4,192    4,287    4,399
    Estimated outlays.....................................  .......    3,725    4,092    4,191    4,285    4,392
                                                                                                                
                                      Total Authorizations Under H.R. 3874                                      
                                                                                                                
    Estimated authorization level.........................    4,000    4,104    4,184    4,282    4,380    4,485
    Estimated outlays.....................................    3,985    4,081    4,179    4,280    4,377    4,478
----------------------------------------------------------------------------------------------------------------
1 Less than $500,000.                                                                                           

    Spending subject to appropriations: Title I would authorize 
such sums as are necessary for a universal free breakfast pilot 
project. The project would examine the effect of serving all 
breakfasts free for three years in selected elementary schools. 
Breakfasts would be reimbursed at the rate for meals served 
free. A pilot project involving 36 schools for a 3-year period 
would cost $3 million for meals and $10 million for evaluation 
over the 1999-2003 period according to information provided by 
the Food and Nutrition Service. Significantly more than 36 
schools could participate if more funds were appropriated. A 
similar pilot project was authorized for 1996 to 1998 but was 
not funded.
    Title II of the bill would extend the authorization of the 
Special Supplemental Nutritional Program for Women, Infants, 
and Children at such sums as may be necessary for fiscal years 
1999 through 2003. The WIC program provides food and other 
support to low-income pregnant, post-partum and breast-feeding 
women, infants, and children up to age five. The bill would 
make several changes to the underlying authorization of WIC. 
However, most of these changes would not have significant 
budgetary effects.
    In reauthorizing the farmers' market nutrition program 
within the WIC program, the bill would reduce the state match 
rate required for participation from 30 percent of total costs 
to 30 percent of administrative costs. Currently, about $12 
million of the total $3.9 billion WIC appropriation is set 
aside for the farmers' market nutrition program. Although data 
on the administrative portion of this program are not 
available, CBO estimates that in order to maintain the current 
level of funding from both federal and nonfederal sources, 
about $3.5 million more than the 1998 amount would need to be 
authorized annually for the program.
    The bill would require the Economic Research Service to 
study and prepare a report on the effect of cost-containment 
practices employed by the states. This report would be due 
three years after the bill's enactment. Based on information 
from the Economic Research Service, the costs of this study are 
estimated at $1.5 million from 1999-2003.
    Finally, the bill would amend the Nutritional Education and 
Training program, which provides funds to train food service 
personnel and to instruct students, teachers, and parents about 
nutrition and health. The program is currently authorized 
through fiscal year 2002 at $10 million per year. H.R. 3874 
would authorize such sums as may be necessary for fiscal years 
1999 through 2003. In fiscal year 1998, $4 million was 
appropriated for this program. CBO assumes that, under the new 
authorization provision, this level of funding would continue 
for 1999-2003.
    Direct spending and revenues: H.R. 3874 would make several 
changes to the National School Lunch Act and the Child 
Nutrition Act resulting in a net decrease in direct spending 
over the 1999-2003 period. These programs provide subsidies to 
schools and child care programs to help provide meals to 
children. CBO's estimates of the bill's effects on direct 
spending, by provision, are detailed in Table 4 and explained 
below.

                                               TABLE 4. ESTIMATED EFFECTS OF H.R. 3874 ON DIRECT SPENDING                                               
                                                        [By fiscal year, in millions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                        5- year  10-year
                                                         1999    2000    2001    2002    2003    2004    2005    2006    2007    2008    total    total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Round down reimbursement rates:                                                                                                                         
    Budget authority..................................      -6     -38     -42     -44     -45     -46     -47     -48     -48     -49     -175     -413
    Outlays...........................................      -2     -35     -41     -44     -45     -46     -47     -48     -48     -49     -167     -404
Adjust Summer Food Program reimbursement rates for                                                                                                      
 Alaska and Hawaii:                                                                                                                                     
    Budget authority..................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        1        3
    Outlays...........................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        1        3
Expand private, nonprofit participation in the Summer                                                                                                   
 Food Program:                                                                                                                                          
    Budget authority..................................   (\1\)   (\1\)       1       1       1       1       1       1       1       1        3        7
    Outlays...........................................   (\1\)   (\1\)       1       1       1       1       1       1       1       1        2        6
Expand offer versus serve:                                                                                                                              
    Budget authority..................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        1        3
    Outlays...........................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        1        3
Reinstate categorical eligibility for Even Start                                                                                                        
 participants:                                                                                                                                          
    Budget authority..................................       1       1       1       1       1       0       0       0       0       0        5        5
    Outlays...........................................       1       1       1       1       1   (\1\)       0       0       0       0        5        5
Reduce 2 percent audit funds to 1 percent:                                                                                                              
    Budget authority..................................     -15     -15     -16     -17     -18     -19     -19     -21     -22     -23      -80     -183
    Outlays...........................................      -5      -6      -6      -6      -7      -7      -7      -8      -8      -8      -29      -67
Make Kentucky-Iowa demonstration permanent:                                                                                                             
    Budget authority..................................       4       4       4       4       4       4       4       4       5       5       20       42
    Outlays...........................................       3       4       4       4       4       4       4       4       5       5       19       41
Transfer homeless programs to CACFP:                                                                                                                    
    Budget authority..................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       1       1        2        4
    Outlays...........................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       1       1        2        4
Provide snacks for teens in low-income areas:                                                                                                           
    Budget authority..................................       1       1       1       1       1       2       2       2       2       2        6       14
    Outlays...........................................   (\1\)       1       1       1       1       1       2       2       2       2        6       14
Provide after-school snacks through the School Lunch                                                                                                    
 Program:                                                                                                                                               
    Budget authority..................................       7      14      24      26      28      30      32      35      38      40       98      273
    Outlays...........................................       5      13      22      25      27      30      32      34      37      40       93      266
Spending from WIC fines and penalties:                                                                                                                  
    Budget authority..................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)    (\1\)    (\1\)
    Outlays...........................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)    (\1\)    (\1\)
Interactions:                                                                                                                                           
    Budget authority..................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       -1       -2
    Outlays...........................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       -1       -2
Total:                                                                                                                                                  
    Budget authority..................................      -8     -32     -27     -27     -27     -27     -26     -26     -24     -23     -120     -246
    Outlays...........................................       4     -21     -18     -17     -16     -16     -14     -13     -11      -9      -68     -130
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.                                                                                                                                 
                                                                                                                                                        
Note.--Details may not sum to totals due to rounding.                                                                                                   

    Round Down Reimbursement Rates. Section 103 would lower the 
reimbursement rate for meals served free or for a reduced price 
in schools and day care centers. Under current law, the 
reimbursement rates for those meals are adjusted for inflation 
each year and then rounded to the nearest quarter cent. The 
bill would require those rates (except for lunches) to be 
rounded down to the nearest whole cent. The reimbursement rate 
for free and reduced lunches has two components: the 
reimbursement rate for a full-price meal plus a special 
assistance rate. Each of those rates would be rounded down to 
the nearest cent and then summed. On average, schools would 
receive one cent less reimbursement for each lunch served and 
one-half cent less reimbursement for every other meal served. 
The provision would take effect July 1, 1999, and would reduce 
federal outlays by $2 million in 1999, and $49 million by 2008.
    Adjust Summer Food Reimbursement Rates for Alaska and 
Hawaii. Section 104 would allow the Secretary of Agriculture to 
set higher reimbursement rates for the Summer Food Service 
program in Alaska, Hawaii, and territories where the cost of 
providing meals is greater than in the rest of the states. 
Under current law, the Secretary may set higher rates in all 
the other Child Nutrition programs. The authority to adjust 
rates is currently used only in Alaska and Hawaii. Based on the 
number of meals served in Alaska and Hawaii and the size of the 
adjustment the Secretary makes in the other child nutrition 
programs, the provision would cost less than $500,000 a year.
    Expand Private, NonProfit Participation in the Summer Food 
Program. Section 105(a) would allow private, nonprofit sponsors 
to operate more sites in the Summer Food Service program. 
Current law limits a private, nonprofit sponsor to 5 urban 
sites, 20 rural sites, and 20 sites in total. The proposal 
would raise the limit to 25 sites of any type. In 1997 there 
were about 600 private, nonprofit sponsors operating 2,200 
sites. Only 13 percent of sponsors operate more than 5 sites, 
and only 6 percent of sponsors operate more than 10 sites, 
according to a Food and Nutrition Service (FNS) internal study. 
FNS officials report that about a dozen rural sponsors and a 
couple of urban sponsors have expressed interest in exceeding 
the limits under current law. The estimate assumes that 10 
rural sponsors add 5 additional sites and 4 urban sponsors add 
5 to 10 sites for a total of 80 new sites serving 5,000 new 
participants by 2001. The provision would increase outlays by 
less than $500,000 in 1999 and 2000 and by about $1 million 
each year thereafter.
    Expand Offer versus Serve. Section 105(b) would allow all 
school-sponsored Summer Food Service program sites to receive 
reimbursement for a meal even if a child does not accept every 
component of the meal. Current law allows such reimbursement 
only if the program is sited at a school. This provision would 
extend the authority to programs that schools operate at other 
sites, such as parks or community centers. Based on discussions 
with federal officials, we assume that the provision would make 
the program marginally more attractive to sponsor. We assume a 
1 percent increase in participation in school-sponsored 
programs that are not school-based. This change would result in 
an increase of less than $500,000 a year.
    Reinstate Categorical Eligibility for Even Start 
Participants. Section 107(b) reinstates categorical eligibility 
for free meals in the Child and Adult Care Food Program (CACFP) 
for Even Start participants. Under this provision, children 
would not have to meet income guidelines because the Even Start 
Program does not have any specific income guidelines. Program 
data show that while most families enrolled in Even Start have 
very low incomes, 8 percent of families have an annual income 
of between $15,000 and $20,000, and an additional 9 percent 
have income over $20,000. Most of the children in those 
families would not meet the income eligibility limit for free 
meals. Program data indicates that between 10 and 15 percent of 
the approximately 50,000 children enrolled in Even Start would 
be eligible for free meals under the provision despite having 
incomes that exceed the program limits. The provision would 
increase federal outlays by $1 million annually.
    Reduce 2 Percent Audit Funds to 1 Percent. Section 107(d) 
would reduce the funds available to states to conduct audits of 
CACFP. Under current law, each state receives an annual payment 
equaling 2 percent of the CACFP funds it spent in the second 
preceding fiscal year. The proposal would halve that payment. 
The funding is used by the states to conduct audits of 
participating CACFP institutions. Generally, states do not 
spend all of thefunding available to them: in 1995 states spent 
$15 million out of $23 million available; in 1996 states spent $15 
million out of $26 million available. The proposal would cut the funds 
available to states by $15 million in 1999 rising to $23 million by 
2008. Because a portion of that funding would not have been used 
anyway, spending would decrease by only an estimated $5 million in 1999 
and $8 million by 2008.
    Make Kentucky-Iowa Demonstration Permanent. Section 107(e) 
would permanently authorize a demonstration project that allows 
expanded participation by for-profit providers in CACFP in 
Kentucky and Iowa. Current law allows most for-profit providers 
to participate in CACFP only if at least 25 percent of the 
children at the center receive Title XX funds. In Kentucky and 
Iowa, a for-profit provider can also participate if at least 25 
percent of the children enrolled meet the income eligibility 
criteria for free and reduced meals (185 percent of poverty). 
The pilot project was funded at $3.7 million in 1998. We 
estimate that funding would increase each year by 2.7 percent, 
the projected increase in the CACFP reimbursement rate. The 
provision would increase federal costs by $4 million to $5 
million a year.
    Transfer Homeless Programs to CACFP. Section 107(f) would 
consolidate two programs that provide meals to homeless 
children into CACFP. The Homeless Children Nutrition program 
serves children under age 7 in homeless shelters up to three 
meals and one snack per day. About 1 million meals were served 
through that program in 1997. The Summer Food Homeless program 
serves children under age 19 in homeless shelters up to two 
meals a day during summer months. About 100,000 meals were 
served through that program in 1997. The consolidated program 
would serve homeless children under age 13 up to three meals a 
day through CACFP. On balance, this program would provide 
reimbursement for more meals, mostly due to additional meals 
served to children between the ages of 6 and 12 year-round 
instead of just in the summer. The provision would cost less 
than $500,000 a year through 2006, and about $1 million in 2007 
and 2008.
    Provide Snacks for Teens in Low-Income Areas. Section 
107(g) would allow centers that care for youth between the ages 
of 12 and 18 in low-income areas to participate in CACFP. 
Centers in areas where at least 50 percent of the enrolled 
students are certified eligible for free or reduced meals could 
be reimbursed for one snack per child per day. Reimbursement 
would be at the rate for free snacks and all snacks would be 
served free. Reimbursement would be available for snacks served 
after school, on holidays, and on weekends.
    CBO estimates that, after the initial year, about 10,000 
youths would participate in the programs, rising to 15,000 by 
2008. About 500,000 children between the ages of 6 and 12 
currently participate in CACFP. Data from the Survey of Income 
and Program Participation indicate that for every 20 children 
between the ages of 6 and 12 who are in care, one child between 
the ages of 13 and 18 is in care. If after-school programs 
serving children ages 13-18 participate at the same rate as 
those serving younger children, then 25,000 additional youths 
could participate daily. Because the program could operate only 
in low-income areas, CBO estimates that only 40 percent of 
those children (10,000) would be eligible to participate. This 
number is assumed to grow by 5.5 percent a year, the projected 
rate of growth for snacks served in CACFP.
    After-school programs would be reimbursed for 1 million 
snacks in 1999, 2 million in 2000, and 3 million by 2008. The 
estimate assumes that programs would operate 200 days a year on 
average. The school lunch program operates 180 days, but this 
program can also operate on weekends and holidays. Each snack 
would be reimbursed at about 50 cents for an annual cost of $1 
million to $2 million once the provision is phased-in.
    Provide After-School Snacks through the School Lunch 
Program. Section 108 would allow schools that operate a school 
lunch program to receive reimbursement for snacks served to 
children in after-school care programs. Under current law, a 
school can receive reimbursement for after-school snacks only 
if it establishes a child care center and participates in 
CACFP. Many school-based after-school programs do not 
participate in CACFP, partly because they are not willing or 
able to meet state requirements for child care centers. The 
provision would make it significantly easier for schools to 
receive reimbursement for snacks served to children after 
school, because schools would not have to apply as child care 
centers through a separate federal program. Only after-school 
programs which have an educational or enrichment purpose and 
are organized primarily for the purpose of providing care could 
participate.
    In 1999, about 16,000 after-school programs could 
potentially participate in the new snack program. In 1991, 
there were about 13,500 after-school programs in public and 
private schools according to a Department of Education (ED) 
study. About 97 percent of public schools and 45 percent of 
private schools participate in the school lunch program. CBO 
estimates that 10,600 sites had both a school lunch program and 
an after-school program. Participation in CACFP by after-school 
programs has grown by 9 percent each year in recent years. 
School enrollment grew about 2 percent a year in the early 
1990s. CBO projects that the number of after-school programs 
would grow by the average of those two rates, or 5.5 percent a 
year.
    The estimate assumes that 60 percent of eligible programs, 
or 9,600 programs, would participate. This is slightly less 
than the 70 percent rate at which schools participate in the 
school breakfast program. Wealthier schools are generally 
somewhat less likely to participate in the child nutrition 
programs, and ED data indicate that the schools withafter-
school programs are somewhat wealthier than average. About 2,800 
school-based after-school programs already receive reimbursement for 
snacks through the CACFP, so 6,800 additional after-school programs 
would participate.
    The new program could serve 60 million new snacks in 1999, 
and 95 million by 2008. If the new programs are the average 
size of programs already participating in CACFP (45 children) 
and operate the same number of days a year as lunch and 
breakfast programs (180 days) then the program would subsidize 
56 million snacks in 1999. Because children between the ages of 
13 to 18 could also participate in the new program, the number 
of new snacks would be 5 percent higher. CBO projects the 
number of snacks would grow at the same rate projected for all 
snacks in CACFP.
    Assuming the income of the new participants is the same as 
for CACFP, 58 percent of the snacks would receive reimbursement 
at the free rate, 8 percent at the reduced-price rate, and the 
remainder at the paid rate. CBO assumes that participation 
would increase gradually so the first year cost would be $6 
million, about one-third of the cost of a fully implemented 
program. By 2001, the first year we expect the program would be 
fully phased in, the cost would be $23 million; the cost would 
rise to $39 million by 2008.
    Spending from WIC Fines and Penalties. Section 202 would 
require state agencies to permanently disqualify from 
participating in the WIC program vendors who are convicted of 
trafficking in food instruments or selling firearms in exchange 
for food instruments. If disqualifying a vendor would pose a 
hardship to program participants, the vendor could remain in 
the program but would be assessed a civil money penalty by the 
state. In addition, states could impose fines on venders and 
participants who are found guilty of fraud against the program. 
These penalties and fines could be spent by the state on 
nutrition services, administrative expenses, and food benefit 
assistance. Finally, the bill would require courts to order 
persons convicted of violating any WIC provisions to forfeit 
all property used in the transaction that resulted in the 
violation. The proceeds from a sale of the forfeited property 
would be used to reimburse federal and state agencies for costs 
incurred in the forfeiture proceedings. This section would 
increase both direct spending and receipts, but the amount is 
likely to be insignificant.
    Pay-as-you-go considerations: Section 252 of the Balanced 
Budget and Emergency Deficit Control Act sets up pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts. The net changes in outlays and governmental receipts 
that are subject to pay-as-you-go procedures are shown in Table 
5. For the purposes of enforcing pay-as-you-go procedures, only 
the effects in the budget year and the succeeding four years 
are counted.

                                                 TABLE 5. SUMMARY OF PAY-AS-YOU-GO EFFECTS OF H.R. 3874                                                 
                                                        [By fiscal year, in millions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   1998    1999    2000    2001    2002    2003    2004    2005    2006    2007    2008 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays..............................................       -       4     -21     -18     -17     -16     -16     -14     -13     -11      -9
Changes in receipts.............................................       -   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ = Less than $500,000.                                                                                                                               

    Estimated impact on State, local, and tribal governments: 
Although Title I of the bill, which would reauthorize child 
nutrition programs, would impose new requirements on states and 
local education agencies, these requirements would not be 
mandates as defined in UMRA. Specifically, the bill would:
    Require local food service operations to undergo two annual 
health and safety inspections if state or local laws did not 
require it. Information from the American School Food Service 
Association (ASFSA) indicates that such inspections are 
required in all but two or three states. CBO estimates that 
local education agencies in the affected states would incur new 
costs of approximately $1 million a year.
    Require inflation adjustments for free and reduced price 
meals served in schools and day care centers to be rounded down 
to the nearest whole cent. CBO estimates that local education 
agencies would receive $2 million less in fiscal 1999 and $167 
million less over the 1999-2003 period as the result of this 
provision.
    Reduce funds allocated for state audits under the Child and 
Adult Care Food Programs from 2 percent to 1 percent of funds 
spent on the program in the second preceding fiscal year. CBO 
estimates that states would receive $5 million less in fiscal 
1999 and $30 million less for the 1999-2003 period as the 
result of this provision.
    Section 421(5)(B)(ii) of UMRA provides that new grant 
conditions and reductions in federal funding for certain 
entitlement programs, including child nutrition programs, are 
mandates if the state, local, or tribal governments that 
participate in the program lack the authority toamend their 
financial or programmatic responsibilities to continue providing 
required services under the program. Based on information from ASFSA 
and the Congressional Research Service, CBO assumes that states and 
local education agencies do, in general, have the authority to amend 
their financial and programmatic responsibilities to offset the costs 
imposed on them by this legislation. In addition to the flexibility 
under current law, the bill would grant additional flexibility by 
consolidating certain administrative requirements on states and local 
education agencies.
    Title II of the bill, which would reauthorize the Special 
Supplemental Nutrition Program for Women, Infants, and 
Children, would also impose new requirements on the state and 
local agencies that administer the program. CBO estimates that 
the net costs of these new requirements, which would be the 
result of complying with grant conditions, would not be 
significant because many states are already complying. The bill 
would also reduce the state match rate requirement for 
participation in the Farmer's Market Nutrition program from 30 
percent of total costs to 30 percent of administrative costs. 
CBO estimates that this change could save states $3.5 million 
annually.
    Estimated impact on the private sector: H.R. 3874 contains 
no private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal costs: Valerie Baxter, Sheila 
Dacey, and Christina Hawley Sadoti; revenues: Hester Grippando; 
impact on State, local, and tribal governments: Marc Nicole; 
impact on the private sector: Bruce Vavrichek.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.


                             Rollcall Votes





         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

NATIONAL SCHOOL LUNCH ACT

           *       *       *       *       *       *       *


                      direct federal expenditures

  Sec. 6. (a) * * *
  (b) The Secretary shall deliver, to each State participating 
in the school lunch program under this Act, commodities valued 
at the total level of assistance [authorized under subsection 
(c)] required under subsections (c) and (e) for each school 
year for the school lunch program in the State, not later than 
September 30 of the following school year.
  [(c) Notwithstanding any other provision of law, the 
Secretary, until such time as a supplemental appropriation may 
provide additional funds for the purpose of subsection (b) of 
this section, shall use funds appropriated by section 32 of the 
Act of August 24, 1935 (7 U.S.C. 612c) to make any payments to 
States authorized under such subsection. Any section 32 funds 
utilized to make such payments shall be reimbursed out of any 
supplemental appropriation hereafter enacted for the purpose of 
carrying out subsection (b) of this section and such 
reimbursement shall be deposited into the fund established 
pursuant to section 32 of the Act of August 24, 1935, to be 
available for the purposes of said section 32.
  [(d) Any funds made available under subsection (b) or (c) of 
this section shall not be subject to the State matching 
provisions of section 7 of this Act.]
  [(e)] (c)(1)(A) The national average value of donated foods, 
or cash payments in lieu thereof, shall be 11 cents, adjusted 
on July 1, 1982, and each July 1 thereafter to reflect changes 
in the Price Index for Food Used in Schools and Institutions. 
The Index shall be computed using 5 major food components in 
the Bureau of Labor Statistics' Producer Price Index (cereal 
and bakery products, meats, poultry and fish, dairy products, 
processed fruits and vegetables, and fats and oils). Each 
component shall be weighed using the same relative weight as 
determined by the Bureau of Labor Statistics.

           *       *       *       *       *       *       *

  [(f)] (d) Beginning with the school year ending June 30, 
1981, the Secretary shall not offer commodity assistance based 
upon the number of breakfasts served to children under section 
4 of the Child Nutrition Act of 1966.
  [(g)] (e)(1) Subject to paragraph (2), in each school year 
the Secretary shall ensure that not less than 12 percent of the 
assistance provided under section 4, this section, and section 
11 shall be in the form of commodity assistance provided under 
this section, including cash in lieu of commodities and 
administrative costs for procurement of commodities under this 
section.

           *       *       *       *       *       *       *


               NUTRITIONAL AND OTHER PROGRAM REQUIREMENTS

  Sec. 9. (a) * * *

           *       *       *       *       *       *       *

  (h) If the food service operations of a school participating 
in the school lunch program under this Act or the school 
breakfast program under section 4 of the Child Nutrition Act of 
1966 (42 U.S.C. 1773) are not required by State or local law to 
undergo health and safety inspections, then the school shall 
twice during each school year obtain State or local health and 
safety inspections to ensure that meals provided under such 
programs are prepared and served in a healthful and safe 
environment.
  (i)(1) If a single State agency administers the school lunch 
program under this Act, the school breakfast program under 
section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773), 
the summer food service program for children under section 13 
of this Act, or the child and adult care food program under 
section 17 of this Act, then such agency--
          (A) shall require each school food authority to 
        submit a single agreement with respect to the operation 
        of such programs by such authority; and
          (B) shall require a common claiming procedure with 
        respect to meals and supplements served under such 
        programs.
  (2) The agreement described in paragraph (1)(A) shall be a 
permanent agreement that may be amended as necessary.

           *       *       *       *       *       *       *


                           SPECIAL ASSISTANCE

  Sec. 11. (a)(1) * * *

           *       *       *       *       *       *       *

  (3)(A) * * *

           *       *       *       *       *       *       *

  (B) The annual adjustment under this paragraph shall reflect 
changes in the cost of operating meal programs under this Act 
and the Child Nutrition Act of 1966, as indicated by the change 
in the series for food away from home of the Consumer Price 
Index for all Urban Consumers, published by the Bureau of Labor 
Statistics of the Department of Labor. Each annual adjustment 
shall reflect the changes in the series for food away from home 
for the most recent 12-month period for which such data are 
available. The adjustments made under this paragraph shall 
becomputed [to the nearest one-fourth cent, except that adjustments to 
payment rates for meals and supplements served to individuals not 
determined to be eligible for free or reduced price meals and 
supplements shall be computed] to the nearest lower cent increment and 
based on the unrounded amount for the preceding 12-month period.

           *       *       *       *       *       *       *


                MISCELLANEOUS PROVISIONS AND DEFINITIONS

  Sec. 12. (a) * * *

           *       *       *       *       *       *       *

  (f) In providing assistance for [school breakfasts and 
lunches] breakfasts, lunches, suppers, and supplements served 
in Alaska, Hawaii, Guam, American Samoa, Puerto Rico, the 
Virgin Islands of the United States, and the Commonwealth of 
the Northern Mariana Islands, the Secretary may establish 
appropriate adjustments for each such State to the national 
average payment rates prescribed under [sections 4 and 11] 
sections 4, 11, 13, and 17 of this Act and section 4 of the 
Child Nutrition Act of 1966, to reflect the differences between 
the costs of providing [lunches and breakfasts] meals in those 
States and the costs of providing [lunches and breakfasts] 
meals in all other States.

           *       *       *       *       *       *       *

  (n) Buy American Requirement.--
          (1) In general.--For purposes of providing meals 
        under the school lunch program under this Act or the 
        school breakfast program under section 4 of the Child 
        Nutrition Act of 1966 (42 U.S.C. 1773), the Secretary 
        shall require schools located in the contiguous United 
        States to purchase, to the extent practicable, only 
        food products that are produced in the United States.
          (2) Additional requirement.--The requirement of 
        paragraph (1) shall also apply to recipient agencies in 
        Hawaii only with respect to food products that are 
        grown in Hawaii in sufficient quantities to meet the 
        needs of meals provided under the school lunch program 
        under this Act or the school breakfast program under 
        section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 
        1773).
          (3) Definition.--As used in this subsection, the term 
        ``food products that are produced in the United 
        States'' means--
                  (A) unmanufactured food products that are 
                grown or produced in the United States; and
                  (B) manufactured food products that are 
                manufactured in the United States substantially 
                from agricultural products grown or produced in 
                the United States.

                SUMMER FOOD SERVICE PROGRAM FOR CHILDREN

  Sec. 13. (a)(1) * * *

           *       *       *       *       *       *       *

  (3) Eligible service institutions entitled to participate in 
the program shall be limited to those that--
          (A) * * *

           *       *       *       *       *       *       *

          (C)(i) conduct a regularly scheduled food service for 
        children from areas in which poor economic conditions 
        exist; or
          [(ii) conduct a regularly scheduled food service 
        primarily for homeless children; or]
          [(iii)] (ii) qualify as camps; and

           *       *       *       *       *       *       *

  (7)(A) * * *
  (B) As used in this paragraph, the term ``private nonprofit 
organizations'' means those organizations that--
          [(i)(I) serve a total of not more than 2,500 children 
        per day at not more than 5 sites in any urban area, 
        with not more than 300 children being served at any 1 
        site (or, with a waiver granted by the State under 
        standards developed by the Secretary, not more than 500 
        children being served at any 1 site); or
          [(II) serve a total of not more than 2,500 children 
        per day at not more than 20 sites in any rural area, 
        with not more than 300 children being served at any 1 
        site (or, with a waiver granted by the State under 
        standards developed by the Secretary, not more than 500 
        children being served at any 1 site);
          [(ii) use self-preparation facilities to prepare 
        meals, or obtain meals from a public facility (such as 
        a school district, public hospital, or State 
        university) or a school participating in the school 
        lunch program under this Act;
          [(iii) operate in areas where a school food authority 
        or the local, municipal, or county government has not 
        indicated by March 1 of any year that such authority or 
        unit of local government will operate a program under 
        this section in such year;]
          (i) operate not more than 25 sites, with not more 
        than 300 children being served at any one site (or, 
        with a waiver granted by the State agency under 
        standards developed by the Secretary, not more than 500 
        children being served at any one site);
          [(iv)] (ii) exercise full control and authority over 
        the operation of the program at all sites under their 
        sponsorship;
          [(v)] (iii) provide ongoing year-around activities 
        for children or families;
          [(vi)] (iv) demonstrate that such organizations have 
        adequate management and the fiscal capacity to operate 
        a program under this section; and
          [(vii)] (v) meet applicable State and local health, 
        safety, and sanitation standards.

           *       *       *       *       *       *       *

  (f)(1) * * *

           *       *       *       *       *       *       *

          (7) Offer versus serve.--A school food authority 
        participating as a service institution may permit a 
        child [attending a site on school premises operated 
        directly by the authority] to refuse one or more items 
        of a meal that the child does not intend to consume, 
        under rules that the school uses for school meals 
        programs. A refusal of an offered food item shall not 
        affect the amount of payments made under this section 
        to a school for the meal.

           *       *       *       *       *       *       *

  (l)(1) Service institutions [(other than private nonprofit 
organizations eligible under subsection (a)(7))] may contract 
on a competitive basis [only with food service management 
companies registered with the State in which they operate] with 
food service management companies for the furnishing of meals 
or management of the entire food service under the program, 
except that a food service management company entering into a 
contract with a service institution under this section may not 
subcontract with a single company for the total meal, with or 
without milk, or for the assembly of the meal. The Secretary 
shall prescribe additional conditions and limitations governing 
assignment of all or any part of a contract entered into by a 
food service management company under this section. Any food 
service management company shall, in its bid, provide the 
service institution information as to its meal capacity. [The 
State shall, upon award of any bid, review the company's 
registration to calculate how many remaining meals the food 
service management company is equipped to prepare.]
  (2) Each State [shall] may provide for the registration of 
food service management companies. [For the purposes of this 
section, registration shall include, at a minimum--
          [(A) certification that the company meets applicable 
        State and local health, safety, and sanitation 
        standards;
          [(B) disclosure of past and present company owners, 
        officers, and directors, and their relationship, if 
        any, to any service institution or food service 
        management company that received program funds in any 
        prior fiscal year;
          [(C) records of contract terminations or 
        disallowances, and health, safety, and sanitary code 
        violations, in regard to program operations in prior 
        fiscal year; and
          [(D) the addresses of the company's food preparation 
        and distribution sites.
No food service management company may be registered if the 
State determines that such company (i) lacks the administrative 
and financial capability to perform under the program, or (ii) 
has been seriously deficient in its participation in the 
program in prior fiscal years.
  [(3) In order to ensure that only qualified food service 
management companies contract for services in all States, the 
Secretary shall maintain a record of all registered food 
service management companies that have been seriously deficient 
in their participation in the program and may maintain a record 
of other registered food service management companies, for the 
purpose of making such information available to the States.]
  [(4)] (3) In accordance with regulations issued by the 
Secretary, positive efforts shall be made by service 
institutions to use small businesses and minority-owned 
businesses as sources of supplies and services. Such efforts 
shall afford those sources the maximum feasible opportunity to 
compete for contracts using program funds.
  [(5)] (4) Each State, with the assistance of the Secretary, 
shall establish a standard form of contract for use by service 
institutions and food service management companies. The 
Secretary shall prescribe requirements governing bid and 
contract procedures for acquisition of the services of food 
service management companies, including, but not limited to, 
bonding requirements (which may provide exemptions applicable 
to contracts of $100,000 or less), procedures for review of 
contracts by States, and safeguards to prevent collusive 
bidding activities between service institutions and food 
service management companies.

           *       *       *       *       *       *       *

  (q) For the fiscal year beginning October 1, 1977, and each 
succeeding fiscal year ending before October 1, [1998] 2003, 
there are hereby authorized to be appropriated such sums as are 
necessary to carry out the purposes of this section.

                     COMMODITY DISTRIBUTION PROGRAM

  Sec. 14. (a) Notwithstanding any other provision of law, the 
Secretary, during the period beginning July 1, 1974, and ending 
September 30, [1998] 2003, shall--
          (1) * * *

           *       *       *       *       *       *       *


                   CHILD AND ADULT CARE FOOD PROGRAM

  Sec. 17. (a) The Secretary may carry out a program to assist 
States through grants-in-aid and other means to initiate and 
maintain nonprofit food service programs for children in 
institutions providing child care. For purposes of this 
section, the term ``institution'' means any public or private 
nonprofit organization providing nonresidential child care, 
including, but not limited to, child care centers, settlement 
houses, recreational centers, Head Start centers, and 
institutions providing child care facilities for children with 
handicaps; and such term shall also mean any other private 
organization providing nonresidential day care services for 
which it receives compensation from amounts granted to the 
States under title XX of the Social Security Act (but only if 
such organization receives compensation under such title for at 
least 25 percent of its enrolled children or 25 percent of its 
licensed capacity, whichever is less). In addition, the term 
``institution'' shall include programs developed to provide day 
care outside school hours for schoolchildren, and public or 
nonprofit private organizations that sponsor family or group 
day care homes. Reimbursement may be provided under this 
section only for meals or supplements served to children not 
over 12 years of age (except that such age limitation shall not 
be applicable for children of migrant workers if 15 years of 
age or less or for children with handicaps). The Secretary may 
establish separate guidelines for institutions that provide 
care to school children outside of school hours. For purposes 
of determining eligibility--
          [(1) no institution, other than a family or group day 
        care home sponsoring organization, or family or group 
        day care home shall be eligible to participate in the 
        program unless it has Federal, State, or local 
        licensing or approval, or is complying with appropriate 
        renewal procedures as prescribed by the Secretary and 
        the State has no information indicating that the 
        institution's license will not be renewed; or where 
        Federal, State, or local licensing or approval is not 
        available, it receives funds under title XX of the 
        Social Security Act or otherwisedemonstrates that it 
meets either any applicable State or local government licensing or 
approval standards or approval standards established by the Secretary 
after consultation with the Secretary of Health and Human Services; 
and]
          (1) an institution (except a school or family or 
        group day care home sponsoring organization) or family 
        or group day care home--
                  (A)(i) shall be licensed, or otherwise have 
                approval, by the appropriate Federal, State, or 
                local licensing authority; or
                  (ii) shall be in compliance with appropriate 
                procedures for renewing participation in the 
                program, as prescribed by the Secretary, unless 
                the State has information indicating that the 
                institution or family or group day care home's 
                license will not be renewed;
                  (B) if Federal, State, or local licensing or 
                approval is not available-----
                          (i) shall meet any alternate approval 
                        standards established by the 
                        appropriate State or local governmental 
                        agency; or
                          (ii) shall meet any alternate 
                        approval standards established by the 
                        Secretary after consultation with the 
                        Secretary of Health and Human Services; 
                        or
                  (C) if the institution provides care to 
                school children outside of school hours and 
                Federal, State, or local licensing or approval 
                is not required for such institution, shall 
                meet State or local health and safety 
                standards; and

           *       *       *       *       *       *       *

  (c)(1) * * *

           *       *       *       *       *       *       *

  (6)(A) * * *
  (B) Subparagraph (A) shall apply only with respect to the 
provision of benefits under this section for the period 
beginning September 1, 1995, and ending September 30, [1997] 
2003.
  (d)(1) Any eligible public institution shall be approved for 
participation in the child care food program upon its request. 
Any eligible private institution shall be approved for 
participation if it (A) has tax exempt status under the 
Internal Revenue Code of 1986 or, under conditions established 
by the Secretary, is moving toward compliance with the 
requirements for tax exempt status, or (B) is currently 
operating a Federal program requiring nonprofit status. Family 
or group day care homes need not have individual tax exempt 
certification if they are sponsored by an institution that has 
tax exempt status, or, under conditions established by the 
Secretary, such institution is moving toward compliance with 
the requirements for tax exempt status or is currently 
operating a Federal program requiring nonprofit status. An 
institution moving toward compliance with the requirement for 
tax exempt status shall be allowed to participate in the 
program for a period of not more than 6 months unless it can 
demonstrate to the satisfaction of the State agency that its 
inability to obtain tax exempt status within the 6-month period 
is beyond the control of the institution in which case the 
State agency may grant a single extension not to exceed 90 
days. An institution applying for participation under this 
section shall be notified of approval or disapproval in writing 
within thirty days after the date its completed application is 
filed. [If an institution submits an incomplete application to 
the State, the State shall so notify the institution within 
fifteen days of receipt of the application.]

           *       *       *       *       *       *       *

  (i) The Secretary shall make available for each fiscal year 
to States administering the child care food program, for the 
purpose of conducting audits of participating institutions, an 
amount up to [2] 1 percent of the funds used by each State in 
the program under this section, during the second preceding 
fiscal year.

           *       *       *       *       *       *       *

  (p)(1) * * *

           *       *       *       *       *       *       *

  [(4) Such project shall--
          [(A) commence not earlier than May 1, 1990, and not 
        later than June 30, 1990; and
          [(B) terminate on September 30, 1998.
  [(5) Notwithstanding paragraph (4)(B), the Secretary shall 
continue until September 30, 1998, the two pilot projects 
established under this subsection to the extent, and in such 
amounts, as are provided for in advance in appropriations 
Acts.]
  (q) Participation by Emergency Shelters.--
          (1) In general.--Except as otherwise provided in this 
        subsection, an emergency shelter shall be eligible to 
        participate in the program authorized under this 
        section in accordance with the terms and conditions 
        applicable to eligible institutions described in 
        subsection (a).
          (2) Licensing requirements.--The licensing 
        requirements contained in subsection (a)(1) shall not 
        apply to emergency shelters or sites operated by such 
        shelters under the program.
          (3) Additional requirements.--
                  (A) Health and safety standards.--An 
                emergency shelter and each site operated by 
                such shelter shall comply with State or local 
                health and safety standards.
                  (B) Meal reimbursement.--
                          (i) Limitation.--An emergency shelter 
                        may claim reimbursement--
                                  (I) only for meals and 
                                supplements served to children 
                                who have not attained the age 
                                of 13 and who are residing at 
                                an emergency shelter; and
                                  (II) for not more than 3 
                                meals, or 2 meals and a 
                                supplement, per child per day.
                          (ii) Rate.--A meal or supplement 
                        eligible for reimbursement shall be 
                        reimbursed at the rate at which free 
                        meals and supplements are reimbursed 
                        under subsection (c).
                          (iii) No charge.--A meal or 
                        supplement claimed for reimbursement 
                        shall be served without charge.
          (4) Definition of emergency shelter.--As used in this 
        subsection, the term ``emergency shelter'' has the 
        meaning givensuch term in section 321(2) of the Stewart 
B. McKinney Homeless Assistance Act (42 U.S.C. 11351(2)).
  (r) ``At Risk'' Child Care.--
          (1) In general.--Subject to the conditions in this 
        subsection, institutions that provide care to at risk 
        school children during after-school hours, weekends, or 
        holidays during the regular school year may participate 
        in the program authorized under this section. Unless 
        otherwise specified in this subsection, all other 
        provisions of this section shall apply to these 
        institutions.
          (2) At risk school children.--Children ages 12 
        through 18 who live in a geographical area served by a 
        school enrolling elementary students in which at least 
        50 percent of the total number of children enrolled are 
        certified eligible to receive free or reduced price 
        school meals under this Act or the Child Nutrition Act 
        of 1966 shall be considered at risk.
          (3) Supplement reimbursement.--
                  (A) Limitation.--Only supplements served to 
                at risk school children during after-school 
                hours, weekends, or holidays during the regular 
                school year may be claimed for reimbursement. 
                Institutions may claim reimbursement for only 
                one supplement per child per day.
                  (B) Rate.--Eligible supplements shall be 
                reimbursed at the rate for free supplements 
                under subsection (c)(3).
                  (C) No charge.--All supplements claimed for 
                reimbursement shall be served without charge.

SEC. 17A. MEAL SUPPLEMENTS FOR CHILDREN IN AFTERSCHOOL CARE.

  (a) General Authority.--
          (1) * * *
          (2) Eligible schools.--For the purposes of this 
        section, the term ``eligible elementary and secondary 
        schools'' means schools that--
                  (A) * * *

           *       *       *       *       *       *       *

                  [(C) are participating in the child care food 
                program under section 17 on May 15, 1989.]
                  (C) operate afterschool programs with an 
                educational or enrichment purpose.
  (b) Eligible Children.--Reimbursement may be provided under 
this section only for supplements [served to children--
          [(1) who are not more than 12 years of age; or
          [(2) in the case of children of migrant workers or 
        children with handicaps, who are not more than 15 years 
        of age.] served to children who are not more than 18 
        years of age.

           *       *       *       *       *       *       *


[SEC. 17B. HOMELESS CHILDREN NUTRITION PROGRAM.

  [(a) In General.--The Secretary shall conduct projects 
designed to provide food service throughout the year to 
homeless children under the age of 6 in emergency shelters.
  [(b) Agreements To Participate in Projects.--
          [(1) In general.--The Secretary shall enter into 
        agreements with State, city, local, or county 
        governments, other public entities, or private 
        nonprofit organizations to participate in the projects 
        conducted under this section.
          [(2) Eligibility requirements.--The Secretary shall 
        establish eligibility requirements for the entities 
        described in paragraph (1) that desire to participate 
        in the projects conducted under this section. The 
        requirements shall include the following:
                  [(A) Each private nonprofit organization 
                shall operate not more than 5 food service 
                sites under the project and shall serve not 
                more than 300 homeless children at each such 
                site.
                  [(B) Each site operated by each such 
                organization shall meet applicable State and 
                local health, safety, and sanitation standards.
  [(c) Project Requirements.--
          [(1) In general.--A project conducted under this 
        section shall--
                  [(A) use the same meal patterns and receive 
                reimbursement payments for meals and 
                supplements at the same rates provided to child 
                care centers participating in the child care 
                food program under section 17 for free meals 
                and supplements; and
                  [(B) receive reimbursement payments for meals 
                and supplements served on Saturdays, Sundays, 
                and holidays, at the request of the sponsor of 
                any such project.
          [(2) Modification.--The Secretary may modify the meal 
        pattern requirements to take into account the needs of 
        infants.
          [(3) Homeless children eligible for free meals 
        without application.--Homeless children under the age 
        of 6 in emergency shelters shall be considered eligible 
        for free meals without application.
  [(d) Funding Priorities.--From the amount described in 
subsection (g), the Secretary shall provide funding for 
projects carried out under this section for a particular fiscal 
year (referred to in this subsection as the ``current fiscal 
year'') in the following order of priority, to the maximum 
extent practicable:
          [(1) The Secretary shall first provide the funding to 
        entities and organizations, each of which--
                  [(A) received funding under this section or 
                section 18(c) (as in effect on the day before 
                the date of enactment of this section) to carry 
                out a project for the preceding fiscal year; 
                and
                  [(B) is eligible to receive funding under 
                this section to carry out the project for the 
                current fiscal year;
        to enable the entity or organization to carry out the 
        project under this section for the current fiscal year 
        at the level of service provided by the project during 
        the preceding fiscal year.
          [(2) From the portion of the amount that remains 
        after the application of paragraph (1), the Secretary 
        shall provide funds to entities and organizations, each 
        of which is eligible to receive funding under this 
        section, to enable the entity or organization to carry 
        out a new project under this section for the 
currentfiscal year, or to expand the level of service provided by a 
project for the current fiscal year over the level provided by the 
project during the preceding fiscal year.
  [(e) Notice.--The Secretary shall advise each State of the 
availability of the projects conducted under this subsection 
for States, cities, counties, local governments, and other 
public entities, and shall advise each State of the procedures 
for applying to participate in the project.
  [(f) Plan To Allow Participation in the Child and Adult Care 
Food Program.--Not later than September 30, 1996, the Secretary 
shall submit to the Committee on Education and Labor of the 
House of Representatives and the Committee on Agriculture, 
Nutrition, and Forestry of the Senate a plan describing--
          [(1) how emergency shelters and homeless children who 
        have not attained the age of 6 and who are served by 
        the shelters under the program might participate in the 
        child and adult care food program authorized under 
        section 17 by September 30, 1998; and
          [(2) the advantages and disadvantages of the action 
        described in paragraph (1).
  [(g) Funding.--
          [(1) In general.--In addition to any amounts made 
        available under section 7(a)(5)(B)(i)(I) of the Child 
        Nutrition Act of 1966 (42 U.S.C. 1776(a)(5)(B)(i)(I)) 
        and any amounts that are otherwise made available for 
        fiscal year 1995, out of any moneys in the Treasury not 
        otherwise appropriated, the Secretary of the Treasury 
        shall provide to the Secretary to carry out this 
        section $1,800,000 for fiscal year 1995, $2,600,000 for 
        fiscal year 1996, $3,100,000 for fiscal year 1997, 
        $3,400,000 for fiscal year 1998, and $3,700,000 for 
        fiscal year 1999 and each succeeding fiscal year. The 
        Secretary shall be entitled to receive the funds and 
        shall accept the funds.
          [(2) Insufficient number of applicants.--The 
        Secretary may expend less than the amount described in 
        paragraph (1) for a fiscal year if there is an 
        insufficient number of suitable applicants to carry out 
        projects under this section for the fiscal year. Any 
        funds made available under this subsection to carry out 
        the projects for a fiscal year that are not obligated 
        to carry out the projects in the fiscal year shall 
        remain available until expended for purposes of 
        carrying out the projects.
  [(h) Definition of Emergency Shelter.--As used in this 
section, the term ``emergency shelter'' has the meaning 
provided the term in section 321(2) of the Stewart B. McKinney 
Homeless Assistance Act (42 U.S.C. 11351(2)).]

                             PILOT PROJECTS

  Sec. 18. (a) * * *

           *       *       *       *       *       *       *

  [(i)(1) Subject to the availability of advance appropriations 
under paragraph (8), the Secretary shall make grants to a 
limited number of schools to conduct pilot projects in 2 or 
more States approved by the Secretary to--
          [(A) reduce paperwork;
          [(B) reduce application and meal counting 
        requirements; and
          [(C) make changes that will increase participation in 
        the school lunch and school breakfast programs.
  [(2)(A) Except as provided in subparagraph (B), the Secretary 
may waive the requirements of this Act and the Child Nutrition 
Act of 1966 (42 U.S.C. 1771 et seq.) relating to counting of 
meals, applications for eligibility, and related requirements 
that would preclude the Secretary from making a grant to 
conduct a pilot project under paragraph (1).
  [(B) The Secretary may not waive a requirement under 
subparagraph (A) if the waiver would prevent a program 
participant, a potential program recipient, or a school from 
receiving all of the benefits and protections of this Act, the 
Child Nutrition Act of 1966, or a Federal statute or regulation 
that protects an individual constitutional right or a statutory 
civil right.
  [(C) No child otherwise eligible for free or reduced price 
meals under section 9 or under section 4 of the Child Nutrition 
Act of 1966 (42 U.S.C. 1773) shall be required to pay more 
under a program carried out under this subsection for such a 
meal than the child would otherwise pay under section 9 or 
under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 
1771 et seq.), respectively.
  [(3) To be eligible to receive a grant to conduct a pilot 
project under this subsection, a school shall--
          [(A) submit an application to the Secretary at such 
        time, in such manner, and accompanied by such 
        information as the Secretary may reasonably require, 
        including, at a minimum, information--
                  [(i) demonstrating that the program carried 
                out under the project differs from programs 
                carried out under subparagraph (C), (D), or (E) 
                of section 11(a)(1);
                  [(ii) demonstrating that at least 40 percent 
                of the students participating in the school 
                lunch program at the school are eligible for 
                free or reduced price meals;
                  [(iii) demonstrating that the school operates 
                both a school lunch program and a school 
                breakfast program;
                  [(iv) describing the funding, if any that the 
                school will receive from non-Federal sources to 
                carry out the pilot project;
                  [(v) describing and justifying the additional 
                amount, over the most recent prior year 
                reimbursement amount received under the school 
                lunch program and the school breakfast program 
                (adjusted for inflation and fluctuations in 
                enrollment), that the school needs from the 
                Federal government to conduct the pilot; and
                  [(vi) describing the policy of the school on 
                a la carte and competitive foods;
          [(B) not have a history of violations of this Act or 
        the Child Nutrition Act of 1966 (42 U.S.C. 1771 et 
        seq.); and
          [(C) meet any other requirement that the Secretary 
        may reasonably require.
  [(4) To the extent practicable, the Secretary shall select 
schools to participate in the pilot program under this 
subsection ina manner that will provide for an equitable 
distribution among the following types of schools:
          [(A) Urban and rural schools.
          [(B) Elementary, middle, and high schools.
          [(C) Schools of varying income levels.
  [(5)(A) Except as provided in subparagraph (B), a school 
conducting a pilot project under this subsection shall receive 
commodities in an amount equal to the amount the school 
received in the prior year under the school lunch program under 
this Act and under the school breakfast program under section 4 
of the Child Nutrition Act of 1966, adjusted for inflation and 
fluctuations in enrollment.
  [(B) Commodities required for the pilot project in excess of 
the amount of commodities received by the school in the prior 
year under the school lunch program and the school breakfast 
program may be funded from amounts appropriated to carry out 
this section.
  [(6)(A) Except as provided in subparagraph (B), a school 
conducting a pilot project under this subsection shall receive 
a total Federal reimbursement under the school lunch program 
and school breakfast program in an amount equal to the total 
Federal reimbursement for the school in the prior year under 
each such program (adjusted for inflation and fluctuations in 
enrollment).
  [(B) Funds required for the pilot project in excess of the 
level of reimbursement received by the school in the prior year 
(adjusted for inflation and fluctuations in enrollment) may be 
taken from any non-Federal source or from amounts appropriated 
to carry out this subsection. If no appropriations are made for 
the pilot projects, schools may not conduct the pilot projects.
  [(7)(A) The Secretary shall require each school conducting a 
pilot project under this subsection to submit to the Secretary 
documentation sufficient for the Secretary, to the extent 
practicable, to--
          [(i) determine the effect that participation by 
        schools in the pilot projects has on the rate of 
        student participation in the school lunch program and 
        the school breakfast program, in total and by various 
        income groups;
          [(ii) compare the quality of meals served under the 
        pilot project to the quality of meals served under the 
        school lunch program and the school breakfast program 
        during the school year immediately preceding 
        participation in the pilot project;
          [(iii) summarize the views of students, parents, and 
        administrators with respect to the pilot project;
          [(iv) compare the amount of administrative costs 
        under the pilot project to the amount of administrative 
        costs under the school lunch program and the school 
        breakfast program during the school year immediately 
        preceding participation in the pilot project;
          [(v) determine the reduction in paperwork under the 
        pilot project from the amount of paperwork under the 
        school lunch and school breakfast programs at the 
        school; and
          [(vi) determine the effect of participation in the 
        pilot project on sales of, and school policy regarding, 
        a la carte and competitive foods.
  [(B) Not later than January 31, 1998, the Secretary shall 
submit to the Committee on Education and Labor of the House of 
Representatives and the Committee on Agriculture, Nutrition, 
and Forestry of the Senate a report containing--
          [(i) a description of the pilot projects approved by 
        the Secretary under this subsection;
          [(ii) a compilation of the information received by 
        the Secretary under paragraph (1) as of this date from 
        each school conducting a pilot project under this 
        subsection; and
          [(iii) an evaluation of the program by the Secretary.
  [(8) There are authorized to be appropriated to carry out 
this subsection $9,000,000 for each fiscal year during the 
period beginning October 1, 1995, and ending July 31, 1998.]
  (i) Universal Free Breakfast Pilot Projects.--
          (1) In general.--
                  (A) Grants to states.--(i) Subject to the 
                availability of advance appropriations under 
                paragraph (8), the Secretary shall make grants 
                to not more than 5 States to conduct pilot 
                projects in elementary schools under school 
                food authorities located in each such State--
                          (I) to reduce paperwork;
                          (II) to simplify meal counting 
                        requirements; and
                          (III) to make changes that will 
                        increase participation in the school 
                        breakfast program.
                  (ii) The Secretary shall select States to 
                receive grants under clause (i), and make 
                grants to such States, in the first fiscal year 
                for which appropriations are made to carry out 
                this subsection.
                  (B) Grants to school food authorities; 
                duration of pilot projects.--(i)(I) A State 
                receiving a grant under subparagraph (A) shall 
                make grants to school food authorities to carry 
                out the pilot projects described in such 
                subparagraph.
                  (II) The State shall select school food 
                authorities to receive grants under clause (i), 
                and make grants to such authorities, in the 
                first fiscal year for which the State receives 
                amounts under a grant.
                  (ii) A school food authority receiving 
                amounts under a grant to conduct a pilot 
                project described in subparagraph (A) shall 
                conduct such project for the 3-year period 
                beginning in the first fiscal year in which the 
                authority receives amounts under a grant from 
                the State.
                  (C) Participation limitation.--A school food 
                authority conducting a pilot project under this 
                paragraph shall ensure that some elementary 
                schools under such authority do not participate 
                in the pilot project.
          (2) Waiver authority.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the Secretary may waive the 
                requirements of this Act and the Child 
                Nutrition Act of 1966 (42 U.S.C. 1771 et seq.) 
                relating to counting of meals, applications for 
                eligibility, and related requirements that 
                would preclude the Secretary from making a 
                grant to conduct a pilot project under 
                paragraph (1).
                  (B) Non-waivable requirements.--The Secretary 
                may not waive a requirement under subparagraph 
                (A) if the waiver would prevent a program 
                participant, a potential recipient, or a school 
                from receiving all of the benefits and 
                protections of this Act, the Child Nutrition 
                Act of 1966, or a Federal statute or regulation 
                that protects an individual constitutional 
                right or a statutory civil right.
          (3) Requirements for participation in pilot.--To be 
        eligible to participate in a pilot project under this 
        subsection--
                  (A) a State--
                          (i) shall submit an application to 
                        the Secretary at such time and in such 
                        manner as the Secretary shall 
                        establish; and
                          (ii) shall provide such information 
                        relative to the operation and results 
                        of the pilot as the Secretary may 
                        reasonably require; and
                  (B) a school food authority--
                          (i) shall agree to serve all 
                        breakfasts at no charge to all children 
                        in participating elementary schools;
                          (ii) shall not have a history of 
                        violations of this Act or the Child 
                        Nutrition Act of 1966 (42 U.S.C. 1771 
                        et seq.); and
                          (iii) shall meet any other 
                        requirement that the Secretary may 
                        reasonably require.
          (4) Selection of pilot elementary schools.--To the 
        extent practicable, a State shall select school food 
        authorities to participate in the pilot program under 
        this subsection in a manner that will provide for an 
        equitable distribution among the following types of 
        elementary schools:
                  (A) Urban and rural elementary schools.
                  (B) Elementary schools of varying family 
                income levels.
          (5) Reimbursement rates.--A school food authority 
        conducting a pilot project under this subsection shall 
        receive reimbursement for each breakfast served under 
        the pilot in an amount equal to the rate for free 
        breakfasts established under section 4(b)(1)(B) of the 
        Child Nutrition Act of 1966 (42 U.S.C. 1773(b)(1)(B)).
          (6) Commodity entitlement.--A school food authority 
        conducting a pilot project under this subsection shall 
        receive commodities in the amount of at least 5 cents 
        per breakfast served under the pilot. The value of such 
        commodities shall be deducted from the amount of cash 
        reimbursement described in paragraph (5).
          (7) Evaluation of pilot project.--
                  (A) In general.--The Secretary, acting 
                through the Administrator of the Food and 
                Nutrition Service, shall conduct an evaluation 
                of the pilot projects in each of the school 
                food authorities selected for participation. 
                Such evaluation shall include--
                          (i) a determination of the effect of 
                        participation in the pilot project on 
                        the academic achievement, tardiness and 
                        attendance, and dietary intake of 
                        participating children that is not 
                        attributable to changes in educational 
                        policies and practices; and
                          (ii) a determination of the effect 
                        that participation by elementary 
                        schools in the pilot projects has on 
                        the proportion of students who eat 
                        breakfast.
                  (B) Report.--Upon completion of the pilot 
                projects and the evaluation, the Secretary 
                shall submit to the Committee on Education and 
                the Workforce of the House of Representatives 
                and the Committee on Agriculture, Nutrition, 
                and Forestry of the Senate a report containing 
                the evaluation of the pilot required under 
                subparagraph (A).
          (8) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as may be 
        necessary to carry out this subsection.

           *       *       *       *       *       *       *


SEC. 21. TRAINING, TECHNICAL ASSISTANCE, AND FOOD SERVICE MANAGEMENT 
                    INSTITUTE.

  (a) * * *

           *       *       *       *       *       *       *

  (e) Authorization of Appropriations.--
          (1) Training activities and technical assistance.--
        There are authorized to be appropriated to carry out 
        subsection (a)(1) $3,000,000 for fiscal year 1990, 
        $2,000,000 for fiscal year 1991, and $1,000,000 for 
        each of fiscal years 1992 through [1998] 2003.

           *       *       *       *       *       *       *


SEC. 22. COMPLIANCE AND ACCOUNTABILITY.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Authorization of Appropriations.--There is authorized to 
be appropriated for purposes of carrying out the compliance and 
accountability activities referred to in subsection (c) 
$3,000,000 for each of the fiscal years 1994 through [1996] 
2003.

           *       *       *       *       *       *       *


SEC. 26. INFORMATION CLEARINGHOUSE.

  (a) In General.--The Secretary [shall] may enter into a 
contract with a nongovernmental organization described in 
subsection (b) to establish and maintain a clearinghouse to 
provide information to nongovernmental groups located 
throughout the United States that assist low-income individuals 
or communities regarding food assistance, self-help activities 
to aid individuals in becoming self-reliant, and other 
activities that empower low-income individuals or communities 
to improve the lives of low-income individuals and reduce 
reliance on Federal, State, or local governmental agencies for 
food or other assistance.
  (b) Nongovernmental Organization.--The nongovernmental 
organization referred to in subsection (a) shall be selected on 
a competitive basis, except that, notwithstanding any other 
provision of law, the Secretary may enter into a contract for 
the services of any organization with which the Secretary has 
previously entered into a contract under this section without 
such organization competing for such new contract, if such 
organization has performedsatisfactorily under such prior 
contract and otherwise meets the criteria established in this 
subsection, and shall--
          (1) * * *

           *       *       *       *       *       *       *

  (c) Limitation on Amount Provided Under the Contract.--The 
Secretary may provide to the organization described in 
subsection (b) an amount not to exceed $150,000 in each of 
fiscal years 1999 through 2003.
  [(c)] (d) Audits.--The Secretary shall establish fair and 
reasonable auditing procedures regarding the expenditures of 
funds to carry out this section.
  [(d) Funding.--Out of any moneys in the Treasury not 
otherwise appropriated, the Secretary of the Treasury shall pay 
to the Secretary to provide to the organization selected under 
this section, to establish and maintain the information 
clearinghouse, $200,000 for each of fiscal years 1995 and 1996, 
$150,000 for fiscal year 1997, and $100,000 for fiscal year 
1998. The Secretary shall be entitled to receive the funds and 
shall accept the funds.]
  (e) Funding.--
          (1) In general.--There are authorized to be 
        appropriated $150,000 for each of the fiscal years 1999 
        through 2003 to carry out this section.
          (2) Requirement.--No amounts may be provided for the 
        clearinghouse under this section unless specifically 
        provided in appropriations Acts.

[SEC. 27. GUIDANCE AND GRANTS FOR ACCOMMODATING SPECIAL DIETARY NEEDS 
                    OF CHILDREN WITH DISABILITIES.

  [(a) Definitions.--As used in this section:
          [(1) Children with disabilities.--The term ``children 
        with disabilities'' means individuals, each of whom 
        is--
                  [(A) a participant in a covered program; and
                  [(B) an individual with a disability, as 
                defined in section 7(8) of the Rehabilitation 
                Act of 1973 (29 U.S.C. 706(8)) for purposes of 
                section 504 of the Rehabilitation Act of 1973 
                (29 U.S.C. 794).
          [(2) Covered program.--The term ``covered program'' 
        means--
                  [(A) the school lunch program established 
                under this Act;
                  [(B) the school breakfast program established 
                under section 4 of the Child Nutrition Act of 
                1966 (42 U.S.C. 1773); and
                  [(C) any other program established under this 
                Act or the Child Nutrition Act of 1966 (42 
                U.S.C. 1771 et seq.) that the Secretary 
                determines is appropriate.
          [(3) Eligible entity.--The term ``eligible entity'' 
        means a school food service authority, or an 
        institution or organization, that participates in a 
        covered program.
  [(b) Guidance.--
          [(1) Development.--The Secretary, in consultation 
        with the Attorney General and the Secretary of 
        Education, shall develop and approve guidance for 
        accommodating the medical and special dietary needs of 
        children with disabilities under covered programs in a 
        manner that is consistent with section 504 of the 
        Rehabilitation Act of 1973 (29 U.S.C. 794).
          [(2) Timing.--In the case of the school lunch program 
        established under this Act and the school breakfast 
        program established under section 4 of the Child 
        Nutrition Act of 1966 (42 U.S.C. 1773), the Secretary 
        shall develop the guidance as required by paragraph (1) 
        not later than 150 days after the date of enactment of 
        this section.
          [(3) Distribution.--Not later than 60 days after the 
        date that the development of the guidance relating to a 
        covered program is completed, the Secretary shall 
        distribute the guidance to school food service 
        authorities, and institutions and organizations, 
        participating in the covered program.
          [(4) Revision of guidance.--The Secretary, in 
        consultation with the Attorney General and the 
        Secretary of Education, shall periodically update and 
        approve the guidances to reflect new scientific 
        information and comments and suggestions from persons 
        carrying out covered programs, recognized medical 
        authorities, parents, and other persons.
  [(c) Grants.--
          [(1) In general.--Subject to the availability of 
        appropriations provided in advance to carry out this 
        subsection, the Secretary shall make grants on a 
        competitive basis to State educational agencies for 
        distribution to eligible entities to assist the 
        eligible entities with nonrecurring expenses incurred 
        in accommodating the medical and special dietary needs 
        of children with disabilities in a manner that is 
        consistent with section 504 of the Rehabilitation Act 
        of 1973 (29 U.S.C. 794).
          [(2) Additional assistance.--Subject to paragraph 
        (3)(A)(iii), assistance received through grants made 
        under this subsection shall be in addition to any other 
        assistance that State educational agencies and eligible 
        entities would otherwise receive.
          [(3) Allocation by secretary.--
                  [(A) Preference.--In making grants under this 
                subsection for any fiscal year, the Secretary 
                shall provide a preference to State educational 
                agencies that, individually--
                          [(i) submit to the Secretary a plan 
                        for accommodating the needs described 
                        in paragraph (1), including a 
                        description of the purpose of the 
                        project for which the agency seeks such 
                        a grant, a budget for the project, and 
                        a justification for the budget;
                          [(ii) provide to the Secretary data 
                        demonstrating that the State served by 
                        the agency has a substantial percentage 
                        of children with medical or special 
                        dietary needs, and information 
                        explaining the basis for the data; or
                          [(iii) demonstrate to the 
                        satisfaction of the Secretary that the 
                        activities supported through such a 
                        grant will be coordinated with 
                        activities supported under other 
                        Federal, State, and local programs, 
                        including--
                                  [(I) activities carried out 
                                under title XIX of the Social 
                                Security Act (42 U.S.C. 1396 et 
                                seq.);
                                  [(II) activities carried out 
                                under the Individuals with 
                                Disabilities Education Act (20 
                                U.S.C. 1400 et seq.); and
                                  [(III) activities carried out 
                                under section 19 of the Child 
                                Nutrition Act of 1966 (42 
                                U.S.C. 1788) or by the food 
                                service management institute 
                                established under section 21.
                  [(B) Reallocation.--The Secretary shall act 
                in a timely manner to recover and reallocate to 
                other States any amounts provided to a State 
                educational agency under this subsection that 
                are not used by the agency within a reasonable 
                period (as determined by the Secretary).
                  [(C) Applications.--The Secretary shall allow 
                State educational agencies to apply on an 
                annual basis for assistance under this 
                subsection.
          [(4) Allocation by state educational agencies.--In 
        allocating funds made available under this subsection 
        within a State, the State educational agency shall give 
        a preference to eligible entities that demonstrate the 
        greatest ability to use the funds to carry out the plan 
        submitted by the State in accordance with paragraph 
        (3)(A)(i).
          [(5) Maintenance of effort.--Expenditures of funds 
        from State and local sources to accommodate the needs 
        described in paragraph (1) shall not be diminished as a 
        result of grants received under this subsection.
          [(6) Authorization of appropriations.--There are 
        authorized to be appropriated $1,000,000 for each of 
        fiscal years 1995 through 1998 to carry out this 
        subsection.]

SEC. 27. ACCOMMODATION OF THE SPECIAL DIETARY NEEDS OF INDIVIDUALS WITH 
                    DISABILITIES.

  (a) In General.--The Secretary may carry out activities to 
help accommodate the special dietary needs of individuals with 
disabilities who are participating in a covered program. Such 
activities may include--
          (1) developing and disseminating to State agencies 
        guidance and technical assistance materials;
          (2) conducting training of State agencies and 
        eligible entities; and
          (3) providing grants to State agencies and eligible 
        entities.
  (b) Definitions.--As used in this section:
          (1) Individuals with disabilities.--The term 
        ``individuals with disabilities'' has the meaning given 
        the term `individual with a disability' as defined in 
        section 7(8) of the Rehabilitation Act of 1973 (29 
        U.S.C. 706(8)).
          (2) Covered program.--The term ``covered program'' 
        means--
                  (A) the school lunch program authorized under 
                this Act;
                  (B) the school breakfast program authorized 
                under section 4 of the Child Nutrition Act of 
                1966 (42 U.S.C. 1773); and
                  (C) any other program authorized under this 
                Act or the Child Nutrition Act of 1966 (except 
                for section 17) that the Secretary determines 
                is appropriate.
          (3) Eligible entity.--The term ``eligible entity'' 
        means a school food authority, institution, or service 
        institution that participates in a covered program.
  (c) Authorization of Appropriations.--There are authorized to 
be appropriated such sums as may be necessary for each of the 
fiscal years 1999 through 2003 to carry out this section.
                              ----------                              


CHILD NUTRITION ACT OF 1966

           *       *       *       *       *       *       *


                     STATE ADMINISTRATIVE EXPENSES

  Sec. 7. (a)(1) * * *

           *       *       *       *       *       *       *

  (5)(A) * * *
  (B)[(i)] In the fiscal year 1991 and each succeeding fiscal 
year, any amounts appropriated that are not obligated or 
expended during such fiscal year and are not carried over for 
the succeeding fiscal year under subparagraph (A) shall be 
returned to the Secretary. [From any amounts returned to the 
Secretary under the preceding sentence:
          [(I) The Secretary shall allocate, for the purpose of 
        providing grants on an annual basis to public entities 
        and private nonprofit organizations participating in 
        projects under section 17B of the National School Lunch 
        Act, not more than $4,000,000 in fiscal year 1995 and 
        each subsequent fiscal year. Subject to the maximum 
        allocation for the projects for each fiscal year, at 
        the beginning of fiscal year 1995 and each subsequent 
        fiscal year, the Secretary shall allocate, from funds 
        available under this section that have not been 
        otherwise allocated to the States, an amount equal to 
        the estimates by the Secretary of funds to be returned 
        under this clause, but not less than $1,000,000 in each 
        fiscal year. To the extent that amounts returned to the 
        Secretary are less than estimated or are insufficient 
        to meet the needs of the projects, the Secretary may, 
        subject to the maximum allocations established in this 
        subclause, allocate amounts to meet the needs of the 
        projects from funds available under this section that 
        have not been otherwise allocated to States.
          [(II) After making the allocations under subclause 
        (I), the Secretary shall allocate, for purposes of 
        administrative costs, any remaining amounts among 
        States that demonstrate a need for such amounts.
  [(ii) In any fiscal year in which amounts returned to the 
Secretary under the first sentence of clause (i) are 
insufficient to provide the complete allocation described in 
clause (i)(I), all of such amounts shall be allocated for the 
purpose described in clause (i)(I).] The Secretary shall then 
allocate, for purposes of administrationcosts, any remaining 
amounts among States that demonstrate a need for such amounts.
  [(6) Funds available to States under this subsection and 
under section 13(k)(1) of the National School Lunch Act shall 
be used for the costs of administration of the programs for 
which the allocations are made, except that States may transfer 
up to 10 percent of any of the amounts allocated among such 
programs.]
  (6) Funds available to States under this subsection and under 
section 13(k)(1) of the National School Lunch Act may be used 
by State agencies for the costs of administration of the 
programs authorized under this Act (except for the programs 
authorized under sections 17 and 21) and the National School 
Lunch Act without regard to the basis on which such funds were 
earned and allocated.

           *       *       *       *       *       *       *

  (g) For the fiscal year beginning October 1, 1977, and each 
succeeding fiscal year ending before October 1, [1998] 2003, 
there are hereby authorized to be appropriated such sums as may 
be necessary for the purposes of this section.

           *       *       *       *       *       *       *


SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN

  Sec. 17. (a) * * *

           *       *       *       *       *       *       *

  (d)(1) * * *

           *       *       *       *       *       *       *

  (3)(A) * * *

           *       *       *       *       *       *       *

  (C)(i) Except as provided in clause (ii), each applicant to 
the program shall be physically present at each certification 
determination in order to determine eligibility under the 
program.
  (ii) A local agency may waive the requirement of clause (i)--
          (I) if required to do so by requirements under the 
        Americans with Disabilities Act;
          (II) with respect to a child who was present at the 
        initial certification visit and who is receiving on-
        going health care from a provider other than such local 
        agency, if the agency determines that the requirement 
        of clause (i) would present a barrier to participation; 
        or
          (III) with respect to a child (aa) who was present at 
        the initial certification visit, (bb) who was present 
        at a certification determination within the 1-year 
        period ending on the date of the certification 
        determination described in clause (i), and (cc) who has 
        one or more parents who work, if the agency determines 
        that the requirement of clause (i) would cause a 
        barrier to participation.
  (D)(i) Except as provided in clause (ii), in order to be 
eligible for the program, each applicant to the program shall 
provide--
          (I) documentation of household income; or
          (II) documentation of participation in a program 
        described in clauses (ii) and (iii) of paragraph 
        (2)(A).
  (ii)(I) A State agency may waive the requirement of clause 
(i)--
          (aa) with respect to an applicant for whom the 
        necessary documentation is not available; or
          (bb) with respect to an applicant, such as homeless 
        women or children, for whom the agency determines the 
        requirement of clause (i) would present a barrier to 
        participation.
  (II) The Secretary shall prescribe regulations to carry out 
division (aa).
  (e)(1) The State agency shall ensure that nutrition education 
and drug abuse education is provided to all pregnant, 
postpartum, and breastfeeding participants in the program and 
to parents or caretakers of infant and child participants in 
the program. The State agency may also provide nutrition 
education and drug abuse education to pregnant, postpartum, and 
breastfeeding women and to parents or caretakers of infants and 
children enrolled at local agencies operating the program under 
this section who do not participate in the program. A local 
agency participating in the program shall provide education or 
educational materials relating to the effects of drug and 
alcohol use by a pregnant, postpartum, or breastfeeding woman 
on the developing child of the woman.

           *       *       *       *       *       *       *

  (4) The Secretary may provide nutrition education materials, 
including breastfeeding promotion materials, developed with 
funds appropriated to carry out the program under this section 
in bulk quantity to State agencies administering the commodity 
supplemental food program authorized under sections 4(a) and 5 
of the Agriculture and Consumer Protection Act of 1973 at no 
cost to that program.
  [(4)] (5) The State agency--
          (A) * * *

           *       *       *       *       *       *       *

  [(5)] (6) Each local agency shall maintain and make available 
for distribution a list of local resources for substance abuse 
counseling and treatment.
  (f)(1) * * *

           *       *       *       *       *       *       *

  (23) Each State agency shall implement a system designed to 
identify recipients who are participating at more than 1 site 
under the program.
  (24) Each State agency--
          (A) shall identify vendors that have a high 
        probability of program abuse; and
          (B) shall conduct compliance investigations of such 
        vendors.
  (g)(1) There are authorized to be appropriated to carry out 
this section $2,158,000,000 for the fiscal year 1990, and such 
sums as may be necessary for each of the fiscal years [1995 
through 1998] 1999 through 2003. As authorized by section 3 of 
the National School Lunch Act, appropriations to carry out the 
provisions of this section may be made not more than 1 year in 
advance of the beginning of the fiscal year in which the funds 
will become available fordisbursement to the States, and shall 
remain available for the purposes for which appropriated until 
expended.

           *       *       *       *       *       *       *

  (h)(1)(A) * * *

           *       *       *       *       *       *       *

  (C)(i) In any fiscal year, amounts remaining from amounts 
appropriated for such fiscal year under subsection (g)(1) and 
from amounts appropriated under such section for the preceding 
fiscal year, after carrying out subparagraph (A), shall be made 
available for food benefits under this section, except to the 
extent that such amounts are needed to carry out the purposes 
of subsections (g)(4) and (g)(5).
  (ii)(I) Notwithstanding any other provision of this section, 
with respect to fiscal year 2000 and subsequent fiscal years, a 
State agency may use amounts made available under clause (i) 
for the purchase of breast pumps.
  (II) A State agency that exercises the authority of subclause 
(I) shall expend from amounts allocated for nutrition services 
and administration an amount for the purchase of breast pumps 
that is not less than the amount expended for the purchase of 
breast pumps from amounts available for nutrition services and 
administration for the prior fiscal year.
  (2)(A) For each of the fiscal years [1995 through 1998] 1999 
through 2003, the Secretary shall allocate to each State agency 
from the amount described in paragraph (1)(A) an amount for 
costs of nutrition services and administration on the basis of 
a formula prescribed by the Secretary. Such formula--
          (i) * * *

           *       *       *       *       *       *       *

  (B)(i) * * *
  (ii) If a State agency's per participant expenditure for 
nutrition services and administration is more than [15 percent] 
10 percent (except that the Secretary may establish a higher 
percentage for small State agencies) higher than its per 
participant grant for nutrition services and administration 
without good cause, the Secretary may reduce such State 
agency's operational level for costs of nutrition services and 
administration.

           *       *       *       *       *       *       *

  (5)(A) Subject to subparagraph (B), in any fiscal year that a 
State agency [achieves, through use of acceptable measures, 
participation that exceeds the participation level estimated 
for such State agency under paragraph (2)(A)(ii)(I), such State 
agency may] submits a plan to reduce average food costs per 
participant and to increase participation above the level 
estimated for such State agency, such State agency may, with 
the approval of the Secretary, convert amounts allocated for 
food benefits for such fiscal year for costs of nutrition 
services and administration to the extent that such conversion 
is necessary--
          (i) * * *

           *       *       *       *       *       *       *

  (8)(A)(i) * * *

           *       *       *       *       *       *       *

  (iii) A State agency using a competitive bidding system for 
infant formula shall award contracts to the bidder offering the 
lowest net price unless the State agency demonstrates to the 
satisfaction of the Secretary that the weighted average retail 
price for different brands of infant formula in the State does 
not vary by more than five percent.

           *       *       *       *       *       *       *

  (10)(A) [For each of fiscal years 1995 through 1998,] For 
each fiscal year through 2003, the Secretary shall use for the 
purposes specified in subparagraph (B), $10,000,000 or the 
amount of nutrition services and administration funds and food 
benefit funds for the prior fiscal year that has not been 
obligated, whichever is less.

           *       *       *       *       *       *       *

  (11)(A) For the purpose of promoting efficiency and to 
contain costs under the program, a State agency shall, in 
selecting a retail store for participation in the program, take 
into consideration the prices that the store charges for foods 
under the program as compared to the prices that other stores 
charge for such foods.
  (B) The State agency shall establish procedures to insure 
that a retail store selected for participation in the program 
does not subsequently raise prices to levels that would 
otherwise make the store ineligible for selection in the 
program.
  (i)(1) * * *

           *       *       *       *       *       *       *

  (3)(A) Notwithstanding paragraph (2) and subject to 
subparagraphs (B) and (C)--
          [(i) not more than 1 percent (except as provided in 
        subparagraph (H)) of the amount of funds allocated to a 
        State agency under this section for supplemental foods 
        for a fiscal year may be expended by the State agency 
        for expenses incurred under this section for 
        supplemental foods during the preceding fiscal year; 
        and
          [(ii) not more than 1 percent of the amount of funds 
        allocated to a State agency for a fiscal year under 
        this section maybe expended by the State agency during 
        the subsequent fiscal year.]
          (i) not more than 1 percent (except as provided in 
        subparagraph (C)) of the amount of funds allocated to a 
        State agency under this section for supplemental foods 
        for a fiscal year, and not more than 1 percent of the 
        amount of funds allocated to a State agency under this 
        section for nutrition services and administration for a 
        fiscal year, may be expended by the State agency for 
        allowable expenses incurred under this section for 
        supplemental foods and nutrition services and 
        administration, respectively, during the preceding 
        fiscal year; and
          (ii)(I) a State agency may expend, from amounts 
        allocated to the agency for nutrition services and 
        administration, an amount equal to not more than 1 
        percent of the total amount of funds allocated to the 
        agency under this section for a fiscal year for 
        allowable expenses incurred under this section 
fornutrition services and administration during the subsequent fiscal 
year; and
          (II) with the prior approval of the Secretary, a 
        State agency may expend, from amounts allocated to the 
        agency for nutrition services and administration, an 
        amount equal to not more than one-half of 1 percent of 
        the total amount of funds allocated to the agency under 
        this section for a fiscal year for the development of a 
        management information system, including an electronic 
        benefit transfer system, during the subsequent fiscal 
        year.

           *       *       *       *       *       *       *

  [(C) The total amount of funds transferred from any fiscal 
year under clauses (i) and (ii) of subparagraph (A) shall not 
exceed 1 percent of the amount of the funds allocated to a 
State agency for such fiscal year.
  [(D) For State agencies implementing cost containment 
measures as defined in subsection (h)(9), not more than 5 
percent of the amount of funds allocated under this section to 
such a State agency for supplemental foods for the fiscal year 
in which the system is implemented, and not more than 3 percent 
of the amount of funds allocated to such a State agency for the 
fiscal year following the fiscal year in which the system is 
implemented, may be expended by the State agency for expenses 
incurred under this section for supplemental foods during the 
succeeding fiscal year.
  [(E) Notwithstanding any other provision in this paragraph 
and paragraph (2) a State agency may, subject to the approval 
of the Secretary under subparagraph (F), expend not more than 3 
percent of the amount of funds allocated to such agency for 
supplemental foods for the fiscal year 1991 for expenses 
incurred under this section for supplemental foods during the 
fiscal year 1990.
  [(F) Each State agency which intends to use the authority 
provided in subparagraph (E) shall request approval from the 
Secretary in advance and shall submit a plan showing how the 
State's caseload will be managed to meet funding limitations. 
The Secretary shall review and make determinations on such 
plans on an expedited basis.
  [(G) No State can use the authority provided under 
subparagraph (E) to increase the caseload level above the 
highest level to date in fiscal year 1990.]
  [(H)] (C) The Secretary may authorize a State agency to 
expend not more than 3 percent of the amount of funds allocated 
to a State under this section for supplemental foods for a 
fiscal year for expenses incurred under this section for 
supplemental foods during the preceding fiscal year, if the 
Secretary determines that there has been a significant 
reduction in infant formula cost containment savings provided 
to the State agency that would affect the ability of the State 
agency to at least maintain the level of participation by 
eligible participants served by the State agency.

           *       *       *       *       *       *       *

  (m)(1) * * *

           *       *       *       *       *       *       *

  (3) The Secretary shall not make a grant to any State under 
this subsection unless the State agrees to provide State, 
local, or private funds for the program in an amount that is 
equal to not less than 30 percent of the [total] administrative 
cost of the program, which may be satisfied from State 
contributions that are made for similar programs. The Secretary 
may negotiate with an Indian State agency a lower percentage of 
matching funds than is required under the preceding sentence, 
but not lower than 10 percent of the [total] administrative 
cost of the program, if the Indian State agency demonstrates to 
the Secretary financial hardship for the affected Indian tribe, 
band, group, or council.

           *       *       *       *       *       *       *

  (6)(A) * * *

           *       *       *       *       *       *       *

  [(F) In approving and ranking State plans submitted under 
this paragraph, the Secretary shall--
          [(i) favorably consider a State's prior experiences 
        with this or similar programs;
          [(ii) favorably consider a State's operation of a 
        similar program with State or local funds that can 
        present data concerning the value of the program;
          [(iii) require that if a State receiving a grant 
        under this section applies the Federal grant to a 
        similar program operated in the previous fiscal year 
        with State or local funds, the State shall not reduce 
        in any fiscal year the amount of State and local funds 
        available to the program in the preceding fiscal year 
        after receiving funds for the program under this 
        subsection;
          [(iv) give preference to State plans that would serve 
        areas in the State that have--
                  [(I) the highest concentration of eligible 
                persons;
                  [(II) the greatest access to farmers' 
                markets;
                  [(III) broad geographical area;
                  [(IV) the greatest number of recipients in 
                the broadest geographical area within the 
                State; and
                  [(V) any other characteristics, as determined 
                appropriate by the Secretary, that maximize the 
                availability of benefits to eligible persons; 
                and
          [(v) take into consideration the amount of funds 
        available and the minimum amount needed by each 
        applicant State to successfully operate the program.]
  [(G)] (F)(i) An amount equal to 75 percent of the funds 
available after satisfying the requirements of subparagraph (B) 
shall be made available to States participating in the program 
that wish to serve additional recipients, and whose State plan 
to do so is approved by the Secretary. If this amount is 
greater than that necessary to satisfy the approved State plans 
for additional recipients, the unallocated amount shall be 
applied toward satisfying any unmet need of States that have 
not participated in the program in the prior fiscal year, and 
whose State plans have been approved.

           *       *       *       *       *       *       *

  (9)(A) There are authorized to be appropriated to carry out 
this subsection $8,000,000 for fiscal year 1994, $10,500,000 
for fiscalyear 1995, and such sums as may be necessary for each 
of fiscal years [1996 through 1998] 1999 through 2003.

           *       *       *       *       *       *       *

  (o) Disqualification of Vendors Convicted of Trafficking or 
Illegal Sales.--
          (1) In general.--Except as provided in paragraph (5), 
        the State agency shall permanently disqualify a vendor 
        convicted of trafficking in food instruments (including 
        any voucher, draft, check, or access device, including 
        an electronic benefit transfer card or personal 
        identification number, issued in lieu of a food 
        instrument pursuant to the provisions of this section), 
        or selling firearms, ammunition, explosives, or 
        controlled substances (as defined in section 102 of the 
        Controlled Substances Act) in exchange for food 
        instruments.
          (2) Notice of disqualification.--The State agency 
        shall provide the vendor with notification of the 
        disqualification and shall make such disqualification 
        effective on the date of receipt of the notice of 
        disqualification.
          (3) Prohibition on receipt of lost revenues.--A 
        vendor shall not be entitled to receive any 
        compensation for revenues lost as a result of the 
        disqualification under this subsection.
          (4) Hardship exception in lieu of disqualification.--
                  (A) In general.--A State agency may permit a 
                vendor that would otherwise be disqualified 
                under paragraph (1) to continue to redeem food 
                instruments or otherwise provide supplemental 
                foods to participants if the State agency 
                determines, in its sole discretion according to 
                criteria established by the Secretary, 
                disqualification of the vendor would cause 
                hardship to participants in the program 
                authorized under this section.
                  (B) Civil money penalty.--Whenever a State 
                agency authorizes a vendor that would otherwise 
                be disqualified to redeem food instruments or 
                provide supplemental foods in accordance with 
                subparagraph (A), the State agency shall assess 
                the vendor a civil money penalty in lieu of a 
                disqualification.
                  (C) Amount.--The State agency shall determine 
                the amount of the civil penalty according to 
                criteria established by the Secretary.
  (p) Study and Report by Economic Research Service.--
          (1) Study.--The Secretary, acting through the 
        Administrator of the Economic Research Service, shall 
        conduct a study on the effect of cost containment 
        practices established by States under the program for 
        the selection of vendors and approved food items (other 
        than infant formula) on the following:
                  (A) Program participation.
                  (B) Access and availability of prescribed 
                foods.
                  (C) Voucher redemption rates and actual food 
                selections by participants.
                  (D) Participants on special diets or with 
                specific food allergies.
                  (E) Participant use and satisfaction of 
                prescribed foods.
                  (F) Achievement of positive health outcomes.
                  (G) Program costs.
          (2) Report.--Not later than 3 years after the date of 
        the enactment of the Child Nutrition and WIC 
        Reauthorization Amendments of 1998, the Administrator 
        shall submit to the Secretary of Agriculture, the 
        Committee on Education and the Workforce of the House 
        of Representatives, and the Committee on Agriculture, 
        Nutrition, and Forestry of the Senate a report 
        containing the results of the study conducted under 
        paragraph (1).
  (q) Use of Penalties From Vendor and Recipient Fraud and 
Abuse.--Amounts collected from penalties from vendors and 
recipients relating to violations of any provision of this 
section (including any regulation established to carry out this 
section) for fraud and abuse under the program may be used for 
nutrition services and administration and food benefits only 
for the 1-year period beginning on the date on which amounts 
under the penalty are received.
  (r) Maximum Amount of Fine for Certain Violations Under the 
Program.--The maximum amount of a fine with respect to the 
embezzlement, willful misapplication, stealing, obtaining by 
fraud, or trafficking in food instruments of funds, assets, or 
property that are of a value of $100 or more under the program 
shall be $25,000.
  (s) Criminal Forfeiture.--
          (1) In general.--In imposing a sentence on a person 
        convicted of an offense in violation of any provision 
        of this section (or any regulation promulgated under 
        this section), a court shall order, in addition to any 
        other sentence imposed under this section, that the 
        person forfeit to the United States all property 
        described in paragraph (2).
          (2) Property subject to forfeiture.--All property, 
        real and personal, used in a transaction or attempted 
        transaction, to commit, or to facilitate the commission 
        of, a violation (other than a misdemeanor) of any 
        provision of this section (or any regulation 
        promulgated under this section), or proceeds traceable 
        to a violation of any provision of this section (or any 
        regulation promulgated under this section), shall be 
        subject to forfeiture to the United States under 
        paragraph (1).
          (3) Interest of owner.--No interest in property shall 
        be forfeited under this subsection as the result of any 
        act or omission established by the owner of the 
        interest to have been committed or omitted without the 
        knowledge or consent of the owner.
          (4) Proceeds.--The proceeds from any sale of 
        forfeited property and any monies forfeited under this 
        subsection shall be used--
                  (A) first, to reimburse the Department of 
                Justice for the costs incurred by the 
                Department to initiate and complete the 
                forfeiture proceeding;
                  (B) second, to reimburse the Department of 
                Agriculture Office of Inspector General for any 
                costs the Office incurred in the law 
                enforcement effort resulting in the forfeiture;
                  (C) third, to reimburse any Federal or State 
                law enforcement agency for any costs incurred 
                in the law enforcement effort resulting in the 
                forfeiture; and
                  (D) fourth, by the State agency to carry out 
                the approval, reauthorization, and compliance 
                investigations of vendors.

           *       *       *       *       *       *       *


                    NUTRITION EDUCATION AND TRAINING

  Sec. 19. (a) * * *

           *       *       *       *       *       *       *


                       APPROPRIATIONS AUTHORIZED

  (i)[(1) For the fiscal years beginning October 1, 1977, and 
October 1, 1978, grants to the States for the conduct of 
nutrition education and information programs shall be based on 
a rate of 50 cents for each child enrolled in schools or in 
institutions within the State, except that no State shall 
receive an amount less than $75,000 per year.
  [(2)(A) Out of any moneys in the Treasury not otherwise 
appropriated, and in addition to any amounts otherwise made 
available for fiscal year 1995, the Secretary of the Treasury 
shall provide to the Secretary $1,000 for fiscal year 1995 and 
$10,000,000 for fiscal year 1996 for making grants under this 
section to each State for the conduct of nutrition education 
and training programs. The Secretary shall be entitled to 
receive the funds and shall accept the funds.
  [(B)(i)(I) Subject to clause (ii), grants to each State from 
the amounts appropriated under subparagraph (A) shall be based 
on a rate of 50 cents for each child enrolled in schools or 
institutions within such State.
  [(II) If the amount appropriated for any fiscal year is 
insufficient to pay the amount to which each State is entitled 
under subclause (I), the amount of each grant shall be ratably 
reduced. If additional funds become available for making such 
payments, such amounts shall be increased on the same basis as 
they were reduced.
  [(ii) No State shall receive an amount that is less than--
          [(I) $50,000, in any fiscal year in which the amount 
        appropriated for purposes of this section is less than 
        $10,000,000;
          [(II) $62,500, in any fiscal year in which the amount 
        appropriated for purposes of this section is 
        $10,000,000 or more but is less than $15,000,000;
          [(III) $68,750, in any fiscal year in which the 
        amount appropriated for purposes of this section is 
        $15,000,000 or more but is less than $20,000,000; and
          [(IV) $75,000 in any fiscal year in which the amount 
        appropriated for purposes of this section is 
        $20,000,000 or more.]
          [(3)] (1) Fiscal years [1997 through 2002] 1999 
        through 2003.--
                  [(A) In general.--There are authorized to be 
                appropriated to carry out this section 
                $10,000,000 for each of fiscal years 1997 
                through 2002.]
                  (A) In general.--There are authorized to be 
                appropriated to carry out this section such 
                sums as are necessary for fiscal years 1999 
                through 2003.

           *       *       *       *       *       *       *

  [(4)] (2) Funds made available to any State under this 
section shall remain available to the State for obligation in 
the fiscal year succeeding the fiscal year in which the funds 
were received by the State.
  [(5)] (3) Enrollment data used for purposes of this 
subsection shall be the latest available as certified by the 
Department of Education.

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    I am compelled to respond to concerns with my amendment to 
allow the federal U.S. Department of Agriculture to purchase 
the lower priced non-quota peanuts for the school lunch and 
other food assistance programs raised during full Committee 
consideration of H.R. 3874. Allegations made during discussion 
of the amendment reflected the fear that the purchasing of non-
quota peanuts would result in the infiltration of foreign foods 
into the school lunch program. However, Federal nutrition law 
has longstanding ``Buy American'' provisions that require the 
government to purchase U.S.-produced commodities. U.S. grown 
non-quota peanuts are no different than U.S. quota peanuts, 
except that they are grown without a license and they are 
available at approximately $350 per ton as compared to quota 
peanuts at about $650 per ton. The proposed amendment to the 
National School Lunch Act had absolutely nothing to do with the 
importation of foreign peanuts, nor food safety.
    Contrary to the rhetoric of peanut quota program 
proponents, the Depression era peanut quota system was not 
phased out in the Federal Agriculture Improvement and Reform 
(``FAIR'') Act, Some food commodities were transitioned to the 
free market under the provisions of the Farm Bill of 1996. 
However, the peanut quota system was left untouched by the new 
law. Therefore, U.S. peanuts continue to be subject to severe 
restrictions on production with artificial price supports that 
are almost twice the world market price.
    The proposed amendment to the National School Lunch Act to 
allow USDA to buy non-quota peanuts for the school lunch 
program would not ``kill the American peanut farmer'' as 
suggested during consideration of the amendment. The amount of 
non-quota peanuts purchased for USDA food assistance programs 
is less than 2% of the national peanut quota production. In 
1997, the Secretary of Agriculture set the national peanut 
quota at 1,133,000 tons, while the USDA purchases of peanuts 
totaled 19,200 tons. Thus, to have the USDA buy non-quota 
peanuts would hardly kill the American peanut farmer. In fact, 
it may help U.S. farmers that grow peanuts who are just as 
``American'' as farmers and quota holders that have an 
exclusive federal license to grow peanuts at a support price 
that is almost twice the world price.
    The amendment I proposed to the National School Lunch Act 
simply provided a mechanism for the U.S. government to buy non-
quota peanuts at the same price that we sell American peanuts 
to foreign countries. While current law requires U.S. peanut 
growth without a quota to be exported or crushed into oil or 
meal, my amendment would have made these peanuts available at 
the same lower price for consumption by American school 
children. If we were to allow the Federal government to 
purchase peanuts for American school children for the same 
price we sell American peanuts to consumers in other countries, 
we could have saved at least $5 million to purchase a greater 
amount of nutritious food through government feeding programs. 
It is now particularly clear that peanut quota holders want the 
federal government to support their pocketbooks, even if its at 
the expense of enhanced nutrition for American school children.

                                                   Donald M. Payne.

                            DISSENTING VIEWS

                            i. introduction

    Congress should reject HR 3874, a bill reauthorizing the 
Women's, Infant, and Children's (WIC) program and other 
childhood nutrition programs, and the flawed redistributionist, 
welfare state model that lies behind this bill. Although the 
goals of this legislation are noble, the means toward achieving 
the goals embodied therein are unconstitution and ineffective.
    Providing for the care of the poor is a moral 
responsibility of every citizen, however, it is not a proper 
function of the federal government to plunders one group of 
citizens and redistribute those funds to another group of 
citizens. Nowhere in the United States Constitution is the 
federal government authorized to provide welfare services. If 
any government must provide welfare services, it should be 
state and local governments. However, the most humane and 
efficient way to provide charitable services are through 
private efforts. Among their other virtues, private charities 
are much more likely to provide short-term assistance rather 
than fostering long-term dependency upon government programs.
    Private charities are also much better able to target 
assistance to the truly needy than government programs, which 
are burdened with bureaucratic rules of eligibility, as well as 
procedures designed to protect the ``due process'' rights of 
recipients, which cannot be adequately changed to meet unique 
individual circumstances. Thus many people who are genuinely 
needy do not receive needed help. In fact, more than 40% of all 
families living below the poverty level receive no government 
assistance. Private charities can also be more effective 
because they do not have to fulfill administrative 
requirements, such as the WIC's programs rebate system, which 
actually divert resources from the needy.

ii. government welfare programs violate the privacy and other rights of 
                             the recipients

    Private charities are also able to place an emphasis upon 
reformation of personal behavior while not imposing the 
controls on personal life that government programs, such as 
WIC, impose on the program recipients. When a pregnant woman 
signs up to receive WIC vouchers, she is trading away a large 
amount of her personal freedom. Her choices of where to shop 
will be restricted to WIC-approved vendors and her choice of 
what foods to buy will be restricted to those foods which match 
the WIC nutrition specifications. WIC recipients are also 
required to participate in WIC parenting and nutrition classes.
    As an OB/GYN I certainly recognize the importance of proper 
nutrition for pregnant women and young children. However, as a 
constitutionalist, I strenuously object to the federal 
government coercing pregnant women into accepting such services 
and restricting their choices of food products. The founders of 
this country would be flabbergasted if they knew that the 
federal government had monopolized the provisions of charitable 
services to low-income women, but they would be horrified if 
they knew the federal government was forbidding poor women from 
purchasing Post Raisin Bran for their children because some 
federal bureaucrats had determined that it contains too much 
sugar!

  iii. the programs in hr 2646 are corporate welfare masquerading as 
                               compassion

    The fact that the manufacture of foods such as Raisin Bran 
battle to get their products included in this program reveals 
the extent to which WIC is actually corporate welfare. Many 
corporations have made a tidy profit from helping to feed the 
poor and excluding their competitors in the process. For 
example, thanks to the WIC program, the federal government is 
the largest purchaser of infant formula in the nation.
    According to the Congressional Research Service, food 
vendors participating in WIC received $9.86 billion in Fiscal 
Year 1997--75% of the total funds spent on the WIC program! 
This fiscal year, producers of food products approved by the 
federal government for purchase by WIC participants are 
expected to receive $10 billion in taxpayer dollars! Small 
wonder the lobbyists who came to my office to discuss WIC were 
not advocates for the poor, but rather well-healed 
spokespersons for corporate interests!
    Anyone who doubts that these programs serve the interests 
of large corporations should consider that one of the most 
contentious issue debated at Committee mark-up was opposition 
to an attempt to allow USDA to purchase non-quota peanuts 
(currently the only peanuts available for sale are farmers who 
have a USDA quota all other farmers are forbidden to sell 
peanuts in the US) for school nutrition programs. Although this 
program would have saved the American taxpayers $5 million this 
year, the amendment was rejected at the behest of supporters of 
the peanut lobby. A member of my staff, who appropriately asked 
why this amendment could not pass with overwhelming support, 
was informed by a staffer for another member, who 
enthusiastically supports the welfare state, that the true 
purpose of this program is to benefit producers of food 
products, not feed children.

    iii. federal welfare programs crowd out more compassionate and 
                       efficient private efforts

    The main reason supporters of a free and moral society must 
oppose this bill is because federal welfare programs crowd out 
the more efficient private charities for two reasons. First, 
the taxes imposed on the American people in order to finance 
these programs leave taxpayers with fewer resources to devote 
to private charity. Secondly, the welfare state erodes the 
ethic of charitable responsibility as citizens view aiding the 
poor as the government's role, rather than a moral obligation 
of the individual.
    The best way to help the poor is to dramatically cut taxes 
thus allowing individuals to devote more of their own resources 
to those charitable causes which better address genuine need. I 
am a cosponsor of H.R. 1338, which raises the charitable 
deduction and I believe Congress should make awakening the 
charitable impulses of the American people by reducing their 
tax burden one of its top priorities. In fact, Congress should 
seriously consider enacting a dollar-per-dollar tax credit for 
donations to the needy. This would do more to truly help the 
disadvantaged than a tenfold increase in spending on the 
programs in H.R. 3874.

                             iv. conclusion

    Congress should reject H.R. 3874 because the programs 
contained therein lack constitutional foundation, allow the 
federal government to control the lives of program recipients, 
and serve as a means of transferring monies from the taxpayers 
to big corporations. Instead of funding programs, Congress 
should return responsibility for helping those in need to those 
best able to effectively provide assistance, the American 
people acting voluntarily.


                                                          Ron Paul.

                                
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